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IN THE HIGH COURT AT CALCUTTA
KRISHNA RAO, J.
Swastik Project Private Limited – Plaintiff
Versus
Ratnakar Commercial Private Limited and Others – Defendants
IA No. GA 7 of 2022, CS No. 109 of 2018
Decided On : 12-06-2024
Jurisdiction - Civil Procedure - RDDBFI Act, 1993 - Sections 17, 18, 34 - The court interpreted the jurisdictional bars under the RDDBFI Act, emphasizing that fraud claims are outside the purview of the Debt Recovery Tribunal, allowing the civil suit to proceed.
Fact of the Case:
The plaintiff filed a suit seeking declarations regarding ownership and possession of a property, claiming that the defendants had no rights over it due to fraudulent actions. The defendants argued that the suit was barred under the RDDBFI Act, 1993.
Finding of the Court:
The court found that the plaintiff had established a cause of action based on specific allegations of fraud, which could not be adjudicated by the Debt Recovery Tribunal, thus allowing the suit to proceed.
Issues: Whether the suit was barred under the RDDBFI Act, 1993, and whether the plaintiff had disclosed a valid cause of action.
Ratio Decidendi: The court held that allegations of fraud must be adjudicated in civil court, as they fall outside the jurisdiction of the Debt Recovery Tribunal, which is limited to debt recovery matters.
Result: The application for rejection of the plaint was dismissed.
JUDGMENT :
KRISHNA RAO, J.
1. The defendant no. 1 has filed the present application being G.A. No. 7 of 2022 praying for rejection of plain under Order VII Rule 11 of the Civil Procedure Code, 1908.
2. The plaintiff has filed the present suit in C.S. No. 109 of 2018 praying for the following reliefs:
(a) Declaration that the defendant no. 6 of which the plaintiff is a shareholder is the absolute lawful owner of the said property being Premises No. 201, 202 and 2023, Old China Bazar Street, Kolkata-700001 morefully described in the Schedule written hereunder free from all encumbrances, charges, liens, attachments, whatsoever.
(b) Order for delivery of vacant, peaceful and khas possession of the said property being premises Nos. 201, 202 and 203 Old China Bazar Street, Kolkata-700001 morefully described in the Schedule written hereunder to the defendant no. 6.
(c) Declaration that the defendant No. 1 has no right, title or interest in the said property being the premises No. 201, 202 and 203 Old China Bazar Street, Kolkata-700001 morefully described in the schedule hereunder.
(d) Declaration that the defendants Nos.2 and 3 had also never acquired and could not have acquired any right, title or interest in the said property morefully described in the schedule hereunder.
(e) Declaration that any arrangement between the defendant no. 2 and the directions of the defendant no. 6 for mortgaging the Schedule property in favour of the defendant no. 3 was unauthorized, illegal, null and void.
(f) Perpetual injunction restraining the defendant no. 1, its agents servants and assigns from in any manner dealing with or disposing of or encumbering any part or portion of the suit property and/or changing the nature and character of the suit property as morefully described in the schedule hereunder.
(g) Declaration that all sale, mortgage and/or any other form of transfer of right, title and interest of the said property being premises No. 201, 202 and 203 Old China Bazar Street, Kolkata-700001 since the time when the defendant No. 6 became the owner of the said property by way of the registered conveyance deed 31st March 1986, are illegal, null and void.
(h) All documents of sale, mortgage and/or transfer of any right, title and interest in the said premises No. 201, 202 and 203, Old China Bazar Street, Kolkata-700001 since the defendant No. 6 became the owner of the said property by the registered conveyance dated 31st March 1986, be adjudged void, delivered up and cancelled.
(i) Declaration that all resolutions of board meeting and/or general meeting that the defendants may rely upon and/or disclose in connection with and/or in aid of transfer, mortgage or the like of the said premises Nos.201, 202 and 203, Old China Bazar Street, Kolkata-700001 by the defendant no. 6, are illegal, null and void.
(j) The defendants be directed to disclose on oath full particulars of all dealings and transactions by way of sale, mortgage or other form of transfer of the Premises Nos.201, 202 and 2023, Old China Bazar Street, Kolkata-700001 since the purchase of the said property by a registered deed of conveyance dated 31st March, 1986.
(k) An enquiry be made into damages and decree be passed for such sum as may be found due and payable upon such enquiry and in favour of such defendants as may be found entitled for compensation.
(l) Declaration that any general meeting of the company held subsequent to 29th September, 2015 authorizing the company and/or directors to file an application to strike off its name from the register of companies maintained by the Registrar of Companies, West Bengal, are null and void and not binding on the company and its shareholders including the plaintiff.
(m) Perpetual injunction restraining the defendants Nos.4 and 5, their agents, servants and assigns from acting as directors of the defendant no. 6 and/or intermeddling in the affairs of the said defendants.
(n) A declaration that all purported Board Meeting and all purported resolutions of the
AI
Fraud claims are not within the jurisdiction of the Debt Recovery Tribunal, allowing civil suits to proceed despite jurisdictional bars under the RDDBFI Act.
The bar under Section 34 of the SARFAESI Act cannot be extended to claims involving collusion and fraud, which are better addressed before the Civil Court.
Once a party submits to the jurisdiction of the DRT and suffers an order, they cannot pursue their remedy before the Civil Court.
Application against measures to recover secured debts – Jurisdiction - Jurisdiction of Civil Court is not ousted. However, Civil Courts have to be extremely cautious while granting any interim order ....
Point of law: Even when the allegations made in the plaint are taken to be correct as a whole on their face value, if they show that the suit is barred by any law, or do not disclose cause of action,....
Civil courts can adjudicate suits involving fraud and complex factual disputes, despite the SARFAESI Act's jurisdictional limitations.
Civil Courts retain jurisdiction to hear suits alleging fraud against secured creditors, despite Section 34 of the SARFAESI Act, provided specific allegations are made.
Civil Courts retain jurisdiction to hear fraud allegations only when not covered by the DRT's jurisdiction in SARFAESI Act cases.
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