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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 ..... roperties. It is alleged that the plaintiff Nos. 1 and 2 together are carrying on the ancestral business of selling of books on the ground floor of the suit property and the first floor of the suit property is being used as the residential house of the Joint Hindu Family. It is claimed that the suit property has not been partitioned and hence a decree for partition and separate possession of their share in the suit property has been claimed by the plaintiff to the extent of their share - defendant No. 1 has taken a loan from the defendant No. 3-Bank to satisfy his vices, by mortgaging the suit property with the defendant No. 3-Bank. The defendant No. 3-Bank has issued a notice under section 13(2) of the said Act to the plaintiffs and the defendant Nos. 1 and 2 to discharge the liabilities due and owing to the defendant No. 3-Bank in the sum of Rs. 31,79,484.91 as on 31-12-2007 along with future interest. It is alleged that the defendant Nos. 1 and 2 were not the absolute owners of the entire suit property and had, therefore, no authority to mortgage the same with the defendant No. 3-Bank – Held that:- jurisdiction of civil court to entertain, try and decide a civil suit challenging ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her 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 in any manner, in the process under section 13 of the said Act, during the pendency of the suit was also filed. The parties shall hereinafter referred to as per their original status in civil suit. 4. The claim of the plaintiffs in the suit is that the suit property is the ancestral Joint Hindu Family property and they are the coparceners of it, having 1/4th undivided share each in the said property. It is claimed in the plaint that the suit property has been purchased by the defendant Nos. 1 and 2 from out of the income from the ancestral property, including the income from the agricultural fields and other immovable properties. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intiffs 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 is a collusion between the plaintiffs and the defendant No. 1 to defeat the proposed action of the Bank, has been rejected. The contention of the applicant that the jurisdiction of the Civil Court is barred in view of section 34 of the said Act, has also been rejected by holding that the plaintiffs are the sons of the defendant Nos. 1 and 2 and they have share in the suit property and hence the statutory provisions of section 34 of the said Act will not take away the jurisdiction of the Civil Court to deal with the suit for partition and separate possession. While deciding the application Exhibit 5, the finding is recorded tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Code will have to be seen. Section 9 of the Code of Civil Procedure deals with the Courts to try all civil suits unless barred. It states that the Courts (subject to the provisions herein contained) have jurisdiction to try all suits of a civil nature excepting suits of which their cognizance is either expressly or impliedly barred. There is a strong presumption that Civil Courts have jurisdiction to decide all questions of civil nature. The rule that the exclusion of jurisdiction of Civil Courts is not to be readily inferred, is based on the theory that Civil Courts are the Courts of general jurisdiction an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssets 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 Act. Sub-section (8) of section 13, however, provides that if all the dues of the secured creditor including all costs, charges and expenses, etc., as may be incurred are tendered to the secured creditor before sale or transfer, no further steps be taken in that direction. 13. Section 17 of the said Act deals with the right of appeal before the Debts Recovery Tribunal and it states that any person (including borrower) aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorised officer under this Chapter, may make an applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 said Act. The bar of the 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. In para 51 of the judgment in the Mardia Chemical Ltd. s case ( supra ), the Apex Court has held that to a very limited extent the jurisdiction of the Civil Court can also be invoked, where, for example, the action of the secured creditor is alleged to be fraudulent or his claim may be so absurd and entertainable which may not require any pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 secured assets as invalid and restore the possession of the secured assets to the borrower or restore the management 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, notwith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt 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 Tribunal or the Appellate Tribunal is empowered by or under the said Act, to determine. 18. Once it is admitted that the suit property has in fact been mortgaged with the Bank or Financial Institution, then it cannot be disputed that the "security interest" is created, as defined under section 2( zf ) of the said Act in favour of a "secured creditor", as defined under section 2( zd ) of the said Act in respect of the suit property. The secured creditor thereupon, becomes entitled to enforce its secured interest without intervention of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 entitled to take recourse to one or more of the measures specified under sub-section (4) of section 13 to recover its secured debts, notwithstanding anything contained in any other law for the time being in force. In such situation, the normal jurisdiction of Civil Court cannot be invoked to defeat the rights of secured creditor under section 13 and to arrest the jurisdiction exercised by the Debts Recovery Tribunal under section 17, in view of bar of its jurisdiction created under section 34 of the said Act. 20. So far as the ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 Commissioner be appointed to effect the partition of the suit property by metes and bounds and plaintiffs be put in separate possession of their 50 per cent share while the defendant Nos. 1 and 2 be put in separate possession of her 25 per cent share each. ( v )The plaintiffs costs of the suit and any other suitable reliefs be decreed against the defendants." The plaintiffs are asking for a declaration that the suit property is ancestral joint Hindu family property and they have 50 per cent undivided s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant 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 for example, the action of the secured creditor is alleged to be fraudulent or his claim may be so absurd and entertainable, which may not require any probe whatsoever. The question whether the cause of action is made out for filing such suit on the basis of pleading of material facts to find out whether any probe is required or not, can be gone into by the Civil Court. The Debts Recovery Tribunal under section 17 of the said Act cannot adjudicate upon the question as to wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 permanent injunction in terms of prayer clause ( iii ) is ousted. 25. The learned counsel for the applicant/appellant-Bank has relied upon the judgment, which I have delivered in Punjab National Bank Ballarpur v. Shaikh Jumman Shaikh Guljar 2010 (4) Mh. L.J. 133. It was a case arising out of the order passed by the Trial Court dismissing the suit filed by the plaintiff, in exercise of its jurisdiction under Order 7, Rule 11( d ) read with section 9A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 security interest under sub-section (1) of section 13, the jurisdiction of the Civil Court is held to be barred under section 34 of the said Act, in the aforesaid judgment. Hence, the said judgment does not apply to the facts of this case. 27. The learned counsel for the applicant/appellant relied upon the judgment of this Court in Khamgaon Urban Co-op. Bank Ltd. v. Karunashankar Ramkishore Tiwari 2007 (2) Mh. L.J. 641, in sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 Procedure Code, or while deciding the suit on merits. The said judgment is also of no help to the applicant/appellant. 29. The third judgment relied upon by the learned counsel for the applicant/appellant is rendered by this Court in Yuth Development Co-operative Bank Ltd. v. Balasaheb Dinkarrao Salokhe 2008 (5) Mh. L.J. 326. It was, however, a case where an application under section 9A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 is always open for the Debts Recovery Tribunal either to pass an order of injunction restraining the Bank or the Financial Institution from selling the property or creating any third party interest or to pass such orders as may be deemed fit or proper to protect or secure the interest of such person approaching the Debts Recovery Tribunal. If suit is filed subsequent to in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 plaintiffs are not likely to suffer any irreparable loss. The application Exhibit 5 is, therefore, liable to be rejected with the condition that the outcome of the proceedings under sections 13 and 17 of the said Act would be subject to the decision of this Special Civil Suit. 33. In view of above, the sum and substance of the decision is that : ( i )The jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liciter 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 fraudulent and void, its jurisdiction to grant consequential relief of permanent injunction and the relief of temporary injunction in such suit, is not ousted. (Para 26) ( ix )Once it is held that the jurisdiction of the Civil Court to entertain, try and decide the civil suit for partition and separate possession of the suit property ..... X X X X Extracts X X X X X X X X Extracts X X X X
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