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2025 (3) TMI 557 - HC - Indian LawsRefusal of an ad interim prayer of injunction made by the plaintiff in a suit inter alia for declaration that the plaintiff/appellant is having 50% ownership right title and interest in the suit property - jurisdiction of Civil Court has jurisdiction to grant injunction - competence of the signatory under Order XXIX Rule 1 of the Code of Civil Procedure. Refusal of ad interim injunction - HELD THAT - The learned Trial Judge in a single sentence held that considering the nature of the case it appeared to him that in this nature of case injunction should not be granted without hearing the other side. Under Order XXXIX Rule 3-A it is incumbent upon the court to record its reasons for its inability to dispose of an injunction application within Thirty (30) days from the date on which ex parte injunction is granted without giving notice the opposite party. However such reasons are confined to the inability of the court to dispose of the application within Thirty (30) days in case an ad interim ex parte injunction is granted. The said provision does not necessarily mean that either while granting or refusing ad interim injunction independent reasons for such grant or refusal is not required to be given. It is well-settled that reason is the soul of any judgment and any judicial order without cogent reasons is on the face of it bad in law. The order impugned herein suffers from such malady. Whether a triable issue has been made out by the plaintiff? - HELD THAT - It transpires from the purported declaration/letter issued by Hari Ram along with the appellant which is produced by the Bank that the Bank had obtained a magisterial declaration from the owners including the appellant. However such declaration has not been produced by the respondent no. 1-Bank thereby constraining the court to draw adverse inference against the Bank on such count. That apart the appellant has alleged in his pleadings that the documents produced by the Bank are forged and manufactured insofar as any continuing guarantee having been granted by the appellant is concerned - sufficient doubt as to be veracity of the Bank s claim of the appellant being either a borrower or a guarantor has been raised. The recurring notices issued by the Bank under Section 13(2) of the SARFAESI Act also indicate the extreme urgency involved. In the event coercive measures under Section 13(4) of the SARFAESI Act are taken by the Bank against the appellant the appellant might suffer irreparable injury - the balance of convenience and inconvenience is thus in favour of the appellant since if the suit property is disposed of in favour of third parties or the appellant is ousted from the suit property prior to the disposal of the suit it would affect the plaintiff/appellant irreversibly whereas the suffering of the Bank would not be of such magnitude even if its action for recovery of the loan is deferred - all the ingredients for grant of ad interim injunction are satisfied in the present case. Maintainability of the suit - HELD THAT - It is an admitted position that the suit was filed on November 5 2024 whereas the first notice under Section 13(2) of the SARFAESI Act was received by the appellant only subsequently on November 6 2024. In any event the said first notice was waived by the respondent no.1-Bank by issuance of a subsequent notice under the self-same provision on December 24 2024 that is after the filing of the suit. Importantly the remedy of a borrower and/or any person aggrieved by the actions of the Bank under Section 17 of the SARFAESI Act is available only upon measures being taken under Section 13(4) of the said Act. In the present case there is nothing on record to show that any such measure has been taken by the Bank till date or at least that any such measure had been taken till the date of passing of the impugned order - the remedy of the appellant under Section 17 of the SARFAESI Act is not only illusory but also non-existent. Locus standi of the signatory to the affidavit- in-opposition of the injunction application - HELD THAT - Rule 1 of Order XXIX clearly stipulates that in a suit by or against a corporation any pleading may be signed and verified on behalf of the corporation by the Secretary or by any Director or other Principal Officer of the corporation who is able to depose on the facts of the case. As per the averment in the affidavit- in-opposition the signatory thereto merely claims herself to be a constituted attorney of the Bank and not a Secretary/Director/Principal Officer thereof. Hence the necessary ingredients of Order XXIX Rule 1 are not satisfied. There is no reason as to why the principle incorporated in Order XXIX although applicable in terms to a suit should not also be borrowed in connection with an application filed in an appeal arising out of a suit. Conclusion - i) The refusal of the ad interim injunction by the Trial Court was unjustified due to the lack of reasons. ii) The Civil Court has jurisdiction to entertain the suit and grant the reliefs sought as the principal reliefs fall outside the DRT s jurisdiction. iii) The appellant had established a prima facie case for an injunction with the balance of convenience and potential irreparable harm favoring the appellant. Application disposed off.
ISSUES PRESENTED and CONSIDERED
The core legal questions considered in the judgment include: 1. Whether the Civil Court has jurisdiction to grant an ad interim injunction in a suit involving claims of ownership and alleged forgery of loan-related documents, especially in the context of the SARFAESI Act, 2002. 2. Whether the refusal of the ad interim injunction by the Trial Court was justified, given the absence of reasons in the impugned order. 3. Whether the appellant has established a prima facie case for the grant of ad interim injunction based on the allegations of forgery and the absence of signatures on loan documents. 4. Whether the appellant's remedy lies exclusively with the Debts Recovery Tribunal (DRT) under the SARFAESI Act, or whether the Civil Court can entertain the suit and grant the reliefs sought. 5. The competence of the signatory to the affidavit-in-opposition on behalf of the respondent bank under Order XXIX Rule 1 of the Code of Civil Procedure. ISSUE-WISE DETAILED ANALYSIS 1. Jurisdiction of the Civil Court The relevant legal framework involves the SARFAESI Act, 2002, specifically Sections 13(2), 13(4), and 17, which outline the procedures for enforcement of security interests and the jurisdiction of the DRT. The Court referred to the Supreme Court's decision in Central Bank of India v. Prabha Jain, which held that the jurisdiction of Civil Courts is not ousted in matters beyond the scope of the DRT, such as declarations of title and challenges to the validity of documents. The Court interpreted that the reliefs sought by the appellant, including declarations of ownership and challenges to the authenticity of loan documents, fall outside the jurisdiction of the DRT and are within the purview of the Civil Court. The Court emphasized that Section 34 of the SARFAESI Act bars Civil Court jurisdiction only in matters that the DRT is empowered to determine. 2. Justification for Refusal of Ad Interim Injunction The Court found that the Trial Court's refusal of the ad interim injunction was devoid of reasons, violating the principle that judicial orders must be reasoned. Under Order XXXIX Rule 3-A of the Code of Civil Procedure, reasons must be recorded for the refusal of an injunction, which the Trial Court failed to do. 3. Prima Facie Case for Ad Interim Injunction The Court assessed whether the appellant established a prima facie case for an injunction. It noted discrepancies in the bank's claims regarding the appellant's role as a borrower or guarantor, as well as allegations of forged documents. The absence of the appellant's signature on key loan documents raised doubts about the bank's claims, supporting the appellant's prima facie case. The Court also considered the balance of convenience and potential irreparable harm to the appellant if the injunction were not granted, concluding that these factors favored the appellant. 4. Remedy under the SARFAESI Act vs. Civil Court Jurisdiction The Court analyzed whether the appellant's remedy lay exclusively with the DRT. It concluded that since no measures under Section 13(4) of the SARFAESI Act had been taken, the appellant could not approach the DRT under Section 17. The Court highlighted that the principal reliefs sought, such as declarations of ownership, were beyond the DRT's jurisdiction, affirming the Civil Court's competence to hear the suit. 5. Competence of the Signatory to the Affidavit-in-Opposition The Court examined the competence of the signatory to the affidavit-in-opposition under Order XXIX Rule 1 of the Code of Civil Procedure, which requires pleadings on behalf of a corporation to be signed by its Secretary, Director, or Principal Officer. The signatory, described as a constituted attorney, did not meet these criteria, rendering the affidavit procedurally defective. SIGNIFICANT HOLDINGS The Court held that the refusal of the ad interim injunction by the Trial Court was unjustified due to the lack of reasons. It emphasized that "reason is the soul of any judgment and any judicial order without cogent reasons is, on the face of it, bad in law." The Court established that the Civil Court has jurisdiction to entertain the suit and grant the reliefs sought, as the principal reliefs fall outside the DRT's jurisdiction. It concluded that the appellant had established a prima facie case for an injunction, with the balance of convenience and potential irreparable harm favoring the appellant. The Court set aside the impugned order and granted an ad interim injunction restraining the respondent bank from dispossessing the appellant or creating third-party rights in the suit property until the disposal of the injunction application in the Trial Court. The Court clarified that its findings were for the purpose of the ad interim injunction and not conclusive for the final hearing.
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