Verisetty Krishna vs Polisetty Manjula
2022 Latest Caselaw 8626 AP

        HIGH COURT OF ANDHRA PRADESH: AMARAVATI

     HON'BLE MR. JUSTICE PRASHANT KUMAR MISHRA, CHIEF
                          JUSTICE
                                      &
             HON'BLE MR. JUSTICE D.V.S.S. SOMAYAJULU
                              A.S.No.278 of 2022
 Verisetty Krishna,
S/o late Hussainayya,
Aged 67 yrs.,
R/o Kamakshi lake view apartments,
Near Rangarayyudu Cheruvu,
Ongole Town,
Prakasam District.
                                                         .. Appellant
       Versus

Polisetty Manjula, W/o Pothuri Ratnambabu,
D/o Polisetty Subbaratnam,
D.No.7-1-10/1, Opp.line of Sri Sairam Temple,
Hareram Bazaar, Ongole Town,
Prakasam District and 2 others.
                                                        .. Respondents

Counsel for the appellant             : Sri K.Sarvabhouma Rao

Counsel for the respondents         : Sri
                                 JUDGMENT

Date: 10.11.2022

(per D.V.S.S.Somayajulu, J)

This appeal is filed questioning the rejection of the plaint by

order dated 25.07.2022 by the Principal District Judge, Prakasam

District, Ongole.

2. This Court has heard learned junior counsel representing Sri

K.Sarvabhouma Rao, learned counsel for the appellant.

3. Learned counsel for the appellant points out that the trial

Court committed an error in rejecting the plaint at the very

threshold without considering the issues raised. It is his

contention that the property involved in the suit is mortgaged to

the plaintiff by defendant Nos.1 and 2 and their father.

Registered deeds of mortgage were executed in the year 2016 in

favour of the plaintiff. As the money due under the said

mortgages was not cleared, the suit is filed for recovery for a sum

of Rs.2,81,72,532/ under the four mortgage deeds which are

mentioned in the plaint. This sum is due from plaintiff Nos.1 and

2. Learned counsel for the appellant argues that a personal

decree is also sought for recovery of the said sum. As far as the

3rd defendant is concerned, it is submitted that he was added as a

party because he has purchased the property in an auction

conducted by the authorized Officer. Learned counsel points out

that questioning the auction and the confirmation of the sale in

favour of the third respondent S.A.No.157 of 2021 is filed by the

plaintiff on the file of Debt Recovery Tribunal, Visakhapatnam. He

points out that this is clearly pleaded in the plaint itself. It is the

contention of the learned counsel that since a personal decree is

sought and a personal decree can only be granted by the Civil

Court, the suit is definitely maintainable before the Civil Court

and the learned District Judge committed an error in returning

the plaint at the threshold itself. It is his contention that the suit

should have been numbered, notices should have been ordered to

the defendants and the plaint should not have been returned at

the threshold itself. He contends that the plaintiff has got an

independent claim against the defendants and therefore, the

rejection of the plaint is per se incorrect. He also relies upon the

judgment of the Hon'ble Supreme Court reported in Jagdish

Singh v. Heeralal and others1 in support of his contentions.

4. This Court after considering the submissions notices that as

can be seen from the plaint itself, the 3rd defendant has already

purchased the property being the successful auction purchaser of

the property. The trial Court noticed that the discrepancy in the

boundaries pointed out by the plaintiff is not really material and

the boundaries of the property mentioned in the auction sale in

which the 3rd defendant purchased the property and the

(2014) 1 SCC 479

boundaries of the property mortgaged as per the plaint are one

and the same. Apart from this, this Court also notices that under

section 13 (4) of the Securitization and Reconstruction of Financial

Assets and Enforcement of Security Interest Act, 2002 (for short

'the SARFAESI Act'), if the borrower fails to discharge his

liabilities, the secured creditor can bring the property for sale for

realizing the dues. This is one of the measures contemplated

under section 13 of the SARFAESI Act.

5. Under section 17 of the SARFAESI Act, 'any person', who is

aggrieved by any of the measures taken under section 13 (4) of the

SARFAESI Act, can make an application before the Debt Recovery

Tribunal questioning the said action/measures taken.

Admittedly, in this case, the plaintiff is aware of the action taken

under section 13 (4) of the SARFAESI Act, and the confirmation of

the sale of the property in favour of the 3rd defendant in the suit.

This is clear from the plaint itself. The secured creditor, namely

HDB Financial Services Limited is claiming a mortgage over the

property in the year 2014, whereas, the plaintiff is claiming that

the defendant Nos.1 and 2 and their father have mortgaged the

property in favour of the plaintiff in the year 2016. It is also

apparent from a reading of the plaint that the sale in favour of the

3rd defendant is already concluded and questioning the same, the

plaintiff has already filed O.S.No.157 of 2021 before the Debt

Recovery Tribunal, Visakhapatnam.

6. This Court notices that the trial Court has already relied

upon the leading judgment in the case of Mardia Chemicals and

others v. Union of India and others2, wherein the Hon'ble

Supreme Court has already considered sections 17 and 34 of the

SARFAESI Act. Section 17 clearly states that any person

including a borrower aggrieved by any of the measures referred to

in section 13(4), can make an application before the Debt Recovery

Tribunal.

7. Section 34 of the SARFAESI Act is also very clear. It is to

the following effect:

34. Civil court not to have jurisdiction: 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).

2 (2004) 4 SCC 311

8. Both these sections were considered by the trial Court before

the plaint was rejected. The same is visible from a reading of para

7 of the impugned order. The judgment relied upon by the learned

junior counsel in the case of Jagdish Singh (1 supra) also

supports the conclusion reached by the trial Court. Paras 24, 25

and 26 of the said judgment are to the following effect:

24. Statutory interest is being created in favour of the secured creditor on the secured assets and when the secured creditor proposes to proceed against the secured assets, sub - section (4) of Section 13 envisages various measures to secure the borrower's debt. One of the measures provided by the statute is to take possession of secured assets of the borrowers, including the right to transfer by way of lease, assignment or realising the secured assets. Any person aggrieved by any of the "measures" referred to in sub-section (4) of Section 13 has got a statutory right of appeal to the DRT under Section 17. The opening portion of Section 34 clearly states that no civil court shall have the jurisdiction to entertain any suit or proceeding "in respect of any matter"

which a DRT or an Appellate Tribunal is empowered by or under the Securitisation Act to determine. The expression "in respect of any matter" referred to in Section 34 would take in the "measures" provided under sub-section (4) of Section 13 of the Securitisation Act. Consequently, if any aggrieved person has got any grievance against any "measures" taken by the borrower under sub-section (4) of Section 13, the remedy open

to him is to approach the DRT or the Appellate Tribunal and not the civil court. The civil court in such circumstances has no Jurisdiction to entertain any suit or proceedings in respect of those matters which fall under sub-section (4) of Section 13 of the Securitisation Act because those matters fell within the jurisdiction of the DRT and the Appellate Tribunal. Further, Section 35 says, the Securitisation Act overrides other laws, if they are inconsistent with the provisions of that Act, which takes In Section 9 CPC as well.

25. We are of the view that the civil court jurisdiction is completely barred, so far as the "measures" taken by a secured creditor under sub-section (4) of Section 13 of the Securitisation Act, against which an aggrieved person has a right of appeal before the DRT or the Appellate Tribunal, to determine as to whether there has been any illegality In the "measures taken. The Bank, In the instant case, has proceeded only against secured assets of the borrowers on which no rights of Respondents 6 to 8 (sic Respondents 1 to 5) have been crystallised, before creating security interest In respect of the secured assets.

26. In such circumstances, we are of the view that the High Court was in error in holding that only civil court has the jurisdiction to examine as to whether the "measures" taken by the secured creditor under sub-section (4) of Section 13 of the Securitisation Act were legal or not. In such circumstances, the appeal is allowed and the judgment of the High Court is set aside. There shall be no order as to costs.

9. Lastly, in Authorised Officer, State Bank of India v.

Allwyn alloys Private Limited and others3 the Hon'ble Supreme

Court held as follows in paras 8 and 9:

8. After having considered the rival submissions of the parities, we have no hesitation In acceding to the argument urged on behalf of the Bank that the mandate of Section 13 and, in particular, Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short "the 2002 Act"), clearly bars filing of a civil suit. For, no civil court can exercise jurisdiction to entertain any suit or proceeding in respect of any matter which a DRT or DRAT is empowered by or under this Act to determine and no injunction can be granted by any court or authority in respect of any action taken or to be taken in pursuance of any power conferred by or under the Act.

9. The fact that the stated flat is the subject-matter of a registered sale deed executed by Respondents 5 and 6 (writ petitioners) in favour of Respondents 2 to 4 and which sale deed has been deposited with the Bank along with the share certificate and other documents for creating an equitable mortgage and the Bank has initiated action in that behalf under the 2002 Act, is indisputable. If so, the question of permitting Respondents 5 and 6 (writ petitioners) to approach any other forum for adjudication of issues raised by them concerning the right, title and interest in relation to the said property, cannot be countenanced. The High Court has not

2018 (8 0 SCC 120

analysed the efficacy of the concurrent finding of fact recorded by DRT and DRAT but opined that the same involved factual issues warranting production of evidence and a full-fledged trial. The approach of the High Court as already noted hitherto is completely fallacious and untenable in law.

10. Section 17 (3) of the SARFAESI Act also clearly states that if

the Debt Recovery Tribunal after examining the facts and

circumstances of the case and the evidence is of the opinion that

any of the measures referred to in section 13 (4) of the SARFAESI

Act are not in accordance with law and the Rules, it can pass

appropriate orders as the case may be.

11. In that view of the matter and in view of the settled law on

the subject, this Court is of the opinion that the trial Court did not

commit any error whatsoever in rejecting the plaint at the

threshold in view of the express bar in the law.

12. The Appeal Suit is therefore dismissed. No order as to costs.

Pending miscellaneous applications, if any, shall stand closed.

PRASHANT KUMAR MISHRA, CJ D.V.S.S. SOMAYAJULU,J

KLP