2003 (3) TMI 526 - HC - Companies Law

Issues Involved:

1. Jurisdiction of the District Judge to grant ad interim ex parte injunction.
2. Bar under Section 18 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.
3. Availability of alternative remedy under Section 30 of the Act.
4. Validity of the auction conducted by the Recovery Officer.
5. Jurisdiction of the Civil Court to entertain the suit for partition and related reliefs.

Detailed Analysis:

1. Jurisdiction of the District Judge to Grant Ad Interim Ex Parte Injunction:

The revision petitioner-ICICI Bank challenged the order of the District Judge, Ranga Reddy District, granting ad interim ex parte injunction. The Bank argued that the order was without jurisdiction and contrary to law, particularly in light of the bar under Section 18 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The respondents contended that the suit was filed by third parties who were not parties to the original proceedings and that the bar under Section 18 did not apply to them. The court held that the civil court had jurisdiction to entertain the suit for partition and could pass appropriate orders to safeguard the interests of the parties pending the suit.

2. Bar Under Section 18 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993:

Section 18 bars the jurisdiction of civil courts in matters specified in Section 17, which pertains to recovery of debts by banks and financial institutions. The Bank argued that this provision barred the civil court from granting the injunction. However, the court noted that Section 29 of the Act recognizes the jurisdiction of civil courts to entertain suits filed by third-party claimants. Thus, the bar under Section 18 did not apply to the respondents, who were third parties claiming a share in the property.

3. Availability of Alternative Remedy Under Section 30 of the Act:

The Bank contended that the respondents had an alternative remedy under Section 30 of the Act, which provides for an appeal to the Tribunal against the order of the Recovery Officer. The court acknowledged this but emphasized that the respondents, as third parties, were entitled to file a suit in a civil court to establish their rights over the disputed property. The court further noted that the Bank could have approached the civil court for vacation of the ad interim ex parte injunction or filed an appeal under Order 43 Rule 1 of the Code of Civil Procedure.

4. Validity of the Auction Conducted by the Recovery Officer:

The respondents argued that the auction conducted by the Recovery Officer on 4-2-2003 was irregular and contrary to the procedure, as it was done under the garb of the interim suspension of the injunction. The court agreed, stating that the auction was highly irregular and contrary to the procedure contemplated for such auctions. The court held that the sale conducted by the Recovery Officer was non est in the eye of law and could not be proceeded with.

5. Jurisdiction of the Civil Court to Entertain the Suit for Partition and Related Reliefs:

The court held that the civil court had jurisdiction to entertain the suit for partition filed by the respondents, who were claiming a share in the property owned by the third respondent. The court noted that any order passed by the Recovery Officer rejecting the claim would be subject to the result of the suit. The court emphasized that the civil court could pass appropriate orders to safeguard the interests of the parties pending the suit.

Conclusion:

The court dismissed the civil revision petition with costs, holding that the civil court had jurisdiction to entertain the suit for partition and related reliefs. The court also declared the auction conducted by the Recovery Officer as non est in the eye of law and emphasized that the Bank could have pursued alternative remedies instead of invoking the supervisory jurisdiction of the High Court under Article 227 of the Constitution.

← Previous Next →