2018 (9) TMI 925 - HC - Indian Laws

Whether the Petitioner in C. R. P. (MD). No. 2332 of 2008 is entitled for the relief sought for and whether the action of the Respondent bank is sustainable in Law? - whether the Petitioner in C. R. P. (MD). No. 535 of 2017 can get the plaint in O. S. No. 797 of 2014 rejected at this stage? Held that - The bank had not taken any earnest step to settle the dispute by receiving the debt amount especially when the debtor had come forward to deposit the decreetal amount. The bank has even now not furnished any particulars pertaining to the alleged sale said to have been conducted by it. The bank has not filed any documents for this Court to at least have a glance to satisfy itself as to whether the bank followed at least rudimentary principles of auction sale. This shows that the bank is not willing to frankly disclose the facts and it reflects upon the illegal way in which the bank had tried to bring the borrowers property for sale instead of trying to realize the debt. The alleged auction purchasers as stated above have also not taken any earnest steps in spite of the knowledge of the pendency of the Civil Revision Petition. Furthermore the alleged auction purchasers, who are litigation purchasers, may not be entitled to any equity especially as the borrower has taken earnest steps to deposit the decreetal amount. The alleged auction purchaser can be treated only at par with an Pendent lite Purchaser and the alleged sale in favour of the auction purchaser during the pendency of the suit in O. S. No. 33 of 2004 will not confer any right in favour of the alleged auction purchaser beyond the outcome of the suit. In view of the mater it is not even necessary for hearing the said auction purchasers before granting relief to the Revision Petitioners in C. R. P. (NPD). (MD). No. 2332 of 2008. The principles of natural justice will not come into play in this case in view of the above findings and also in view of the exception to the above said rule on the ground of Doctrine of Empty Formality. When this Court finds that the very act of the Respondent bank in invoking SARFAESI proceedings during the pendency of the civil suit is illegal all further actions taken pursuant to such a proceeding will also be null and void and it will not confer any right upon the auction purchaser. This Court is of the view that the impugned order passed by the learned Principal District Judge, Dindigul in I. A. No. 83 of 2008 in O. S. No. 33 of 2004 dated 20. 11. 2008 is liable to be interfered with and accordingly, the same is set aside. The Petitioner in C. R. P. (NPD). (MD). No. 2332 of 2008 is directed to deposit the amount Decreed in O. S. No. 33 of 2004 as modified in A. S. (MD)No. 217 of 2009 after deducting ₹ 3, 00, 000/- (Rupees Three Lakhs) within a period of four weeks from the date of receipt of a copy of this order before the learned Principal District Judge, Dindigul to the credit of the Decree in O. S. No. 33 of 2004 dated 26. 03. 2008. Petition dismissed.

Summary

Issues Involved:
1. Entitlement of the Petitioner in CRP (MD) No. 2332 of 2008 for the relief sought.
2. Sustainability of the Respondent bank's actions in law.
3. Rejection of the plaint in O.S. No. 797 of 2014 at this stage as sought by the Petitioner in CRP (MD) No. 535 of 2017.

Issue-Wise Detailed Analysis:

1. Entitlement of the Petitioner in CRP (MD) No. 2332 of 2008 for the Relief Sought:
The primary issue is whether the Petitioner is entitled to the relief sought in CRP (MD) No. 2332 of 2008. The Petitioner had contested the liability in O.S. No. 33 of 2004, which was pending before the Principal District Court, Dindigul. The Respondent bank invoked the SARFAESI Act without withdrawing or informing the civil court, issuing a Section 13(2) notice. The court had directed the Petitioner to deposit ?3,00,000, which was complied with. The Petitioner later filed S.A. No. 16 of 2008 before the Debts Recovery Tribunal, Madurai. The Respondent bank continued to pursue the civil suit and the SARFAESI proceedings simultaneously, which was deemed unfair. The civil court decreed the bank's claim partially, allowing the OCC Loan account claim but rejecting the MTL/Vehicle loan claim. The Petitioner took steps to deposit the decreetal amount within the permissible period under the Limitation Act. The court found that the Petitioner's compliance with the decree was sufficient and the Trial Court's finding of non-compliance was erroneous. Thus, the Petitioner is entitled to deposit the decreetal amount with interest.

2. Sustainability of the Respondent Bank's Actions in Law:
The Respondent bank's actions were scrutinized for invoking the SARFAESI Act while simultaneously pursuing the civil suit. The bank sold the mortgage property without informing the civil court and without disclosing the auction details, raising suspicion about its bona fides. The court found the bank's conduct in pursuing parallel and inconsistent remedies as an attempt to outwit the borrower, which is not permissible. The bank's failure to withdraw the civil suit or inform the court while invoking the SARFAESI Act was deemed unlawful. The Punjab and Haryana High Court in Kalyani Sales Company vs. Union of India held that banks must withdraw civil suits before proceeding under the SARFAESI Act. The court concluded that the bank's actions were inconsistent and illegal, and the sale conducted was null and void.

3. Rejection of the Plaint in O.S. No. 797 of 2014:
The Petitioner in CRP (MD) No. 535 of 2017 sought to reject the plaint in O.S. No. 797 of 2014. The suit was filed for an injunction to restrain eviction from the tenanted premises. The Trial Court dismissed the application under Order VII Rule 11(d) CPC for rejection of the plaint, holding that the suit was maintainable and issues regarding tenancy could be decided during the trial. The court referenced the Supreme Court's decision in Vishal N. Kalsaria vs. Bank of India, which held that tenants cannot be arbitrarily evicted using the SARFAESI Act, and their statutory rights must be protected. The court found no merit in the petition to reject the plaint and dismissed CRP (MD) No. 535 of 2017.

Conclusion:
The court allowed CRP (NPD) (MD) No. 2332 of 2008, directing the Petitioner to deposit the decreetal amount within four weeks, and the Respondent bank to return the bid amount to the auction purchaser. The court dismissed CRP (MD) No. 535 of 2017, confirming the Trial Court's order that the suit was maintainable. The court emphasized the need for banks to act fairly and not pursue inconsistent remedies, protecting the debtor's rights and ensuring the sanctity of judicial proceedings.