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TMI Blog2014 (3) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court was in error in holding that only civil court has jurisdiction to examine as to whether the “measures” taken by the secured creditor under sub-section (4) of Section 13 of the Securitisation Act were legal or not. - Order of High Court set aside - Decided in favor of appellant. - Civil Appeal No. 9771 of 2013 (Arising out of Special Leave Petition (Civil) No. 18 of 2011) - - - Dated:- 30-10-2013 - K. S. Radhakrishnan And A. K. Sikri,JJ. JUDGMENT K.S. Radhakrishnan, J. Leave granted. 2. The appellant herein was the auction purchaser, being the highest bidder for Rs.18,01,000/-, in respect of the land admeasuring one acre in Khasra Nos.104/3 and 105/2, Patwari Halka No.4, Village Segaon, Anjad Road, Barwani, M.P., which was brought to sale for recovery of loan amounts under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short the Securitisation Act ). The auction was confirmed by the bank on 08.11.2005 on the appellant s depositing Rs.2,90,250/- by 09.11.2005 and remaining 75% within 15 days. The appellant was not put in possession of the property in question even though the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pleadings in para 10 of the written statement of defendant No.10 and also mentioned in para 15 of the written statement of defendant Nos.6 7. 6. The civil court upheld the preliminary objection stating that if the plaintiffs had any right, they ought to have filed an appeal under Section 17 of the DRT Act and not a suit in view of the specific bar contained in Section 34 of the Securitisation Act. Civil court, therefore, passed an order on 18.01.2008 holding that the suit is not maintainable and, hence, the application preferred by the bank under Order 7 Rule 11 of the Civil Procedure Code (for short the CPC ) was allowed. 7. Aggrieved by the said order, Respondent Nos.1 to 5 herein filed Civil First Appeal No.130/08 before the High Court of Madhya Pradesh at Indore. The High Court, however, allowed the appeal. The operative portion of the judgment reads as follow: I have perused the contents of the plaint from the record of the case. A bare perusal of the plaint indicates that the plaintiffs have raised the question of title, on the basis of Joint Hindu Family property and they being the members of the Joint Hindu Family, it has been pleaded by them that the property i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 009) 8 SCC 646, Indian Bank v. ABS Marine Products Pvt. Ltd. (2006) 5 SCC 72 and also to the Mardia Chemicals Ltd. (supra). Learned counsel submitted that the DRT, exercising powers under Section 17 of the Securitisation Act, cannot decide the rights of Respondent Nos.1 to 5 vis- -vis Respondent Nos.7 to 9 in a proceeding under Section 17 of the Securitisation Act and civil court is the right forum to decide as to whether the secured assets are ancestral properties of a Hindu Undivided Family (HUF) and they were acquired through the earnings out of the joint family properties. Discussion 10. The Bank of India had advanced a loan of Rs.25 lakhs to M/s Guru Om Automobiles, 10th respondent herein, through its proprietor, the 6th respondent on 17.02.2000. The loan was secured by equitable mortgage executed by Respondent Nos.7 to 9 in respect of land measuring one acre in Khasra No.104/3 and 105/2, Patwari Halka No.5, Village Seagon, Anjad Road, Barwani, MP. Respondent Nos.6 to 8 had also created equitable mortgage on three houses, which were in their respective names. Original title deeds of all the abovementioned properties were duly deposited with the bank at the time of availing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Respondent Nos.6 to 9. Due to non-repayment of the loan amount, the Bank can always proceed against the secured assets. 13. Security interest, within the meaning of Section 2(zf) has been created in respect of the above mentioned properties which are secured assets within the meaning of Section 2(zc), in favour of the secured creditor (the bank) within the meaning of Section 2(zd). On failure to re-pay, the bank, secured creditor can always enforce its security interest over the secured assets. 14. Secured asset is defined under Section 2(zc) of the Securitisation Act to mean the property on which security interest is created. Section 13(1) of the Securitisation Act states that notwithstanding anything contained in Section 69 or 69A of the Transfer of Property Act, 1882, any security interest created in favour of any secured creditor may be enforced, without the intervention of the court or tribunal by such creditor, in accordance with the provisions of the Act. In case the borrower fails to discharge his liability, the bank can take the measures provided in Section 13(4) of the Securitisation Act for recovery of the loan amount. The measures available for enforcement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson other than the borrower. Explanation : For the removal of doubts, it is hereby declared that the communication of the reasons to the borrower 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 1. (2) The Debts Recovery Tribunal shall consider whether any of the measures referred to in subsection (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 ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 18 of the Act. 17. The expression any person used in Section 17 is of wide import and takes within its fold not only the borrower but also the guarantor or any other person who may be affected by action taken under Section 13(4) of the Securitisation Act. Reference may be made to the Judgment of this Court in Satyavati Tondon s case (supra). 18. Therefore, the expression any person referred to in Section 17 would take in the plaintiffs in the suit as well. Therefore, irrespective of the question whether the civil suit is maintainable or not, under the Securitisation Act itself, a remedy is provided to such persons so that they can invoke the provisions of Section 17 of the Securitisation Act, in case the bank (secured creditor) adopt any measure including the sale of the secured assets, on which the plaintiffs claim interest. 19. Section 34 of the Securitisation Act ousts the civil court jurisdiction. For easy reference, we may extract Section 34 of the Securitisation Act, which is as follow: 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 Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 22. Statutory interest is being created in favour of the secured creditor on the secured assets and when the secured creditor proposes to proceed against the secured assets, sub section (4) of Section 13 envisages various measures to secure the borrower s debt. One of the measures provided by the statute is to take possession of secured assets of the borrowers, including the right to transfer by way of lease, assignment or realizing the secured assets. Any person aggrieved by any of the measures referred to in subsection (4) of Section 13 has got a statutory right of appeal to the DRT under Section 17. The opening portion of Section 34 clearly states that no civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a DRT or an Appellate Tribunal is empowered by or under the Securitisation Act to determine. The expression in respect of any matter referred to in Section 34 would take in the measures provided under sub-section (4) of Section 13 of the Securitisation Act. Consequently if any aggrieved person has got any grievance against any measures taken by the borrower under sub-section (4) of Section 13, the remedy open to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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