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2024 Supreme(P&H) 71
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
GURBIR SINGH, J.
Central Bank of India – Petitioner
Versus
Parveen Jain and Another – Respondents
CR-3257 of 2021
Decided On : 16-01-2024
Advocate Appeared:
For the Petitioner: C.S. Pasricha.
For the Respondent: G.S. Madaan.
The court emphasized the importance of protecting the interests of the plaintiff and future buyers of the property, while also affirming the rights of the secured creditor under SARFAESI Act.
Headnote:
Attachment - Recovery of Debt - Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, Section 13(2) of SARFAESI Act, Order 38 Rule 5 CPC - 26 - The court discussed the order of attachment of mortgaged assets and the red entry in the revenue record, and its impact on the recovery process of the Bank. The court also considered the priority of the secured creditor under Section 26 of SARFAESI Act and the purpose of Order 38 Rule 5 CPC in bringing an unsecured debt under the category of secured debt.
Fact of the Case:
The petitioner, a bank, sought to set aside orders directing recital in the deed about the pendency of suit and red entry in the revenue record, which were impeding the recovery process. The respondent had filed a suit for recovery of debt and moved an application for attachment of properties of the defendant, who was a borrower and guarantor. The court had passed orders to protect the interest of the plaintiff and future buyers of the property.
Finding of the Court:
The court found that the orders did not affect the right of the petitioner-Bank and were passed to give notice to the buyer that a civil suit for recovery was pending against the owner of the property. The court held that the orders did not restrain the petitioner-Bank from proceeding against the property under SARFAESI Act.
Issues: The issues involved the impact of the orders on the recovery process of the Bank, the maintainability of the application filed by the petitioner-Bank, and the rights of the parties involved in the suit for recovery of debt.
Ratio Decidendi: The court held that the orders were passed to protect the interest of the plaintiff and future buyers of the property, and did not restrain the petitioner-Bank from proceeding against the property under SARFAESI Act. The court also found that the orders did not decide the rights of the petitioner-Bank and were not grounds to invoke the extraordinary jurisdiction of the Court.
Final Decision: The revision petition was found to be without merit and was dismissed accordingly.
JUDGMENT :
GURBIR SINGH, J.
1. Prayer in this revision petition filed under Article 227 of the Constitution of India is for setting aside the order dated 20.07.2020 (Annexure P-4) passed by learned Civil Judge (Junior Division), Ludhiana vide which respondent No. 2-defendant has been directed that in case of alienation of suit property, make recital in the deed itself about the pendency of suit and the Registrar was also directed to make red entry in this regard in the revenue record; and order dated 19.11.2020 (Annexure P-6) passed by learned Additional Civil Judge (Senior Division), Ludhiana whereby application moved by the petitioner-Bank under Section 151 CPC for clarification of order dated 20.07.2020, has been disposed of.
2. The brief facts of the case are that the petitioner is a body corporate constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and is carrying on business as Banker. Respondent No. 2 is the Director of M/s Dove Apparels Private Limited, which Company deals with the business of manufacturing of Woolen Kurti, Legging, Cardigans etc. at Ludhiana. Respondent No. 2 availed loan facilities from petitioner-Bank. The petitioner Bank is a secured creditor of M/s Dove Apparels Private Limited through its Directors respondent No. 2-Manisha Jain and Neeraj Kumar Jain as borrower. Respondent No. 2 is also the guarantor. To secure the interest of the Bank, various immovable/movable properties were mortgaged by respondent No. 2 which includes (i) the property i.e. factory land and building located at B-32, E-14/1674, Karabara Bahadur Ke Road, Ludhiana, measuring 1315 square yards in the name of M/s Dove Apparel Private Limited; (ii) equitable mortgage of residential property bearing plot No. 11, Abadi Sharman Ji Vatika near Raja Garden, Barewall Awana, Ludhiana bearing MC No. B-XIX-1405/50/11 measuring 463 square yards registered in the name of respondent No. 2-Manisha Jain and the movables of M/s Dove Apparels Private Limited were also charged in favour of the petitioner-Bank. Since the mortgagors/guarantors of said Company failed to maintain financial discipline, they were classified as NPA by the petitioner-Bank on 29.09.2019. The petitioner-Bank also issued notice under Section 13(2) of SARFAESI Act on 01.10.2019 (Annexure P-1). The petitioner-Bank also approached Debts Recovery Tribunal-III, Chandigarh for recovery of amount. The petitioner-Bank under the SARFAESI Act took symbolic possession of the mortgaged properties on 01.01.2020 and thereafter, physical possession in January, 2021.
2.1 It is further pleaded that during the pendency of recovery process of the Bank, respondent No. 1-Parveen Jain in connivance with respondent No. 2-Manisha Jain filed a Civil Suit No. 2870 of 2020 on 13.07.2020 (Annexure P-2) before the learned trial Court at Ludhiana for recovery of Rs.46 lacs including interest from respondent No. 2. Along with said suit, respondent No. 1-plaintiff also filed an application dated 13.07.2020 (Annexure P-3) under Order 38 Rule 5 CPC for attachment of property of respondent No. 2-defendant which are secured assets with the petitioner Bank. Vide order dated 20.07.2020 (Annexure P-4), said application was allowed and respondent No. 2-defendant was directed that in the event of alienation of properties, mentioned above, she would specifically recite in the deed of alienation itself about the pendency of suit so that the alienee becomes aware of the pendency of suit.
2.2 The petitioner-Bank, on coming to know about the order dated 20.07.2020, immediately moved an application dated 09.11.2020 (Annexure P-5) under Section 151 CPC seeking clarification of order dated 20.07.2020 that the attachment order on the mortgaged property is a clog on the recovery action of the Bank. The contention raised by the petitioner-Bank that it being mortgagee is having priority to the secured creditor under Section 26 of SARFAESI Act and the purpose of Order 38 Rule 5 CPC is not to br
