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2019 Supreme(UK) 453

IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL
Sharad Kumar Sharma, J.
Sheetal Joshi - Appellant
Versus
State Bank of India and others - Respondents
First Appeal No. 100 of 2019
Decided On : 20-06-2019

Advocates:
Advocate Appeared:
For the Appellant :Mrs. Neetu Singh, Advocate along with Mrs. Lata Negi, Advocate
For the Respondent:Mr. Bhupendra Singh Bisht, Advocate on behalf of Mr. D.S. Patni, Advocate

Headnote:

SARFAESI Act - Property Dispute - Section 34 of SARFAESI Act, 2002 - Summary of Acts and Sections: SARFAESI Act, 2002 - Section 34 - The court discussed the implications of Section 34 of the SARFAESI Act, 2002, which bars the jurisdiction of civil courts to entertain suits or proceedings in respect of matters determined by the Debts Recovery Tribunal or the Appellate Tribunal. The court highlighted the statutory remedy of preferring an appeal before the DRT under Section 17 of the Act and emphasized that the civil court had no jurisdiction to entertain suits or proceedings in matters falling under Section 13(4) of the SARFAESI Act. The court referred to various judgments, including Jagdish Singh v. Heeralal and others, to support its decision.

Fact of the Case:

The appellant purchased a property without being aware of its mortgage and subsequent proceedings initiated under Section 13 of the SARFAESI Act, 2002. The appellant filed a suit seeking a decree of permanent injunction against the interference by the respondent bank. The court found that the suit was not maintainable due to the bar created by Section 34 of the SARFAESI Act, 2002, and dismissed the suit.

Finding of the Court:

The court found that the suit was not maintainable due to the specific bar created by Section 34 of the SARFAESI Act, 2002, and dismissed the suit based on the proposition laid down by the Hon’ble Apex Court in Jagdish Singh v. Heeralal and others.

Issues: The main issue was whether the suit would be barred by the provisions contained under the SARFAESI Act, 2002, and whether the Civil Court had jurisdiction to deal with the subject matter of the suit.

Ratio Decidendi: The court held that the suit was not maintainable due to the bar created by Section 34 of the SARFAESI Act, 2002, and dismissed the suit based on the statutory remedy of preferring an appeal before the DRT under Section 17 of the Act.

Final Decision: The First Appeal was dismissed by the court based on the statutory bar created by Section 34 of the SARFAESI Act, 2002, and there was no order as to cost.

JUDGMENT :

Sharad Kumar Sharma, J.

Though, this happens to be a First Appeal, apparently against a dismissal of a Civil Suit being Suit No. 92 of 2018, Sheet al Joshi v. State Bank of India and another branch Pithoragarh, whereby, the learned Civil Judge (Senior Division), Pithoragarh, had dismissed Suit of the plaintiff (appellant herein) on the ground that the relief sought for in the Suit was barred by the provisions contained under Section 34 of the Securitisation and Reconstruction o f Financial Assests and Enforcement of Security Interest Act, 2002 (SARFAESI Act, 2002)

2. The brief facts, which are involved in the case at hand are that the seller of t he plaintiff/appellant was a borrower of a loan from the respondent/Bank to the tune of Rs. 2,90,00,000/- (Rupees Two Crore Ninety Lakh only). The endorsement pertaining to mortgaging of the property in question, which stands recorded in the khatoni in khata No. 1 of 142 3 to 1428 fasli it shows that the property was mortgaged as against the financial assistance extended by the respondent/bank to the seller of the plaintiff/appellant by Mr. Rajesh Samant.

3. The learned counsel for the appellant contends that the appellant is a purchaser of the property in question from the borrower, by virtue of sale deed dated 28th September 2016, and as far as the issue pertaining to an extension of loan and mortgage of the property against the loan extended was not ma de aware or was in the knowledge of the appellant prior to his purchase on 28th September 2016. Consequently, when did the respondent/bank has initiated the proceedings under Section 13 of the SARFAESI Act, 2002, too was not known to the plaintiff/appellant and since the appellant has stepped into the shoes of the principal borrower after the purchase being made by him by the sale deed dated 28th September 2016, the necessity arose for the plaintiff/appellant to institute a Suit before the Civil Court being Suit No. 92 of 2018, Sheetal Joshi v. State Bank of India and others

4. In the suit in question, the plaintiff/appellant had sought for the following reliefs:-

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5. As per the relief clause, he has sought for a decree of permanent injunction as against the defendant/respondent, seeking a decree of restraint as against the interference being caused by the defendant/respondent to the suit property lying in khata No. 19, which stood mortgaged for the purposes of extension of loan by the seller of the plaintiff/appellant with the bank.

6. The argument which has been extended by the learned counsel for the plaintiff/appellant, is to the effect that the appellant was not made aware of the fact that the property having been mortgaged by his seller and without being made aware of the said fact that the plaintiff/appellant had purchased the property in question which according to him, was a bonafide purchase made by the plaintiff/appellant. But, on the basis of the fact, which has been brought on record by the plaintiff/appellant him self shows that as against the loan advance extended to the seller of the plaintiff/appellant, the respondent/bank had already initiated the proceeding by issuing notices under Section 13 (2) of the SARFAESI Act, 2002 on 28th June 2017, and thereafter an action under sub Section (4) of Section 13 of the Act has been taken by the respondent No. 2 on 30th October 2017, and consequent thereto, the property was put to for e-auctioning by the respondent. Even so much so, that after the alleged purchase when the application for

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