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2019 DIGILAW 727 (MAD)

State Bank of India, SAM Branch v. G. Moorthi

2019-03-15

R.SUBRAMANIAN

body2019
ORDER : R. Subramanian, J. 1. This application has been taken out by the 2nd defendant in the suit seeking rejection of the plaint. The suit in CS No. 673 of 2018 has been filed by the 1st respondent herein seeking the following reliefs. (a) For a specific performance directing the 1st defendant to execute and register a Conveyance Deed in favour of the plaintiff in respect of the property morefully described in the schedule hereunder, within a fixed period of time; as per the deed of declaration dated 12.04.2013; (b) For a declaration to declare that the encumbrances bearing document No. 63/2014 dated 07.07.2014 and document No. 28/2015 dated 21.12.2015 in favour of the 2nd defendant are null and void and not binding on the plaintiff and the suit schedule property; (c) For a permanent injunction restraining the defendants their men, agents, assigns, or any person claiming through or under them or acting on their behalf, from in any manner interfering with possession of the plaintiff over the suit schedule property; or dealing, transferring, alienating or creating any encumbrances whatsoever upon the suit schedule property, belonging to the plaintiff and morefully described in the schedule hereunder; 2. The main contention of the applicant Bank is that the suit is barred under the provisions of Section 18 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest, Act 2002. It is also further claimed that pursuant to the decree granted by the Debt Recovery Tribunal, the Bank has initiated recovery proceedings in DRC No. 160/2015/SP for sale of the property and a sale proclamation had also been issued by the Debt Recovery Tribunal. It is further claimed that action has also been initiated under the SARFAESI Act, for bringing the properties belonging to the 2nd respondent for sale. It is at this juncture, the 1st respondent has come forward with the above suit and which according to the applicant-Bank is collusive in nature with the object of delaying the execution proceedings and the proceedings under SARFAESI Act. 3. It is at this juncture, the 1st respondent has come forward with the above suit and which according to the applicant-Bank is collusive in nature with the object of delaying the execution proceedings and the proceedings under SARFAESI Act. 3. The application is resisted by the 1st respondent contending that the suit is one for specific performance, inasmuch as, the said relief of specific performance cannot be sought for under the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, the suit cannot be said to be barred by any law. It is also claimed that the relief of declaration relating to the encumbrances dated 07.07.2014 and 21.12.2015 are only consequential reliefs and as such, they cannot be said to be barred. The only question that arises for consideration is as to whether the suit can be said to be barred by the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 or the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest, Act 2002. 4. I have heard Mr. M.L. Ganesh, learned counsel appearing for the applicant-Bank and Mr. N.L. Rajah, learned Senior Counsel appearing for Mr. V. Chandraprabu, learned counsel for the 1st respondent. 5. Mr. M.L. Ganesh, learned counsel appearing for the applicant Bank would submit that in view of the provisions of Section 18 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and Section 34 of the SARFAESI Act, the suit is barred and as such the plaint is liable to be rejected. 6. Section 18 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, reads as follows: 18. Bar of Jurisdiction.--On and from the appointed day, no court or other authority shall have, or be entitled to exercise, any jurisdiction, powers or authority (except the Supreme Court, and a High Court exercising jurisdiction under articles 226 and 227 of the Constitution) in relation to the matters specified in section 17. A reading of the above provision would show that what is barred under the said Act is only proceedings in relation to matters specified under Section 17 of the said Act. A reading of the above provision would show that what is barred under the said Act is only proceedings in relation to matters specified under Section 17 of the said Act. In order to be a proceeding under Section 17 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, a proceeding must be essentially for recovery initiated by the Bank or a counter claim made against the Bank. It cannot include reliefs sought for by third parties against the debtor, though the property mortgaged with the Bank happens to be the subject matter of such proceeding. 7. Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest, Act 2002, reads as follows: 34. Civil Court not to have jurisdiction.- No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993). A reading of Section 34 would show that what is barred under the said provision are only proceedings, in respect of any matter which a Debts Recovery Tribunal or Appellate Tribunal, would have jurisdiction. The second limb of the Section only prohibits grant of an order of injunction, in respect of any action taken in pursuance of power conferred under the Securitisation Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. 8. A Full Bench of this Court while considering the nature of bar of jurisdiction of Civil Courts imposed under Section 16(A) of the Tamil Nadu Agricultural Lands Record of Tenancy Rights Act, 1969, in Periathambi Goundan v. The District Revenue Officer, reported in AIR 1980 Mad 180 , had observed as follows: “36. The next aspect to be considered, is the ascertainment of the ambit, amplitude and the extent of the interdict imposed by Section 16-A of the Act, on the exercise of jurisdiction by a Civil Court. We have already extracted Section 16-A. Two things are clear from the language of the section. The next aspect to be considered, is the ascertainment of the ambit, amplitude and the extent of the interdict imposed by Section 16-A of the Act, on the exercise of jurisdiction by a Civil Court. We have already extracted Section 16-A. Two things are clear from the language of the section. One is, the interdict is on the jurisdiction of the matters which by or under the Act have to be determined by the Record Officer, the District Collector or other officer or authority empowered by the Act. The section itself does not enumerate as to what those matters are. The second is, the interdict is not on any particular proceeding in the Civil Court, but only on the exercise of the jurisdiction in respect of matters. Controversies that come before a court or a tribunal cannot be either pigeon-holed or put in strait-jackets. They may be of different varieties as well as different standards. For the purpose of deciding the main controversy, the court or the Tribunal may have incidentally to decide a number of subsidiary questions or controversies. Therefore, when the section itself does not enumerate the matters in respect of which the jurisdiction of the Civil Court is ousted, one will have to ascertain the said matters, with reference to the other provisions of the Act conferring power or jurisdiction on the authorities functioning under the Act. Similarly a suit or proceeding in a Civil Court may involve the determination of several matters, some of which may be within the jurisdiction of the authorities functioning under the Act and some others outside the jurisdiction. In such a case, the suit or proceeding as such cannot fail unless it is of such a nature that it can be terminated solely on the determination of the matter falling within the jurisdiction of the authorities functioning under the Act. Since the section itself aces not bar the institution of the suit or a proceeding, it is unnecessary to labour the second aspect any further.” 9. The Hon'ble Full Bench also referred to judgment of the Division Bench of this Court in Muniyandi v. Rajangam Iyer, reported in 1976 (1) MLJ 344 , and the judgment in Second Appeal 1496 of 1976 dated 05.01.1977. The Hon'ble Full Bench also referred to judgment of the Division Bench of this Court in Muniyandi v. Rajangam Iyer, reported in 1976 (1) MLJ 344 , and the judgment in Second Appeal 1496 of 1976 dated 05.01.1977. The Hon'ble Full Bench had extracted with approval the following passage from the judgment in Second Appeal No. 1496 of 1976: “Dealing with the contention regarding the jurisdiction of the Civil Court to entertain this suit as framed, the lower appellate court has expressed the view that the relief sought for in the suit does not in any way, infringe the functions of the Record Officer, and that, therefore, the first respondent can invoke the jurisdiction of the Civil Court if his possession is sought to be disturbed by the appellant and respondents 2 and 3, and that Section 16-A will not, therefore, stand in the way of the first respondent maintaining this suit. I am of the view that though Section 16-A excludes the jurisdiction of the Civil Court to determine a question which the authorities constituted under the Tamil Nadu Act, X of 1969 had to decide, the present suit, which is one for mere injunction, can be maintained in the Civil Court. It is true that for the purpose of granting the relief of injunction claimed in the suit, the court has to incidentally go into the question as to who is in possession of the property and in what capacity. The fact that the court has to consider an incidental question for the purpose of granting the main relief claimed in the suit will not make the suit incompetent in a Civil Court. In Rama-Papiah v. Ellappa Gounder, 1960 2 MLJ SN 26, Ramachandra Iver J. as he then was, had held that an injunction, which is preventive remedy, can be granted only by the Civil Court, that there is no inherent power in any tribunal to grant an injunction and that, therefore, the tenant has always got his remedy to approach the Civil Court for the relief by way of injunction whenever his possession is interfered with. In Ramachandra Sastrigal V. Kuppusami Vanniar, 1961-1 Mad LJ 335 while dealing with the scope of S. 6-A of the Tamil Nadu Act XXV of 1955, a Division Bench had expressed the view that in a simple suit for an injunction laid in a Civil Court for restraining the defendant, from interfering with the plaintiffs possession, the defendant, even if he were to be a cultivating tenant entitled to the benefits of the Act, cannot gain anything by merely having the forum of adjudication being shifted from the Civil Court to the Revenue court as it is obvious that a Revenue Court cannot grant any injunction. In Sri Venkataramanaswamy Deity v. Vadugammal, 1974-1 Mad LJ 431, a Division Bench of this Court, while construing the scope of S. 93 of the Tamil Nadu Hindu Religious and Charitable Endowments Act 1959, held that a relief which cannot be granted by the Deputy Commissioner under Section 57 can be asked for in a Civil Court and that the Civil Court, while deciding whether the plaintiff is entitled to the relief asked for, can go into and decide incidental questions which may fail within Section 57. The Bench has observed -' Therefore, the preponderance of authority of our court is that a civil suit is not barred in respect of a relief which cannot be granted by the Deputy Commissioner and that in such a suit, the Civil Court has jurisdiction to decide incidental issues which are within the jurisdiction of the Deputy Commissioner”. 10. From the above pronouncement of the Hon'ble Full Bench of this Court, it is clear that the bar enacted that any provision which creates a bar on the jurisdiction of a Civil Court must be construed strictly and it would apply only to proceedings, which are completely covered by the bar. I have already extracted both Section 18 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, and Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest, Act 2002. The language of the both the provisions do not cover a dispute between third parties relating to specific performance of an agreement of sale. The language of the both the provisions do not cover a dispute between third parties relating to specific performance of an agreement of sale. It may sometime happen that the jurisdiction will over lap and in deciding the question of specific performance, the Civil Court may also be compelled to decide on the validity of certain encumbrances created by the agreement vendor. Such question cannot be said to be barred by the provisions of the two enactments referred to above. 11. Mr. M.L. Ganesh, learned counsel appearing for the applicant Bank, would also draw my attention to the provisions of the Income Tax Rules on procedure for Recovery of Tax. According to him, Rule 9 of the Rules bar jurisdiction of Civil Court, Rule 9 of the said rules reads as follows: General bar to jurisdiction of civil courts, save where fraud alleged. “9. Except as otherwise expressly provided in this Act, every question arising between the Tax Recovery Officer and the defaulter or their representatives, relating to the execution, discharge or satisfaction of a certificate, or relating to the confirmation or setting aside by an order under this Act of a sale held in execution of such certificate, shall be determined, not by suit, but by order of the Tax Recovery Officer before whom such question arises: Provided that a suit may be brought in a civil court in respect of any such question upon the ground of fraud.” A bare reading of Rule 9, would show that a suit for specific performance, cannot be said to be barred under the said rule. Rule 9 is akin to Section 47 of the Code of Civil Procedure. It relates to question arising between the Recovery Officer and the defaulter which relate to the execution, discharge and satisfaction of a certificate or confirmation or setting aside by an order under this Act of a sale held in execution of such certificate. Therefore, I am unable to agree with the contention of Mr. M.L. Ganesh, that Rule 9 bars the present suit. 12. Mr. M.L. Ganesh, learned counsel, would also invite my attention to Rule 16 of the said rules, which reads as follows: Private alienation to be void in certain cases. 16. Therefore, I am unable to agree with the contention of Mr. M.L. Ganesh, that Rule 9 bars the present suit. 12. Mr. M.L. Ganesh, learned counsel, would also invite my attention to Rule 16 of the said rules, which reads as follows: Private alienation to be void in certain cases. 16. (1) Where a notice has been served on a defaulter under rule 2, the defaulter or his representative in interest shall not be competent to mortgage, charge, lease or otherwise deal with any property belonging to him except with the permission of the Tax Recovery Officer, nor shall any civil court issue any process against such property in execution of a decree for the payment of money. (2) Where an attachment has been made under this Schedule, any private transfer or delivery of the property attached or of any interest therein and any payment to the defaulter of any debt, dividend or other moneys contrary to such attachment, shall be void as against all claims enforceable under the attachment. Again I must point out that Rule 16 imposes a prohibition on the defaulter from creating any mortgage or charge or lease or any other encumbrance after issuance of notice under Rule 2. In the present case, the Recovery proceedings were initiated only after the agreement between the plaintiff and the 1st defendant, which is sought to be enforced by way of specific performance and not after the issuance of notice under Rule 2. Therefore, I do not think Rule 16 could be invoked by the Bank to contend that the suit is barred by law. 13. Mr. M.L. Ganesh would also draw my attention to the judgment of the Hon'ble Supreme Court in Authorised Officer, State Bank of India v. Allwyn Alloys Pvt. Ltd., reported in 2018 (5) CTC 225 , wherein the dispute related to a claim made before the Debt Recovery Tribunal in respect of the properties subject matter of mortgage and after the Claim Petition was rejected by the Debt Recovery Tribunal as well as the Debt Recovery Appellate Tribunal, a civil suit was instituted claiming rights. The Hon'ble Supreme Court held that the civil suit would not lie in view of the provisions of Section 34 of SARFAESI Act. The Hon'ble Supreme Court held that the civil suit would not lie in view of the provisions of Section 34 of SARFAESI Act. The said judgment in my considered opinion cannot be applied to the facts of the present case, inasmuch as the present suit is by a third party seeking specific performance of an agreement of sale. If specific performance is granted, the question as to whether the encumbrances created by the agreement vendor, would be binding on the plaintiffs or not is another question to be decided independently and the same may not have a bearing on the grant or otherwise of the relief of specific performance, which is the main relief sought for in this suit. 14. As regards the Division Bench judgment relied upon by Mr. M.L. Ganesh, in V. Thulasi v. Indian Overseas Bank, Sowcarpet Branch, reported in 2011 (3) CTC 801 , here again I must point out that in the suit for injunction restraining the Bank from proceeding for sale of the property under the SARFAESI Act, the Division Bench held that the plaint was liable to be rejected. 15. Mr. M.L. Ganesh, learned counsel would also draw my attention to another judgment of the learned Single Judge of this Court in State Bank of India, Vadavalli Branch, Coimbatore v. Minor Krithaanyaa, rep. by its mother/guardian G. Rekha, reported in 2012 (1) Mad LJ 952, wherein this Court had held that in view of the bar created under Section 34, a Civil Court cannot grant an injunction restraining the Bank from proceeding under the SARFAESI Act. There is no dispute regarding the law laid down in this pronouncement. As I have already pointed out in view of the decision of the Full Bench of this Court, what is to be seen is whether the bar imposed either under Section 17 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, or under Section 34 of the SARFAESI Act, would cover the relief that is sought for in the suit. If the answer is no, then the suit cannot be rejected as barred by law. 16. I have already adverted to the main prayer in the suit, which is one for specific performance. It cannot be granted by the Debt Recovery Tribunal or the Debt Recovery Appellate Tribunal. If the answer is no, then the suit cannot be rejected as barred by law. 16. I have already adverted to the main prayer in the suit, which is one for specific performance. It cannot be granted by the Debt Recovery Tribunal or the Debt Recovery Appellate Tribunal. Therefore, I am of the considered opinion that the present suit cannot be said to be barred either under Section 17 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, or under Section 34 of SARFAESI Act. 17. In view of the above conclusion, the application stands dismissed. However, there shall be no order as to costs.