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2011 (2) TMI 1282 - HC - Indian LawsApplication for grant of temporary injunction restraining the appellant/defendant No. 3 Bank temporarily from taking possession of the suit property or auctioning the same during the pendency of the suit - respondent Nos. 1 and 2 are the original plaintiffs, who have filed Special Civil Suit for declaration, partition, separate possession and permanent injunction in respect of the suit property described in the schedule of the suit property attached to the plaint. The plaintiffs joined their father as the defendant No. 1, since he had mortgaged the suit property with the respondent No. 3-Bank, and the mother of the plaintiffs was joined as the defendant No. 3 - claim of the plaintiffs in the suit is that the suit property is the ancestral Joint Hindu Family property and they are the coparceners of it, having 1/4th undivided share each in the said property. It is claimed in the plaint that the suit property has been purchased by the defendant Nos. 1 and 2 from out of the income from the ancestral property, including the income from the agricultural fields and other immovable properties. It is alleged that the plaintiff Nos. 1 and 2 together are carrying on the ancestral business of selling of books on the ground floor of the suit property and the first floor of the suit property is being used as the residential house of the Joint Hindu Family. It is claimed that the suit property has not been partitioned and hence a decree for partition and separate possession of their share in the suit property has been claimed by the plaintiff to the extent of their share - defendant No. 1 has taken a loan from the defendant No. 3-Bank to satisfy his vices, by mortgaging the suit property with the defendant No. 3-Bank. The defendant No. 3-Bank has issued a notice under section 13(2) of the said Act to the plaintiffs and the defendant Nos. 1 and 2 to discharge the liabilities due and owing to the defendant No. 3-Bank in the sum of Rs. 31,79,484.91 as on 31-12-2007 along with future interest. It is alleged that the defendant Nos. 1 and 2 were not the absolute owners of the entire suit property and had, therefore, no authority to mortgage the same with the defendant No. 3-Bank Held that - jurisdiction of civil court to entertain, try and decide a civil suit challenging action of defendant No. 3-bank to take possession of suit property and to sell same to recover its debts by enforcing security interest in suit property in accordance with provisions of section 13, was completely barred by section 34. since jurisdiction of civil court to entertain, try and decide civil suit for partition and separate possession of suit property was not barred by section 34, jurisdiction of civil court to grant permanent and temporary injunction refraining defendants from dealing with suit property or creating third party interest therein was also not ousted by section 34. it was open to plaintiffs to lodge their objection(s) under section 17 before Debts Recovery Tribunal
Issues Involved:
1. Jurisdiction of Civil Court under Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. 2. Rejection of plaint under Order 7, Rule 11 of the Civil Procedure Code. 3. Grant of temporary injunction under Order 39, Rules 1 and 2 of the Civil Procedure Code. 4. Declaration of the suit property as ancestral Joint Hindu Family property. 5. Allegations of fraudulent mortgage creation. Issue-wise Detailed Analysis: 1. Jurisdiction of Civil Court under Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002: The court examined whether the jurisdiction of the Civil Court to entertain, try, and decide the suit for partition and separate possession of the suit property is barred by Section 34 of the said Act. Section 34 bars the jurisdiction of Civil Courts in matters which the Debts Recovery Tribunal (DRT) or Appellate Tribunal is empowered to determine. The court held that the jurisdiction of the Civil Court is not entirely ousted and continues to exercise jurisdiction over matters not falling within the DRT's purview. Specifically, the court found that the Civil Court retains jurisdiction to decide on the partition and separate possession of the property and to grant declarations regarding the ancestral nature of the property and fraudulent mortgage claims. 2. Rejection of plaint under Order 7, Rule 11 of the Civil Procedure Code: The court considered the rejection of the plaint under Order 7, Rule 11(d) on the grounds that the suit was barred by Section 34 of the said Act. The court emphasized that the facts stated in the plaint, and not the defense, are to be considered for such a determination. It concluded that the jurisdiction of the Civil Court to entertain, try, and decide the suit for partition and separate possession is not barred by Section 34 of the said Act. Thus, the application for rejection of the plaint was partly allowed, but only to the extent that the Civil Court cannot grant a declaration that the action of the bank was not in accordance with the provisions of the said Act and the rules framed thereunder. 3. Grant of temporary injunction under Order 39, Rules 1 and 2 of the Civil Procedure Code: The court examined the temporary injunction granted by the Trial Court restraining the bank from taking possession of the suit property or auctioning it during the pendency of the suit. The court held that while the Civil Court can grant permanent and temporary injunctions in suits where it has jurisdiction, it cannot do so in suits solely seeking to restrain the bank from enforcing security interest without substantive relief of declaration. Consequently, the temporary injunction was quashed, and the application for temporary injunction was rejected, subject to the condition that the bank's actions under Section 13 and proceedings under Section 17 of the said Act would be subject to the decision of the Special Civil Suit. 4. Declaration of the suit property as ancestral Joint Hindu Family property: The plaintiffs claimed that the suit property was ancestral Joint Hindu Family property and sought partition and separate possession. The court found that the DRT does not have the jurisdiction to pass a decree for partition and separate possession of the suit property or declare it as ancestral property. Thus, the Civil Court's jurisdiction to entertain, try, and decide such claims is not barred by Section 34 of the said Act. 5. Allegations of fraudulent mortgage creation: The plaintiffs alleged that the mortgage created by the defendants was fraudulent and not for the benefit of the family. The court held that the DRT cannot adjudicate on the question of whether the mortgage was created fraudulently or without authority. Therefore, the Civil Court's jurisdiction to entertain, try, and decide the suit for a declaration that the mortgage was fraudulent is not barred by Section 34 of the said Act. However, the Civil Court cannot grant a declaration that the bank's actions were not in accordance with the provisions of the said Act and the rules framed thereunder. Conclusion: The court allowed the Civil Revision Application in part, holding that the jurisdiction of the Civil Court to grant the second part of the relief in the suit is barred by Section 34 of the said Act. The Appeal against Order was allowed, setting aside the temporary injunction granted by the Trial Court. The court clarified the extent of the Civil Court's jurisdiction vis-`a-vis the DRT's jurisdiction under the said Act and provided detailed guidelines on the demarcation of powers between the two.
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