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TMI Blog2005 (11) TMI 260X X X X Extracts X X X X X X X X Extracts X X X X ..... 9, Rules 1 and 2, C.P.C. seeking temporary injunction against defendants 5 and 6 restraining them from proceeding in any manner with their 5/16th share in the suit schedule property pending disposal of the suit. 6. According to the plaintiffs, the cause of action for filing the present suit was that defendants 1 to 4 did business incurring heavy debts without any benefit to the joint family and since they are also the members of the said Hindu joint family they sought for partition and separate possession of their respective shares from out of the joint family property. 7. It is not out of place to mention at this juncture that defendants 2 to 4 are the sons of the first defendant, and the plaintiffs are the children of D.2 to D.4 and grand-children of D.1. 8. The case of the plaintiffs is that they came to know that D.1 to D.4 were contemplating to contract additional debts burdening the plaintiffs without any use or purpose to the Hindu joint family. Plaintiffs alleged that D.1 to D.4 indebted to D.5 and D.6 (State Bank of India, Commercial Branch, Ongole and State Bank of India, Main Branch, Ongole, respectively) and since the debts incurred by D.1 to D.4 are not for the bene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that defendants 5 and 6 are the 'secured creditors' as defined under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short 'the Act'); that there is an efficacious alternative remedy provided to the plaintiffs under section 17 of the Act and hence I.A. No. 2282 of 2003 was not maintainable in the Court below and, consequently, the impugned order cannot be countenanced; that the suit was a collusive one; in fact, the suit was expressly barred under the Act and, more particularly, no injunction can be granted against the secured creditors as per section 34 of the Act. 16. Repudiating the aforesaid contentions urged on behalf of defendants 5 and 6 (appellants herein), learned counsel appearing for the plaintiffs (respondents herein), while supporting the impugned order passed by the Court below, contended that if no relief under Order 39 Rules 1 and 2, C.P.C. is granted to the plaintiffs, the plaintiffs will be deprived of their right to have 5/16th share in the Hindu joint family property which would result in great hardships to the plaintiffs. 17. Having regard to the relative rival contentions of the parties, the poin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-section (2), the borrower makes any representation or raises any objection, the secured creditor shall consider such representation or objection and if the secured creditor comes to the conclusion that such representation or objection is not acceptable or tenable, he shall communicate within one week of receipt of such representation or objection the reasons for non-acceptance of the representation or objection to the borrower : Provided that the reasons so communicated or the likely action of the secured creditor at the stage of communication of reasons shall not confer any right upon the borrower to prefer an application to the Debts Recovery Tribunal under section 17 or the Court of District Judge under section 17A. (4) In case the borrower fails to discharge his liability in full within the period specified in sub-section (2), the secured creditor may take recourse to one or more of the following measures to recover his secured debt, namely:-- (a )take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realizing the secured asset; (b)take over the management of the business of the borrower including the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the conclusion that any of the measures referred to in sub-section (4) of section 13, taken by the secured creditor are not in accordance with the provisions of this Act and the rules made thereunder, and require restoration of the management of the secured assets to the borrower or restoration of possession of the secured assets to the borrower, it may by order, declare the recourse to any one or more measures referred to in sub-section (4) of section 13 taken by the secured assets as invalid and restore the possession of the secured assets to the borrower, as the case may be, and pass such order as it may consider appropriate and necessary in relation to any of the recourse taken by the secured creditor under sub-section (4) of section 13. (4) If, the Debts Recovery Tribunal declares the recourse taken by a secured creditor under sub-section (4) of section 13, is in accordance with the provisions of this Act and the rules made thereunder, then notwithstanding anything contained in any other law for the time being in force, the secured creditor shall be entitled to take recourse to one or more of the measures specified under sub-section (4) of section 13 to recover his secured ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r industries. It is also a fact that a large sum of amount remains unrecovered. Normal process of recovery of debts through Courts is lengthy and time taken is not suited for recovery of such dues. For financial assistance rendered to the industries by the financial institutions, financial liquidity is essential failing which there is a blockade of large sums of amounts creating circumstances which retard the economic progress followed by a large number of other consequential ill effects. Considering all these circumstances, the Recovery of Debts Due to Banks and Financial Institutions Act was enacted in 1993 but as the figures show it also did not bring the desired results. Though it is submitted on behalf of the petitioners that it so happened due to inaction on the part of the Government in creating Debts Recovery Tribunal and appointing Presiding Officers for a long time. Even after leaving that margin, it is to be noted that things in the concerned spheres are desired to move faster. In the present day global economy it may be difficult to stick to old and conventional methods of financing and recovery of dues. Hence, in our view, it cannot be said that step taken towards secu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depth by the committees specially constituted consisting of the experts in the field. In the prevalent situation where the amount of dues are huge and hope of early recovery is less, it cannot be said that a more effective legislation for the purpose was uncalled for or that it could not be resorted to. It is again to be noted that after the report of the Narasimham Committee, yet another committee was constituted headed by Mr. Andhyarujina for bringing out the needed steps within the legal framework. We are, therefore, unable to find much substance in the submission made on behalf of the petitioners that while the Recovery of Debts due to Banks and Financial Institutions Act was in operation it was uncalled for to have yet another legislation for the recovery of the mounting dues. Considering the totality of circumstances the financial climate world over, if it was thought as a matter of policy, to have yet speedier legal method to recover the dues, such a policy decision cannot be faulted with nor it is a matter to be gone into by the Courts to test the legitimacy of such a measure relating to financial policy." "80. ... 2. As already discussed earlier, on measures having been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d proper. 27. Therefore, when a notification had been issued by the Bank (defendants 5 and 6), exercising their jurisdiction under section 13(4) of the Act, the only course open to the aggrieved persons, including the borrowers, the guarantors or any person/persons aggrieved thereof, is to proceed under section 17 of the Act. 28. Furthermore, notwithstanding the nature of the suit, the Act expressly prohibited the civil Court from granting any order of injunction against the secured creditors when such secured creditors exercised the jurisdiction under the Act. 29. In our considered view, the impugned order passed by the Court below is contrary to the express statutory prohibition contained under section 34 of the Act. We are of the further view that the Court below is totally oblivious of the existence and the implications of the provisions of section 34 of the Act. 30. In view of the observations made by the Apex Court in Mardia Chemicals Ltd.'s case (supra), the jurisdiction of the State Bank of India (defendants 5 and 6) to invoke the provisions of section 13(4) of the Act and the interests of the aggrieved persons also are well-safeguarded. 31. An incidental question may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is able to furnish us the particulars thereof. But, however, from the copy of the plaint supplied to the Court as a material paper, it could be seen that the suit was filed in the month of December, 2003. 38. From the notification issued by the State Bank of India, published in 'Andhra Jyothi' daily vernacular (Telugu) dated 7-8-2004, Prakasam District Edition, it is clear that consequent upon the failure of the borrower - Sri Vasavi Agencies, represented by its Proprietrix, Chinegepalli Padmini, Ongole and the Guarantors - (1) Chinegepalli Satyanarayana, S/o Seshaiah, (2) Chinegapalli Seshagiri Rao, S/o Satyanarayana Rao, (3) Chinegeplli Umamaheswara Rao, S/o Satyanarayana, and (4) Chinegapalli Chandrasekhar Rao, S/o Satyanarayana, to pay the amount of Rs. 48,35,847.55ps with interest from 5-3-2004 and costs in spite of issuance of notice, under section 13(2) of the Act, dated 23-10-2003, possession of the property shown in the schedule of the said paper notification was taken over by the Bank on 6-8-2004 itself, in exercise of the powers conferred upon it by section 13(4) of the Act. 39. From the aforesaid paper notification, it could be further seen that consequent upon such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in favour of the Bank/defendents 5 and 6 was not disclosed anywhere in the plaint averments. The entire assertion of the plaintiffs is that defendants 1 to 4 have been doing business, entered into contracts and borrowing monies which are not beneficial to the Hindu joint family, more particularly to the plaintiffs which prompted the plaintiffs to file the present suit for partition. 46. We are of the prima facie view that the plaintiffs have deliberately suppressed material facts while filing the suit as well as the interlocutory application seeking temporary injunction. We are of the further prima facie view that even though the material facts were brought to the notice of the Court below by the 5th defendant in its counter-affidavit filed in I.A. No. 2282 of 2003, the Court below ignored to take them into consideration and passed the impugned order of temporary injunction. Therefore, the finding recorded by the Court below that the plaintiffs have made out a prima facie case and balance of conveniencies lies in their favour is baseless and incorrect. 47. We are of the further view that suppression of material fact, which is vital - itself is a ground to reject any relief to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s/respondents herein in not arraying defendants 1 to 4 in the suit as party-respondents to I.A No. 2282 of 2003, more so, when it is the specific averment/allegation of the plaintiffs that the property in question is the property of the Hindu joint family is highly reprehensible. Added to that, the Bank/appellants herein had brought to the notice of the Court below by way of a counter-affidavit that defendants 1 to 4, at the time of mortgaging the property in favour of the bank, as guarantors of the borrower, furnished a declaration to the bank that the property in question is their self-acquired property. Therefore, the presence of defendants 1 to 4 in I.A. No. 2282 of 2003 is very much essential and the non-joinder of such necessary parties as party-respondents in the said I.A. also led to our recording findings on points 1 and 2 supra. 51. We may observe that the Court while considering an application under Order 39, C.P.C. is expected to find out, prima facie, whether the given case falls within the four corners of Order 39, C.P.C. or not. 52. It is not even the case of the plaintiffs, either in the plaint or in the affidavit filed in support of the temporary injunction appli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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