Punjab National Bank vs M/S Jainam Dormitary And Another

S.K. Awasthi, J.

The order dated 25.01.2018 passed by learned Second Civil Judge, Class II, Indore in Civil suit No 1339-A/2017 has been called in question by way of

the present revision whereby the court below has dismissed the application under order 7 Rule 11 of the Code of Civil Procedure (In short“CPCâ€)

filed by the present applicant/defendant.

Briefly stated the facts of the case that on 09.05.2013 the respondent No.2 applied the applicant-Bank for financial assistance. The bank sanctioned

the loan and mortgaged was created in favour of the bank with respect to the Office No.101, Trivedi Chambers, 5 Maharani Road, Indore (M.P.).

The respondent No. 2 defaulted in payment of loan amount and therefore, the loan account has been declared as Non Performing Assets (NPA) by

the applicant-Bank. On 10.04.2017, a notice under Section 13 (2) of SARFESAI Act was issued to the respondent No. 2 . Even after service of the

notice, neither the respondent No.2 deposit the outstanding amount nor any reply to the notice was sent. On 25.08.2017 the symbolic possession of the

mortgaged property was taken by the applicant-Bank under Section 13 (4) of the SARFESAI Act. Thereafter, the application under Section 14 of the

SARFESAI Act has been filed by the applicant before District Magistrate, Indore for taking vacant physical possession of the mortgaged property and

the same was allowed on 10.01.2018.

Being aggrieved by the aforesaid action initiated by the applicant-bank, respondent No.1 has filed suit for permanent injunction alongwith documents

contending inter alia claiming to be a tenant in the suit property owned by the defendant No.1, which is registered as Civil Suit No. 1339-A/2017.

After receiving the notice from the Civil Court an application under Order 7 Rule 11 of C.P.C. was filed by the applicant challenging the

maintainability of the suit in view of the provision contended under Section 34 of the SARFESAI Act. It was also contended in the application that a

lease for more than a year can only be executed by a registered instrument whereas the basis of the present suit is a lease agreement dated

26/04/2017 which has been purported to be executed for a period of 3 years, which is an unregistered document. Hence, the plaintiff is not entitled for

lease on the basis of the said unregistered document.

The respondent 1 had filed reply to the application by contending that he was not having any knowledge that the respondent No.2 had taken any loan

from the bank while creating a mortgaged the suit property in favour of the bank and he defaulted in non payment of the loan amount. He is residing in

the suit property as tenant of respondent No.2. According to the section 35 of the SARFESAI Act, the provision of SARFESAI Act cannot be used to

override the provision of the Rent control Act, therefore, he can approach before the Civil Court for protecting his possession in the mortgaged

property, hence, suit is not barred by any law.

The learned trial court after hearing both the parties vide impugned order 25.01.2018 has dismissed the application under Order VII Rule 11 of C.P.C.

filed by the applicant holding that the judgments relied by the plaintiff/respondent No.1 has been overriding effect on the judgment relied by the

applicant-bank and provision of order VII Rule 11 of C.P.C. are not attracted for the purpose of admissibility of any document.

Learned counsel for the applicant submitted that there is specific bar under Section 34 of the SARFESAI Act that 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, therefore the suit of plaintiff/respondent No.1 is barred by law. It is further submitted that the learned trial court has erred in not

considering the provision of section 17 of the SARFESAI Act wherein it provides remedy to appeal under Section 17 on the steps being taken under

section 13 (4) of the Act if any person aggrieved by any of measures referred in section 13 (4) may make application to the DRT having jurisdiction,

therefore the matter is to be determined by Debt Recovery Tribunal, He further submitted that present suit has been filed on the basis of unregistered

lease deed 26/04/2018 and this lease has been executed by respondent No.2 in favour of the respondent No.1 without the consent and after the

mortgage has been created in favour of the applicant-bank, and therefore, the said unregistered lease agreement is not binding on the applicant-bank.

Under these circumstances he prays for order passed by learned trial court be quashed and suit filed by the plaintiff/ respondent No.1 be dismissed.

On the other hand learned counsel for the respondent No.1 supported the impugned order and submitted that no sufficient ground is made for

interference in the view taken by the Trial court, therefore, he prays for dismissal of the civil revision.

Having heard learned counsel for the respective parties and perused the record, this court is of the considered opinion that the court below has not

correctly met out with all the objections canvassed by the present applicant, looking to the provision of Section 34 and 17 (4) (A) of the SARFESAI

Act which is specifically bars the jurisdiction of the Civil Court.

Section 34 reads thus:

“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, 1993â€​

It is admittedly proceedings have been initiated by the bank under Section 13 (4) of the Act which bars jurisdiction of Civil Court to grant any

injunction or any nature.

By way of amendment incorporated in the year 2016 the sub Section 17 (4) A has been inserted which provides that:

(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 65 A of the Transfer of Property Act, 1882; 4 of 1882. or

(c) is contrary to terms of mortage;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 leaseshold rights claimed in secured asset falls under the sub-clause (a) or sub-clause

(b) or sub-clause (c) (d) of clause (I) then nothwithstanding anything to the countrary 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 provision of Act.

Looking to the provision of Section 17 (4) A) of SARFESAI Act which is incorporated by the amended Act, 2016, this amendment came into force

from 01.10.2016 but while deciding the application under 7 Rule 11 of C.P.C, the Trial Court has over looked the aforesaid provision, therefore, the

impugned order passed by the Trial court is hereby set aside and matter is remitted back to the Trial court with direction to decide the application

afresh considering the amended provision of Section 17 (4) (A) of SARFESAI Act without being influenced by the observation made in this order.

Consequently, the Civil Revision No. 136/2018, is disposed of with the aforesaid direction.

Let copy of order be sent to the concerned trial court for information and necessary compliance.