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2015 (9) TMI 811 - HC - Indian LawsReview petition - Jurisdiction - Validity of action under SARFAESI Act, 2002 - in respect of the secured asset being the immovable property mortgaged by the opposite party no. 1/plaintiff to secure the repayment of loan obtained from the defendant no. 1 bank. - By the impugned order the learned Court below held that since the claim of the defendant no. 1 bank against the opposite party no. 1/plaintiff is ₹ 6,10,111/- which is less than the ₹ 10 lakhs, the suit is not barred under the Act of 2002 and the City Civil Court has the pecuniary jurisdiction to try the suit. Held that - Section 31(h) of the Act of 2002 provides that the provisions of the Act of 2002 shall apply to any security interest for securing repayment of any financial asset exceeding one lakh rupees. However, Section 17 of the 2002 Act being a provision of a subsequent special statute confers the appellate jurisdiction on the Debts Recovery Tribunal to decide an application of any person aggrieved by any measure adopted by the secured creditor under sub-section (4) of Section 13 of the Act of 2002. Sub-section (4) of Section 1 the RDB Act relates to the original jurisdiction of the Debts Recovery Tribunal to entertain an application of the banks or financial institutions for recovery of their dues from the borrowers under the said Act and by no means the said provisions can be construed to have any bearing on the jurisdiction conferred by the Act of 2002 to entertain an appeal under Section 17 of the said Act against any decision of the secured creditor under sub-section (4) of Section 13 of the Act of 2002. Section 35 of 2002 Act provides that the provisions of the said Act shall have overriding effect on any provision of any Act, which is inconsistent with the provisions of the said Act. The suit, filed by the opposite party no. 1 is not maintainable and the impugned decision of the learned court below rejecting the application under Order 7 Rule 11(d) of the Code cannot be sustained. - Decided in favor of appellant.
Issues Involved:
1. Jurisdiction of the Civil Court to entertain the suit. 2. Applicability of Order 7 Rule 11(d) of the Code of Civil Procedure. 3. Interpretation of Sections 17, 34, and 35 of the Securitisation and Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (SARFAESI Act). 4. Relevance of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDB Act). Issue-wise Detailed Analysis: 1. Jurisdiction of the Civil Court to entertain the suit: The primary issue was whether the City Civil Court had the jurisdiction to entertain a suit challenging the notices issued under Sections 13(2) and 13(4)(a) of the SARFAESI Act. The plaintiff sought declarations that these notices were void and that the bank had no right to demand any amount or possession of the mortgaged property. The court below held that since the claim was less than Rs. 10 lakhs, the suit was not barred under the SARFAESI Act, and the City Civil Court had pecuniary jurisdiction. 2. Applicability of Order 7 Rule 11(d) of the Code of Civil Procedure: The petitioners (State Bank of India and its officers) filed an application under Order 7 Rule 11(d) of the Code of Civil Procedure, seeking rejection of the plaint on the ground that the suit was barred by law. The trial court rejected this application, leading to the revisional application before the High Court. 3. Interpretation of Sections 17, 34, and 35 of the SARFAESI Act: The petitioners argued that under Sections 17 and 34 of the SARFAESI Act, the actions taken by the bank could not be challenged in a civil court. Section 17 provides a right of appeal to the Debts Recovery Tribunal (DRT) for any person aggrieved by the measures taken under Section 13(4), while Section 34 bars the jurisdiction of civil courts in matters that the DRT or Appellate Tribunal is empowered to determine. Section 35 states that the provisions of the SARFAESI Act override any other inconsistent laws. The High Court referenced Supreme Court decisions (United Bank of India vs. Satyabati Tandon and Jagdish Singh v. Heeralal & Ors.) which held that the expression "any person" in Section 17 includes borrowers and others affected by the secured creditor's actions. Therefore, the remedy for the plaintiff was to approach the DRT, not the civil court. 4. Relevance of the RDB Act: The trial court had held that since the claim was less than Rs. 10 lakhs, the DRT lacked jurisdiction under the RDB Act, and thus the City Civil Court could entertain the suit. However, the High Court clarified that Section 17 of the SARFAESI Act, being a subsequent special statute, conferred appellate jurisdiction on the DRT for measures taken under Section 13(4) of the SARFAESI Act, regardless of the amount involved. Section 35 of the SARFAESI Act ensures its provisions have an overriding effect on any inconsistent laws, including the RDB Act. Conclusion: The High Court concluded that the suit filed by the plaintiff was not maintainable in the civil court. The impugned order of the trial court rejecting the application under Order 7 Rule 11(d) was set aside. The plaint in Title Suit No. 411 of 2002 was rejected, and the revisional application (C.O. 1590 of 2015) was disposed of without any order as to costs.
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