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SUPREME COURT OF INDIA
UDAY UMESH LALIT, INDIRA BANERJEE, M.R. SHAH, JJ.
Canara Bank – Appellant
Versus
P. Selathal and others etc. etc. – Respondents
Civil Appeal Nos.1863-1864 of 2020 (Arising out of SLP(C) Nos.24819-24820 of 2019)
Decided On : 28-02-2020
Code of Civil Procedure, 1908 - Order VII Rule 11 - Partners of Firm availing loan from appellant-bank - The Firm and the guarantor mortgaging properties to avail the loan - Default in payment - DRT passing order for recovery proceeding - Recovery officer passing orders - Petitioners filing suit alleging fraud in partnership deed - Neither mortgage deed challenged nor appellant-bank made party - Petitioners in fact challenging Judgment and order of DRT in the suit - Such decree and order passed by Recovery officer appealable before Appellate Tribunal u/s 20, Recovery of Debts due to Banks and Financial Institutions Act, 1993 - Not maintainable in a civil court or even the High Court under Article 227 - Suit being vexatious and mala fide and filed after 15 years from the date of mortgage and 7 years from the date of passing of the decree by the DRT ought to be rejected. (Para 10, 11)
Facts of the case:
The appellant-bank sanctioned and granted a term loan of Rs.49,50,000/- to M/s Coimbatore Hatcheries, a partnership firm in which one Shri Ravichandran and G. Suresh Babu were the partners, in the year 1995. That the said loan was secured by mortgage of immovable property belonging to the said firm and the suit property belonging to one Shri M.C. Kallikutty – the guarantor who created equitable mortgage.
As the original borrower failed to repay the loan amount, the appellant-bank filed O.A. before the Debt Recovery Tribunal, in October, 1997 against the principal borrower, its partners as well as against the Guarantor. The OA filed by the appellant-bank came to be decreed by the DRT for Rs.57,35,770/- with 18% interest per annum in favour of the appellant-bank and against the principal borrower as well as Guarantor. A Recovery Certificate was issued accordingly.
The Recovery Officer, DRT issued a Demand Notice to the principal borrower, its partners and the Guarantor directing them to pay the sum of Rs.1,55,75,443/- as decreed. The Guarantor filed a writ petition denying his guarantee and creation of EMT and sought direction to the Crime Branch-CID to register an FIR and investigate into the matter. FIR came to be registered and the CBCID, filed a final report for the offences under Sections 120B read with 465, 466, 467, 468, 471, 420 and 419 of the IPC.
3.3 That in the year 2007 in pursuance of the Recovery Certificate in favour of the appellant-bank, the bank auctioned and sold the properties of the partnership firm and recovered Rs.38 lacs. After a period of five years from the date of the order passed by the DRT the Guarantor filed I.A. for setting aside the exparte decree before the DRT. The DRT dismissed the said I.A filed by the Guarantor and refused to condone the delay of 1337 days in challenging the exparte decree and for condonation of delay of 2392 days in filing the petition to set aside the exparte order.
After a period of 15 years from the date of mortgage and after seven years from the date of the decree passed by the DRT, the respondents herein filed O.S. in the Court of learned Second Additional Subordinate Court, Coimbatore against the Guarantor, principal borrower and its partners and the appellant-bank for a declaration to declare the order passed by the DRT as nonest, ultra vires, null and void and not binding on the suit property and also for a consequential permanent injunction restraining the Recovery Officer from interfering with their peaceful possession and enjoyment of the suit property. That the appellant-bank filed I.A. to reject the respective plaints under Order 7 Rule 11(d) of the CPC.
The learned trial Court dismissed the said applications and refused to reject the respective plaints.
The appellant-bank preferred two separate revision applications before the High Court. By the impugned common judgment and order, the High Court has dismissed the said revision applications.
Finding of the Court:
Suit being vexatious and mala fide and filed after 15 years from the date of mortgage and 7 years from the date of passing of the decree by the DRT ought to be rejected.
Result: Appeals allowed.
JUDGMENT :
M.R. SHAH, J.
1. Leave granted.
2. Feeling aggrieved and dissatisfied with the impugned common judgment and order dated 09.11.2017 passed by the High Court of Judicature at Madras in C.R.P.(PD) No. 2586/2013 and C.R.P.(PD) No. 2587/2013, by which the High Court has dismissed the said revision applications preferred by the appellant herein – Canara Bank and has confirmed the orders passed by the learned trial Court dismissing the applications preferred by the appellant herein to reject the respective plaints in exercise of powers under Order 7 Rule 11 of the CPC, original defendant no.5 – Canara Bank in O.S. No. 1269/2010, who is original defendant no.6 in O.S. No.233/2011, has preferred the present appeals.
3. The facts leading to the present appeals in nutshell are as under:
That the appellant – bank sanctioned and granted a term loan of Rs.49,50,000/- to M/s Coimbatore Hatcheries, a partnership firm in which one Shri Ravichandran and G. Suresh Babu were the partners, in the year 1995. That the said loan was secured by mortgage of immovable property belonging to the said firm and the land situated at Survey Nos. 472 and 488 of Sanganur Village of one Shri M.C. Kallikutty – Guarantor. That the land bearing Survey Nos. 472 and 488 of Sanganur Village of one Shri M.C. Kallikutty – Guarantor is the subject matter of dispute. At this stage, it is required to be noted that the said Shri M.C. Kallikutty stood as a Guarantor. That the said Shri M.C. Kallikutty (hereinafter referred to as the ‘Guarantor’) signed Guarantee Deed dated 28.09.1995 and created equitable mortgage by deposit of Title Deeds of the disputed lands in question.
3.1 That as the original borrower failed to repay the loan amount due to the appellant-bank, the appellant-bank filed O.A. No. 489 of 2001 before the Debt Recovery Tribunal, Chennai in the month of October, 1997 against the principal borrower, its partners as well as against the Guarantor. That on 31.10.2001, DRT, Chennai passed an order in O.A. No. 489/2001 to proceed exparte against the Guarantor. That O.A. No. 489/2001 was transferred to DRT, Coimbatore and was renumbered as T.A. No. 822/2002. That T.A. No. 822/2002 (previously O.A. No. 489/2001) filed by the appellant-bank came to be decreed by the DRT for Rs.57,35,770/- with 18% interest per annum in favour of the appellant-bank and against the principal borrower as well as Guarantor. That a Recovery Certificate dated 16.09.2003 was issued in favour of the appellant-bank for a sum of Rs.57,35,770/ with 18% interest per annum.
3.2 That Recovery Officer, DRT, Coimbatore issued a Demand Notice dated 11.11.2003 in R.P. No. 141/2003 to the principal borrower, its partners and the Guarantor directing them to pay the sum of Rs.1,55,75,443/- as decreed in T.A. No. 822/2002. That the Guarantor filed a writ petition before the High Court of Madras denying his guarantee and creation of EMT and sought direction to the Crime Branch-CID to register an FIR and investigate into the matter. That on directions of the High Court of Madras, FIR No. 152/2010 came to be registered on 2.11.2005. The CBCID, Coimbatore filed a final report under Section 173(2) of Cr.P.C. for the offences under Sections 120B read with 465, 466, 467, 468, 471, 420 and 419 of the IPC against the partners of the principal borrower and also against one K.V. Roshan Babu, Agricultural Extension Officer of the appellant – bank. It appears that thereafter the criminal proceedings against the officer of the bank – Roshan Babu came to be quashed by the High Court vide judgment and order dated 28.06.2011.
3.3 That in the year 2007 and in pursuance of the Recovery Certificate in favour of the appellant-bank, the bank auctioned and sold the properties of the partnership firm and recovered Rs.38 lacs. That thereafter after a period of five years from the date of the order passed by the DRT dated 27.08.2003, the Guarantor filed I.A. No. 1821 of 2008 in the year 2008 for setting aside the exparte decree d
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