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TMI Blog2023 (3) TMI 420X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment in BANK OF RAJASTHAN LTD. VERSUS VCK SHARES STOCK BROKING SERVICES LTD. [ 2022 (11) TMI 1325 - SUPREME COURT] , though pertaining to RDDBFI Act, which contains the para materia provisions as the SARFAESI Act, while dealing with the transfer of civil proceedings, has held that the DRT, being a Tribunal and a creature of the Statute, does not have any inherent power which inheres in Civil Courts such as Section 151 of the Code. The facts of the present case disclose that the respondents instituted a suit for declaration qua reliefs arising out of non-issuance of Sale Deed and for waiver of wrongful imposition of interest by the appellant-bank alongwith other reliefs dependent thereupon, which reliefs were beyond the scope of the SARFAESI Act or the RDDBFI Act and resultantly, the only forum, which could/can grant such reliefs, was/is a Civil Court - Admittedly, though the appellant-bank in its reply dated 20.01.2020 categorically stated that no action under SARFAESI Act had yet been initiated against respondents and that it would initiate necessary proceedings under the SARFAESI Act and RDDBFI Act to protect its interest, till date no proceedings of any kind have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 hereinafter referred as SARFAESI ACT and after taking possession, issued notice for public auction. Respondents, vide e-auction dated 15.07.2016 bought the property for Rs.6,10,05,000/- and deposited 25% of the bid amount alongwith the TDS of 1% from 15.07.2016 to 17.08.2016. Sale thereof was confirmed on 25.07.2016 and the balance sale consideration of Rs.4,50,00,000/- was to be paid within 15 days of the date of confirmation of sale i.e., by 10.08.2016. 3. Appellant-bank, Mayur Vihar Branch, after sanctioning loan of Rs.4,50,00,000/- credited it to respondents on 09.08.2016. Thereafter, a Sale Certificate was issued in favour of respondents and the possession of the property was also handed over to them on 11.08.2016 itself. Meanwhile, the original borrower filed S.A. No. 265/2016 titled as Ajay Gupta vs. PNB before the Debt Recovery Tribunal-III, Delhi Hereinafter referred as DRT , wherein, though the appellant-bank was restrained from creating any third-party interest in the property vide an order dated 08.09.2016 in the presence of learned counsel for appellant-bank, the DRT was neithe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ronounced a judgment under Order XII rule 6, CPC against the appellant-bank, in favour of respondents on various grounds, primarily on the ground of nonmaintainability of the suit before a Civil Court under Section 34 of the SARFAESI Act. As the appellant-bank has not raised any challenge to any of the other findings, thus, the moot issue for consideration in the present appeal is only with respect to non-maintainability of the suit before a Civil Court. Accordingly, this Court is restricting itself to the necessary pleadings qua Section 34 of the SARFAESI Act only. 8. Learned Trial Court, after hearing learned counsels for both parties and while referring to the provisions of Section(s) 13(1), (2), (4), 17 and 34 of SARFAESI Act, noted that since the appellant-bank had not initiated any proceedings under Section 13 of SARFAESI Act against the respondents and that in such a case of non-initiation, the provisions of Section 13 of SARFAESI Act were not set into motion, consequently, bar under Section 34 of SARFAESI Act cannot operate and held that even in view of the Sale Deed dated 20.05.2017 and registration thereof on 30.05.2017, there will be no bar under Section 34 of SARFAES ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the learned Trial Court is at no fault in entertaining and decreeing the suit under Order XII rule 6, CPC in view of the fact that the respondents had no other alternative remedy available but to approach a Civil Court by instituting a suit for declaration for seeking the reliefs sought therein. Learned counsel for respondents, during the course of his arguments has taken this Court through the provisions of Section 13(1), 13(2) and 34 of SARFAESI Act to submit that as the appellant-bank had never initiated any proceedings against respondents, they could not have approached the DRT for initiating any proceedings against the appellant-bank under the SARFAESI Act or the RDDBFI Act and in any way, there was no occasion for them to do so. 12. This Court has patiently heard the learned counsel for both parties at considerable length and has expended sufficient time to go through all the documents on record. After giving note of the factual position and giving our thoughtful disposition to the legal issue qua maintainability of proceedings before a Civil Court under the present facts and pondering over the rights of a party like the appellant-bank herein, prior to proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is held as security for the debt: Provided further that where the management of whole of the business or part of the business is severable, the secured creditor shall take over the management of such business of the borrower which is relatable to the security for the debt;] (c) appoint any person (hereafter referred to as the manager), to manage the secured assets the possession of which has been taken over by the secured creditor; (d) require at any time by notice in writing, any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the secured creditor, so much of the money as is sufficient to pay the secured debt. 17. [Application against measures to recover secured debts]. (1) 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, 1 [may make an application along with such fee, as may be prescribed,] to the Debts Recovery Tribunal having jurisdiction in the matter within forty five days from the date on which such measure had been taken: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already been taken under Section 13(4) of SARFAESI Act. In case the aforesaid steps are not followed, the borrower is left remediless and the whole purpose of SARFAESI Act will be nugatory and redundant, which could never have been the intention of the legislature. 15. Lastly the words in respect of any action taken or to be taken forming a part of Section 34 of SARFAESI Act are in itself granting a two-fold protection to a party, essentially a bank, one when the action has already been taken signifying that the proceedings have well been initiated and the ball has been set rolling and another when the action is yet to be taken signifying that the proceedings are yet to be initiated and can be initiated in future. The word taken forming a part of Section 34 of SARFAESI Act is clear and unambiguous and nothing calls for this Court to dissect or determine the meaning thereof, however, the words to be taken forming a part of Section 34 of SARFAESI Act are the words which call for a determination by this Court, as the counsel for the appellant-bank heavily relying upon the same, has contended that the right of the appellant-bank to initiate proceedings against respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of any action taken or to be taken forming a part of Section 34 of SARFAESI Act were explained, but, in our view, rightly so, no extension of time for initiating such action to be taken was granted and it was held as under:- 50. That is to say, 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. 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 proceeding 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. 51. However, to a very limited extent 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 untenable which may n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions which are beyond the domain of the SARFAESI Act of the RDDBFI Act. The jurisdiction of a Civil Court has not been ousted and has only been restricted by introduction of the SARFAESI Act. The Hon‟ble Supreme Court in a recent judgment in Bank of Rajasthan Ltd. vs VCK Shares Stock Broking Services Ltd. 2022 SCC OnLine SC 1557, though pertaining to RDDBFI Act, which contains the para materia provisions as the SARFAESI Act, while dealing with the transfer of civil proceedings, has held as under:- 45 We are thus of the view that there is no provision in the RDB Act by which the remedy of a civil suit by a defendant in a claim by the bank is ousted, but it is the matter of choice of that defendant. Such defendant may file a counterclaim, or may be desirous of availing of the more strenuous procedure established under the Code, and that is a choice which he takes with the consequences thereof. 46 The Legislature did not, at any stage, make any further amendment for excluding the jurisdiction of the Civil Court in respect of a claim of a defendant in such a proceeding being filed along with the suit. The Legislature in its wisdom has also not considered it appro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndents, it is highly implausible to believe that the appellant-bank, with all the arsenal and force at their disposal, would have chosen not to proceed against the respondents and instead to proceed with the aforesaid documentation in favour of respondents and rely upon their statement of initiating proceedings against them in future. This is besides any logical reasoning. Appellant-bank cannot be allowed to approbate and reprobate. As the lid is closed and there is nothing surviving against the respondents, in such a scenario, any party like the respondents herein, who have neither been declared as defaulters nor against whom appellant-bank has initiated any action or against whom there is no scope of initiation of any action left, cannot be made to suffer the ignominy of eternal wait for no wrong attributable to it. Respondents cannot be left at the mercy of the appellant-bank, without any clarity and for no plausible reason. This, surely could never have been the intention of the legislature. 26. SARFAESI Act is a piece of beneficial legislation brought in to aid the financial institutions and others related with them or in transactions with them and thus cannot be seen from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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