T. Dayanandan vs The Bank of India and Sreekumar R. Menon

Justice Thomas P. Joseph

The plaintiff in O.S. No. 201 of 2009 of Munsiff''s Court, Koyilandy is aggrieved by the dismissal of the suit on a finding as to its maintainability, confirmed by Sub Court, Koyilandy in A.S. No. 25 of 2010. The appellant claimed that he is a tenant of the plaint schedule building, his father having obtained tenancy from Appukutty Marar in the year, 1965 as per kaichit reciting payment of rent at the rate of Rs. 25/- per month. Later, appellant claimed to have taken up the business in the said building and continued as its tenant. While so, the 2nd respondent/2nd defendant affixed notice (obviously under Sec. 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - for short, "SARFAESI Act" with intent to dispossess the appellant from the building. Appellant prayed for a decree for prohibitory injunction against dispossession otherwise than as provided under the law. According to the appellant, he being a tenant of the building even prior to creation of security in favour of the 1st respondent (by the 3rd respondent) he is entitled to the protection of Act 2 of 1965 and could be evicted only in accordance with the provisions of the said Act.

Respondents 1 and 2/defendants 1 and 2 denied that there was a lease in favour of the appellant/plaintiff. They also claimed that they are proceeding under the provisions of the SARFAESI Act and notice was given to the 3rd respondent and his wife, the borrowers as provided under Sec. 13 of the SARFAESI Act to clear the loan amount. As they failed, respondents 1 and 2 filed application before the Chief Judicial Magistrate concerned as provided under Sec. 14 of the SARFAESI Act for taking possession of the property. The Chief Judicial Magistrate has appointed an Advocate Commissioner to render assistance to the respondents 1 and 2 to take possession of the property. It is further contended that the suit is not maintainable in view of the provisions of the SARFAESI Act.

The trial court raised a preliminary issue as to the maintainability of the suit obviously in view of Sec. 34 of the SARFAESI Act. In paragraph 9 of the judgment, the trial court observed that even though in the written statement respondents 1 and 2 denied status of the appellant/plaintiff as a tenant initially, subsequently there is an admission to the effect that appellant is a tenant in the building situated in the suit property. However relying on the decisions in Shameem v. City Police Commissioner ((2005 (4) KLT SN 70 - Case No. 96) and Muhammad Rafeeq v. Bank of Baroda (2010 (2) KLT 905) trial court held that provisions of the SARFAESI Act would override the provisions of Act 2 of 1965 and that the suit is not maintainable.

The 1st appellate court took notice of the decision in Pushpangadan Vs. Federal Bank Ltd., rendered by the Full Bench and held that though the provisions of Act 2 of 1965 are not overridden by the provisions of the SARFAESI Act, the suit is not maintainable. The ultimate conclusion reached by the trial court was confirmed and the appeal was dismissed. Hence the Second Appeal.

The learned Counsel would contend that though initially respondents 1 and 2 had denied the status of appellant as a tenant of the building in the suit property, later, that is admitted as pointed out by the learned Munsiff in paragraph 9 of the judgment. According to the learned Counsel, it is sufficient that this Court makes an observation that the appellant is a tenant of the building in the suit property and entitled to the protection of Act 1 of 1965. The learned Counsel submits that it is not necessary to drive the appellant to another proceeding before the Debt Recovery Tribunal (for short, "the DRT").

Though the consistent view this Court had taken earlier was that Sec. 35 of the SARFAESI Act is sufficient to override all other laws (including Act 2 of 1965) the Full Bench has overruled the said decisions and held that there is no inconsistency so far as provisions of Act 2 of 1965 and the SARFAESI Act are concerned and that so far as a tenant who was inducted into possession of the property even prior to creation of security is concerned, he can be evicted only in accordance with the provisions of Act 2 of 1965. The first appellate court has taken note of the decision of the Full Bench (supra) and moulded its finding accordingly.

Still, I am inclined to think that appellant cannot seek relief in the present litigation. The reason is that there is a total ouster of the jurisdiction of the civil court under Sec. 34 of the SARFAESI Act. True that under Sec. 34 of the Specific Relief Act, a plaintiff is entitled to seek declaratory relief even without asking for consequential relief in appropriate cases. But any such relief could be granted by the civil court only if it has jurisdiction to entertain the suit. Sec. 34 of the SARFAESI Act provides an express ouster of jurisdiction of the civil court in entertaining any suit or proceeding in respect of any matter which the DRT or the Appellate Tribunal is empowered by or under the SARFAESI Act to determine and 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 the SARFAESI Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

I am unable to understand the above provision as barring jurisdiction of the civil court only in the matter of granting injunction. For, the first part of Sec. 34 of the SARFAESI Act is clear that the jurisdiction of the civil court to entertain any suit or proceeding in respect of any matter which the DRT or the Appellate Tribunal is empowered by or under the SARFAESI Act to determine is taken away. Therefore, entertaining a suit where relief sought is with respect to a matter which ought to be decided by the DRT is prohibited.

So far as a tenant who got possession of the security property even before creation of security, there was some dispute whether he has to wait till dispossession to approach the DRT with an application under Sec. 17 of the SARFAESI Act. That doubt is cleared by the learned Single Judge in K. Sami Vs. Branch Manager, Bank of India, Authorised Officer and Chief Manager and Arun P. Samuel, Proprietor, which has been referred to by the Full Bench also in the decision (supra) in paragraphs 36 to 45 to hold that Sec. 17 of the SARFAESI Act would apply to the claim of symbolic possession also. In paragraph 45, the Full Bench states that if the claim made by the applicant (before the DRT) who claims to be a tenant in possession of the building even before the security is created is found to be genuine and legal, appropriate orders can be passed by the DRT holding, either that the actual possession of the applicant shall not be disturbed (just as an order of injunction the civil court may grant) or that only symbolic possession shall be taken or that any sale shall be subject to the right of applicant.

It follows that even before actual dispossession, it was possible for the appellant to approach the DRT with an application under Sec. 17 of the SARFAESI Act and seek appropriate relief. Therefore, the present suit has to come within the mischief of Sec. 34 of the SARFAESI Act.

Since the civil court cannot entertain the suit, the question of granting any relief be it in the nature of a declaration or observation that appellant as a tenant inducted into possession of the building before creation of security and continues to be so does not arise. The remedy of the appellant as the Full Bench has held in Pushpangadan v. Federal Bank Ltd. (supra) is before the DRT with an application under Sec. 17 of the SARFAESI Act. In that view of the matter, courts below are correct in the ultimate decision that the suit is not maintainable. No substantial question of law is involved in this matter.

Without prejudice to the above right if any, of the appellant the Second Appeal is dismissed.

All pending interlocutory applications will stand dismissed.