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IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA
P.S. RANA, J.
Smt. Manu Goel W/o. Sh. Ashok Goel & others - Plaintiffs
Versus
Tarsem Chand Jain & others - Defendants
C.S. No. 96 of 2010
Decided On : 27-04-2016
SARFAESI Act - Jurisdiction of Civil Court - Section 34 of SARFAESI Act 2002
Fact of the Case:
The plaintiffs sought relief in a civil suit against the defendants, including a declaration that certain partnership deeds were illegal and fraudulent, possession of property, and recovery of a substantial amount. The defendants contended that the suit was not maintainable and that the jurisdiction of the civil court was barred under the SARFAESI Act 2002.
Finding of the Court:
The court found that the jurisdiction of the civil court relating to proceedings under the SARFAESI Act 2002 is indeed barred under Section 34 of the Act. However, it also held that the entire civil suit of the plaintiffs is not barred as the SARFAESI Act is in addition to other laws and not derogation to other law.
Issues: The issues included the maintainability of the suit, jurisdiction of the court, and the legality of the partnership deeds and possession of property.
Ratio Decidendi: The court's decision was based on the interpretation of Section 34 of the SARFAESI Act 2002, which bars the jurisdiction of the civil court in matters determined by the Debts Recovery Tribunal or the Appellate Tribunal under the Act. However, the court also considered Section 37 of the SARFAESI Act, which states that the Act is in addition to and not in derogation of other laws.
Final Decision: The court decided that the jurisdiction of the civil court relating to proceedings under the SARFAESI Act 2002 is barred under Section 34 of the Act, but the entire civil suit of the plaintiffs is not barred.
JUDGMENT :
P.S. Rana, J.
Decision upon preliminary issue No.9:
Hon’ble Division Bench of Himachal Pradesh High Court in OSA No. 11 of 2011 title Manu Goel and others vs. Tarsem Chand Jain and others decided on 19.8.2014 directed to decide issue No. 9 as preliminary issue. In compliance to direction of Hon’ble Division Bench dated 19.8.2014 issue No.9 is decided as preliminary issue.
Brief facts of the case:
2. In Civil Suit No. 96 of 2010 title Manu Goel & others vs. Tarsem Chand Jain & others plaintiffs have sought relief for declaration to the effect that reconstituted partnership deeds dated 9.2.2007, 10.9.2007, 15.12.2007 and 17.12.2007 entered between plaintiffs and defendant No.1 are wrong illegal and result of fraud played upon plaintiffs by defendants No. 1 and 2. It is pleaded that reconstituted partnership deeds are not binding upon plaintiffs and further declaration sought that plaintiffs are in fact partners of defendant No.3 and consequential relief of possession sought directing defendants No. 1 and 2 to handover vacant and peaceful possession of property of defendant No.3 to plaintiffs free from all encumbrances. Further declaration sought that pledging of sale deed dated 27.9.2003 property of co-defendant No.3 with co-defendant No.4 is wrong illegal and is result of fraud played upon plaintiffs. Further declaration sought that notice under Section 13 (2) of SARFESI Act 2002 dated 29.9.2010 and act of defendant No.4 in taking possession of the property of co-defendant No.3 on 9.12.2010 and thereafter publication of possession-cum-sale notice dated 16.12.2010 be held as wrong illegal and not binding upon plaintiffs and be set aside. Further decree of permanent prohibitory injunction restraining defendants No. 1, 2 and 4 from alienating or transferring or selling the property of co-defendant No.3 sought. In alternative relief for recovery of Rs.3,28,23,000/- (Rupees three crores twenty eight lac twenty three thousand) along with interest at the rate of 18% also sought.
3. Per contra written statement filed on behalf of co-defendants No. 1 to 3 pleaded therein that suit of the plaintiffs is not maintainable. It is pleaded that plaintiffs have executed reconstituted deeds in favour of defendants No. 1 to 3 voluntarily and handed over possession by assigning all the rights and liabilities and now they cannot wriggle out from their acts. It is further pleaded that plaintiffs have no cause of action against co-defendants No. 1 to 3. It is further pleaded that UCO bank co-defendant No.4 has obtained possession of suit property owned by co-defendant No.3 under the SARFASI Act 2002 and at present all assets of co-defendant No.3 are in possession of co-defendant No.4. It is further pleaded that Civil Court has no jurisdiction to entertain and try the present suit. It is further pleaded that remedy available to plaintiffs is only under the SARFAESI Act 2002. It is further pleaded that proper court fee not filed and suit of plaintiffs is barred by law of limitation act.
4. Per contra separate written statement filed on behalf of co-defendant No.4 UCO Bank pleaded therein that civil suit is not maintainable against co-defendant No.4 in view of SARFAESI Act 2002. It is further pleaded that as per Section 34 of the SARFAESI Act 2002 jurisdiction of Civil Court is barred relating to proceedings initiated under SARFAESI Act 2002. It is further pleaded that no injunction by Civil Court could be granted relating to proceedings initiated under SARFAESI Act 2002 as per Section 34. It is further pleaded that suit property is mortgaged with co-defendant No.4 bank and bank has already proceeded in consonance with procedure of SARFAESI Act 2002. It is further pleaded that when defendants failed to repay the outstanding loan amount within the stipulated period then co-defendant No.4 took possession of mortgaged property on 9.12.2010 under Section 13 (4) of SARFAESI Act 2002. It is further pleaded that possession-cum-sale notice dated 15.12.2010
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