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2023 DIGILAW 921 (KAR)

Ramachandra C S/o Late Chowdappa v. Karnataka Bank Limited

2023-07-27

C.M.POONACHA, G.NARENDAR

body2023
JUDGMENT : Heard the learned senior counsel Sri Rueben Jacob along with Sri Piyush Kumar Jain for the appellants and the learned counsel Sri K.V. Shyamaprasada for respondents No.1 to 4. 2. The appeal involves a very short point and is taken up for disposal at the admission stage itself with the consent of the counsels. 3. The appellant who is the plaintiff before the Court below had participated in an auction sale conducted by the second respondent and was declared the successful bidder and thereafter, in terms of the conditions of sale, the appellant complied with the conditions of sale, and the possession of the property has been delivered to him and the sale has been completed in his favour. 4. The case of the appellant/plaintiff is that the actions of the bank resulted in a delay in handing over possession of the property and that consequently, the same has resulted in loss of the rental income and that the delay in handing over possession was unjustified. Hence, the following reliefs were sought for:- “PRAYER WHEREFORE, it is prayed that this Hon’ble Court may be pleased to: (a) Direct the Defendants to pay a sum of Rs.1,36,11,080/-(Rupees One Crore Thirty Six Lakhs Eleven Thousand and Eighty Only) to the plaintiffs as compensation for loss and damages sustained by the plaintiffs on account of the delay in handing over the vacant possession of the schedule property from 24-11-2017 till 14-08-2019 calculated on the basis of loss of rental income at the rate of Rs.57/-per square feet in respect of 11554.40 square feet, along with interest at the rate of 18% per annum from the date of filing of the suit. (b) Direct the Defendants to pay a sum of Rs.7,92,934/-(Rupees Seven lakhs Ninety Two Thousand Nine Hundred and Thirty Four Only) being the excess amount of 1% (along with interest at 9.5% per annum from 24-11-2017 to 09-02-2021) collected by the defendants from the plaintiffs along with interest at the rate of 18% per annum from the date of filing of the suit. (c) Direct the Defendants to Pay a sum of Rs.17,99,052/-(Rupees Seventeen lakhs Ninety Nine Thousand and Fifty Two Only) to the plaintiffs being interest at the rate of 9.5% per annum calculated from 26-08-2016 till 24-11-2017 on the 25% of the bid amount of Rs.1,51,91,500/-, along with interest at the rate of 18% per annum from the date of filing of the suit. (d) Grant cost/s. (e) Pass such other order/s as this Hon’ble deems fit in the facts and circumstances of the case”. 5. The learned senior counsel would also canvass that the Competent Court is the Commercial Courts and he would take the Court through Clause (c)(i) of Section 2 of the Commercial Courts Act, 2015 (hereinafter referred to as ‘the Act’) to state that the dispute raised by the appellant is a Commercial dispute and that the lis would lie to the Commercial Court as defined under Section 2(b) of the Act. He would also take the Court through Section 12 to state that the appellant, apart from damages has also prayed for recovery of certain sums which he alleges were collected over and above the sum due to the bank. In our considered opinion, the said contention is misplaced. 6. The claims as prayed for in the plaint would clearly disclose that the claim is one for damages of an indeterminate amount and not for a determinate amount. Further more, the reliance on Clause (c)(i) 2 of the Act to classify the claim as an ordinary transaction, in our considered opinion is inapplicable in the facts and circumstances of the case. The claim is one of a simple compensation for damages suffered by the appellant on account of certain actions of the Bank outside the ordinary transaction of the sale. The issues that would be required to be adjudicated are issues; as to whether the appellant/plaintiff has indeed suffered any damages as also, whether the respondent bank has been negligent, resulting in and giving rise to an actionable claim; are issues that would require to be adjudicated upon and thereafter, it could be open for the Court of competent jurisdiction to adjudicate as to whether the plaintiff is entitled for any compensation or not. In our opinion, Section 12 of the Act is placed in Chapter-III which goes with the nomenclature “Specified Value” maintaining thereby, that the claim ought to be premised on a determined amount. In our opinion, Section 12 of the Act is placed in Chapter-III which goes with the nomenclature “Specified Value” maintaining thereby, that the claim ought to be premised on a determined amount. In a suit for damages and compensation, the amount is indeterminate and the determination is a discretion of the Court. In that view, the claims are triable by a Court exercising jurisdiction under Section 9 of the CPC. 7. The suit was instituted and registered as a Commercial Suit and listed before the Commercial Court. Upon notice, the respondent bankers appeared and filed an application invoking the provisions of Order VII Rule 11(d) of the CPC. The Trial Court after hearing, has been pleased to uphold the contention that Section 34 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short “SARFAESI Act”) is a bar to hear the suit and proceeded to reject the application. But, while so rejecting the application, it further directed that the plaint be returned to the appellant/plaintiff and ordered the plaintiff to present it before the Competent Forum and further directed refund of the admissible Court Fee. Though the operative portion of the order does not indicate the Appropriate Forum, yet in the preceding paragraph No.29, it has observed that the appropriate forum would be the Debt Recovery Tribunal (for short “DRT”) and that proceedings ought to have been initiated before the DRT. 8. In the above background, the issue for consideration is; whether a suit for damages arising out of SARFAESI proceedings is maintainable before the Commercial Court or whether Section 34 of the SARFAESI Act is a bar for entertaining a suit of a like nature by the Commercial Courts or other Court or in the alternative, whether the suit is triable by another Court. 9. The learned counsel for the respondents has placed reliance on an unreported judgment of the Hon’ble Apex Court rendered in Civil Appeal No.19847/2017 upon which, the Commercial Court had placed reliance and more particularly, the Trial Court has placed reliance on para 28 and reading the same as a bar, has been pleased to pass the order appealed against. 9. The learned counsel for the respondents has placed reliance on an unreported judgment of the Hon’ble Apex Court rendered in Civil Appeal No.19847/2017 upon which, the Commercial Court had placed reliance and more particularly, the Trial Court has placed reliance on para 28 and reading the same as a bar, has been pleased to pass the order appealed against. The facts involved in the said judgment can be noticed in para 4 to 9 and it can be safely concluded that the facts involved in the said case and the facts involved in the instant case on hand are different and are at variance. 10. Per contra, the learned senior counsel would place reliance on the ruling of the Hon’ble Apex Court in the case of Leelamma Mathew vs. Indian Overseas Bank and Others, 2022 SCC OnLine SC 1601. The facts of the said case have been recorded in para 4 and the conclusion drawn by the Hon’ble Apex Court in the facts of the said case is found at para 25. Para 4 and 25 read as under:- “4. It appears that thereafter the Bank took the possession of the property pursuant to the order passed by the CJM, Manjeri in an application under Section 14 of the SARFAESI Act. That thereafter the plaintiff paid a total sale consideration in the month of October, 2007. That thereafter the Tehsildar submitted the report dated 21.11.2007 submitting that the actual measurement of the land is 39.60 cents and that the debtor had already transferred 14.40 cents out of land admeasuring 54 cents prior to the creation of the mortgage with the Bank. Despite the above the Bank issued the sale certificate for 54 cents dated 21.11.2007 and handed over the possession of the secured property admeasuring 39.60 cents only however, the sale consideration is issued for 54 cents. That thereafter the sale deed on the basis of the sale certificate was actually executed in favour of the plaintiff only on 01.10.2010 for 54 cents. That thereafter the plaintiff instituted the suit for recovery of damages/compensation with respect to 14.40 cents. That thereafter the sale deed on the basis of the sale certificate was actually executed in favour of the plaintiff only on 01.10.2010 for 54 cents. That thereafter the plaintiff instituted the suit for recovery of damages/compensation with respect to 14.40 cents. It was the case of the plaintiff that as the plaintiff paid a total sale consideration for 54 cents of the land and even the sale certificate and the sale deed was executed for 54 cents the plaintiff has been handed over the possession of 39.60 cents of the land only and therefore the plaintiff is entitled to the damages/compensation with respect to the 14.40 cents which was less than the area for which the plaintiff paid the amount i.e. 54 cents. It was the case on behalf of the plaintiff that it was the duty of the bank when accepted the total sale consideration for 54 cents, to hand over the peaceful and vacant possession of the land admeasuring 54 cents. It was also the case on behalf of the plaintiff that as the bank was aware of the true facts that the area of the property/land is less despite that the bank did not disclose the true facts to the plaintiff and suppressed the material fact and played a fraud. 25. Now so far as the submission on behalf of the plaintiff and the finding recorded by the High Court that the suit was barred by Section 34 of the SARFAESI Act is concerned, at the outset it is required to be noted that the suit was for damages/compensation, with respect to the balance land, which could not have been decided by the DRT or Appellate Tribunal, Section 34 of the SARFAESI Act shall be applicable only in a case where the Debt Recovery Tribunal and/or Appellate Tribunal is empowered to decide the matter under the SARFAESI Act. The plaintiff was not challenging the sale/sale certificate. The plaintiff claimed the damages/compensation with respect to the less area. Therefore, the High Court has seriously erred in holding that the suit was barred by Section 34 of the SARFAESI Act.” 11. In our considered opinion, the judgment of the Hon’ble Apex Court in Leelamma Mathew’s case (stated supra) squarely applies to the facts and circumstances of the case on hand. Therefore, the High Court has seriously erred in holding that the suit was barred by Section 34 of the SARFAESI Act.” 11. In our considered opinion, the judgment of the Hon’ble Apex Court in Leelamma Mathew’s case (stated supra) squarely applies to the facts and circumstances of the case on hand. Though the order appealed against does not specifically name the DRT as the Appropriate Forum, in the operative portion, yet on a conjoint reading of para 29 and the operative portion of para 30 would indicate that the Court below has accepted the case of the respondents that the DRT is the Appropriate Forum. 12. In that view of the matter and in the light of the law laid down by the Hon’ble Apex Court as noted supra in para 25 of the Leela Mathew’s case, the instant appeal requires to be allowed and is accordingly, partly allowed. The order under the appeal is modified. The order insofar as it relates to dismissing the application is affirmed. The order insofar as it directs return of the plaint to the plaintiff is also affirmed. The order insofar as it directs the plaintiff to present it before the Competent Forum is modified and is modified to read as a Competent Civil Court. The appellant is permitted to represent the same before a Competent Civil Court. The appeal stands ordered accordingly.