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2019 DIGILAW 9 (HP)

State Bank of India v. Jatin Handa

2019-01-01

TARLOK SINGH CHAUHAN

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JUDGMENT : TARLOK SINGH CHAUHAN, J. 1. The petitioner is aggrieved by the order passed by the learned Trial Court on 10.11.2017, whereby its application for rejection of the plaint came to be dismissed. It is the specific case of the petitioner that the suit of the present kind, which was initiated by the respondent was not maintainable in view of the specific bar contained under Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (for short SARFAESI Act). However, the said contention was rejected by the learned Trial Court. 2. The respondent/plaintiff filed a suit for issuance of permanent injunction restraining defendants from causing interference in any manner whatsoever in business activities of Kabul Hotel, ousting the plaintiff by taking forcible possession of building of Kabul hotel and land underneath building, throwing threats to conduct auction-sale proceedings or claiming rights of any kind whatsoever of auctioning building and land measuring 0-76-16 sq. mts. bearing khasra no. 2284, 2896/2285 kitta 2 comprised in khewat no. 21 min. khatoni no. 28 min as entered in Jamabandi for years 2012-13 situate in village / Mohal Bharolian Khurd Tehsil & Distt. Una (HP) except in due course of law, in alternative suit for mandatory injunction directing defendants to restore original position of suit property in case defendants succeed in taking forcible possession or auction of suit property. 3. It is not in dispute that proceedings against the defendant were initiated under SARFAESI Act and it was only thereafter that the suit was filed by the respondent. Therefore, in such circumstances, the moot question is whether the suit is maintainable in view of Section 34 of the SARFAESI Act, which reads thus:- “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).” 4. The issue in question is no longer res integra in view of the three Judges Bench decision of the Hon’ble Supreme Court in Authorised Officer, State Bank of India vs. Allwyn Alloys Private Limited and others, 2018 (8) SCC 120 , wherein it has been held that civil suit in respect of a matter in which DRT or DRAT is empowered to determine, the civil court has no jurisdiction to entertain any suit or proceeding in respect of any matter falling within the jurisdiction to those authorities under the SARFAESI Act. It is apt to reproduce the relevant observations as contained in para 3 to 9 of the judgment which reads thus:- “3. On the basis of the documentary evidence, DRT as well as the DRAT concurrently held that it is well established that the said respondents had legitimately created an equitable mortgage in respect of the said flat in favour of the Bank, which has had security interest upon the said flat. On the other hand, respondent Nos.5 and 6 (writ petitioners) have failed to file any documentary evidence to establish their subsisting title over the subject flat. On that basis, the relief claimed by respondent Nos.5 and 6 (writ petitioners) to restrain the Bank from proceeding with the auction of the subject flat stood rejected. 4. This decision of the DRAT dated 20th November, 2013 was assailed by respondent Nos.5 and 6 (writ petitioners) by way of Writ Petition No.7480 of 2014. The Division Bench of the High Court noted the plea of the writ petitioners and opined that the question regarding the right, title and interest or marketable title of the writ petitioners or any interest that could have been parted by respondent Nos.2 to 4 under the so called mortgage, involved disputed facts and would require evidence and a full-fledged trial. After so noting, the High Court went on to observe that with a view to give full opportunity to the parties to bring on record the relevant facts in terms of the pleadings and for full and complete adjudication of the matters in issue, it is apposite to give liberty to the writ petitioners to contest the matter before a proper forum where all the issues could be agitated. For, indisputably, respondent No.5 (writ petitioner No.1) is in physical possession of the stated flat. 5. For, indisputably, respondent No.5 (writ petitioner No.1) is in physical possession of the stated flat. 5. The High Court proceeded to pass the following operative order in the said writ petition: "7.. Accordingly, we dispose of the writ petition with the following directions: (a) Period of 8 weeks is granted for the writ petitioners to approach proper forum to get adjudication of the rights of the writ petitioners as contended in the writ petition and within the said period of 8 weeks, they shall file and seek proper interim relief in their favour. Till expiry of 8 weeks, the 1st respondent bank shall not proceed with the matter in terms of the order obtained by them before Debts Recovery Tribunal so far as the property in question; (b) Amount of Rs.25 Lacs shall be deposited in an interest earning deposit, by the respondent No.1 bank and profits of the said deposit shall ensure to the benefits of the parties, who become successful in the litigation; and (c) No order as to costs." 6. The Bank has assailed the aforesaid decision of the High Court primarily on the ground that all issues concerning the mortgaged/secured property are required to be decided only by the DRT; and not in any civil proceedings as has been observed by the High Court in the impugned judgment. For, filing of a civil suit in respect of secured assets is barred by law. Secondly, the DRT as well as DRAT have examined the merits of the controversy and justly answered the same against the writ petitioners. The concurrent finding of fact recorded by the said Tribunals is that the writ petitioners have failed to establish any right, title or interest in the subject flat. That finding has neither been disturbed nor is it assailable. According to the Bank, the High Court judgment under appeal is untenable and deserves to be set aside. 7. The concurrent finding of fact recorded by the said Tribunals is that the writ petitioners have failed to establish any right, title or interest in the subject flat. That finding has neither been disturbed nor is it assailable. According to the Bank, the High Court judgment under appeal is untenable and deserves to be set aside. 7. The contesting respondent Nos.5 and 6 (writ petitioners), however, supported the view taken by the High Court and would contend that it is indisputable that respondent No.5 (writ petitioner No.1) is in physical possession of the subject flat and was entitled to pursue his claim about the right, title and interest in the subject flat in view of the Memorandum of Understanding dated 13th March, 2011, executed between the writ petitioners and respondent Nos.2 to 4 regarding resale of the subject flat in their (writ petitioners) favour. The respondent Nos.5 and 6 would also contend that the original share certificate and few receipts of payments made to the Society were still in their possession and that the entries effected in the Society's record to transfer the share certificate in favour of respondent Nos. 2 to 4 are fabricated. 8. After having considered the rival submissions of the parities, we have no hesitation in acceding to the argument urged on behalf of the Bank that the mandate of Section 13 and, in particular, Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, "the 2002 Act"), clearly bars filing of a civil suit. For, no civil court can exercise jurisdiction to entertain any suit or proceeding in respect of any matter which a DRT or DRAT is empowered by or under this Act to determine and no injunction can be granted by any Court or authority in respect of any action taken or to be taken in pursuance of any power conferred by or under the Act. 9. The fact that the stated flat is the subject matter of a registered sale deed executed by the respondent Nos. 5 and 6 (writ petitioners) in favour of respondent Nos. 2 to 4 and which sale deed has been deposited with the Bank along with the share certificate and other documents for creating an equitable mortgage and the Bank has initiated action in that behalf under the 2002 Act, is indisputable. 5 and 6 (writ petitioners) in favour of respondent Nos. 2 to 4 and which sale deed has been deposited with the Bank along with the share certificate and other documents for creating an equitable mortgage and the Bank has initiated action in that behalf under the 2002 Act, is indisputable. If so, the question of permitting the respondent Nos.5 and 6 (writ petitioners) to approach any other forum for adjudication of issues raised by them concerning the right, title and interest in relation to the said property, cannot be countenanced. The High Court has not analysed the efficacy of the concurrent finding of fact recorded by the DRT and DRAT but opined that the same involved factual issues warranting production of evidence and a full-fledged trial. The approach of the High Court as already noted hitherto is completely fallacious and untenable in law. 5. In addition to the above, the suit as filed by the respondent is otherwise barred in view of the newly added Section 17(4)(A) of the SARFAESI Act, which reads thus:- 17(4A) Where - (i) any person, in an application under sub-section (1), claims any tenancy or leasehold rights upon the secured asset, the Debt Recovery Tribunal, after examining the facts of the case and evidence produced by the parties in relation to such claims shall, for the purposes of enforcement of security interest, have the jurisdiction to examine whether lease or tenancy- (a) has expired or stood determined; or (b) is contrary to section 65A of the Transfer of Property Act, 1882 (4 of 1882); or (c) is contrary to terms of mortgage; or (d) is created after the issuance of notice of default and demand by the Bank under sub-section (2) of section 13 of the Act; and (ii) The Debt Recovery Tribunal is satisfied that tenancy right or leasehold rights claimed in secured asset falls under the sub-clause (a) or sub-clause (b) or sub-clause (c) or sub-clause (d) of clause (I), then notwithstanding anything to the contrary contained in any other law for the time being in force, the Debt Recovery Tribunal may pass such order as it deems fit in accordance with the provisions of this Act. 6. In light of the aforesaid discussion, the order dated 10.11.2017, passed by the learned Trial Court is set aside. Consequently, the suit filed by the respondent is ordered to be rejected. 6. In light of the aforesaid discussion, the order dated 10.11.2017, passed by the learned Trial Court is set aside. Consequently, the suit filed by the respondent is ordered to be rejected. However, the rejection of the plaint will not debar the respondent from availing such remedy as may be available under the law. 7. The petition is disposed of in the aforesaid terms, leaving the parties to bear their own costs.