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2022 (6) TMI 1511 - HC - Indian LawsApplication restraining a secured creditor from proceeding with auction under the provisions of Sections 13 and 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Order XXXIX Rule 1 and 2 - HELD THAT - On careful perusal of the impugned judgment, the learned trial Court was perfectly justified in rejecting the application for a temporary injunction restraining the secured creditor from proceeding with the measures provided under Section 13(4) of the SARFAESI Act as the jurisdiction of the Civil Court is barred in view of Section 34 of the said Act. The Apex Court in the case of M/S. Sree Anandhakumar Mills Ltd. vs M/s. Indian Overseas Bank and Ors 2018 (5) TMI 2183 - SUPREME COURT was considering the legality of the order passed by the High Court of Madras holding civil suit for partition and injunction maintainable notwithstanding the provisions of Section 34 of SARFAESI Act. The upshot of the position of law crystallized by the judgments of the Apex Court is that any person aggrieved against any measures under the provisions of the SARFAESI Act is entitled to approach the Debt Recovery Tribunal or Appellate Tribunal, and Civil Court has no jurisdiction to entertain such matters. SARFAESI Act overrides other laws in terms of Section 35; if they are inconsistent with the provisions of the Act, which takes relief is sweep Section 9 as well. It is not in dispute that in the present case, respondent no.5 has proceeded against secured assets of the borrower, i.e. respondent no.1. Thus, the learned trial Court was justified in rejecting the application for a temporary injunction against the respondent no.5-secured creditor. Tthe Civil Court could not have granted an injunction restraining the secured creditor from enforcing measures under Section 13 of the SARFAESI Act. Therefore, there are no merits in the appeal - The appeal is dismissed.
Issues Involved:
1. Maintainability of the civil suit for partition and injunction against the secured creditor under SARFAESI Act. 2. Jurisdiction of the Civil Court versus Debt Recovery Tribunal (DRT) under SARFAESI Act. 3. Applicability of Section 34 of SARFAESI Act barring civil suits. 4. Legal precedents supporting the jurisdiction of Civil Courts and DRT. Detailed Analysis: 1. Maintainability of the Civil Suit for Partition and Injunction Against the Secured Creditor under SARFAESI Act: The appellant (original plaintiff) filed a Regular Civil Suit No.223 of 2022 seeking a declaration regarding a will-deed and a decree of partition and separate possession. Additionally, a permanent injunction was sought against co-sharers and the secured creditor (defendant no.5) from creating third-party interest in the subject matter of the suit. The secured creditor contested the suit, stating that it was barred by Section 34 of the SARFAESI Act. The trial court rejected the application for a temporary injunction, holding that the plaintiff should approach the Debt Recovery Tribunal (DRT) for relief. 2. Jurisdiction of the Civil Court versus Debt Recovery Tribunal (DRT) under SARFAESI Act: The appellant argued that the civil court has jurisdiction to decide the suit for partition, citing various judgments. However, the respondent (secured creditor) contended that the civil court has no jurisdiction to grant relief that restrains the secured creditor from enforcing measures under Section 13(4) of the SARFAESI Act. The court upheld the respondent's argument, stating that the jurisdiction of the civil court is barred by Section 34 of the SARFAESI Act. 3. Applicability of Section 34 of SARFAESI Act Barring Civil Suits: The court referred to multiple judgments from the Apex Court, including SBI Vs. M/s. Allwyn Alloys Pvt. Ltd., State Bank of Patiala Vs. Mukesh Jain, Jagdish Singh vs Heeralal & Ors, and M/S. Sree Anandhakumar Mills Ltd. vs M/s. Indian Overseas Bank, to emphasize that Section 34 of the SARFAESI Act bars civil courts from entertaining suits or proceedings in respect of matters that fall under the jurisdiction of the DRT or Appellate Tribunal. The court reiterated that any person aggrieved by measures taken under Section 13(4) of the SARFAESI Act must approach the DRT or Appellate Tribunal, not the civil court. 4. Legal Precedents Supporting the Jurisdiction of Civil Courts and DRT: The appellant relied on several judgments, including Indian Bank Vs. ABS Marine Products (P) Ltd., Bank of Baroda Vs. Gopal Shriram Panda, and others, to argue that civil courts have jurisdiction in matters of partition and injunction. However, the court distinguished these cases, noting that they did not apply to the present case where the secured creditor was enforcing rights under Sections 13 and 14 of the SARFAESI Act. The court concluded that the authoritative position of law laid down by the Apex Court in the cases of State Bank of Patiala, SBI, Jagdish Singh, and M/S. Sree Anandhakumar Mills overrides the appellant's arguments. Conclusion: The court dismissed the appeal, affirming that the civil court has no jurisdiction to grant an injunction restraining the secured creditor from enforcing measures under Section 13 of the SARFAESI Act. The appellant's request for an extension of interim relief was also rejected. The judgment underscores the primacy of the SARFAESI Act in matters involving secured creditors and the limited role of civil courts in such disputes.
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