Amish Jain & Anr vs Icici Bank Ltd.
2012 Latest Caselaw 5488 Del

*        IN THE HIGH COURT OF DELHI AT NEW DELHI

                                   Date of decision: 13th September, 2012

+                          W.P.(C) No. 3957/2012

%        AMISH JAIN & ANR.                                   ....Petitioners
                       Through:        Mr. Rajiv Bansal, Amicus Curiae
                                       with Mr. Saurav Suman Sinha & Mr.
                                       Rahul Bhandari, Advs and the
                                       petitioner No.1 in person.

                                   Versus
         ICICI BANK LTD.                                 ..... Respondent
                       Through:        Mr. Punit K. Bhalla & Ms. Chetna
                                       Bhalla, Advs.
CORAM:-
HON'BLE THE ACTING CHIEF JUSTICE
HON'BLE MR. JUSTICE KAILASH GAMBHIR
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

RAJIV SAHAI ENDLAW, J.

1. A doubt having arisen as to the correctness of the judgment of the

Division Bench of this Court in Indira Devi Vs. Debt Recovery Appellate

Tribunal 171 (2010) DLT 439 (DB), insofar as holding that an appeal

under Section 17 of The Securitization and Reconstruction of Financial

Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act)

can be filed not only in the Debt Recovery Tribunal (DRT) having

jurisdiction where the mortgaged property is situated but also in DRT

having jurisdiction where the branch of the Bank / Financial Institution

which has disbursed the loan is situated as well as in all DRTs which would

have jurisdiction in terms of Section 19(1) of The Recoveries of Debts Due

to Banks and Financial Institutions Act, 1993 (DRT Act) read with Rule 6

of the Debts Recovery Tribunal (Procedure) Rules, 1993 (DRT Rules), this

Full Bench was constituted.

2. This petition was filed impugning the order dated 7th June, 2012 of

DRT-III, Delhi holding that it has no jurisdiction to entertain the appeal

preferred by the petitioners under Section 17 of the SARFAESI Act for the

reason of, i) the petitioners being residents of Meerut; ii) the loan in their

favour having been sanctioned by the branch at Meerut of the respondent

ICICI Bank Limited and being re-payable at Meerut; and, iii) the

mortgaged property being also situated at Meerut. It was further held that

merely because the notice under Section 13(2) of the SARFAESI Act had

been issued by the Jhandewalan, New Delhi Branch of the respondent Bank,

would not vest the DRT Delhi with a jurisdiction to entertain the appeal at

Delhi. Yet another reason given is, that even if action under Section 13(4)

or Section 14 of the SARFAESI Act is to be taken by the Bank, the Bank

will have to approach the concerned District Magistrate at Meerut for

appointment of Receiver, for taking possession of the property.

3. It is the contention of the petitioners in the writ petition, that DRT,

Delhi has jurisdiction by virtue of the provisions of Section 19(1)(c) of the

DRT Act read with Rule 6(d) of the DRT Rules, to entertain and decide

such an appeal. Reliance is placed on State of Rajasthan Vs. M/s Swaika

Properties AIR 1985 SC 1289 and Indira Devi Vs. Debt Recovery

Appellate Tribunal 171 (2010) DLT 439 (DB). It is further pleaded, that

the Bank cannot sell the mortgaged property of the petitioners by violating

the procedure laid down in SARFAESI Act and the Rules framed

thereunder; that the notices under Sections 13(2) and 13(4) of the

SARFAESI Act are illegal and the Bank cannot take possession of or sell

the property in pursuance thereto. It is yet further pleaded that since the

challenge in the appeal preferred by the petitioners before DRT, Delhi is to

the validity of the notices and which notices have been issued by the branch

of the respondent Bank at Delhi within the jurisdiction of DRT, Delhi, DRT,

Delhi would have jurisdiction. The petition contains numerous averments

pointing out the defects in notices under Section 13(2) and 13(4) of the

SARFAESI Act, but which it is not necessary to discuss.

4. Finding the question raised to be one purely of law, notwithstanding

the availability of the remedy of appeal to Debt Recovery Appellate

Tribunal (DRAT), notice of the petition was issued to the respondent Bank.

The counsel for the Bank appeared on 19th July, 2012 and though supporting

the reasoning in the impugned order, contended that it is rather in the

interest of the Bank also if the jurisdiction of DRT Delhi is permitted to be

invoked; it was submitted that on the same parity, the Bank should also have

the freedom to approach the Chief Metropolitan Magistrate (CMM) at Delhi

for assistance for taking possession of the mortgaged property, even if

situated outside Delhi. Since the petitioner No.1 was appearing in person,

Mr. Rajiv Bansal, Advocate was appointed as Amicus Curiae.

5. We have heard the petitioner No.1 appearing in person, the learned

Amicus Curiae and the counsel for the respondent Bank.

6. The Amicus Curiae has supported the petitioners and has contended

that the appeal can be filed before the DRT having jurisdiction wherever the

cause of action has accrued. It is contended that the application under

Section 17(1) of the SARFAESI Act is against the measures under Section

13(4) of the SARFAESI Act taken by the Bank / Financial Institution as a

Secured Creditor or its „Authorized Officer‟ and thus can be filed wherever

the „Authorized Officer‟ of the Secured Creditor i.e. the Bank or Financial

Institution is situated. Attention is also invited to Section 17(7) of the

SARFAESI Act providing for disposal of such appeal in accordance with

the provisions of the DRT Act and the Rules made thereunder. On the basis

thereof, it is argued that the jurisdiction of the DRT before which appeal

under Section 17(1) of the SARFAESI Act can be filed shall be determined

as per the DRT Act and the Rules made thereunder. Reference thereafter is

made to Section 19(1) of the DRT Act to contend that the jurisdiction

thereunder is of the DRT where the defendants or any of them resides or

carries on business or where the cause of action wholly or in part arises. It

is contended that since the event which triggers the appeal under Section

17(1), is the action of the Authorized Officer of the Bank / Financial

Institution, the DRT within whose jurisdiction the said Authorized Officer is

situated would have jurisdiction. It is thus argued that since in the present

case, the Authorized Officer of the respondent Bank has issued notice to the

petitioners from within the jurisdiction of Delhi, the DRT having

jurisdiction over Delhi would definitely have jurisdiction to entertain the

appeal. Attention is next invited to Rule 6 supra and it is highlighted that

prior to amendment thereof on 21.01.2003, the same provided for the

jurisdiction only of the DRT where the applicant was functioning as a Bank

or Financial Institution but after amendment, the same has been amended to

provide for the jurisdiction not only of the DRT where the applicant is

functioning as a Bank or Financial Institution but also of the DRTs within

whose jurisdiction the defendants or any of them resides or carry on

business or where the cause of action wholly or in part arises. It is

contended that the said amendment dated 21.01.2003 of Rule 6 is after the

SARFAESI Act came into force on 17.12.2002 and the Legislature should

be deemed to have amended the Rule to provide for the jurisdiction of the

DRT qua appeal under Section 17(1) of the SARFAESI Act also. Learned

Amicus Curiae, besides Indira Devi (supra), has also referred to i)

Transcore Vs. Union of India (2008) 1 SCC 125, ii) Mardia Chemicals

Ltd. Vs. Union of India (2004) 4 SCC 311, iii) State of Rajasthan Vs. M/s

Swaika Properties AIR 1985 SC 1289, iv) Harman Electronics Pvt. Ltd.

Vs. National Panasonic India Pvt. Ltd. (2009) 1 SCC 720 and Elements

Coke Pvt. Ltd. Vs. UCO Bank AIR 2009 Calcutta 252. Attention is also

invited to the definition of "defendant" in Pramanatha Aiyar‟s, The Major

Law Lexicon, 4th Edition 2010.

7. The counsel for the respondent Bank, though contending as aforesaid

that it would be in the interest of the Bank also if they are permitted to

approach, the District Magistrate / CMM, under Section 14 of the

SARFAESI Act of any of the aforesaid jurisdiction, has on the question of

law argued that if the aforesaid argument were to be accepted, then the Bank

/ Financial Institution would be entitled to create jurisdiction of any DRT by

sending the notice under the SARFAESI Act therefrom.

8. It is important to highlight the context in which the question had

arisen before the Division Bench in Indira Devi. The appeal under Section

17(1) of the SARFAESI Act, in that case, had been filed before the DRT

within whose jurisdiction the secured asset was situated. There it was the

contention of the creditor Bank that since under Rule 6 supra (as it stood

prior to the amendment) the Bank could file recovery proceedings only in

the DRT within whose jurisdiction the branch of the Bank / Financial

Institution which had disbursed the loan was functioning and in no other

DRT, similarly the appeal under Section 17(1) of the SARFAESI Act could

also be filed in that DRT only and in no other. The said contention was

negated by the Division Bench observing that even the Bank under Rule 6

(as it stood after the amendment and without noticing that the argument of

the Bank was predicated on the un-amended Rule) could file recovery

proceedings in the DRT in which its branch, which had disbursed the loan,

was situated or in the DRT where any of the defendants was residing or

carrying on business or in the DRT in which the cause of action has arisen

and hence even the appeal under Section 17(1) of the SARFAESI Act can

be filed in any of the said DRT. It would thus be seen that before the

Division Bench, it was not the contention of either of the parties that the

jurisdiction should be confined only to the place where the property was

situated, though notice is taken by the Division Bench that under Section 16

of the CPC, legal proceedings, subject matter whereof was a mortgaged

property, could be filed only in the Court within whose territorial

jurisdiction the mortgaged property was situated. It was however held that

the DRT Act made a specific departure from the provision of Section 16 of

CPC inasmuch as the Bank was not required to file recovery proceedings

only with the DRT which had territorial jurisdiction over the mortgaged

property and could file the proceedings for recovery either where the

defendant resides or carries on business or where whole or part of cause of

action arose including where the branch which had advanced the loan was

situated, although the mortgaged property was situated elsewhere. Having

held so, the Division Bench held that since there was no restriction on the

Bank, under Section 19(1) of the DRT Act, to institute recovery proceedings

at any one place, no such restriction could be placed on the borrower /

mortgagor also. Accordingly, option of choosing territorial jurisdiction, as

available to the Bank under Section 19(1) of the DRT Act, was held to be

available to the borrower / mortgagor also under Section 17(1) of the

SARFAESI Act. Relying on Mardia Chemicals Ltd. supra, it was also held

that in an application under Section 17(1) of the SARFAESI Act, the

aggrieved person has a right also to challenge the amount being claimed by

the Bank / Financial Institution under Section 13 of the SARFAESI Act.

The judgment of a Single Judge of the Calcutta High Court in Elements

Coke Pvt. Ltd. supra laying down that only DRT of the place where the

mortgaged property is situated would have jurisdiction to decide the appeal

under Section 17(1) of the SARFAESI Act was dissented from by observing

that the proceedings under Section 17(1) of the SARFAESI Act though

titled as „Appeal Proceedings‟ are „Original Jurisdiction Proceedings‟.

9. The reasons for which a doubt was entertained as to the correctness of

the view taken in Indira Devi, are stated in para 6 of the referral order dated

26.07.2012 as under:

"6. The right of appeal under Section 17(1) of SARFAESI Act is only against measures under Section 13(4) of the Act and not against a notice under Section 13(2) of the Act. A notice under

Section 13(2) of the Act cannot thus be the cause of action for an appeal under Section 17(1) of the Act, even if it be defective or invalid. The measures under Section 13(4) of the Act are inter alia of taking possession of the secured assets of the borrowers and transferring the same by way of lease, assignment or sale, for realizing the said secured assets or taking over management of the business or of appointment of any person to manage the secured assets etc. The manner of so taking over possession is provided in Section 14 of the SARFAESI Act which requires the secured creditor to approach the Chief Metropolitan Magistrate or the District Magistrate within whose jurisdiction any such secured assets may be situated. Thus the secured creditor i.e., the Bank has no choice but to approach the Chief Metropolitan Magistrate or District Magistrate having jurisdiction over the area where the secured asset is situated. Once the grievance is against the action of so taking over the assets with the assistance of the Chief Metropolitan Magistrate or the District Magistrate, it prima facie appears that the jurisdiction to entertain an appeal against such action also will be of the DRT having jurisdiction over the area where the secured asset is situated and over the area whose Chief Metropolitan Magistrate or District Magistrate has been approached for so taking over the secured assets. It may be noticed that the DRT, in such appeal under Section 17(3) of the SARFAESI Act, if finds that the measures taken under Section 13(4) are not in accordance with

SARFAESI Act and the Rules made thereunder, is authorized to declare such measures to be invalid and to restore the possession of the secured assets to the borrowers. We have wondered whether the DRT not having jurisdiction over the Chief Metropolitan Magistrate/District Magistrate would be entitled to direct such restoration of possession. It is not as if DRT exercises jurisdiction over the entire country. Section 3 of the DRT Act providing for establishment of DRTs, in sub- Section (2) thereof requires the notification establishing a DRT to specify the areas within which the said DRT shall exercise jurisdiction for entertaining and deciding an application filed before it. From the same it appears that DRT at Delhi is unlikely to have jurisdiction over the area of Meerut for it to declare any action of Chief Metropolitan Magistrate / District Magistrate of Meerut as invalid if finds in favour of the petitioners or to direct the secured assets to be restored etc. We are further prima facie of the view that the principle applicable to a suit for enforcement of mortgage i.e., of it being maintainable only in the Courts within whose jurisdiction the mortgaged property is situated, would also apply. The provisions of Section 19 of the DRT Act and of Rule 6 of the DRT Rules are intended for applications before the DRT for recovery of money and which can be filed in the DRT within whose jurisdiction any part of the cause of action has accrued and would have no application to an action for enforcement of security interest under the SARFAESI Act."

10. We have considered the matter. The reason which prevailed with the

Division Bench in Indira Devi, to hold that an appeal under Section 17(1) of

the SARFAESI Act can be filed in any of the DRTs where the Bank under

Section 19(1) of the DRT Act could initiate proceedings, was predicated on

the DRT Act making a departure from Section 16 of the CPC in enabling

the Bank to initiate proceedings not necessarily within the jurisdiction of the

DRT where the mortgaged property is situated but in any of the DRTs. The

Division Bench was also guided by the consideration of giving the same

opportunity of choosing jurisdiction to the borrower, as available to the

Bank.

11. We are however of the opinion that the Division Bench fell in error in

assuming the debt / money recovery proceedings to be initiated by the Bank

under the DRT Act as equivalent to legal proceedings subject whereof is a

mortgaged property, within the meaning of Section 16 of the CPC. The

proceedings referred to in Section 19(1) of the DRT Act are merely

proceedings for recovery of debt and not for enforcement of mortgage.

Even prior to coming into force of the DRT Act, the Bank, even if a

mortgagee, was not mandatorily required to enforce the mortgage and which

under Section 16 of the CPC could be done only within the territorial

jurisdiction of the Court where the mortgaged property was situated and the

Bank was free to institute a suit, only for recovery of money and territorial

jurisdiction whereof was governed by Section 20 of CPC, containing the

same principles as in Section 19(1) of the DRT Act. We are therefore

unable to accept that any departure qua territorial jurisdiction has been made

in the DRT Act, as has been observed by the Division Bench in Indira Devi.

12. The proceedings in the DRT for recovery of debt, culminate in a

„Certificate of Recovery‟ which is equivalent to a Money Decree of a Civil

Court. Just like a Money Decree of a Civil Court, can be transferred for

execution to another Court where the assets of the Judgment Debtor from

which recovery is to be effected are situated, under Section 19(23) of the

DRT Act also, where the property from which recoveries are to be effected,

is situated outside the local limits of the jurisdiction of the DRT which has

issued the Certificate, the DRT is required to send a copy of the Certificate

for execution to the DRT within whose jurisdiction the property is situated.

Section 25 provides for modes of recovery of the debts specified in the

Certificate, including by attachment and sale of property. The recovery

proceedings under the DRT Act are thus equivalent to a suit for recovery of

money before a Civil Court and cannot be said to be for enforcement of

mortgage. Thus it cannot be said that the DRT Act has made any departure

from Section 16 of the CPC.

13. We may however notice that in State Bank of India Vs. Samneel

Engineering Co. MANU/DE/0462/1995 an argument was raised that a

proceeding under Section 19(1) of the DRT Act for recovery of debt did not

include a debt which was secured by a mortgage. This contention was

negatived by this Court holding a mortgage debt to be included in „debt‟

within the meaning of Section 2(g) of the DRT Act. It was further held that

the modes of recovery prescribed in the DRT Act are inclusive of the rights

of the Bank as a mortgagee and the rights under Order 34, CPC of the

mortgagor, have been taken away by the DRT Act. This Court explained

that the DRT Act had made the recovery of debt as distinct from

enforcement of mortgage, a cause of action and for this reason the situs of

mortgaged property, relevant under Section 16 of the CPC, had become

irrelevant. We respectfully concur. Though this judgment of a Single Judge

of this Court was cited before the Division Bench in Indira Devi but was

held to be not applicable. The Division Bench did not notice that this Court

in Samneel Engineering Co. has held, the DRT Act to be not in departure

from Section 16 of the CPC, and the situs of the mortgaged property being

irrelevant to the proceedings under Section 19(1) of the DRT Act which are

for recovery of debt. We find the Debt Recovery Appellate Tribunal

(DRAT) also in Bank of Baroda Vs. Teg's Musrado Ltd. (2006) 129

CompCas 275 (NULL) to have held that the relief sought under Section

19(1) of the Act is for a money decree and even if consequent reliefs are

also sought, that cannot be a ground to construe the proceeding as for

enforcement of mortgage. We further find Samneel Engineering Co. to

have been followed in State Bank of India Vs. Gujarmal Modi Hospital &

Research Centre for Medical Sciences 61 (1996) DLT 614 as well as in

Hindustan Laminators Pvt. Ltd. Vs. Central Bank of India AIR 1998 Cal

300.

14. For enforcement of the mortgage, the SARFAESI Act was enacted.

While the Preamble of the DRT Act describes the same as to provide for

establishment of Tribunals for expeditious adjudication and recovery of

debts due to the Banks and Financial Institutions, the Preamble to the

SARFAESI Act describes the same as an act inter alia for enforcement of

security interest. The Supreme Court in Transcore supra, on analysis of

provisions of DRT Act in juxtaposition to SARFAESI Act, held the DRT

Act to be providing for adjudication of disputes, as far as debt due is

concerned, whether it be a secured or an unsecured debt.

15. We may mention, that while in the DRT Act, there is no mention of

mortgage and even an application under Section 19(1) is required to only

specify the properties required to be attached and which may not necessarily

be mortgaged property, Section 2(l) of the SARFAESI Act while defining

"financial asset" expressly includes "mortgage" and Sections 2(zc), 2(ze)

and 2(zf) define the "secured asset", "secured debt" and "secured interest"

as meaning the property on which security interest is created and rights

under a mortgage. Section 13 of the SARFAESI Act provides for

enforcement of such mortgage without the intervention of the Court or the

DRT.

16. We are therefore of the view that the question of territorial

jurisdiction for the remedy of appeal provided in Section 17(1) of the

SARFAESI Act has to be construed in the said light and not in the light of

the DRT Act making a departure from the principle enshrined in Section 16

of the CPC.

17. Section 17(1) of the SARFAESI Act provides for filing of the appeal /

application thereunder not to any DRT but only to the "DRT having

jurisdiction in the matter". However, such jurisdiction is not specified. To

determine which DRT will have jurisdiction in the matter, we have to find

as to what is to be the matter for adjudication in a proceeding under Section

17(1) of the SARFAESI Act and what relief the DRT is empowered to grant

in the said proceeding. The scope of a proceeding under Section 17(1) of

the SARFAESI Act is described in Section 17(2) of the SARFAESI Act as

of "whether any of the measures referred to in Sub-Section (4) of Section 13

of the SARFAESI Act taken by the secured creditor for enforcement of

security are in accordance with the provisions of the SARFAESI Act and

the Rules made thereunder". The measures which the Bank / Financial

Institution is empowered to take under Section 13(4) of the SARFAESI Act

are of taking over possession or management as aforesaid of the secured

asset. Of course, the action of so taking over possession or management is

to be preceded by (a) the borrower under a liability under a secured

agreement making any default in repayment of the secured debt or any

installment thereof; (b) the borrower‟s account in respect of such debt being

classified as non-performing asset; (c) the Bank / Financial Institution

requiring the borrower by notice in writing to discharge in full his liabilities

within sixty days and giving details of the amount payable and the secured

asset intended to be enforced in the event of non-payment; d) consideration

of representation if any made by the borrower thereagainst and

communication to the borrower of the reasons for non-acceptance of such

representation. Though, it could well be argued that the DRT within whose

jurisdiction Bank / Financial Institution to whom the borrower is indebted is

situated, would also have jurisdiction to adjudicate whether the action under

Section 13(4) of taking over possession / management is in accordance with

the aforesaid procedure but the explanation to Section 17(1) of the

SARFAESI Act clarifies that the communication of the reasons to the

borrower for not accepting the representation or the likely action of the

Bank / Financial Institution shall not entitle the borrower to make an

application under Section 17(1) of the SARFAESI Act. Thus the cause of

action for the appeal under Section 17(1) of the SARFAESI Act is the

taking over of the possession / management of the secured asset and which

cause of action can be said to have accrued only within the jurisdiction of

the DRT where the secured asset is so situated and the possession thereof is

taken over. We are thus of the view that it is the said DRT only which can

be said to be having "jurisdiction in the matter" within the meaning of

Section 17(1) of the Act.

18. Further, the relief to be granted by the DRT in an appeal under

Section 17(1) of the SARFAESI Act, if successful, is (under Section 17(3))

of restoration of possession / management of the secured asset to the

borrower and to pass such order as it may consider appropriate and

necessary in relation to the recourse taken by the Banks / Financial

Institution under Sub-Section (4) of Section 13 of the SARFAESI Act. This

relief also, we find, the DRT within whose jurisdiction the secured asset to

be so restored to the borrower is situated, to be the most competent to grant

and implement. The orders which the DRT under Section 17(3) of the

SARFAESI Act may be required to pass may also entail exercising

jurisdiction over the CMM / DM which is approached by the Bank /

Financial Institution for assistance for taking over possession / management.

Notice in this regard may be taken of Kanaiyalal Lalchand Sachdev Vs.

State of Maharashtra (2011) 2 SCC 782 and of United Bank of India Vs.

Satyawati Tandon (2010) 8 SCC 110 suggesting that appeal under Section

17(1) can be filed after the Bank has filed application under Section 14,

even if possession / management has not been taken. In such a situation,

DRT may be required to issue direction to the CMM / DM approached by

the Bank / Financial Institution. As already noticed in the referral order

dated 26.07.2012, Section 3(2) of the DRT Act requires the notification

constituting the DRT to specify the area within which the said DRT shall

exercise jurisdiction. A DRT at Delhi, as in the facts of the present case,

would have no jurisdiction over the DM at Meerut or for that matter over

the property at Meerut. We are of the view that exercise of jurisdiction

under Section 17(1) of the SARFAESI Act by DRTs of a place other than

where the secured asset is situated is likely to lead to complexities and

difficulties and which are best avoided. It may also be mentioned that the

remedy under Section 17(1) is available not only to the borrower or

mortgagor, but also to any other person aggrieved from the measures under

Section 13(4). In Satyawati Tandon supra it was invoked by the guarantor.

If it were to be held that more than one DRT will have jurisdiction, it may

also lead to remedy under Section 17(1) against same action under Section

13(4) being invoked by different persons before different DRTs. There is

no provision in the DRT Act for transfer of proceedings from one DRT to

another. The Supreme Court, in Authorized Officer, Indian Overseas Bank

Vs. Ashok Saw Mill (2009) 8 SCC 366 has held the scope of a proceeding

under Section 17(1) to be extending to scrutinizing even the steps taken by

the Bank / Financial Institution subsequent to measures under Section 13(4).

Such scrutiny by the DRT may entail adjudication of disputes as to

preservation and protection of the secured asset (see Rule 4 of the Security

Interest (Enforcement) Rules, 2002), valuation of the secured asset (Rule 5),

sale thereof (Rules 6 to 8) and in the case of the borrower being a company

in liquidation, distribution of sale proceeds thereof or between more than

one secured creditor of the secured asset (see Section 13(9) of the

SARFAESI Act). Such scrutiny by DRT of post Section 13(4) measures

may yet further enlarge the number of persons interested in invoking the

remedy under Section 17(1). Also, all these disputes bear closest proximity

to the place where the secured asset is situated and the DRT having

jurisdiction over that place would be the most suitable DRT to entertain

such disputes.

19. As far as Section 17(7) of the SARFAESI Act requiring disposal of

appeals under Section 17(1) of the SARFAESI Act, "as far as may be" in

accordance with the provisions of the DRT Act and the Rules framed

thereunder is concerned, though the learned Single Judge of this Court in

Upendra Kumar Vs. Harpriya Kumar MANU/DE/0136/1978 had held that

Section 21 of the Hindu Marriage Act, 1955 providing for the proceedings

thereunder to be regulated „as far as may be‟ by the CPC, could not be read

as incorporating every provision of CPC or making applicable the

provisions of CPC to substantive aspects like jurisdiction but the Supreme

Court in Guda Vijayalakshmi Vs. Guda Ramachandra Sekhara Sastry

AIR 1981 SC 1143 took a contrary view and held that Section 21 of the

Hindu Marriage Act does not make a distinction between procedural and

substantive provisions of CPC and thus the provisions of CPC as partake of

the character of substantive law are also by implication to apply to the

proceedings under the Hindu Marriage Act and the use of the expression "as

far as may be" is intended to exclude only such provisions of CPC as may

be inconsistent with any of the provisions of the Hindu Marriage Act.

Applying the said law, Section 17(7) of the SARFAESI Act is to be read as

providing for disposal of appeal under Section 17(1) of the SARFAESI Act

in accordance with the provisions of the DRT Act and the Rules made

thereunder save as otherwise provided in the SARFAESI Act.

20. The expression „as far as may be‟ still means „to the extent necessary

and practical‟. Supreme Court in Dr. Pratap Singh Vs. Director of

Enforcement (1985) 3 SCC 72 held that the expression „so far as may be‟

has always been construed to mean that those provisions may be generally

followed to the extent possible but if a deviation becomes necessary to carry

out the purposes of the Act in which reference to another legislation is

made, it would be permissible. Similarly, in Ujagar Prints Vs. Union of

India (1989) 3 SCC 488 a five Judge Bench of the Supreme Court held that

the Legislature sometimes takes a shortcut and tries to reduce the length of a

statute by omitting elaborate provisions where such provisions have already

been enacted earlier and can be adopted for the purpose in hand. The

expression „so far as may be‟ was held to be meaning „to the extent

necessary and practical‟.

21. What we however find is that the DRT Act is not containing any

provision for territorial jurisdiction of an appeal as under Section 17(1) of

the SARFAESI Act, even if it were to be construed not as an appeal and as

an original application. The jurisdictional provision under Section 19(1) of

the DRT Act is only for applications by the Bank / Financial Institution for

recovery of debt from any person. An application by a Bank / Financial

Institution for recovery of debt can by no stretch of imagination be equated

with an appeal under Section 17(1) of the SARFAESI Act. We are

therefore of the view that there is no provision in the DRT Act providing for

territorial jurisdiction of an appeal under Section 17(1) of the SARFAESI

Act and the question of application thereof under Section 17(7) does not

arise. Under Section 17(7) of the SARFAESI Act only that much of the

DRT Act can be said to be incorporated therein as is contained in the DRT

Act and not more. Whether a particular provision of DRT Act would apply

or not, would depend upon the nature and scope of proceeding under the

SARFAESI Act.

22. Once it is held that an appeal under Section 17(1) of the SARFAESI

Act cannot be equated with an application by the Bank / Financial

Institution for recovery of debt under Section 19 of the DRT Act, the limits

of territorial jurisdiction described under Section 19(1) of the DRT Act

cannot be made applicable to Section 17(1) of the SARFAESI Act.

23. It would thus be seen that the provision for territorial jurisdiction

under Section 19 (1) of the DRT Act is only qua the applications to be made

by the Bank or Financial Institution for recovery of its debt. However, a

proceeding under Section 17(1) of the SARFAESI Act is initiated not by the

Bank or the Financial Institution but by a person including the borrower

aggrieved from the measures taken by the Bank or Financial Institution

under Section 13 (4) of the SARFAESI Act. We are thus of the view that

notwithstanding Section 17(7) of the SARFAESI Act providing for the

disposal of the proceedings under Section 17(1) of the SARFAESI Act in

accordance with the provisions of the DRT Act and the Rules made

thereunder, the same cannot make the provisions of Section 19(1) of the

DRT Act applicable to proceedings under Section 17(1) of the SARFAESI

Act. As aforesaid, Section 19(1) of the DRT Act is not an omnibus

provision qua territorial jurisdiction. It is concerned only with providing for

territorial jurisdiction for applications for recovery of debts by the Banks /

Financial Institutions. The same can have no application to the appeals

under Section 17(1) of the SARFAESI Act which are to be preferred, not by

the Banks / Financial Institutions, but against the Banks / Financial

Institutions.

24. We are further of the view that the use, in Section 17(7) of the

SARFAESI Act, of the words "as far as may be" and "save as otherwise

provided in this Act" also exclude applicability even of the principles

contained in Section 19(1) of the DRT Act to determine the territorial

jurisdiction of an appeal under Section 17(1) of the SARFAESI Act. Our

reasons therefor are stated herein below.

25. The provisions of Sections 14 and 17A of the SARFAESI Act clearly

establish the nexus of the appeal under Section 17(1) to the place where the

secured asset is situated. Section 14 of the SARFAESI Act vests the

territorial jurisdiction, for filing of an application by the Bank / Financial

Institution for assistance in taking over possession of the secured asset, in

the Chief Metropolitan Magistrate (CMM) or the District Magistrate (DM)

within whose jurisdiction the secured asset is situated. Similarly, Section

17A of the SARFAESI Act, while making a provision for appeal under

Section 17(1) of the SARFAESI Act for borrowers residing in the State of

Jammu & Kashmir (to which the DRT Act does not apply and where there

are no DRTs), provides for filing of such appeals in the Court of District

Judge in that State having jurisdiction over the borrower. If an appeal under

Section 17(1) of the SARFAESI Act was maintainable in any of the DRTs

as mentioned in the DRT Act and the DRT Rules or as found by the

Division Bench in Indira Devi i.e. either in the DRT having jurisdiction

where the Branch of the Bank / Financial Institution which has disbursed the

loan is situated or in the DRT where the Bank carries on business or in the

DRT where cause of action wholly or in part arises, there was no need for

insertion of Section 17A of the SARFAESI Act with effect from 11.11.2004

to provide for an appeal under Section 17 of the SARFAESI Act by

borrowers residing in the State of Jammu & Kashmir. Further, the

jurisdiction under Section 17A of the SARFAESI Act being limited to only

one DRT i.e. the DRT having jurisdiction over the borrower, is also

indicative of the DRT having jurisdiction in the matter under Section 17(1)

of the SARFAESI Act being only one and the multiple choice available

under Section 19(1) of the DRT Act being not applicable to an appeal under

Section 17(1) of the SARFAESI Act.

26. It would thus be seen that the principles of Section 16 of the CPC are

reflected in the Sections 14 and 17A of the SARFAESI Act. Assistance to

the Secured Creditor has not been provided of any Court but only of the

Court within whose jurisdiction secured asset is situated. This is not

without reason. It is only the CMM / DM within whose jurisdiction such

secured asset is situated who can render such assistance.

27. Mention at this stage may also be made of the dicta of the Supreme

Court in Harshad Chiman Lal Modi Vs. DLF Universal (2005) 7 SCC 791

holding that Section 16 of the CPC recognizes a well established principle

that actions against res or property should be brought in the forum where

such res is situated and a Court within whose territorial jurisdiction the

property is not situated has no power to deal with and decide the rights or

interests in such property or to give an effective judgment with respect

thereto. The Supreme Court met the plea raised, of Section 21 of the CPC,

by holding that when a Court has no jurisdiction owing to the property being

not situated within its jurisdiction, the objection goes to the extent of

making the order of that Court a nullity on the ground of want of

jurisdiction and jurisdiction could not have been conferred by non traverse

or consent. The importance given to territorial jurisdiction in the context of

immovable property can thus be deciphered from the said judgment.

28. We are thus unable to concur with the second reasoning given by the

Division Bench in Indira Devi of any need to provide parity to the borrower

with the Bank, in the matter of territorial jurisdiction. Principles of parity

do not apply to territorial jurisdiction. Merely because the defendant if were

to sue, can sue at the place of the residence of the plaintiff, does not entitle

the plaintiff to sue at the place of his residence if that place would otherwise

not have territorial jurisdiction. We re-emphasize that the scope of the

proceedings under Section 19(1) of the DRT Act is entirely different from a

proceeding under Section 17(1) of the SARFAESI Act and no need for

parity exists.

29. For all the aforesaid reasons, we set aside the judgment of the

Division Bench in Indira Devi supra and hold that an appeal / application

under Section 17(1) of the SARFAESI Act can be filed only before the DRT

within whose jurisdiction the property / secured asset against which action is

taken is situated and in no other DRT.

30. Axiomatically, we do not find any error in the order of the DRT,

Delhi impugned in this petition holding it to have no jurisdiction to entertain

the appeal / application under Section 17(1) of the SARFAESI Act, the

mortgaged property against which action is to be taken being situated at

Meerut.

No costs.

RAJIV SAHAI ENDLAW, J

ACTING CHIEF JUSTICE

KAILASH GAMBHIR, J

SEPTEMBER 13, 2012 „gsr‟