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Gujarat High Court
Judgename :K.A.Puj
ORIENTAL BANK OF COMMERCE - Appellant
Versus
NARESH KHUSHALDAS GANGTANI - Respondent
Special Civil Application 1362 Of 2005
Decided On : 06/15/2007
Whether after initiation of recovery proceedings by Bank under Act of 2002 against borrower, Civil Court has jurisdiction to entertain suit in that regard?
Head Note :
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Central Act 54 of 2002) - Sections 12, 13(2), 13(4), 14, 17(1), 17(3), 34 and 35 - Civil Procedure Code, 1908 (Central Act 5 of 1908) - Section 9-A, Order 7 Rules 10 and 11, 14(2) and 15(1) - Security Interest (Enforcement) Rules, 2002-Rules 8, 8(4), 9(6) and 9(9) - The Recovery of Debts Due to Banks and Financial Institution Act, 1993 (Central Act 51 of 1993) - Constitution of India, 1950 - Articles 105(1) and (2), 143, 226 and 227 - Suit for declaration and permanent injunction - Application - Claiming lack of jurisdiction of Civil Court - Finding as to - Sustainability - Father of the respondent plaintiff created an equitable mortgage in favour of Bank by depositing the original title deeds of the impugned property with petitioner Bank and contacted loan and other facilities - On non-payment of instalments and interest by respondent plaintiff the Bank initiated appropriate proceedings under the Act of 2002 - In order to frustrate recovery of loan by petitioner Bank, respondent who is son of borrower filed suit in Civil Judge Court claiming himself tenant of the suit property and obtained an injunction order against petitioner Bank - The petitioner moved an application Exhibit-12 on 04.01.2005 raising the preliminary issue for rejection of the plaint on ground of lack of jurisdiction by Civil Court in the matter - The Civil Judge erroneously rejected the said petition - After complying with the provisions of the Act and Rules the authorised officer of Bank had taken the possession of the property - The petitioner Bank brought all the facts to the notice of the trial Court and alleged that no Civil Court has jurisdiction to entertain any suit or proceedings in respect of any matter which a DRT is empowered by or under the Act to determine - The petitioner Bank has also made reference to Section 35 of the Act and submitted the provisions of the Act shall have effect not-withstanding therewith contained in any law - Despite these clear statutory provisions the trial Court erroneously entertained the suit and granted injunction and rejected the application Exhibit-12 presented by petitioner Bank - Court held that impugned order by Civil Judge Court is without jurisdiction and cannot be sustained - The Civil Judge has not jurisdiction to entertain suit as well, therefore, plaint is also liable to rejected.
Held :
Despite the fact, that respondent-plaintiff who is son of the borrower and in whose property he has shown himself as the tenant, has not disclosed anything about the issuance of notice under Section 13(2); publication of notice in the newspaper, panchnama, possession notice etc, and by concealing all these facts he has obtained an exparte injunction from the Court. On service of the notice on the petitioner Bank, an application Exhibit-12 was filed raising preliminary objections in respect of jurisdiction of the Civil Court and filing of civil suit by the respondent-plaintiff is was made clear by the petitioner Bank, in the said application that it has already invoked the provision of the Act and has already taken over the symbolic possession of the property in question. The Bank has also brought to the notice of the trial Court the relevant provisions contained under Sections 34 and 35 of the Act. It was made clear in the application that no Civil Court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a DRT is empowered by or under this Act to determine and no injunction shall be granted by a Court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act,
In view of provision of law the Civil Court has no jurisdiction to entertain, deal with or dispose of any suit or proceeding in respect of any matter or in respect of action or measure taken or to be taken by the Bank/Fls or by the secured creditor for the enforcement of security, interest, credit in the secured assets. The petitioner Bank has also submitted in the said application that Chapter-III of the Act provides enforcement of security interest. Section 13 provides enforcement of security interest and Section 17 provides remedy to the aggrieved person by virtue of initiation of action under Section 13(4) of the Act. It is, therefore, urged that the effective, alternative speedy and statutory remedy of an appeal as provided under Section 17 of the Act is available to the respondent-plaintiff. [Para 32]
Court is of the view that the Civil Judge, has no jurisdiction to entertain the suit and to grant any relief in the matter. The impugned order passed by the Civil Judge rejecting the application Exhibit-12 raising preliminary issue regarding jurisdiction is hereby quashed and set aside. The learned 5th Joint Civil Judge (S.D.) Jamnagar has no jurisdiction to entertain the Regular Civil Suit No. 647 of 2004 and to pass any interim order therein. The plaint in the said suit deserves to be rejected and it is accordingly rejected. [Para 34]
Law Laid Down :
The provisions under the Act of 2002 have the effect notwithstanding anything in consistent therewith contained in any other law.
Case Law Analysis :
Kiran Singh vs. Chaman Paswan, AIR 1954 SC 340 [Para 27];; Intazamiya Committee Id Gah. Morar vs. M.P. Wakf Board, Bhopal, AIR 1996 M.P. 47 [Para 27];; Ajmer Kaur & Ors. vs. Punjab State & Ors., AIR 1991 P & H 12 [Para 28];; Tej Kiran Jain & Ors. vs. N. Sanjiva Reddy & Ors., AIR 1971 Delhi 86 [Para 29];; Transcore vs. Union of India & Anr., 2007 (I) BC 33 (SC) = AIR 2007 SC 1249 [Para 30].-Relied on
Conclusion :
In view of clear provisions under the Act of 2002, Civil Court has not jurisdiction to entertain the impugned suit and it is liable to rejected.
Cases Referred :
Privy Council vs. National Bank of India Ltd., 1918 ILR (XL) 598;; Fatehchand Ganeshram Agarwal vs. Wasudeo Shrawan Dalal, AIR (35) 1948 Nagpur 334;; Smt. Indra vs. Raj Bali Tiwari, AIR 1996 All. 559;; Ananti vs. Chhannu, 1930 All LJ 256 = AIR 1930 All 193 (FB);; D.N. Rege vs. Muhammad Haider, AIR 1946 All 379 (FB);; Abdul Waheed Khan vs. Bhawani & Ors., AIR 1966 SC 1718;; Mohd. Yunus vs. Mohd. Mustaqim & Ors., AIR 1984 SC 38;; Narendra Ray vs. Kunjabehari Ray & Anr., AIR 1992 Ori. 217;; M/s. Lakhara & Co. vs. Shivakaran Bhanwar Lal Kila, AIR 1995 Raj 17;; Kaushiklal Nanalal Parikh vs. Mafatlal Industries Ltd. & Ors., 1995 (1) GLR 557;; Saurashtra Cement & Chemical Industries Ltd. vs. Esma Industries, 1989 (2) GLR 1263;; Major Ramchandran & Anr. vs. Mrs. Rema Jayarajan, 1999 (III) CLT 96 (DB);; B.S. I. Ltd. vs. CRISTIAN-C & Ors., AIR 1999 Bom 320;; Dhruv Green Field Ltd. vs. Hukum Singh & Ors, 2002 (8) SRJ 126 SC;; Bharat Heavy Electricals Ltd. vs. General Contractor Company, 1996 (1) GLR Vol. XXXVII.
Decided in Favour of :
Petitioner
Petition Allowed
( 1 ) THE petitioner - original defendant i. e. Oriental Bank of Commerce has filed this petition under Articles-226 and 227 of the constitution of India, praying for quashing and setting aside the order dated 4. 1. 2005 passed by the learned 5th Jt. Civil Judge (S. D.) at Jamnagar, dismissing the preliminary objection / application below ex. 12 filed by the petitioner Bank - original defendant in Regular Civil Suit No. 647 of 2004. The petitioner Bank has also prayed for declaration that the learned 5th Jt. Civil judge (S. D.) at Jamnagar has no power, authority and/or jurisdiction to try, entertain and dispose of the Civil Suit of the nature filed by the present respondent - original plaintiff.
( 2 ) THIS Court has issued notice on 4. 2. 2005 and by way of interim relief this court has restrained the trial Court from deciding the matter till this petition is heard by this Court. This Court has thereafter issued rule on 22. 3. 2005 and interim relief granted by this Court earlier was ordered to be continued.
( 3 ) IT is the case of the petitioner -Bank that the petitioner - Bank is the original defendant, against whom the respondent has filed the suit being Regular civil Suit No. 647 of 2004 in the Court of learned 5th Jt. Civil Judge (S. D.) at jamnagar, which is pending for hearing and final disposal in the said Court.
( 4 ) THE petitioner - Bank, original defendant has granted and sanctioned credit facilities to the tune of Rs. 4. 90 lacs by way of Term Loan as well as Rs. 2. 50 lacs by way of Cash Credit (against hypothecation)carrying interest at the rate of 15. 24% per annum with monthly interest, to one Shri khushaldas Bhagwandas Gangtani (hereinafter referred to as the borrower )sole proprietor of M/s. Laxmi Beverages carrying on his business activities at No. 44 gidc, Phase-II Dared, Jamnagar. The petitioner Bank granted the various credit facilities to the said borrower, the father of the respondent, on various terms and conditions contained in letter of sanction issued by the petitioner Bank a original defendant to the said borrower. It was one of the stipulations of the sanctioned terms of the said advances that the said borrower was required to create equitable mortgage/ charge over the immovable property belonging to the said borrower being lying and situated at Plot No. 60 Digvijay Plot on the Land of Survey No. 433/h/4 paiki part "b" paiki on the ground floor having New sheet No. 379 of Survey No. 2858 admeasuring approximately 690 Sq. feet belonging to the said borrower. Under the guise of being a tenant of the suit property, the respondent has filed Regular Civil Suit no. 647 of 2004 in the Court of learned Civil judge (S. D.) at Jamnagar and the petitioner bank filed preliminary objection / application below Ex. 12 in the said suit, which came to be dismissed by an order dated 4. 1. 2005 passed by the learned 5th Jt. Civil Judge (S. D.) at Jamnagar, which is under challenge in the present petition.
( 5 ) MR. KM. PARIKH, learned advocate appearing for the petitioner Bank has submitted that the borrower has executed an agreement on 15. 2. 2000 and deposited the original title deed in respect of immovable property and thereby created first and exclusive equitable mortgage/charge in favour of the petitioner Bank so as to secure repayment of various credit facilities granted by the petitioner Bank to the borrower. He has further submitted that the said borrower was not paying regular installment and interest to the petitioner Bank and, therefore, the petitioner was constrained to issue various notices to the borrower and he was called upon to regularize the two accounts to the satisfaction of the petitioner bank. Despite this fact, the borrower failed and neglected to do so and had also failed and neglected to regularize the two accounts with the petitioner Bank. The petitioner bank was therefore left with no other alternative except to initiate the appropriate proceedings available under the provi
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