2004 (3) TMI 444 - HC - Companies Law

Summary

Issues Involved:
1. Partition of suit properties and allotment of shares.
2. Jurisdiction of Civil Court under Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
3. Grant of injunction against the bank (3rd defendant).

Detailed Analysis:

1. Partition of Suit Properties and Allotment of Shares:
The plaintiffs, who are siblings, filed a suit for partition of the suit properties and requested the allotment of 6/12 shares. They claimed that the properties, though in the name of the first defendant (their mother), were treated as joint family properties. The plaintiffs argued that their father, who died intestate, had treated these properties as joint family assets, and hence they, along with their mother and brother (the second defendant), were entitled to their respective shares. The plaintiffs also sought a permanent injunction against the third defendant, M/s. Lakshmi Vilas Bank Limited, which claimed to be a creditor of the first and second defendants.

2. Jurisdiction of Civil Court under Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002:
The trial court dismissed the plaintiffs' application for an injunction, citing Section 34 of the Act, which bars Civil Courts from entertaining suits or proceedings concerning matters that the Debts Recovery Tribunal or the Appellate Tribunal is empowered to determine. The plaintiffs contended that their suit for partition and separate possession was not barred by the Act, as the Act did not apply to the nature of reliefs claimed by them. They argued that the Civil Court's jurisdiction under Section 9 of the Civil Procedure Code (CPC) was not entirely prohibited by Section 34 of the Act.

3. Grant of Injunction Against the Bank (3rd Defendant):
The plaintiffs sought an injunction to prevent the third defendant from taking action against the entire suit properties, arguing that the third defendant could only proceed against the second defendant's share. The third defendant countered that the Civil Court lacked jurisdiction to grant an injunction due to the provisions of Section 34 of the Act, which prohibits injunctions concerning actions taken under the Act or the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

Court's Observations and Rulings:

- Partition and Allotment of Shares:
The court noted that the plaintiffs' suit for partition and separate possession of their shares was valid. The defendants (mother and brother) admitted the plaintiffs' shares in the suit properties, and their rights had not yet been determined. The court emphasized that only the Civil Court could adjudicate and determine the rights of the parties concerning the suit properties.

- Jurisdiction of Civil Court:
The court examined the scope of Section 34 of the Act, which states, "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." The court held that the jurisdiction of the Civil Court was not entirely barred and that the bar under Section 34 should be read with Section 9 of the CPC. The court concluded that the plaintiffs' suit for partition was not barred by the Act, as the determination of their shares could only be done by the Civil Court.

- Grant of Injunction:
The court found that the plaintiffs were not parties to the liabilities created by the first and second defendants in favor of the third defendant. Therefore, the third defendant could not take action against the entire joint family properties. The court held that the plaintiffs' suit for partition was maintainable and that the third defendant could not invoke the bar under Section 34 of the Act to bring the property for sale.

Conclusion:
The court allowed the civil revision petition, setting aside the trial court's order, and held that the plaintiffs' suit for partition and the grant of injunction against the third defendant were maintainable. The court emphasized that the Civil Court's jurisdiction was not entirely barred under Section 34 of the Act, and the plaintiffs' rights could only be determined by the Civil Court.