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2011 Supreme(Cal) 1545
IN THE HIGH COURT OF CALCUTTA
I.P. Mukerji, J.
EXCEL DEALCOMM PRIVATE UMITED
VS.
ASSET RECONSTRUCTION COMPANY (INDIA) LIMITED
G.A. No. 1225 of 2011; C.S. No. 299 of 2007
Decided On : December 22, 2011
Advocate Appeared:
Bimal Kumar Chatterjee, Surojit Mitra, Rudraman Bhattacharya, Pratik Ghose, Uttiyo Mallick jor the plaintiff;
Jishnu Saha, Sushmita Banerjee, Arunima Moitra. T. Dey for the defendant No.1;
Saptansu Basu. Abhijit Sarkar. Soumya Roy Choudhury for the defendant No.4.
The Debts Recovery Tribunal's jurisdiction is confined to examining whether the measure taken was under the SARFAESI Act and no more.
Headnote:
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Sections 5, 13(4), 17, 34 - Civil Procedure Code, Order 7 Rule 11 - Forum Selection Clause - Jurisdiction - Suit for Specific Performance - Mortgage/Charge of Immovable Property - SARFAESI Act - Applicability - Plaintiff seeks specific performance of agreement dated 13th February, 2007 for sale of mortgaged property by first defendant to plaintiff under Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Whether suit is barred by law - Held, suit is not barred by law - No affirmative answers to questions whether first defendant is securitisation company or reconstruction company and whether it has acquired rights or interest in financial assets of ICICI Bank Ltd relating to third defendant under the Act are available in plaint - Debts Recovery Tribunal's jurisdiction is confined to examining whether measure taken was under the Act and no more - Allegation about assignee of secured creditor not performing agreement for transfer with third party, third party claiming specific performance thereof, is beyond jurisdiction of Debts Recovery Tribunal.
Fact of the Case:
Plaintiff, an intending transferee from the first defendant, entered into an agreement for sale of mortgaged property dated 13th February, 2007 under Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 with the first defendant. Plaintiff sought specific performance of this agreement. The first and second defendants filed an application under Order 7 Rule 11(a) and (d) of the Code of Civil Procedure, seeking revocation of leave under Clause 12 of the Letters Patent and return of the plaint, on the grounds that the suit was barred by law under Section 34 of the SARFAESI Act.
Finding of the Court:
The court held that the suit was not barred by law. The court found that there were no affirmative answers to the questions of whether the first defendant was a securitisation company or reconstruction company and whether it had acquired rights or interest in the financial assets of ICICI Bank Ltd relating to the third defendant under the SARFAESI Act. The court further held that the Debts Recovery Tribunal's jurisdiction was confined to examining whether the measure taken was under the Act and no more, and that an allegation about an assignee of a secured creditor not performing an agreement for transfer with a third party, the third party claiming specific performance thereof, was beyond the jurisdiction of the Debts Recovery Tribunal.
Issues: 1. Whether the suit is barred by law under Section 34 of the SARFAESI Act? 2. Whether the Debts Recovery Tribunal has jurisdiction to try the case?
Ratio Decidendi: 1. The court held that the suit was not barred by law as there were no affirmative answers to the questions of whether the first defendant was a securitisation company or reconstruction company and whether it had acquired rights or interest in the financial assets of ICICI Bank Ltd relating to the third defendant under the SARFAESI Act. 2. The court held that the Debts Recovery Tribunal's jurisdiction was confined to examining whether the measure taken was under the Act and no more, and that an allegation about an assignee of a secured creditor not performing an agreement for transfer with a third party, the third party claiming specific performance thereof, was beyond the jurisdiction of the Debts Recovery Tribunal.
Final Decision: The court dismissed the application filed by the first and second defendants under Order 7 Rule 11(a) and (d) of the Code of Civil Procedure.
J.P. Mukerji, J.
This is an application made by the first and second defendants in the suit. The suit was filed sometime in 2007.This application was filed on 25th April, 2011.Although the prayers in it are for revocation of leave under Clause 12 of the Letters Patent and for return of the plaint the grounds taken in this application were akin to those in Order 7 Rule 11 (a) and (d) of the Code of Civil Procedure.
FACTS:
2. Before examining the merits of this application the facts of this case have to be noted in brief.
3. It appears that the third defendant was a borrower of I.C.I.C.I Bank Ltd. It had mortgaged or charged its substantial assets which included immovable properties, as security. On 30th March, 2004 the I.C.I.C.I Bank Ltd. had assigned their rights to the first defendant. The second defendant is an officer of the first defendant.
4. On 13th February, 2007 the first defendant agreed to transfer to the plaintiff this right for a consideration of Rs. 7.50 crores. It is categorically mentioned in paragraph 2 of the plaint that this sale was being made under section 13 (4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
5. The important terms of this agreement dated 13th February, 2007 were that the sum of Rs. 7.50 crores was to be paid in stages as provided by the agreement. The entire consideration was payable on or before 31st March, 2010. The agreement would be performed by execution of a sale certificate by the first defendant in favour of the plaintiff by 1st June, 2007, upon inter alia, creation of security by the latter as stated in Clause 2 of the agreement. Upon the creation of this security the first defendant would deliver the assets to the plaintiff buyer free from any security, interest, pledge guarantee etc. The security mentioned in Clause 2 were letters of credit, pledge of shares and charge on the assets as mentioned in Schedule I of the agreement. Schedule I inter alia, referred to mortgage of immovable properties. Execution of the Sale Certificate was also conditional upon the payment of earnest money by the plaintiff.
6. The plaintiff seeks specific performance of this agreement dated 13th February, 2007 by a direction upon the first and second defendants to execute the sale certificate in their favour, in terms of the agreement, as claimed in claim (a) of the plaint.
FORUM SELECTION CLAUSE:
7. The first point taken arises out of the Forum Selection Clause. The learned counsel for the applicants relies on two clauses. The first is Clause -1 which is copied hereunder:
"4. Payment & Jurisdiction
The payments/cheque shall be drawn and made payable in Mumbai. The ......jurisdiction shall be Courts of Mumbai."
The second is 9 (e) (ix) which is also reproduced below:
"ix) Disputes, if any, shall be subject to jurisdiction of Mumbai Courts/Tribunals only."
It is argued that use of the word "only" ousts the jurisdiction of all other Courts except those in Mumbai.
8. The learned Counsel for the applicants cited the case of Shriram City Union Finance Corporation Ltd. vs. Rama Mishra reported in 2002 (9) SCC 613. But what is decisive, in my opinion, is the participation of these defendants in the proceeding. In the order dated 6th January, 2011 of San jib Banerjee, J. at page 15 of the Affidavit-in-Reply, in G.A. No. 429 of 2011 it is recorded that these defendants were represented by Counsel who "do not make any submission". His Lordship passed orders for amendment of the plaint, service of the amended plainly filing of written statements and so on.
9. In the case of Harshad Chiman Lal Modi vs. DLF Universal Ltd. And Another reported in (2005) 7 SCC 791 the Supreme Court clearly opined that there were three elements of jurisdiction, namely, territorial, pecuniary and subject matter. It is possible to waive territorial and pecuniary jurisdiction, but it is not so possible to waive, in every case, lack of jurisdiction over the subject matter. The order pa
