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2023 (3) TMI 420 - HC - Indian LawsSuit for declaration instituted by respondent nos. 1, 2 and 3/ original plaintiffs - maintainability of the suit before a Civil Court - As the original borrower defaulted in repaying the loan, appellant-bank initiated proceedings under Section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - HELD THAT - The underlying principle forming the basic layout and purpose of the introduction of the SARFAESI Act has remained unchanged since the time of its incorporation. It is abundantly clear from a bare reading of Section 34 of SARFAESI Act that the same is applicable to only such cases which are governed by and thus are within the purview of the SARFAESI Act or the RDDBFI Act. A perusal of the whole SARFAESI Act reveals that there is no bar of any kind for a Civil Court to proceed with such actions which are beyond the domain of the SARFAESI Act of the RDDBFI Act. The jurisdiction of a Civil Court has not been ousted and has only been restricted by introduction of the SARFAESI Act. The Hon'ble Supreme Court in a recent judgment in BANK OF RAJASTHAN LTD. VERSUS VCK SHARES STOCK BROKING SERVICES LTD. 2022 (11) TMI 1325 - SUPREME COURT , though pertaining to RDDBFI Act, which contains the para materia provisions as the SARFAESI Act, while dealing with the transfer of civil proceedings, has held that the DRT, being a Tribunal and a creature of the Statute, does not have any inherent power which inheres in Civil Courts such as Section 151 of the Code. The facts of the present case disclose that the respondents instituted a suit for declaration qua reliefs arising out of non-issuance of Sale Deed and for waiver of wrongful imposition of interest by the appellant-bank alongwith other reliefs dependent thereupon, which reliefs were beyond the scope of the SARFAESI Act or the RDDBFI Act and resultantly, the only forum, which could/can grant such reliefs, was/is a Civil Court - Admittedly, though the appellant-bank in its reply dated 20.01.2020 categorically stated that no action under SARFAESI Act had yet been initiated against respondents and that it would initiate necessary proceedings under the SARFAESI Act and RDDBFI Act to protect its interest, till date no proceedings of any kind have been initiated to that effect. Whence no claim or scope thereof was left to be adjudicated for appellant-bank to initiate proceedings under the SARFAESI Act, the respondents could not have been and certainly cannot be rendered remediless. In any event, the intention of the legislature could not have been to take away the integral right of respondents to take legal recourse by instituting a suit for their claims. Appellant-bank in such circumstances cannot be allowed to take cover of/for its in-action(s) under the SARFAESI Act as the same cannot and does not come in the way of any party like respondents to initiate a suit for seeking remedies before a Court of law being a Civil Court which are conferred by or under SARFAESI Act or the RDDBFI Act. The present appeal is not maintainable either in law or on facts. Appellant-bank cannot be permitted to carry dead remains to flog a dead horse and cannot be perpetually allowed to hunt for something which is nonexistent and which it, in fact, cannot be permitted under law. Appeal dismissed.
Issues Involved:
1. Non-maintainability of the suit before a Civil Court under Section 34 of the SARFAESI Act. 2. Jurisdiction of Civil Courts in matters related to the SARFAESI Act and RDDBFI Act. 3. Delay in the execution of the Sale Deed and the claim for compensation and damages by the respondents. 4. Applicability of the law of limitation under Section 36 of the SARFAESI Act. Detailed Analysis: 1. Non-maintainability of the suit before a Civil Court under Section 34 of the SARFAESI Act: The appellant-bank contended that the suit was not maintainable in a Civil Court due to the bar under Section 34 of the SARFAESI Act. The Trial Court, however, held that since the appellant-bank had not initiated any proceedings under Section 13 of the SARFAESI Act against the respondents, the provisions of Section 13 were not set into motion, and consequently, the bar under Section 34 could not operate. The Trial Court further noted that the respondents sought reliefs due to the delay in the registration of the Sale Deed, which could only be granted by a Civil Court. Therefore, the suit was maintainable. 2. Jurisdiction of Civil Courts in matters related to the SARFAESI Act and RDDBFI Act: The Trial Court found that the jurisdiction of Civil Courts is not ousted by the SARFAESI Act or the RDDBFI Act for matters beyond their scope. It was noted that the suit for declaration and reliefs arising from the delay in the issuance of the Sale Deed was beyond the domain of these Acts. The High Court concurred, emphasizing that the SARFAESI Act's Section 34 applies only to matters within the exclusive jurisdiction of the Debt Recovery Tribunal (DRT) or the Appellate Tribunal. 3. Delay in the execution of the Sale Deed and the claim for compensation and damages by the respondents: The respondents claimed compensation and damages due to the delay in the registration of the Sale Deed. The Trial Court found that the delay was attributable to the appellant-bank and held that the respondents were entitled to seek reliefs through a Civil Court. The High Court upheld this view, noting the appellant-bank's failure to initiate proceedings under the SARFAESI Act within the prescribed limitation period, thereby rendering the respondents remediless if restricted from approaching a Civil Court. 4. Applicability of the law of limitation under Section 36 of the SARFAESI Act: The High Court emphasized that the appellant-bank's right to initiate proceedings under the SARFAESI Act was subject to the limitation period prescribed under Section 36 of the Act. The court noted that the cause of action for the appellant-bank arose long back in 2016, and any action initiated thereafter was time-barred. The court highlighted that the appellant-bank's reply dated 20.01.2020, indicating future proceedings, was itself time-barred as per the Limitation Act, 1963. Conclusion: The High Court dismissed the appeal, affirming the Trial Court's decision that the suit was maintainable in a Civil Court. The court held that the respondents had no alternative remedy but to approach a Civil Court for the reliefs sought. The court also emphasized the importance of adhering to the law of limitation and the principles of natural justice, concluding that the appellant-bank could not perpetually delay proceedings and deprive the respondents of their legal remedies.
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