Di Chini Mill Majdoor Sangh Thru' ... vs Rajendra Ispat Pvt. Ltd. & 2 Others
2017 Latest Caselaw 6236 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

AFR
 
Court No. - 10
 
Case :- FIRST APPEAL No. - 734 of 2017
 
Appellant :- Di Chini Mill Majdoor Sangh Thru' The Secy. & Another
 
Respondent :- Rajendra Ispat Pvt. Ltd. & 2 Others
 
Counsel for Appellant :- Arvind Srivastava
 
Counsel for Respondent :- Gunjan Jadwani
 

 
Hon'ble Arun Tandon,J.

Hon'ble Rajiv Joshi,J.

This first appeal under Section 96 of the Civil Procedure Code is directed against the order of the Civil Judge, Senior Division, Court No. 18, Deoria dated 11.10.2017, whereunder issue no.1 with regards to the maintainability of the suit has been decided against the plaintiff and it has been held that the suit is not maintainable. The plaintiff is not satisfied, he has therefore, approached this Court by means of the instant appeal. Facts relevant for deciding the present appeal borne out from the records are as under:

M/s Cawnpore Sugar Works Limited, Gauri Bazar, Deoria had obtained loan from Industrial Financial Corporation of India (hereinafter referred to as IFCI). From the records which have been made available to the Court, it is apparent that the IFCI was a secured creditor and the properties of M/s. Cawnpore Sugar Works Limited, Gauri Bazar, Deoria were secured for the financial assistance obtained. Proceedings were initiated under the provisions of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as SARFAESI Act) against the units at Gauri Bazar, Deoria with which we are concerned alongwith another unit of Kathkuiyan.

Janta Chini Mill Mazdoor Sangh and others filed writ petition no. 20805 of 2011 challenging the proceedings initiated under the SARFAESI Act. The writ petition was decided under the judgement and order dated 23.8.2016. Amongst others the writ court specifically took note of the fact that the properties of the sugar mill have already been sold and that the sale proceeds have already been utilized for liquidating the dues of the creditors including IFCI. The writ court took note of the fact that the sugar factory has been sold under the SARFAESI Act in favour of the Rajendra Ispat Pvt. Ltd. It was specifically recorded that the benefit of  the judgement in the case of Vishal N. Kalsaria Vs. Bank of India 2016 (3) SCC 762 cannot be extended to the petitioners, which was the union of employees working in the Mill, which had been so sold. The other judgements relied for the purpose of protecting their right of possession by the Mazdoor Sangh, were specifically considered and the matter was decided against the employees represented by the Sangh. The said judgement also provided that it shall be open to the petitioners to proceed with the recovery of their dues (wages etc.), if any, in accordance with law. The Court directed that the purchasers of the unit shall be provided adequate protection for the lifting of the scrap by the authority concerned and all possible assistance as admissible in law be rendered to them by the respondents.

It appears that after the said issue was settled by the Division Bench of this Court, the other union of the employees decided to file original Suit No. 17 of 2017 before the Civil Judge, Senior Division, Deoria for a permanent injunction restraining the purchaser of the property sold in SARFAESI proceedings from evicting the petitioners from the property of the Mill, which was in their occupation.

The suit as filed was questioned on the ground of maintainability by the purchaser i.e. Rajendra Ispat Pvt. Ltd. by making an application under Order 7 Rule 11 C.P.C. Reference was made to the proceedings, which had taken before the High Court as noticed above.

On the application so made, a preliminary issue was framed with regards to the maintainability of the suit being issue no. 1.

The learned Civil Judge, Senior Division under the order in appeal has upheld the objections made under Order 7 Rule 11 C.P.C. and has proceeded to dismiss the suit as not maintainable. The court below has specifically recorded that the suit filed by the plaintiff was barred by Section 34 of the SARFAESI Act. The plaintiffs fall within the category of aggrieved person within the meaning of Section 13 (4) read with Section 17 of the SARFAESI Act and therefore, must seek their remedy under the SARFAESI Act itself. Hence, this appeal.

Sri Arvind Srivastava, counsel for the appellant contend that the findings returned by the trial court with regards to the plaintiff being covered within the meaning of the word 'aggrieved person' under Section 13 (4) of the SARFAESI Act read with Section 17 is factually incorrect inasmuch as they are tenants of the premises in question and their settled possession must be protected. They cannot be evicted from the premises except in accordance with law.

In support of his plea, Sri Arvind Srivastava, counsel for the appellant has placed reliance upon the judgements in case of Vishal N. Kalsaria Vs. Bank of India reported in 2016 (3) SCC 762, Rajasthan State Road Transport Corporation and another Vs. Bal Mukund Bairwa reported in 2009 (4) SCC 299 paragraph 37, Rame Gowda Vs. M Varadappa Naidu reported in 2004 (1) SCC 769 paragraph 9 as well as upon the judgement in the case of M.P. Electricity Board Vs. Vijay Timber Co. reported in (1997) 1 SCC 68. 

For appreciating the contention, which has been raised on behalf of the appellant, we have carefully gone through the plaint allegations, especially to see as to what right had been set up by the plaintiff in the matter of retention of possession over the property in question, which had admittedly been sold in the SARFAESI proceedings. The record reflects that the only case pleaded by the plaintiff was that the members of the union had constructed their houses over the property of the Mill and an office had been established by the union. Dues of wages etc. against the mill, which has already been wound up, had not been liquidated till date.

From a simple reading of the plaint, we are more than satisfied that no statutory tenancy was claimed by the appellant nor any other evidence was laid for establishing as to what right they had for retaining the possession of the secured assets of the company, once it had been wound up and there was no work for the employees. The tenor of the allegation in the plaint reflects that premise was being retained only because the union and its members claimed that certain dues payable by the sugar mill, which has since been wound up, had not been cleared, and there were orders of the authorities under the Payment of Wages Act, which had not been enforced.

We need not dilate on the rights as claimed by the plaintiff inasmuch as the Division Bench of this Court in the case of Janta Chini Mill Mazdoor Sangh (supra), in respect of the same properties, which have been sold under the SARFAESI Act has already provided that the Mazdoor Union of the sugar factory, would be free to proceed for recovery of its outstanding dues as per the law.

Counsel for the appellant at this stage contended that under the standing orders applicable the employees are entitled to retain possession of the mill properties till their dues are cleared. He for the purpose read out paragraph 7 of the plaint in ex tensio. The statement made at bar by the counsel for the plaintiff is false.

Paragraph 7 of the plaint reads as under:

"यह की यहाँ यह भी विदित रहे के किसी भी कर्मचारी का ग्रेच्युटी का भुगतान भी प्रतिवादीगण द्वारा नहीं किया गया है | उक्त अधिनियम के अनुसार यदि प्रतिवादीगण द्वारा उपादेय, वेतन या भविष्य निधि का भुगतान कर्मचारीगण का नहीं किया जाता है तो उन कर्मचारियों से बगैर भुगतान किये उनसे आवास को खाली नहीं कराया जा सकता |"

From a simple reading of the aforesaid, it is apparently clear that it make no mention to any of the clauses of the standing order applicable. What is referred to are the provisions of the Gratuity Act. We, therefore, insisted upon the counsel for the appellant to refer to any provision of the Gratuity Act, whereunder such a right of retention of premises after the company has been wound up has been conferred upon the employees only because, the payment of gratuity/arrears of salary has not been made.

Counsel for the plaintiff hopelessly failed to refer to any such provision. It appears that the counsel wants to read something, which has not been pleaded in the plaint for questioning the order of the trial court. Such practice cannot be approved of.

We may specifically refer to Section 34 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, which read as under:

"No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993)".

From a simple reading of the aforesaid provision, it would be clear that the civil courts will have no jurisdiction to entertain any suit in respect of any matter which the Recovery Tribunal or Appellate Tribunal is empowered by or under the Act to determine and that no injunction can be granted by a civil court in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Bank and Financial Institutions Act, 1993 (51 of 1993).

The Apex Court in the case of Vishal N. Kalsaria Vs. Bank of India itself has noticed that in the case of Harshad Govardhan Sondagar Vs. International Assets Reconstruction Co. Ltd. 2014 (6) SCC 1, the issue as to whether any tenancy has been created prior to the creation of security interest in favour of the secured creditor needs to be determined by the District Magistrate under Section 17 (1) of the SARFAESI Act and it is only those, whose rights have been created prior to the creation of the security interest in the secured creditor that such rights would survive.

As already noticed above, in the facts of the case, there is no such pleading of any statutory right being created in favour of the plaintiffs prior to the security interest being created in the property in question. Even otherwise such issues need to be examined by the District Magistrate at the first instance in view of the judgement of Apex Court referred to above. Therefore, in view of the bar as contained in Section 34, no injunction could be granted by the civil court in respect of actions taken by the authority under the SARFAESI Act.

So far as the judgement relied upon by the learned counsel for the appellant in the case of Rajasthan State Road Transport Corporation and another Vs. Bal Mukund Bairwa, Rame Gowda Vs. M Varadappa Naidu and M.P. Electricity Board Vs. Vijay Timber Co. are concerned, the same are distinguishable in the facts of the case.

We do not find anything contrary, which may compel this Court to interfere with the order of the trial court, which records that the suit as filed by the plaintiff, was not maintainable.

Appeal is, accordingly, dismissed.

Order Date :- 3.11.2017/Noman