Delhi High Court
Ms. Utpala Mukherjee vs Aeromarine Logistics Pvt. Ltd. & ... on 31 May, 2022
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment Reserved on : 12th May, 2022
Judgment Delivered on : 31st May, 2022
+ CS(OS) 49/2022 & I.A. No.6459/2022 (u/O-VII R-14 of CPC)
UTPALA MUKHERJEE ..... Plaintiff
Through: Ms. Maninder Acharya, Senior
Advocate with Ms. Padna Priya,
Mr.Sidhartha Bawa, Mr. Viplav and
Mr. Daanish Abbasi, Advocates.
versus
AEROMARINE LOGISTICS PVT. LTD. & ORS.
..... Defendants
Through Mr. Sanjeev Singh, Ms. Ridhi Pahuja
and Mr. Dhruv Chawla, Advocates
for D5/IDFC First Bank Limited.
CORAM:
HON'BLE MR. JUSTICE AMIT BANSAL
JUDGMENT
AMIT BANSAL, J.
I.A. 1560/2022 (u/O.XXXIX R. 1 & 2 of CPC)
1. By the present order, I propose to dispose of the application filed on
behalf of the plaintiff under Order XXXIX Rules 1 & 2 of the Code of Civil
Procedure, 1908 (CPC), seeking grant of interim injunction.
2. Summons in the suit and notice in the present application was issued
on 28th January, 2022 and a note was made of the submission on behalf of
the plaintiff, that the plaintiff has also filed an application under section 17
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of Securitisation and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 (SARFAESI act), before the Debt Recovery
Tribunal (DRT), which was coming up for hearing on the same date at 2.00
P.M.
3. In the order dated 2nd February, 2022, it was noted that the DRT vide
order dated 28th January, 2022, has restrained the defendant no.5 Bank from
taking possession of the plaintiff's property and posted the matter for 9th
February, 2022. On 11th February, 2022, it was noted that the plaintiff shall
make a deposit of Rs.20,00,000/- before this Court and the defendant no.5
Bank was restrained from taking possession of the plaintiff's property.
Later the written statement along with the reply to the present application,
was filed on behalf of the defendant no.5 Bank.
4. Office noting reveals that the summons sent to the defendants no.1
and 4 are unserved and the service report in respect of the defendant no.3 is
awaited. Vakalatnama has been filed on behalf of the defendant no.2, but he
has only been represented on 2nd February, 2022 and not on any subsequent
hearing.
5. The case set up by the plaintiff in the plaint is that:
i. The Plaintiff is the owner in possession of the property bearing No.E-
016, Purvasha Anand Lok, Cooperative Housing Society, Mayur
Vihar, Delhi-11009 (suit property).
ii. The plaintiff is a senior citizen and lives alone and has been involved
in a catering business for past many years.
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iii. The defendant no.1 is a company incorporated under provisions of the
Companies Act, 2013, represented by the defendants no.2 and 3 as its
directors. The Plaintiff is neither a director, nor a shareholder in the
defendant no.1 company.
iv. The Plaintiff is a director in the defendant no.4 company, along with
the defendants no.2 and 3.
v. The defendant no.2 is a neighbour of the plaintiff and has known the
plaintiff for last several years. In the year 2005, the defendant no.2
allured the plaintiff to acquire the defendant no.4 company.
vi. In the year 2012-13, a loan of Rs.80,000,00/- was taken for the
defendant no.4 company from the Standard Chartered Bank, for
which the suit property, being residence of the plaintiff, was given as
a security.
vii. In April 2017, the defendant no.2 once again approached the plaintiff
with a proposal to avail fresh financial assistance from the defendant
no.5 Bank, in respect of the defendant no.4 company.
viii. The plaintiff agreed to the above request and was made to sign a
blank loan application form of the defendant no.5 Bank, which was
then known as Capital First Limited.
ix. The defendants no.2 and 3 informed the plaintiff that they require a
loan in respect of the defendant no.1 company that was run by them.
However, the plaintiff did not agree for the same.
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x. Plaintiff was in Mashobra from 9th May,2017 to 14th May,2017 in
connection with her Son's wedding. Phone records have been filed on
behalf of the plaintiff, to show that she was not in Delhi from 9th May,
2017 to 14th May, 2017.
xi. In November, 2018, the plaintiff was informed by the defendants no.2
and 3 that they had taken a loan of Rs.61,50,000/- from the defendant
no.5 Bank, in the name of the defendant no.1 company against the
plaintiff's residential house.
xii. The plaintiff was further informed that the defendant no.5 Bank took
over the balance loan amount from the Standard Chartered Bank and
accordingly, the title documents of the suit property were directly
transferred from the Standard Chartered Bank to the defendant no.5
Bank.
xiii. It was only in May, 2019 that the defendants no.2 and 3 provided the
loan documents to the plaintiff, including the copy of Sanction Letter
dated 9th May, 2017, which was forged by them. The signatures of the
plaintiff on the copy of said Sanction letter provided to her were
deliberately concealed from her as the said copy was without her
signatures/acknowledgment.
xiv. A criminal complaint against the defendants no.2 and 3, was filed on
behalf of the plaintiff on 6th August, 2019 with Police Station, Mayur
Vihar, New Delhi.
xv. A Demand Notice dated 14th July, 2021 was issued by the defendant
no.5 Bank, upon the plaintiff under Section 13(2) of the SARFAESI
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Act, for an amount of Rs.5,21,96,280/-. The plaintiff filed her
objections in respect of the said Notice, stating therein that fraud has
been committed by officials of the defendant no.5 Bank, in
connivance with the defendants no.2 and 3. The aforesaid objections
were replied to by the defendant no.5 Bank vide reply dated 22 nd
November, 2021.
xvi. On 13th January, 2022, the plaintiff received a Notice from the Court
Receiver appointed by the CMM, Karkardooma Courts, East District
vide order dated 9th December, 2021, directing the plaintiff to
handover peaceful possession of the suit property.
6. Accordingly, the present suit has been filed seeking the following
reliefs:
"a. Pass a Decree in favour of the plaintiff declaring the forged
documents executed by the Defendant No. 2 and Defendant No. 3
in connivance with the officials of the Defendant no. 5 Bank as
null and void.
b. Pass a decree for Cancellation of the Mortgage documents of
the property of the Plaintiff being property No. E-016, Purvasha
Anand Lok, Cooperative Housing Society, Mayur Vihar, Delhi-
110091.
c.Pass a Decree of Mandatory Injunction directing the Defendant
No. 5 bank to return the title documents of property being E-016,
Purvasha Anand Lok, Cooperative Housing Society, Mayur Vihar,
Delhi 110091 to the Plaintiff.
d.Pass a Decree of Permanent Injunction restraining the
Defendant No. 5 Bank from in any manner interfering with the
possession of the property of the plaintiff being E-016, Purvasha
Anand Lok, Cooperative Housing Society, Mayur Vihar, Delhi-
110091.
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e.Costs of the suit"
7. Ms. Maninder Acharya, the senior counsel appearing on behalf of the
plaintiff has made the following submissions:
i. The plaintiff was not even in Delhi, when the Sanction Letter was
issued and stated to have been signed on behalf of the plaintiff.
ii. In the various documents filed on behalf of the defendant no.5 Bank,
towards the grant of loan (page no.53 to 59 of the plaintiff's
documents), the signatures of the plaintiff have been forged in all the
documents.
iii. The plaintiff has been defrauded by the defendants no.2 and 3, in
collusion with the officials of the defendant no.5 Bank.
iv. As regards the maintainability of the present suit, the senior counsel
appearing on behalf of the plaintiff, has relied upon various judgments
to contend that, in view of the fraud committed by officials of the
defendant no.5 Bank in collusion with the defendants no.2 and 3, the
present suit is maintainable.
v. Further, the plaintiff can simultaneously maintain proceedings before
the Debt Recovery Tribunal (DRT) under the SARFAESI Act as well
as the present suit before this Court, as the scope of the two
proceedings are different.
8. Based on the written statement filed on behalf of the defendant no.5
Bank, the counsel appearing on behalf of the defendant no.5 Bank has made
the following submissions:
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i. This Court does not have the jurisdiction to entertain the present suit,
in view of the Section 34 of the SARFAESI Act. In terms of Section
35 of the SARFAESI Act, the provisions of SARFAESI Act would
have an overriding effect over any other law.
ii. The jurisdiction of the DRT is wider than the jurisdiction of the Civil
Court and therefore, the DRT is competent to adjudicate upon all
allegations of fraud and forgery. Reliance in this regard has been
placed on the Judgment of Supreme Court in Industrial Credit and
Investment Corporation of India Ltd. v. Grapco Industries Ltd,
(1999) 4 SCC 710.
iii. Similar reliefs have been claimed by the plaintiff in the Securitization
Application No.21/2022 filed by the plaintiff, before the DRT.
iv. The plaintiff along with the defendants no.1 to 4 had approached the
defendant no.5 Bank, to take over the existing loan they had with the
Standard Chartered Bank and had further sought additional facilities.
Representative of the Bank had met the plaintiff at her residence on
8th May, 2017 and based on that, he submitted his collateral visit
report dated 8th May, 2017, which shows that the plaintiff had the
knowledge of the loan being availed by the borrowers and that she
had consented for the same.
v. The plaintiff has admitted in her plaint that she had signed the loan
application forms. Based on the said loan application forms, the
defendant no.5 Bank had got the valuation of the plaintiff's property
done and also obtained the KYC documents of the plaintiff.
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vi. Plaintiff had also signed an undertaking cum declaration dated 15 th
May, 2017, confirming that she had applied for the loan facilities
along with the other borrowers. The claim of forgery has been made
at the belated stage.
9. Both sides have relied extensively upon various judgments in support
of their submissions. Therefore, at the outset, I propose to refer to the said
judgments.
Judgments cited by the plaintiff
10. On behalf of the plaintiff, strong reliance has been placed on the
judgment of the Supreme Court in Mardia Chemicals Ltd. & Ors. v. Union
of India, (2004) 4 SCC 311. Paragraphs 50 and 51 of the said judgment are
set out below:
"50. It has also been submitted that an appeal is entertainable
before the Debts Recovery Tribunal only after such measures as
provided in sub-section (4) of Section 13 are taken and Section 34
bars to entertain any proceeding in respect of a matter which the
Debts Recovery Tribunal or the Appellate Tribunal is empowered
to determine. Thus before any action or measure is taken under
sub-section (4) of Section 13, it is submitted by Mr Salve, one of
the counsel for the respondents that there would be no bar to
approach the civil court. Therefore, it cannot be said that no
remedy is available to the borrowers. We, however, find that this
contention as advanced by Shri Salve is not correct. A full reading
of Section 34 shows that the jurisdiction of the civil court is barred
in respect of matters which a Debts Recovery Tribunal or an
Appellate Tribunal is empowered to determine in respect of any
action taken "or to be taken in pursuance of any power conferred
under this Act". That is to say, the prohibition covers even matters
which can be taken cognizance of by the Debts Recovery Tribunal
though no measure in that direction has so far been taken under
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sub-section (4) of Section 13. It is further to be noted that the bar
of jurisdiction is in respect of a proceeding which matter may be
taken to the Tribunal. Therefore, any matter in respect of which
an action may be taken even later on, the civil court shall have
no jurisdiction to entertain any proceeding thereof. The bar of
civil court thus applies to all such matters which may be taken
cognizance of by the Debts Recovery Tribunal, apart from those
matters in which measures have already been taken under sub-
section (4) of Section 13.
51. However, to a very limited extent jurisdiction of the civil
court can also be invoked, where for example, the action of the
secured creditor is alleged to be fraudulent or his claim may be
so absurd and untenable which may not require any probe
whatsoever or to say precisely to the extent the scope is
permissible to bring an action in the civil court in the cases of
English mortgages. We find such a scope having been recognized
in the two decisions of the Madras High Court which have been
relied upon heavily by the learned Attorney General as well
appearing for the Union of India, namely, V.
Narasimhachariar [AIR 1955 Mad 135] , AIR at pp. 141 and 144,
a judgment of the learned Single Judge where it is observed as
follows in para 22 : (AIR p. 143)
"22. The remedies of a mortgagor against the mortgagee who is
acting in violation of the rights, duties and obligations are twofold
in character. The mortgagor can come to the court before sale
with an injunction for staying the sale if there are materials to
show that the power of sale is being exercised in a fraudulent or
improper manner contrary to the terms of the mortgage. But the
pleadings in an action for restraining a sale by mortgagee must
clearly disclose a fraud or irregularity on the basis of which
relief is sought : Adams v. Scott [(1859) 7 WR 213, 249] . I need
not point out that this restraint on the exercise of the power of sale
will be exercised by courts only under the limited circumstances
mentioned above because otherwise to grant such an injunction
would be to cancel one of the clauses of the deed to which both the
parties had agreed and annul one of the chief securities on which
persons advancing moneys on mortgages rely. (See Ghose,
Rashbehary : Law of Mortgages, Vol. II, 4th Edn., p. 784.)"
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A reading of the aforesaid paragraphs shows that the Supreme Court
has held that the jurisdiction of a Civil Court is barred under Section 34 of
the SARFAESI Act, in respect of a matter of which, the cognizance can be
taken by the DRT. Only a very narrow window is available in respect of a
civil suit, where the action of the secured creditor is alleged to be
fraudulent or the claim may be very absurd and untenable.
11. In the very same judgment, the Supreme Court also made the
following observations in paragraph 81, which is reproduced hereinafter:
"81. In view of the discussion held in the judgment and the
findings and directions contained in the preceding paragraphs, we
hold that the borrowers would get a reasonably fair deal and
opportunity to get the matter adjudicated upon before the Debts
Recovery Tribunal. The effect of some of the provisions may be a
bit harsh for some of the borrowers but on that ground the
impugned provisions of the Act cannot be said to be
unconstitutional in view of the fact that the object of the Act is to
achieve speedier recovery of the dues declared as NPAs and
better availability of capital liquidity and resources to help in
growth of the economy of the country and welfare of the people
in general which would subserve the public interest."
vii.
12. Further, reliance has been placed on behalf of the plaintiff on the
judgment of the Supreme Court in Nahar Industrial Enterprises Ltd. v.
Hong Kong and Shanghai Banking Corporation, (2009) 8 SCC 646, to
contend that the DRT does not have the powers of a Civil Court and
therefore, the jurisdiction of a Civil Court cannot be completely barred.
Paragraph 97 of the said judgment is set out below:
"97. A debtor under the common law of contract as also in terms
of the loan agreement may have an independent right. No forum
has been created for endorsement of that right. Jurisdiction of a
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civil court as noticed hereinbefore is barred only in respect of the
matters which strictly come within the purview of Section 17
thereof and not beyond the same. The civil court, therefore, will
continue to have jurisdiction."
13. It may be noted that in Nahar Industrial (supra), the Supreme Court
was dealing with the issue of transfer of a suit pending in a Civil Court in
one State to a DRT situated in another State and therefore, the observations
made were in that context and would not be applicable in the present case.
14. Next, reliance has been placed on behalf of the plaintiff on the
judgment dated 9th December, 2013 passed by a Coordinate Bench of this
Court in Ashok Kumar Raizada v. Bank of Rajasthan & Anr., 2013 SCC
OnLine Del 4961, in support of her contention that in case of a fraud, the
civil suit would be maintainable. The said judgment dealt with a case where
there were several sale deeds floating in respect of the said property and
therefore, the Court was of the view that the case would fall within the
exceptional category of cases, in terms of the judgment of the Supreme
Court in Mardia Chemicals (supra). In the case at hand, there is no dispute
with regard to the title documents of the suit property.
15. Next, reliance has been placed on behalf of the plaintiff, on the
judgment of the Division Bench of this Court in Gurdeep Singh vs. Punjab
& Sindh Bank & Ors., 2015 SCC OnLine Del 6724. In this case, the
Division Bench was seized of a writ petition filed on behalf of the borrower
against the order of the Debt Recovery Appellate Tribunal (DRAT), where a
stay of recovery proceedings was sought on the ground that the civil suit had
been filed on behalf of the borrower. In the said case, it was the case of the
borrower that the sale deed, which was the subject matter of equitable
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mortgage in favour of the bank, was a fraudulent document and therefore, a
nullity. Further, it was also noted that the suit had reached an advance stage
and issues had already been framed. Under these circumstances, the Court
held that the recovery proceedings should not go on till the suit is finally
decided one way or the other. The Division Bench was not dealing with a
question of maintainability of the suit in the aforesaid case.
16. Reliance has also been placed on the judgment of the Calcutta High
Court in Kaaiser Oils Pvt. Ltd. & Ors. v. Allahabad Bank & Ors.,
MANU/WB/0713/2017, to contend that both civil suit and proceedings
before the DRT can proceed simultaneously. It is to be noted that the
aforesaid observations were made by the Calcutta High Court in the context
of recovery proceedings filed by the bank before the DRT and the recovery
proceedings filed on behalf of the plaintiff/borrower in the suit, which is not
the position in the present case.
Judgments relied upon by the defendant no.5 Bank
17. On the other hand, the counsel for the defendant no.5 Bank has placed
reliance on the judgment of the Supreme Court in Industrial Credit and
Investment Corporation. of India Ltd. v. Grapco Industries Ltd. & Ors.,
(1999) 4 SCC 710, to contend that sufficient powers have been vested on the
DRT under Section 22 of the Recovery of Debts and Bankruptcy Act, 1993
(RDB Act) and therefore, the matters which fall under the jurisdiction of the
DRT cannot be entertained by the civil court. Section 22 of the RDB Act is
set out below:
"22. Procedure and powers of the Tribunal and the Appellate
Tribunal.-- (1) The Tribunal and the Appellate Tribunal shall not
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be bound the procedure laid down by the Code of Civil Procedure,
1908 (5 of 1908), but shall be guided by the principles of natural
justice and, subject to the other provisions of this Act and of any
rules, the Tribunal and the Appellate Tribunal shall have powers
to regulate their own procedure including the places at which they
shall have their sittings.
(2) The Tribunal and the Appellate Tribunal shall have, for the
purposes of discharging their functions under this Act, the same
powers as are vested in a civil court under the Code of Civil
Procedure, 1908 (5 of 1908), while trying a suit, in respect of the
following matters, namely:--
(a) summoning and enforcing the attendance of any person and
examining him on oath;
(b) requiring the discovery and production of documents;
(c) receiving evidence on affidavits;
(d) issuing commissions for the examination of witnesses or
documents;
(e) reviewing its decisions;
(f) dismissing an application for default or deciding it ex parte;
(g) setting aside any order of dismissal of any application for
default or any order passed by it ex parte;
(h) any other matter which may be prescribed.
(3) Any proceeding before the Tribunal or the Appellate Tribunal
shall be deemed to be a judicial proceeding within the meaning of
sections 193 and 228, and for the purposes of section 196, of the
Indian Penal Code (45 of 1860) and the Tribunal or the Appellate
Tribunal shall be deemed to be a civil court for all the purposes of
section 195 and Chapter XXVI of the Code of Criminal Procedure,
1973 (2 of 1974).
1[(4)For the purpose of proof of any entry in the „bankers books‟,
the provisions of the Bankers‟ Books Evidence Act, 1891 (18 of
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1891) shall apply to all the proceedings before the Tribunal or
Appellate Tribunal.]"
Relevant observations of the Supreme Court in paragraph 11 of the
aforesaid judgment is set out below:
"11. We, however, do not agree with the reasoning adopted by the
High Court. When Section 22 of the Act says that the Tribunal
shall not be bound by the procedure laid down by the Code of
Civil Procedure, it does not mean that it will not have
jurisdiction to exercise powers of a court as contained in the
Code of Civil Procedure. Rather, the Tribunal can travel beyond
the Code of Civil Procedure and the only fetter that is put on its
powers is to observe the principles of natural justice.
viii.
18. Next, reliance has been placed on behalf of the defendant no.5 Bank
on the judgment of the Supreme Court in Jagdish Singh vs. Heeralal and
Ors., MANU/SC/1126/2013, to contend that any matters in respect of
which, the remedy to appeal to DRT has been provided under Section 17 of
the SARFAESI Act, the jurisdiction of the Civil Court is barred in terms of
Sections 34 and 35 of the SARFAESI Act. Observations of the Supreme
Court in paragraph 22 of the said judgment in set out below:
"22. Statutory interest is being created in favour of the 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 realizing 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 jurisdiction to
entertain any suit or proceeding "in respect of any matter"
which a DRT or an Appellate Tribunal is empowered by or
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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. 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 Code of Civil Procedure as well."
ix.
19. Next, reliance has been placed on behalf of the defendant no.5 Bank
on the judgment of the Division Bench of the Madras High Court in V.
Thulasi v. Indian Overseas Bank, 2011 SCC OnLine Mad 670. In the said
case, the main contention on behalf of the borrower was that where there is a
dispute with regard to creation of security interest in favour of the creditor,
this would not go within the purview of the DRT and therefore, the Civil
Court has jurisdiction to adjudicate the same. Reliance was placed on the
judgments in Mardia Chemicals (supra) and Nahar Industrial (supra) on
behalf of the borrower. The Division Bench observed that the judgment in
Nahar Industrial (supra) would have no application in the facts of the said
case and therefore, it was observed that the said case would not fall within
the exceptions laid down in Mardia Chemicals (supra). Relevant
observations of the Division Bench are set out below:
"29. By clever and astute drafting, the Plaintiff might create an
illusion of cause of action by trying to bring Civil Suit within the
parameters laid down by the Supreme Court in Mardia Chemicals
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case, 2004 (2) CTC 759 (SC) : 2004 (4) SCC 311. Pointing that
Court has duty to see if such allegations of fraud are thrown just
for the purpose of maintaining a Suit, in Punjab National
Bank v. J. Samsath Beevi, 2010 (3) CTC 310, Justice V.
Ramasubramanian held as under:
"8. But at the same time, the Court has a duty to see, if
such allegations of fraud are thrown, just for the purpose
of maintaining a Suit and ousting the jurisdiction of the
Tribunal and to keep the Banks and Financial Institutions
at bay. If by clever drafting, the Plaintiff creates an
illusion of a cause of action, the Court is duty bound to
nip it in the bud. To find out if it is just a case of clever
drafting, the Court has to read the Plaint, not formally,
but in a meaningful manner. So is the dictum of the Apex
Court in T. Arivandandam v. T.V. Satyapal, 1977 (4) SCC
467. It was again reiterated by the Court in I.T.C.
Ltd. v. Debts Recovery Appellate Tribunal, 1998 (2) SCC
70, by holding that clever drafting, creating illusions of
cause of action are not permitted in law. The ritual of
repeating a word or creation of an illusion in the Plaint can
certainly be unravelled and exposed by the Court while
dealing with an Application under Order 7, Rule 11(a).
9. A Court is obliged to see if the allegations of fraud and
collusion made in the Plaint, are themselves a product of
"fraud and collusion" between the family members of the
borrowers, so as to escape liability and save the secured
assets, somehow or the other. In the recent past, there is a
sudden spurt in the number of Civil cases filed against the
actions initiated by Banks and Financial Institutions,
either under the 1993 Act or under the SARFAESI Act,
2002. All these cases fall under 3 or 4 categories viz.--
(i) Cases filed by strangers claiming that their properties
are brought to sale on the basis of forged documents or
certified copies of documents submitted by borrowers to
Banks
(ii) Cases filed by guarantors claiming that they never
signed letters of guarantee or offered their properties as
securities
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xxx xxxx xxx
10. It is not very difficult for a seasoned litigant or an
intelligent lawyer to draft the Plaint in such a manner as to
make a secured asset, come within anyone of the above 4
categories, by a clever drafting of the Plaint, thereby
creating an illusion of fraud, collusion, misrepresentation
and the like. Today, with the advancement of technology,
the creation of an illusion and the creation of a virtual
world are both possible. The moment the Civil Suit is taken
on file, the proceedings before the Debts Recovery Tribunal
or under the SARFAESI Act, 2002 gets slowed down. This
results in two consequences viz., (i) out of frustration, the
Banks agree for one time settlements, or (ii) third party
rights get created by taking advantage of the situation.
Therefore, the Courts have a greater responsibility to scan
the pleadings and see if the allegations of fraud and
collusion made in the Plaint are actually a product of fraud
and collusion between the borrowers and those making such
claims."
We fully endorse the above views of the learned Single
Judge.
30. In the present case, Plaintiffs seek for a declaration that the
alleged guarantee created in the Plaintiff's name for the loan
advanced to the 1st Defendant is null and void and seeks for
permanent injunction restraining the Defendants from
proceeding against the Plaintiff or the plaint schedule property.
The Plaintiff has brought out the averments in the Plaint to bring
the Suit within the purview of the exception carved out by the
Supreme Court in Mardia Chemicals Ltd. v. Union of India, 2004
(2) CTC 759 (SC) : 2004 (4) SCC 311. In determining whether
such a plea has to be accepted, the Plaint as a whole has to be
read. In Popat and Kotecha v. State Bank of India Staff
Association, 2005 (4) CTC 489 : 2005 (7) SCC 510, the Supreme
Court held that Plaint averments cannot be compartmentalised
or dissected, nor can the averments be read in isolation. As
pointed out earlier, the limited exception, which is carved out by
the Supreme Court, is whether the action of the secured creditor
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is so absurd and untenable that it would not require any probe,
what so ever.
31. As held by the Supreme Court, the pleadings in an action for
restraining a sale by a mortgagee must "clearly disclose a fraud
or irregularity on the basis of which the relief is sought. The
observations of the Supreme Court in Mardia Chemicals
Ltd. v. Union of India, 2004 (2) CTC 759 (SC) : 2004 (4) SCC
311, emphasized that the exception, which is carved out is a
limited exception. Like all exceptions, the exception carved out by
the Supreme Court has to be strictly construed. A borrower or a
third party cannot be permitted to defeat the provisions of the Act
merely by alleging the "gross misuse of the trust reposed" and
"misuse of the documents executed by the Plaintiff. The above
expressions used in the Plaint cannot be compartmentalised and
read in isolation. The Plaint has to be read as a whole along with
the documents produced by the Plaintiff. Considering the Plaint
averments, we are of the view that the learned Single Judge
rightly held that in view of the specific bar under Section 34 of
SARFAESI Act, the Civil Suit filed by the Plaintiff is barred."
x.
xi.
20. Next, reliance has also been placed on behalf of the defendant no.5
Bank on the judgment of the Punjab and Haryana High Court in HDFC
Bank v. K. International MANU/PH/1210/2012. The Court, while taking
note of the judgments in Mardia Chemicals (supra) and Nahar Industrial
(supra), rejected the pleas of fraud and misrepresentation on the ground that
the document in question was signed on behalf of the plaintiff/borrower. The
SLP (C) No.31343/2012 against the aforesaid judgment was dismissed by
the Supreme Court vide order dated 16th December, 2016, by holding that
the defense taken by the borrower of not having signed the agreement
could be considered by the DRT.
21. Now, I propose to examine the facts of the present case in light of the
aforesaid judgments. A reading of the plaint would disclose that the plaintiff
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had voluntarily mortgaged her property with the Standard Chartered Bank,
in order to avail financial facilities in respect of the defendant no.4
company. It is also stated in the plaint that at the behest of the defendant
no.2, the plaintiff signed blank loan application forms of the defendant no.5
Bank. It does not stand to reason that the plaintiff admits signing of the loan
application form of the defendant No.5 Bank, but at the same time denies
the creation of security interest in favour of the defendant No.5 Bank.
22. A holistic reading of the plaint would disclose that the fraud, if any,
committed upon the plaintiff was by the defendants no.2 and 3. It was the
defendants no.2 and 3, who were the business partners of the plaintiff, and
who approached the plaintiff to avail financial assistance from the defendant
no.5 Bank and took the loan for the defendant no. 4 company and defendant
no.1 company.
23. Though, in the plaint, the plaintiff has made allegations of forgery
against the defendants no.2 and 3 in collusion with the officials of the
defendant no.5 Bank, it may be noted that the initial police complaint filed
by the plaintiff on 6th August, 2019, was only against the defendants no.2
and 3 and not against the officials of the defendant no.5 Bank. Therefore, the
allegation of fraud and collusion against the officials of the defendant no.5
Bank were in the nature of an afterthought. The pleadings of fraud and
collusion against the defendant no.5 Bank have only been made, so as to
cover the case within the exception provided in Mardia Chemicals (supra).
In my prima facie view, there is nothing to substantiate the pleadings of
fraud and/or forgery against the officials of the defendant no.5 Bank. A
reading of Mardia Chemicals (supra) would show that only cases for which
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an exception has been carved out is where the action of the secured creditor
has been fraudulent or so absurd or untenable. Therefore, in my view, the
present case will not fall within the exception provided in Mardia
Chemicals (supra). Further, as noted above, the judgments in Nahar
Industrial (supra), Ashok Kumar Raizada (supra), Gurdeep Singh (supra)
and Kaaiser Oils (supra), were in a totally different factual context and
therefore, the same would not be applicable in the facts and circumstances
of the present case.
24. On the other hand, the facts in the present case are almost identical to
the facts in V.Thulasi (supra). In the said case also, the contention of the
borrower was that there was a dispute with regard to creation of security
interest in favour of the secured creditor. The observations of the Madras
High Court in the said case as set out above, would be squarely applicable to
the facts of the present case. Through clever drafting, the plaintiff has sought
to cover her case in terms of the exception in Mardia Chemicals (supra),
which cannot be permitted. A meaningful reading of the plaint reveals that
fraud, if any, has been committed against the plaintiff by the defendants no.2
and 3.
25. It is an admitted position that the plaintiff has filed an application
under Section 17 of the SARFAESI Act, before the DRT claiming similar
reliefs and in fact, an ad interim stay had also been granted in favour of the
plaintiff by the DRT. Yet, the plaintiff has chosen to continue with the
proceedings in the present suit. Clearly, the plaintiff cannot be entitled to
invoke two parallel remedies simultaneously for same set of reliefs. I do not
agree with the submission made on behalf of the plaintiff that the scope of
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two proceedings is different and therefore, the proceedings before the DRT
and this Court, can continue simultaneously. This view is fortified by the
observations of the Supreme Court in Jagdish Singh (supra). The judgment
of the Calcutta High Court in Kaaiser Oils (supra) was in a totally different
context, where the borrower had also filed recovery proceedings against the
bank.
26. Filing of the proceedings before the DRT show that the plaintiff was
well aware of her legal remedies and therefore, she had approached the DRT
under Section 17 of the SARFAESI Act. As noted by the Supreme Court in
Industrial Credit (supra), sufficient powers have been vested with the DRT
to decide all issues including the defence taken by the plaintiff, of not
having signed the loan documents. Therefore, the jurisdiction of DRT is
wider than that of a civil court.
27. In light of the above, I am of the prima facie view that the present suit
filed on behalf of the plaintiff, is not covered under the exception provided
in Mardia Chemicals (supra) and is therefore, not maintainable. I am also of
the prima facie view that in the facts and circumstances of the present case,
the plaintiff cannot simultaneously pursue the present suit as well as the
remedy under Section 17 of the SARFAESI Act. The DRT is already seized
of the proceedings filed on behalf of the plaintiff under Section 17 of the
SARFAESI Act. Therefore, no irreparable harm or injury would be caused
to the plaintiff.
28. In view of the discussion above, I am not inclined to allow the present
application for the grant of interim relief. Dismissed.
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29. The deposit of Rs.20,00,000/- made by the plaintiff before this Court
shall be subject to the orders that may be passed by the DRT in the S.A. No.
21/2022.
30. Needless to state, the observations made herein would not come in the
way of the DRT considering on merits the application filed on behalf of the
plaintiff under section 17 of the SARFAESI Act.
AMIT BANSAL, J.
MAY 31, 2022
at/dk
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