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TMI Blog2011 (2) TMI 1282X X X X Extracts X X X X X X X X Extracts X X X X ..... Exhibit 5 in Special Civil Suit No. 52 of 2010 by the learned 2nd Joint Civil Judge, Senior Division, Amravati, allowing the application for grant of temporary injunction restraining the appellant/defendant No. 3 Bank temporarily from taking possession of the suit property or auctioning the same during the pendency of the suit. 3. The respondent Nos. 1 and 2 are the original plaintiffs, who have filed Special Civil Suit No. 52 of 2010 for declaration, partition, separate possession and permanent injunction in respect of the suit property described in the schedule of the suit property attached to the plaint. The plaintiffs joined their father as the defendant No. 1, since he had mortgaged the suit property with the respondent No. 3-Bank, and the mother of the plaintiffs was joined as the defendant No. 3. The applicant-State Bank of India was joined as the defendant No. 3 in the said suit, for the reason that it had issued notice under section 13(2) of the said Act to the plaintiffs on 28-1-2010. The application for grant of temporary injunction restraining the applicant/defendant No. 3-Bank from taking possession of the suit property or any portion thereof and from selling the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to deal with the property in accordance with the provisions of the said Act. 6. The defendant No. 3-Bank filed an application Exhibit 17, under Order 7, Rule 11 of the Civil Procedure Code for rejection of the plaint on the ground that the suit as framed was barred by section 34 of the said Act. The plaintiffs filed their reply opposing the said application. By an order dated 23-2-2010 passed below Exhibit 17 impugned in Civil Revision Application No. 33 of 2010, the application under Order 7, Rule 11 of the Civil Procedure Code has been rejected. By a separate order dated 23-2-2010, the application Exhibit 5 filed by the plaintiffs has been allowed and the applicant/defendant No. 3-Bank is temporarily restrained from taking possession of the suit property or auctioning the same till the decision of the suit. 7. While rejecting the application under Order 7, Rule 11 of the Civil Procedure Code, the Trial Court has observed that the documents placed on record clearly show that the plaintiffs and the defendant Nos. 1 and 2 were forming the joint family and the defendant No. 1 mortgaged the suit property for loan with the Bank and he is absconding. Hence, the argument that there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legal, valid, proper, without authority or fraudulent, whether the action initiated by the defendant No. 3-Bank under section 13 of the said Act is valid, legal, proper and in accordance with the provisions of the said Act, and whether the plaintiffs are entitled to get an order of injunction - permanent or temporary - restraining the defendant No. 3-Bank, can be gone into by the Civil Court only if it is held that the jurisdiction of the Civil Court to grant such reliefs is not ousted by the provision of section 34 of the said Act. 9. Two questions arise in both these matters - (i) Whether the jurisdiction of the Civil Court to entertain, try and decide such a suit, is barred by the provisions of section 34 of the said Act, and (ii) Even if there is no such bar of jurisdiction of the Civil Court to entertain, try and decide such a suit, whether its jurisdiction to grant or pass an order of injunction is barred under section 34 of the said Act. 10. In order to consider the question as to whether the jurisdiction of the Civil Court to entertain, try and decide the suit for partition and separate possession of the suit property, the provisions of section 9 of the Civil Procedure C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided in sub-section (4) of section 13. It may also be noted that as per sub-section (3) of section 13 a notice given to the borrower must contain the details of the amounts payable and the secured assets against which the secured creditor proposes to proceed in the event of non-compliance with the notice given under sub-section (2) of section 13. 12. Sub-section (4) provides for four measures which can be taken by the secured creditor in case of non-compliance with the notice served upon the borrower. Under clause (a) of sub-section (4) the secured creditor may take possession of the secured assets including the right to transfer the secured assets by way of lease, assignment or sale; may take over the management of the secured assets under clause (b) including right to transfer; under clause (c) of sub-section (4) a manager may be appointed to manage the secured assets which have been taken possession of by the secured creditor and may require any person who has acquired any secured assets from the borrower or from whom any money is due to the borrower to pay the same to him as it may be sufficient to pay the secured debtor as provided under clause (d) of section 3(4) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers which can be taken cognizance of by the Debts Recovery Tribunal though no measure in that direction has so far been taken under sub-section (4) of section 13. It is further to be noted that the bar of jurisdiction is in respect of a proceeding which matter may be taken to the Tribunal. Therefore, any matter in respect of which an action may be taken even later on, the civil court shall have no jurisdiction to entertain any proceedings thereof. The bar of civil court thus applies to all such matters which may be taken cognizance of by the Debts Recovery Tribunal, apart from those matters in which measures have already been taken under sub-section (4) of section 13.' Thus, the contention that the jurisdiction of Debts Recovery Tribunal is available only when measures under sub-section (4) of section 13 of the said Act are taken and therefore, the jurisdiction of civil court to take cognizance before such measures are taken is available, has been rejected. It has been held that the prohibition covers even matters which can be taken cognizance of by the Debts Recovery Tribunal, though no measure in that direction has so far been taken under sub-section (4) of section 13 of the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the secured creditor for not having accepted his representation or objection or the likely action of the secured creditor at the stage of communication of reasons to the borrower shall not entitle the person (including borrower) to make an application to the Debts Recovery Tribunal under sub-section (1) of section 17. (2) The Debts Recovery Tribunal shall consider whether any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor for enforcement of security are in accordance with the provisions of this Act and the rules made thereunder. (3) If, the Debts Recovery Tribunal, after examining the facts and circumstances of the case and evidence produced by the parties, comes to 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 sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the said Chapter. Sub-section (2) of section 17 confers a jurisdiction upon the Debts Recovery Tribunal to consider whether any of the measures referred to in sub-section (4) of section 13 are taken by the secured creditor for enforcement of the security interest in accordance with the provisions of the said Act and the rules made thereunder. 17. Section 34 of the said Act deals with the ouster of the jurisdiction of the Civil Court, the same being relevant is reproduced below : "34. Civil Court not to have jurisdiction.-No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted to any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Bank and Financial Institutions Act, 1993 (51 of 1993)." Bare perusal of section 34 shows that the jurisdiction of the Civil Court is specifically barred to entertain any suit or proceeding only to the extent of the matters, which the Debts Recovery Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the compact area of jurisdiction of the Debts Recovery Tribunal under section 17 of the said Act. In order to decide the question as to whether the jurisdiction of the Civil Court under section 9 of the Civil Procedure Code is ousted or not, the real test would be to find out whether the Debts Recovery Tribunal under section 17 of the said Act is empowered to hold an enquiry on a particular question and to grant the relief in respect thereof. The extent of jurisdiction of the Debts Recovery Tribunal under section 17 of the said Act shall decide the extent of exclusion of the jurisdiction of the Civil Court to decide the dispute in respect of the suit property. 19. Any person, including the borrower, aggrieved by any such action taken by the secured creditor under section 13, can file an objection before the Debts Recovery Tribunal under section 17 of the said Act. If it is found by the Debts Recovery Tribunal that the recourse taken by the secured creditors under sub-section (4) of section 13 is in accordance with the provisions of the said Act and the Rules framed thereunder, then it has jurisdiction under sub-section (4) of section 17 to see that the secured creditor is entitle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivil Court to decide all such questions is barred by section 34 of the said Act. 21. Now coming to the facts of the present case, the plaintiffs have filed Special Civil Suit No. 52 of 2010 for declaration, partition, separate possession and injunction. The reliefs claimed in the suit are as under : "(i )It be declared that the suit property is ancestral, joint Hindu family property coparcenery property and the plaintiffs together have ½ undivided joint share in the suit property. (ii )It be declared that the proposed action of the defendant No. 3-Bank to take possession of the suit property on 8-2-2010 or any other date and thereafter to sell the same is arbitrary, illegal, capricious, mala fide, collusive, clandestine, secret, fraudulent, void ab initio and is not in pursuance of the provisions of the said Act and said Rules and the same is without jurisdiction. (iii)By grant of permanent injunction, defendant No. 3 be restrained from taking possession of the suit property or any portion thereof and be further restrained from selling the suit property or any portion thereof in any manner whatsoever. (iv)By passing preliminary decree for partition of suit property and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same is, therefore, without jurisdiction. The averment in the plaint in support of the first part of the relief claimed in prayer clause (ii) is that the defendant Nos. 1 and 2 were not the absolute owners of the entire suit property and, therefore, they had no authority to mortgage the suit property with the defendant No. 3-Bank. The further averment is that the creation of mortgage was not for the benefit of the family, but was for the purposes of satisfying the vices of the defendant No. 1. It is the further averment that the creation of mortgage was in collusion with the defendant No. 3-Bank and the third parties, which are interested in purchasing the property at throw-away price and the same was, therefore, fraudulent. So far as the second part of the relief claimed in the said prayer clause (ii) is concerned, except a bald statement in the plaint that the action is not in accordance with the said Act and the Rules framed thereunder, there is no other averment in support of it in the plaint. 23. In Mardia Chemicals Ltd.'s case (supra), the Apex Court has held in para 51 of its judgment that to a very limited extent the jurisdiction of the Civil Court can be invoked, where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defendant No. 3-Bank from taking possession of the suit property or any portion thereof and further restraining from selling the suit property or any portion thereof in any manner whatsoever, the provision of section 34 is required to be seen. Section 34 of the said Act reproduced in earlier para is in two parts. The first part states that no Civil Court shall have jurisdiction to entertain the suit or proceeding in respect of any matter, which the Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine. The second part of the provision prohibits the Court from granting injunction in respect of any action taken or to be taken in pursuance of any power conferred by or under the said Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. Once it is held that the suit in question to the extent it claims the reliefs in prayer clauses (i), (iv) and the first part of prayer clause (ii), is maintainable and the jurisdiction of the Civil Court to entertain, try and decide the same, is not barred by section 34 read with section 17 of the said Act, then the question is whether the jurisdiction of the Civil Court to grant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 34 of the said Act. 26. Here, in the present case, it is the suit claiming partition and separate possession of the suit property with further declaration that the proposed action of the defendant No. 3-Bank is fraudulent and void ab initio. Along with these main reliefs, a relief of permanent injunction is claimed. Once it is held that the Civil Court has jurisdiction to entertain, try and decide such a suit claiming reliefs under prayer clauses (i), (iv) and first part of prayer clause (ii) and the bar under section 34 of the said Act does not apply, then the power of the Civil Court to grant permanent injunction in terms of prayer clause (iii) on its own merits, on the touchstone of the provisions of section 38 of the Specific Relief Act, cannot be ousted. Similarly, if the Civil Court has jurisdiction to grant permanent injunction, then its jurisdiction to grant temporary injunction under Order 39, Rules 1 and 2 read with section 151 of the Civil Procedure Code also cannot be held to be barred by section 34 of the said Act. It is only in cases where the suit simpliciter is for grant of permanent injunction restraining the Bank or Financial Institution from enforcing securi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Procedure Code, or while deciding the suit on merits. In the said judgment, the suit was not dismissed, but it was merely an application for temporary injunction, which was rejected. 28. The another judgment relied upon by the learned counsel for the applicant/appellant is delivered by this Court in Khamgaon Urban Co-op. Bank Ltd., Khamgaon v. Prashant Bhagwantrao Raikwar 2010 (1) Mh. L.J. 875. It was also a case arising out of the order passed by the Trial Court restraining the Bank from enforcing liability of repayment of loan against the plaintiff. It was not a judgment rendered either on the application under Order 7, Rule 11(a) and (d) or under section 9A of the Civil Procedure Code or while deciding the suit on merits. In the said judgment, the earlier judgment in the case of Khamgaon Urban Co-op. Bank Ltd. (supra), was relied upon. In view of this, any observation on the question whether the jurisdiction of the Civil Court to try the suit was barred by section 34 of the said Act on prima facie assessment of the case, would not constitute a ratio, which will be binding, while deciding the application under Order 7, Rule 11(a) and (d) or under section 9A of the Civil Procedur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmination. It states that the provisions of the said Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. Such a question will have to be determined with reference to this provision, only upon occurrence of such eventuality and not before. To consider such question and to decide it at any time before the final decision of suit or proceedings under section 17 of the said Act will be premature. It would amount to pre-empting the issue. If such suit is dismissed on merits, it shall clear the way of secured creditor. If it is decreed, the question would arise as to whether such a decree is executable and if it is, then against whom and to what extent. As pointed out earlier, even if such suit is pending in a Civil Court on the date when notice under sub-section (2) of section 13 is issued, in respect of the property, over which security interest is created, an objection can be raised before the Debts Recovery Tribunal under section 17 of the said Act by any person including a person claiming to be a coparcener of ancestral joint Hindu family property. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be barred by section 34 of the said Act. The question whether the defendant No. 3-Bank is acting in accordance with the provisions of the said Act and the Rules framed thereunder, can be gone into by the Debts Recovery Tribunal under section 17 of the said Act. Any action of the secured creditor under section 13 or any order of the Debts Recovery Tribunal can be made subject to the result of the suit. This will, however, not prevent the Debts Recovery Tribunal or its Appellate Tribunal to pass such further orders as it may deem fit and proper to protect the interest of the borrower or the plaintiffs herein in terms of the provisions of sub-sections (2), (3) and (4) of section 17 of the Act. Hence, no prima facie case is made out for grant of temporary injunction, though the plaintiffs may be held entitled to grant of partition and separate possession of the suit property. The balance of convenience does not lie in favour of the plaintiffs, as they are carrying on the ancestral business, for which loan is obtained from the defendant No. 3-Bank. The plaintiffs must have reaped the fruits of borrowings to some extent. Hence, if the order of injunction is refused, then the plaintiff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the action of the secured creditor to take possession of the property and to sell the same, is fraudulent and void, as has been held by the Apex Court in Mardia Chemicals Ltd.'s case (supra), is not barred by section 34 of the said Act. (Para 23) (vii)The jurisdiction of the Civil Court to entertain, try and decide Civil Suit simpliciter for permanent injunction to permanently restrain the defendant No. 3-Bank from taking possession of the suit property and selling the same or to create any third-party interest without any substantive relief of declaration that the creation of security interest in favour of a secured creditor was fraudulent and void-ab-initio, is completely barred under the second part of section 34 and hence consequentially, the jurisdiction of Civil Court to pass an order of temporary injunction in such suit, restraining the defendant No. 3-Bank from alienating the suit property or creating any third-party interest therein, is also barred. (Para 25) (viii)Once it is held that the jurisdiction of Civil Court is not ousted under section 34, to grant substantive relief of declaration that creation of security interest in favour of a secured creditor, was fraudule ..... 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