Syndicate Bank vs Ishrath Ali

B.S. Patil, J—Petitioner is the defendant in O.S. No. 85/2011. Application filed by the defendant under Order VII Rule 11(d) CPC seeking rejection of the plaint has been dismissed. Aggrieved by the same, the present revision petition has been filed.

I.A. 1/2013 is filed seeking amendment of the memorandum of revision petition in order to incorporate an additional prayer to lay a challenge to the order dated 11.04.2011 passed by the Trial Court by which the Trial Court has answered the preliminary point raised regarding maintainability in the affirmative. As there is delay in seeking amendment to challenge the said order dated 11.04.2011. I.A. No. 2/2013 has been filed seeking condonation of delay.

I have heard the learned counsel for both parties on the applications filed seeking amendment along with request for condonation of delay and also on the merits of the grievance made regarding the orders under challenge.

At the outset, as I find that question raised before this Court is with regard to the bar contained under Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, ''the Act'') for maintaining the suit for injunction against the petitioner - Bank, challenge made to the order dated 11.04.2011 assumes importance. Therefore, the amendment sought, in my view, deserves to be allowed to enable the petitioner to lay a challenge to the said order passed in the very suit on 11.04.2011. Though this prayer is opposed by the learned counsel for the respondent, having regard to the fact that question whether the Court below has got jurisdiction to entertain the suit goes to the root of the matter and can be agitated before this Court while considering the challenge laid to the order passed refusing to accede to the request of the defendant to reject the plaint, I am of the considered view that this objection raised by the respondent/plaintiff is not tenable and the same deserves to be overruled. Hence, delay in filing the application for amendment is condoned. Application filed seeking amendment is allowed. Accordingly, petitioner is permitted to amend the prayer.

Facts leading to this petition are that suit O.S. No. 85/2011 has been filed against the defendant -Syndicate Bank, Mandya Branch seeking decree of permanent injunction to restrain the defendant from causing any kind of interference with the plaintiff''s peaceful possession and enjoyment of the suit property in any manner. The suit property is a house property situated at 5th Cross, Gandhi Nagar, Mandya City. This property has been the subject matter of mortgage in favour of defendant - Bank by the owner one Mrs. Ayesha Nazam, wife of Mr. Asadulla Khan. Defendant - Bank has advanced housing loan in a sum of Rs. 25,00,000/- on 20.08.2006 and subsequently, further sum of Rs. 60,00,000/- has been advanced based on the mortgage of the suit property as security. As the borrower committed default in paying installments, the asset was treated as non-performing asset and proceedings were initiated by the Bank under Section 13(2) of the Act. Possession Notice in respect of the mortgaged property/suit schedule property was published in the newspaper. Petitioner - Bank has also initiated recovery proceedings in O.A. No. 807/2010 on the file of Debts Recovery Tribunal, Bengaluru, on 16.08.2010 claiming a sum of Rs. 1,20,66,182.63 paise from the borrower and the guarantor along with future interest. The borrower filed an appeal in S.A. No. 385/2010 under Section 17(1) of the Act challenging the action initiated in issuing possession notice. The Tribunal dismissed the application on 12.01.2011. Writ Petition was filed against this order in W.P. No. 4493/2011. The same came to be dismissed on 04.02.2011. Thereafter, on 07.02.2011, the present suit in O.S. No. 85/2011 has been filed by the plaintiff Mrs. Ishrath Ali seeking a decree of permanent injunction against the Bank in respect of the property subject matter of mortgage in favour of the Bank contending inter alia that she has been a tenant in the premises duly inducted by the landlady and that her lawful possession over the suit property cannot be disturbed by the Bank.

Petitioner - Bank has filed written statement and has contended among other things that the suit itself was not maintainable as the same has been barred under Section 34 of the Act. The Court below passed an order holding that the suit was maintainable. Subsequently, the Bank filed the present application under Order VII Rule 11(d) praying for rejection of the plaint contending that the suit was barred by the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Financial Assets and Enforcement of Security Interest Act, 2002. The said application was resisted by the plaintiff. The Trial Judge has dismissed the application mainly on the ground that based on the very contentions raised by the defendant regarding non-maintainability of the suit, a preliminary issue had been framed and the same was answered against the defendant holding that the suit was maintainable and therefore, defendant cannot reagitate the matter by filing application under Order VII Rule 11(d).

Aggrieved by this order and as also by the order passed on the preliminary issue regarding maintainability of the suit, the present revision petition has been filed.

Having heard the learned counsel for both parties, the only point that arises for consideration is:

"Whether the suit for injunction filed by the respondent - plaintiff was barred under the provisions of Section 34 of the Act and hence, the plaint presented was liable to be dismissed?"

Section 34 of the Act reads as under:

"34. Act to have over-riding effect.--(1) Save as provided under sub-section (2), the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act.

(2) The provisions of this Act or the rules made thereunder shall be in addition to, and not in derogation of, the Industrial Finance Corporation Act, 194 (15 of 194), the State Financial Corporations Act, 1951 (63 of 1951), the Unit Trust of India Act, 1963 (52 of 1963), the Industrial Reconstruction Bank of India Act, 1984 (62 of 1984), the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) and the Small Industries Development Bank of India Act, 1989 (39 of 1989)"

It is thus clear from the language employed in Section 34 of the Act that no Civil Court shall have jurisdiction to entertain any suit or proceeding in respect of matter which the Debts Recovery Tribunal is empowered by the Securitization Act to determine and no injunction shall be granted by any Court in respect of any action taken or to be taken in pursuance of power conferred by the Act. It cannot be disputed that as against the measures initiated under Section 13(4) of the Act, remedy lies before the Debts Recovery Tribunal under Section 17(1) of the Act. Indeed as held by the Apex Court, it is not only the borrower or the guarantor, who will have right to challenge the action initiated under Section 13(4) before the Debts Recovery Tribunal, but any other person who may be affected by the said order can also maintain such an action before the Debts Recovery Tribunal under Section 17(1). Useful reference can be made in this regard to the judgment of the Apex Court in the case of United Bank of India Vs. Satyawati Tondon and Others, AIR 2010 SC 3413 : (2010) 3 BC 495 : (2010) 3 CompLJ 585 : (2010) 7 SCALE 696 : (2010) 8 SCC 110 : (2010) 9 SCR 1 : (2010) 9 UJ 4395 : (2010) AIRSCW 7049 : (2010) AIRSCW 5267 . Observations made in paragraphs 4, 17 & 27 are relevant for the purpose of the present case. The Apex Court, dealing with the scope of Section 17 which provides remedy to persons against action taken by a secured creditor under Section 13(4), has held that expression ''any person'' used in Section 17(1) is of wide import and it takes within its fold not only the borrower, but also the guarantor or any other person who may be affected by the action taken under Section 13(4) or Section 14. The Apex Court has further held that both the Tribunal and the Appellate Tribunal are empowered to pass interim orders under Sections 17 & 18 and are required to decide the matter within the fixed time schedule. It has been also laid down in the said judgment at paragraph 5 that Section 34 ousts the jurisdiction of the Civil Court inasmuch as no Civil Court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Tribunal or the Appellate Tribunal is empowered to determine.

The latter portion of Section 34 which indicates that 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 would also disentitle the plaintiff - respondent herein from approaching the Civil Court to protect her possession contending that she was a tenant under the borrower and the decree of injunction sought was on account of action initiated by the Bank under Section 13(4). Therefore, such relief of injunction cannot be granted by the Civil Court in respect of action that has been taken or that is contemplated pursuant to the powers conferred under the Act. Thus, it is evident that in the wake of clear bar enacted under Section 34 for entertaining any suit, the Trial Court was not justified in holding that the suit was maintainable and the plaint was not liable to be rejected.

Hence, the revision petition is allowed. Both the impugned orders are set aside. Application filed under Order VII Rule 11(d) CPC is allowed. Plaint is rejected.