IMPORTANT POINT
Debt recovery proceeding – No Civil Court can exercise jurisdiction to entertain any suit or proceeding in respect of any action taken in pursuance of any power conferred by SARFAESI Act.

JUDGMENT (ORAL )

Rule returnable forthwith. With the consent of learned advocates appearing for the respective parties, the matter is taken up for final hearing. Learned advocate Mr.Mehul Mehta waives service of notice of rule on behalf of respondent nos.3.

2. The present Civil Revision Application is filed challenging the order passed, below Exhibit 17, in Special Civil Suit No.5 of 2023, whereby the Trial Court has rejected the application filed under Order VII Rule 11 of the Code of Civil Procedure, 1908 (for short “the Code”) by an order dated 07.03.2023.

3. For the sake of brevity and convenience, the parties are referred to as per their original status as that in the suit.

4. The brief facts arising in the present suit are that the plaintiff filed Civil Suit No.5 of 2023, against the defendants wherein a relief has been sought that pursuant to the mortgage deed dated 13.03.2013, which is registered with Sub-Registrar Rajula under Sr. No.466, financial assistance of Rs.50 lakhs was sanctioned to the plaintiff and as the plaintiff defaulted in repayment of the loan amount, the account of the plaintiff was classified as Non Performing Asset, in accordance with RBI guidelines on 29.07.2021 and pursuant there to, measures under Section 13(4) of the Securitisation And Reconstruction Of Financial Assets And Enforcement Of Security Interest Act, 2002 (for short “SARFAESI Act”) took place and possession of the secured assets has been taken on 06.02.2023, and the plaintiff filed a suit and sought for a relief that the defendants be restrained from transferring the suit property by E-Auction and in view of the settlement arrived on 03.03.2023, the defendant be directed to recover an amount of 10,000/- ¹ per month as installment.

5. The defendant appeared in the said suit and filed an application vide Exhibit 17, under the provisions of Order VII Rule 11 of the Code. It is the case of the defendant that the defendant has taken measures under Section 13(4) of the SARFAESI Act, and the physical possession of the suit property is also handed over to the defendant and by way of mortgage deed, dated 13.03.2013, the suit property was a secured asset and in view the fact that action has been taken under Section 13 of the SARFAESI Act and as the plaintiffs failed to pay the due amount, even after the plaintiff filing S.A. No.533 of 2022, before Debt Recovery Tribunal, Ahmedabad, and during the pendency of the said proceedings, the plaintiff approached for One Time Settlement proposal which was sanctioned by the defendant Bank and the plaintiff had agreed to make a payment of 45 lakhs, ¹ being the amount of One Time Settlement, as per the One Time Settlement letter, however, plaintiff failed to keep their commitment and failed to pay the outstanding amount. After considering the plaint and the documents annexed with the plaint, the Trial Court rejected the said application. Aggrieved by the said order the present Civil Application has been filed.

6. Learned advocate for the defendant has mainly argued that the measures that have been taken by the defendant are under Section 13(4) of the SARFAESI Act, which reads as under:-

“13.(4) In case the borrower fails to discharge his liability in full within the period specified in sub-section (2), the secured creditor may take recourse to one or more of the following measures to recover his secured debt, namely:

(a) take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset;

(b) [take over the management of the business of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset: [Substituted by the Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Act, 2004, Section 8 (30 of 2004), for Cl.(b) (w.e.f. 11.11.2004).]

Provided that the right to transfer by way of lease, assignment or sale shall be exercised only where the subst