Kanwalbir Kaur vs Bank of Baroda & Others

Mandeep Pannu, J

This revision petition is directed against the order dated 08.04.20025 passed by the leearned Additional District Judge, Ludhiana, dismissing the apppeal preferred againsst the order dated 01.05.2018 of the learned Civil Judge (Junnior Division), Ludhhiana, whereby the plaint of the revisionist/plaintiff was rejeccted under Order VIII Rule 11 CPC.

Brief Facts

Faccts in brief are that the plaintiff/revisionist instituted a suit for declaration to thhe effect that she is neither a borrower nor a guarantor of M/s Petals Textile and has never mortgaged her property measuring 410 sq. yds. situatedd at Shamsher Avennue, Barewal, Tehsil and District Ludhiana with Bank/responddent No.1 and that she has never availed any loan faacility from defendant No. 1 (Bank of Baroda) on the strength of the aforesaid property and for declaration that defendants No. 1 to 5 have no concern whatsoever with the property. A furtther declaration was sought that any sale letter, if isssued by defendant No. 1 in favour of defendant Noo. 5 Gursewak Lal, in respect off the property, is null and void and not binding on the plaintiff’s rights, along with a permanent injunction restrainning defendant No. 6 (Sub-Registrar, Ludhiana) fromm executing any sale deed in favour of defendant No.5 presented by defendant No.1 on the basis of oral and documentary evidence.

Thee plaint alleged that the petitiooner/plaintiff never approached the Bank or its officers. Defendant No. 2 brought defendant No. 4 to her house. Both assured petitioner/plaintiff that they would arrange a housing loan for her and got some blank papers signed from her and asked for the original sale deed, which the petitioner/plaintiff handed over, believing defendant No. 2 as father of defenddant No. 3 was a cloose friend of her son. On inquiriing subsequently about the houssing loan, defendantss No. 2 and 3 told her that, as shee was not running any business, she would be unable to show repayment capacity and, therefore, the Bank had refused the loan. The plaint further averred that last month the petitioner/plaintiff leaarnt that one Shivraj Singh, who has filed a suit as teenant of the property had mortgaged the property with defendant No. 1 and that the Bank had already issued a sale letter and was trying to take possession from Shivraj Singh, presently in possession. The plaint alleged fraud and connivance by the defendants. The petitioner/plainntiff asserted that shee never availed any loan, never stood guarantor for defendants No. 2 and 3 and never mortgaged the property.

Upon notice, defendant No. 2 movved an application under Order VII Rule 11 CPC for rejection of the plaint. Defeendant No. 5 also filed a separrate application under Order VII Rule 11 CPC. Thhe applications contended that the petitioner/plaintiff had concealed material facts. In fact defendants No. 2 and 3, as partners of M/s Petals Home Textiles Manufacturing Company had availed creedit facilities from defendant No. 1-Bank of Baroda, Sunder Nagar Branch, Ludhiana from time to timme and had sought enhancement of cash-credit limits for machineery. They undertook to execute security documents in favour of the Bank. The propeerty was agreed to be mortgaged along with the plaintiff, who joined as continuuing guarantor and created an equitable mortgage byy deposit of title deeds i.e. origiinal sale deed dated 27.10.2010 and executed the relevant security documents. It was pleaded that afteer availing the facility, the borroowers’ account turned irregular and they were declared Non Performing Assets (NPA) on 20.10.2014. Thereaffter, notice under Seection 13(2) of the SARFAESI Act, 2002 was served upon the petitioner/plaintiff as well as defendants No. 2 and 3 and upon failure to clear dues and after followwing due procedure under the Act, the secured asset i.e. the suit property, was sold to defendant No. 5 Gursewwak Lal as the highest bidder and vacant possessiion was handed over and a sale certificate was issued. It was asserted that in view of the bar under Section 34 of the SARFAESI Act, 2002, the civil court lackeed jurisdiction and hence the plaaint was liable to be rejected beeing barred by the provisions of the above said Act.

No reply was filed by the petitioner/plaintiff to the Order VII Rule 11 application of defendant No.2. However, she filed reply to the application of defendant No.5, contending inter alia that thhe bar under the SARFAESI Act applies to disputes between a bank/financial insstitution and its borrower/guaranntor and that an application for rejection of plaint on that score can be moved only by the secured credditor, not by a private purchaser like defendant No. 5. It was urged that defendant No. 5, being neither bank nor leender, lacked authority to move the application.

Aftter hearing both the parties, vide impugned order dated 01.05.20018, the learned Trial Court allowed the applications under Order VII Rule 11 CPC and rejected the plaiint. The appeal filed by the petitiioner/plaintiff was dismissed by the learned Additional District Judge, Ludhianna, vide impugned order daated 08.04.2025, holding that, in view of Section 34 of the SARFAESI Act, 2002, civil courts have noo jurisdiction in respect of matters falling under the Act and jurisdiction lies with the Debts Recovery Tribunal/Appellate Tribunal and that Order VII Rule 11(d) CPC mandates rejectionn where the suit appears from the plaint to be barred by any law.

Aggrieved, the petitioner/plaintiff has preferred the present revisiion, urging that the Courts below failed to appreciatee that Section 34 of the SARFA ESI Act, 2002 bars Civil Court jurisdiction only where action is taken by a secuured creditor within the borrower–creditor/guarantoor relationship. However, when a person denies being a borrower or guarantor, and denies having mortgaged her property, the baar does not apply. Reliance is placed on a judgment of this Coourt passed in the case of Ankur Goyal HUF v. Corporation Bank, CR No.75522 of 2023, decided on 16.10.2024, to contend that where the matter involves fraaud, collusion, or determination of civil rights, the Civil Court retains jurisdiction. It is argued that the petitioner/plaintiff was not givenn adequate opportunity to prove her contention and that where the mortgage itself is disputed/denied, Civil Court jurisdiction subssists and that the impugned orders deserve to be set aside.

I have heard learned counsel for thee petitioner and perused the record.

Thee sole question falls for determ ination is “whether the civil coourt had jurisdiction to entertain the suit in view of Section 34 of the SARFAESI Act, 2002.” For this reference is made to Section 34 of the SARFAESI Act, 20002, which reads as under:

“"334. 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 Tribunaal is empowered by or under this Act too determine and no injunction shhall be granted by any court or other authority in respect of any acttion taken or to be taken in pursuance of any power conferred by or under thiss Act or under the Recovery of Debts Due to Banks and Financcial Institutions Act, 1993 (51 of 1993).”

Analysis

Froom the averments in the plaint ittself, it is undisputed that the Bank (defendant No.1) has already taken measures under the SARFAESI Act: the property stood sold to defendant No. 5 and vaacant possession was delivered. So much so sale ceertificate was issued. Once such measures have been taken, Secttion 34 of the SARFAESI Act, 2002 expressly ousts civil court jurisdiction and the remedy of an aggrieved person lies before the Debt Recovery Tribunal, with a further appeal to the Debt Recovery A ppellate Tribunal. The learned Courts below coorrectly applied this bar.

Thee reliance on Ankur Goyal HUF’s case (supra) is misplaced on the facts here. That decision recognizes that civil Courts may entertain suits involvving independent civvil rights because jurisdictional clarity ensures that parties havve a legal recourse in civil rights when their civil rights are at stake e.g., competting ownership, transactions void ab initio, or com plex fraud requiring trial. But the present plaint does not present a dispute over title, rather, it admits handing over original title deeds to defendants. The allegations of fraud are bald and withhout particulars as noo specific dates, acts, or documeents constituting fraud are pleadded. In such a postuure, the plaint squarely challennges SARFAESI measures already taken by the secured creditor, a field overr which the DRT has exclussive supervisory jurisdiction and bars civil jurisdictioon.

Thee Supreme Court in Jagdish Singh v. Heeralal & Ors.,(20144) 1 SCC 479, has authoritatively held that civil C ourts lack jurisdiction to enterttain suits when the SARFAESI machinery is invokeed, the proper remedy is Section 17 before the DRT. The ratio directly applies, where a secured creditor has proceeded under Section 13, civil proceedings are barred by Section 34. The Courts bellow rightly relied on Jagdish Singh’s case (supra).

As to the plaintiff’s argument that Order VII Rule 11 could not be invoked at the instance of defendant No. 5, thee plea is untenable. Order VII Rule 11(d) CPC permmits rejection of the plaint wheree, from the statements in the plaint, the suit appears to be barred by any law. The bar is examined on the plaint’s own averments, the court may act upon an applicattion by any defendant or even suo motu. In any caase, the Bank-defendant No.1 allso contested jurisdiction, thus, the maintainability objection is academic.

Conclusion

In view of the express bar containeed in Section 34 of the SARFA ESI Act, 2002 and the law declared by the Sup reme Court in Jagdish Singh v. Heeralal & Orss. (supra), the learned Trial Couurt rightly rejected the plaint unnder Order VII Rule 11(d) CPC, the learned Additional District Judge correcctly affirmed that vieew.

Thee impugned orders dated 01.05.2018 passed by the learned Civil Judge, Junior Division, Ludhiana and 08.04.2025 passed by Additional District Judge, Ludhiana, disclose no illegality or peerversity. Therefore, the same are upheld and the present revision petition is, accorrdingly, dismissed

Pennding application(s), if any, also stand disposed of.