High Court of Judicature at Madras
V. DHANAPALAN, J.
K.R. Radhakrishnan
Versus
K & N Trade, Rep by its Managing Partner, L. Kannan & Others
C.R.P.PD.No.906 of 2012
Decided On : 31-08-2012
Civil Court Jurisdiction - Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act,2002 - Sections 13, 17 and 34 - The court held that the Civil Court had no jurisdiction to entertain the suit or grant interim injunction as the matter fell under the purview of the Debts Recovery Tribunal. The court referred to relevant provisions of the Act and emphasized that the borrower's remedy was to approach the DRT to establish his rights. The court also highlighted the conflict between the SARFAESI Act and the Tamil Nadu Buildings (Lease & Rent Control) Act, and the overriding effect of Section 13(4) of the SARFAESI Act over local laws.
Fact of the Case:
The first respondent filed a suit for permanent injunction against the defendants, claiming tenancy rights over a property that was mortgaged to a bank. The trial court granted interim injunction, which was challenged in the revision petition.
Finding of the Court:
The court found that the Civil Court had no jurisdiction to entertain the suit or grant interim injunction, as the matter fell under the purview of the Debts Recovery Tribunal. The court emphasized the need for the first respondent to approach the DRT to establish his rights.
Issues: The main issue was the jurisdiction of the Civil Court to entertain the suit and grant interim injunction, considering the provisions of the SARFAESI Act.
Ratio Decidendi: The court held that the provisions of the SARFAESI Act clearly indicated that the borrower's remedy was to approach the DRT to establish his rights. The court also emphasized the conflict between the SARFAESI Act and the Tamil Nadu Buildings (Lease & Rent Control) Act, and the overriding effect of Section 13(4) of the SARFAESI Act over local laws.
Final Decision: The court set aside the order of the trial court and allowed the Civil Revision Petition, stating that the Civil Court had no jurisdiction to entertain the suit or grant interim injunction. The court also emphasized that the first respondent should approach the Debts Recovery Tribunal for redressal of his grievance.
1. Revision petitioner is the second defendant in the suit. The suit O.S.No.1757 of 2011 was filed by the first respondent/plaintiff on the file of District Munsif Court, Coimbatore, for the relief of permanent injunction, restraining the defendants, their men and agents from in any manner evicting the plaintiff from the property more fully described in the schedule except following due process of law. Pending the said suit, the first respondent also filed an interlocutory application I.A.No.2266 of 2011 for grant of interim injunction.
2. The case of the first respondent before the trial Court was that he was a firm actively associated with Reliance Telecommunication and engaged in the distribution of e-recharging coupons and peripherals of Reliance group of companies; for the purpose of the said business, the firm had taken on lease the suit premises on 27.05.2006 and 27.12.2006; since the process was a continuous one, the lease period was extended on 21.10.2011; while the activities of the firm were going on, the second respondent herein offered the suit property as security for his business without any intimation to him; on 20.10.2011, he noticed a paper publication stating that the properties were to be auctioned by the fourth respondent and, hence, he filed the suit and also the application for the reliefs stated above.
3. The above case of the first respondent was resisted by the revision petitioner, contending that he was the successful auction purchaser of the suit property; the first respondent was not at all in possession of the suit property from 2006 onwards and, when that be so, the first respondent had no right to file the suit and also the application.
4. The application I.A.No.2266 of 2011 was allowed by the trial Court by an order, dated 12.01.2012, granting interim injunction. Peeved at the said order, this revision petition is directed.
5. Learned Senior Counsel for the petitioner would primarily contend that the civil court has no jurisdiction to entertain the suit or for that matter but it is only the Debts Recovery Tribunal. He would rely upon a Division Bench decision of this Court in Sree Lakshmi Products v. State Bank of India, 2007 (2) CTC 193, wherein it was held as under :
"9. On a plain reading of the observations made in Transcore case, it is clear that the bank/FI is entitled to take actual possession of the secured assets from the borrower or from any other person in terms of Section 13 (4) of the SARFAESI Act. Any transfer of secured assets after taking possession of the same by the bank/FI shall vest in the transferee all rights in relation to the secured assets as if the transfer has been made by the owner of such secured assets. Any party aggrieved by such dispossession will have to take recourse to approaching the DRT under Section 17 (4) of the SARFAESI Act. If the party is dispossessed, not in accordance with the provisions of the Act, then the DRT is entitled to put the clock back by restoring the status quo ante. By virtue of Section 17 (4) read with Section 35 of the SARFAESI Act, if in a given case the measures undertaken by the secured creditor under Section 13 (4) come in conflict with the provisions of any State law, then notwithstanding to such conflict, the provisions of Section 13 (4) shall override the local law. Section 13 (13) of the SARFAESI Act operates as an attachment/injunction restraining the borrower from disposing of the secured assets and therefore, any tenancy created after such notice would be null and void. Any tenancy created by the mortgager after the mortgage in contravention of Section 65-A would not be binding on the bank/FI, and in any event such tenancy rights shall stand determined once action under Section 13 (4) has been taken by the bank/FI. When the petitioner is claiming a tenancy prior to the creation of mortgage and such tenancy is disputed by the bank the remedy of the petitioner is to approach DRT by way of an application under Section
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