Amara Venkata Siva Kumar, S/o. late Amara Sathyanarayana Murthy v. Amara Venkateswarlu, S/o. late Amara Sathyanarayana Murthy
2023-02-09
D.V.S.S.SOMAYAJULU, PRASHANT KUMAR MISHRA
body2023
DigiLaw.ai
JUDGMENT : Prashant Kumar Mishra, J. This appeal under Section 96 of the Code of Civil Procedure, 1908, filed by the plaintiff, assails the legality and validity of the docket order dated 12.04.2022 passed by the learned Principal Senior Civil Judge, Guntur in an unnumbered plaint in C.F.R.No.5448 of 2021, rejecting the plaint on the ground that in the obtaining factual matrix, the civil court has no jurisdiction to entertain the suit in view of the provision contained in Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, “SARFAESI Act”). 2. The plaintiff has preferred the suit seeking partition of the plaint schedule property by dividing it into two equal shares between the plaintiff and the 1st defendant; allot half share to the plaintiff and deliver possession to him by metes and bounds. 3. When the plaint was presented before the trial court, an objection was raised by the office calling upon the plaintiff to explain as to how the civil court has got jurisdiction to entertain the plaint as the bank has already initiated proceedings under the SARFAESI Act with regard to the plaint schedule property. Further objection was raised that when the plaint schedule property stands in the name of the 1st defendant, how can the plaintiff seek relief of partition. It was observed in the docket order dated 07.01.2022 that certified copy of the sale deed dated 26.12.2022 stands in the name of the 1st defendant, it is not showing the names of the family members and there is no recital in it that the family consists of parties to the suit. It was also noticed that the 1st defendant stood as guarantor for a third party and placed the property as surety with a bank, which had already initiated proceedings for taking possession of the property under the SARFAESI Act; in that view of the matter, the plaintiff is liable to explain as to how the civil court has got jurisdiction to entertain the plaint. 4.
4. By the impugned order, the learned Principal Senior Civil Judge, Guntur, has held that in view of the provision under Section 34 of the SARFAESI Act, civil court does not have jurisdiction either to entertain the suit or to grant orders restraining the bank from taking action in pursuance of the power conferred under the said Act for recovery of debts; if the plaintiff is aggrieved of the steps taken under Section 13 of the SARFAESI Act, there is remedy of appeal under Section 17 of the said Act, to the Debts Recovery Tribunal having jurisdiction in the matter and without availing the remedy of appeal and bypassing the same, plaintiff has no right to approach the civil court. 5. It is submitted by the learned counsel for the appellant/plaintiff that the suit is essentially for partition of the plaint schedule property and the bank is not a party to the suit; therefore, in between the plaintiff and the defendants, provisions of the SARFAESI Act would not operate or apply in the matter relating to partition of family property. He would further submit that the trial court has wrongly interpreted the provision contained in Section 34 of the SARFAESI Act. 6. To consider the submissions made by the learned counsel for the appellant/plaintiff at Bar, it is necessary to refer to the plaint averments. Paragraph III (b) of the plaint clearly states that the property was purchased in the name of 1st the defendant under registered sale deed dated 26.12.2002 and all the bills like electricity service connection, house property tax etc., were obtained in the name of the 1st defendant. 7. At paragraph III (d), plaintiff has specifically pleaded that a notice dated 29.10.2021 was issued by Pridivi Asset Reconstruction and Securitization Company Limited on behalf of Karur Vysya Bank to the 1st defendant to the address of the property, which was received by the plaintiff, who was shocked to know that the said property was given as security by the 1st defendant as guarantor for the loan taken by M/s. Sri Lakshmi Chillies Trading Company. 8. According to the plaintiff, the plaint schedule property 1st being joint family property, defendant should have informed or intimated him about his standing as guarantor for the loan obtained by M/s. Sri Lakshmi Chillies Trading Company.
8. According to the plaintiff, the plaint schedule property 1st being joint family property, defendant should have informed or intimated him about his standing as guarantor for the loan obtained by M/s. Sri Lakshmi Chillies Trading Company. The plaintiff, therefore, questions the right and entitlement of the 1st defendant about his unilateral action in giving the plaint schedule property as security in the bank though it is a joint family property. It is stated that, thereafter, the plaintiff demanded the 1st defendant to come forward to partition the property equally between the plaintiff and the 1st defendant. Cause of action for filing the suit is stated to have arisen on 29.10.2021 when notice issued to 1st the defendant by Pridivi Asset Reconstruction and Securitization Company Limited on behalf of Karur Vysya Bank came to the notice of the plaintiff. 9. A plain reading of the plaint averments would reveal that the plaintiff himself has disclosed initiation of proceedings by Pridivi Asset Reconstruction and Securitization Company Limited on behalf of Karur Vysya Bank under the provisions of the SARFAESI Act. Thus, it is the admitted position of the plaintiff that proceedings under the said Act have already been initiated and that the plaint schedule property is mortgaged by the 1st defendant as guarantor to the loan transaction of M/s. Sri Lakshmi Chillies Trading Company. 10. The argument that the suit would not be barred under Section 34 of the SARFAESI Act, has been raised on the ground that the plaintiff is not a party to the loan transaction and that the plaint schedule property is a joint family property; therefore, 1st defendant cannot subject the plaint schedule property as guarantor to the loan transaction of M/s. Sri Lakshmi Chillies Trading Company. 11. In Jagdish Singh v. Heeralal and others – (2014) 1 SCC 479 , a similar situation had arisen when the property was auctioned in course of recovery proceedings under the SARFAESI Act and a civil suit for declaration of title, partition and permanent injunction was filed by one of the family members, who originally owned the property. An objection was raised before the civil court stating that in view of Section 13 read with Section 34 of the SARFAESI Act, civil court has no jurisdiction to entertain the suit.
An objection was raised before the civil court stating that in view of Section 13 read with Section 34 of the SARFAESI Act, civil court has no jurisdiction to entertain the suit. The said objection was upheld by the civil court holding that the suit is not maintainable and the appropriate remedy for the plaintiff is to file appeal under Section 17 of the SARFAESI Act. The High Court allowed the appeal of the plaintiff, holding that the suit is maintainable. 12. Referring to the definition of “security interest” as defined under Section 2(zf), “secured asset” as defined under Section 2(zc) and the provisions contained in Sections 13, 17 and 34 of the SARFAESI Act, the Hon’ble Supreme Court held that the expression ‘any person’ used in Section 17 is of wide import and takes within its fold not only the borrower but also the guarantor or any other person who may be affected by action taken under Section 13(4) of the SARFAESI Act. The Supreme Court relied on its earlier decisions in United Bank of India v. Satyawati Tondon and others – (2010) 8 SCC 110 and Mardia Chemicals Ltd. and others v. Union of India and others – (2004) 4 SCC 311 , to hold that any matter in respect of which an action may be taken even later on, the civil court shall have no jurisdiction to entertain any proceeding thereof and the bar of civil court applies to all such matters which may be taken cognizance of by the Debts Recovery Tribunal; apart from those matters in which measures have already been taken under sub-section (4) of Section 13. The Supreme Court concluded by holding thus in paragraphs 24 and 25: “24. Statutory interest is being created in favour of the secured creditor on the secured assets and when the secured creditor proposes to proceed against the secured assets, sub-section (4) of Section 13 envisages various measures to secure the borrower's debt. One of the measures provided by the statute is to take possession of secured assets of the borrowers, including the right to transfer by way of lease, assignment or realising the secured assets. Any person aggrieved by any of the “measures” referred to in sub-section (4) of Section 13 has got a statutory right of appeal to the DRT under Section 17.
Any person aggrieved by any of the “measures” referred to in sub-section (4) of Section 13 has got a statutory right of appeal to the DRT under Section 17. The opening portion of Section 34 clearly states that no civil court shall have the jurisdiction to entertain any suit or proceeding “in respect of any matter” which a DRT or an Appellate Tribunal is empowered by or under the Securitisation Act to determine. The expression “in respect of any matter” referred to in Section 34 would take in the “measures” provided under sub-section (4) of Section 13 of the Securitisation Act. Consequently, if any aggrieved person has got any grievance against any “measures” taken by the borrower under subsection (4) of Section 13, the remedy open to him is to approach the DRT or the Appellate Tribunal and not the civil court. The civil court in such circumstances has no jurisdiction to entertain any suit or proceedings in respect of those matters which fall under sub-section (4) of Section 13 of the Securitisation Act because those matters fell within the jurisdiction of the DRT and the Appellate Tribunal. Further, Section 35 says, the Securitisation Act overrides other laws, if they are inconsistent with the provisions of that Act, which takes in Section 9 CPC as well.” “25. We are of the view that the civil court jurisdiction is completely barred, so far as the “measures” taken by a secured creditor under subsection (4) of Section 13 of the Securitisation Act, against which an aggrieved person has a right of appeal before the DRT or the Appellate Tribunal, to determine as to whether there has been any illegality in the “measures” taken. The Bank, in the instant case, has proceeded only against secured assets of the borrowers on which no rights of Respondents 6 to 8 (sic Respondents 1 to 5) have been crystallised, before creating security interest in respect of the secured assets.” 13. In the case at hand also, the plaintiff claims interest in the property in respect of which proceedings under the SARFAESI Act have already been initiated.
In the case at hand also, the plaintiff claims interest in the property in respect of which proceedings under the SARFAESI Act have already been initiated. Even if the plaintiff is not the borrower or the guarantor, he being interested in the property which is the subject matter of the proceedings under the SARFAESI Act, bar under Section 34 of the SARFAESI Act would equally apply to him and the remedy for him is to prefer an appeal under Section 17 of the SARFAESI Act. The trial court has rightly dismissed the suit at the stage of registration. 14. The appeal has no substance and is, accordingly, dismissed. No order as to costs. Pending miscellaneous applications, if any, shall stand closed.