Abhinash Baruah vs On The Death Of Raj Kumar Shah
2024 Latest Caselaw 3947 Gua

Gauhati High Court

Abhinash Baruah vs On The Death Of Raj Kumar Shah on 5 June, 2024

Author: Sanjay Kumar Medhi

Bench: Sanjay Kumar Medhi

                                                                 Page No.# 1/11

GAHC010004362024




                      THE GAUHATI HIGH COURT
  (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)

                        Case No. : CRP(IO)/11/2024

         ABHINASH BARUAH
         S/O PRADIP BARUAH, R/O SUBACHANI ROAD, P.O. AND DIST- TINSUKIA,
         ASSAM, PIN-786125



         VERSUS

         ON THE DEATH OF RAJ KUMAR SHAH, HIS LEGAL HEIRS AND ORS.
         REPRESENTED BY

         1.1:SMTI JYOTI SHAH
          D/O LATE RAJ KUMAR SHAH
          R/O RED CROSS ROAD
          GRAHAM BAZAR
          P.O.
          P.S. AND DIST-DIBRUGARH
         ASSAM
          PIN-786001

         1.2:ROSHAN SHAH
          S/O LATE RAJ KUMAR SHAH
          R/O RED CROSS ROAD
          GRAHAM BAZAR
          P.O.
          P.S. AND DIST-DIBRUGARH
         ASSAM
          PIN-786001

         1.3:ROHAN SHAH
          S/O LATE RAJ KUMAR SHAH
          R/O RED CROSS ROAD
          GRAHAM BAZAR
          P.O.
                                                     Page No.# 2/11

P.S. AND DIST-DIBRUGARH
ASSAM
PIN-786001

2:SMTI SWAPNA KUMARI
W/O SRI RAJ KUMAR SHAH
 R/O RED CROSS ROAD
 GRAHAM BAZAR
 P.O.
 P.S. AND DIST-DIBRUGARH
ASSAM
 PIN-786001

3:CENTRAL BANK OF INDIA
 HAVING ITS REGISTERED CENTRAL OFFICE AT CHANDERMUKHI
NIRMAN POINT
 P.O.
 P.S. AND DIST-MUMBAI
 MAHARASTRA
 PIN-400001

4:CHIEF MANAGER CUM AUTHORISED OFFICER
 CENTRAL BANK OF INDIA
 REGIONAL OFFICE
AT NEHRU PARK ROAD
 P.O.
 P.S. AND DIST-JORHAT
ASSAM
 PIN-785001

5:THE BRANCH MANAGER
 CENTRAL BANK OF INDIA
 DIBRUGARH BRANCH
 BHAGAWAN BUILDING
 1ST FLOOR
 H.S. ROAD
 P.O.
 P.S. AND DIST- DIBRUGARH
ASSAM
 PIN-78600
                                                                                  Page No.# 3/11



                                         BEFORE

               Hon'ble MR. JUSTICE SANJAY KUMAR MEDHI

       Advocates for the appellant    : Shri B. Dutta, Sr. Advocate.
                                        Shri S. Deka, Advocate.


      Advocates for the respondents : Shri K. R. Patgiri, Advocate, (R-1 & 2),

Shri M. Sharma, Advocate, (R-3)

Date of hearing : 05.06.2024 Date of Judgment : 05.06.2024

Judgment & Order The instant application has been filed under Article 227 of the Constitution of India against an order dated 18.11.2023 passed by the learned Civil Judge (Sr. Div.), Dibrugarh in Misc. (J) Case No. 279/2023 arising out of TS No. 108/2018. By the aforesaid order, the application filed by the present petitioner as defendant under Order 7 Rule 11 (d) read with Section 151 of the CPC for rejection of the plaint has been dismissed.

2. The facts which emerges from the petition and the documents annexed are that the petitioner is an auction purchaser in proceeding before the learned DRT, Guwahati. The said auction purchase was the subject matter of challenge in a writ petition filed by the predecessors-in-interest of the respondent nos. 1 & 2 in this Court which was registered as WP(C) No. 6015/2014. Though vide an initial order dated 24.11.2014, there was an interim stay, vide the final order dated 21.05.2018, the writ petition was disposed of directing the said respondent to approach the DRT under Section 17 of the Securitization and Page No.# 4/11

Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) with a specific time period. It however transpires that the approach to the DRT was not done within the time prescribed and accordingly when the application was filed beyond such time, the same was rejected. The said respondent had thereafter filed IA(C) No. 3157/2018 before this Court praying for extension of time. The Hon'ble Division Bench however, vide order dated 03.09.2018 had dismissed the application in which the conduct of the said respondent was also deprecated and the issue of lack of bona fide was also discussed. Thereafter, the present respondent no. 1 had filed the above civil suit on 12.10.2018. In the said suit registered as TS No. 108/2018, the present petitioner, as defendant had filed the petition under Order 7 Rule 11 (d) read with Section 151 of the CPC which was registered as Misc. (J) Case No. 279/2023. In the said petition, a specific plea of bar of civil suit under Section 34 of the SARFAESI, Act was taken. However, vide the impugned order dated 18.11.2023, the aforesaid application has been rejected. It is the legality and validity of the said order which has been questioned in the present proceeding.

3. I have heard Shri B. Dutta, learned Senior Counsel assisted by Shri S. Deka, learned counsel for the petitioner. I have also heard Shri K. R. Patgiri, learned counsel for the respondent nos. 1(a), 1 (b), 1(c) & 2 whereas the respondent no. 3, Central Bank of India is represented by Shri M. Sarmah, learned counsel.

4. Shri Dutta, the learned Senior Counsel has submitted that the entire conduct of the plaintiffs in instituting this suit lacks bona fide. Apart from the bar of Section 34 of the SARFAESI Act, there was no complete and candid disclosure of the facts involved. It is categorically submitted that the order of Page No.# 5/11

the Division Bench of this Court dated 03.09.2018 passed in IA(C) No. 3157/2018 was intentionally suppressed. It is submitted that under Section 34 of the SARFAESI Act, there is a clear bar of the Civil Court to entertain any suit or proceeding in respect of any matters connected to the Act of 2002. It is further submitted that the plaintiffs were not remediless as they had an adequate and efficacious remedy under Section 17 and in fact the said remedy was directed to be availed by this Court in the order dated 21.05.2018 which was not done by the plaintiffs within the time prescribed. Reference has also been made to the order dated 03.09.2018 of the Hon'ble Division Bench wherein the conduct of the respondents/plaintiffs have been deprecated with regard to the lack of bona fide.

5. The learned counsel has submitted that though the Hon'ble Supreme Court in the case of Mardia Chemicals Ltd. & Ors Vs Union of India & Ors reported in (2004) 4 SCC 311 has carved out a limited exception to the bar under Section 34, such exceptions are to be given a restrictive meaning and only in case of apparent fraud, a suit may be held to be maintainable. It is submitted that in the instant case, except a bald statement made in paragraph 7 that the property was sold below the reserved price, there is no pleadings regarding any fraud.

6. In support of his submission, the learned Senior Counsel for the petitioner has relied upon the following cases:-

1. (2016) 6 GLR 5 (Vijaya Bank & Anr. Vs Sh. Kaitluanga and Anr.).

2. 2022 (1) GLT 257 (ICICI Bank Ltd. Vs Saswati Das & Ors) Page No.# 6/11

7. In the case of Vijaya Bank (supra), this Court has held that in view of Section 34 of the SARFAESI, Act, the jurisdiction of Civil Court's are barred for entertaining any suit or proceeding arising out of the Act. In the case of ICICI Bank (supra) this Court, after discussing the relevant clause on the present aspect has laid down as follows:-

"10. It is no longer res integra that when a case involves fraud, the bar under the Act of 2002 does not apply. But, the question involved is in respect of the instant proceeding is as to whether the allegation of fraud so made is just an eye wash on account of clever drafting or can be termed to be an allegation of fraud within the meaning of Order VI Rule 4 of the CPC. ..."

8. In the said judgment, reference has also been made to the case of T. Arivandandam vs T. V. Satyapal & Anr. reported in (1977) 4 SCC 467, wherein the following has been laid down in the context of the adjudication process of an application under Order 7 Rule 11 of the CPC.

"5. We have not the slightest hesitation in condemning the petitioner for the gross abuse of the process of the court repeatedly and unrepentantly resorted to. From the statement of the facts found in the judgment of the High Court, it is perfectly plain that the suit now pending before the First Munsif's Court, Bangalore, is a flagrant misuse of the mercies of the law in receiving plaints. The learned Munsif must remember that if on a meaningful-not formal-reading of the plaint it is manifestly vexatious, and meritless, in the sense of not disclosing a clear right to sue, he should exercise his power under Order 7, Rule 11 CPC taking care to see that the ground mentioned therein is fulfilled. And, if clever drafting has created the illusion of a cause of action, nip it in the bud at the first hearing by examining the party searchingly under Order 10, CPC. An activist Judge is the answer to irresponsible law suits."

9. The learned Senior Counsel accordingly submits that the impugned order dated 18.11.2023 is unsustainable in law and is liable to be set aside.

10. Per contra, Shri Patgiri, the learned counsel for the contesting respondents has submitted that though it may be correct that in the plaint, there is no Page No.# 7/11

reference to the order dated 03.09.2018 of the Hon'ble Division Bench, there was disclosure of the proceedings before this Court and also the fact of rejection of the application under Section 17 of the SARFAESI Act. The learned counsel has also emphasized on the issue of fraudulent practice in the transaction and has justified the approach of the plaintiffs to the learned Civil Court by filing the instant suit. It is contended that the issue of fraud can only be adjudicated in the proper manner by a Civil Court and not by the Tribunal.

11. In support of his submission, the learned counsel for the respondents/plaintiffs has referred to the following decisions:-

1. (2021) 9 SCC 99 (Srihari Hanumandas Totala Vs Hemant Vithal Kamat).

2. 2016 (4) GLT 633 ( Giridhar Saha Vs Union of India & Ors).

12. In the case of Srihari Hanumandas Totala (supra), the Hon'ble Supreme Court was considering an order whereby an application under Order 7 Rule 11 of the CPC was refused and such refusal was held to be justified.

13. In the case of Giridhar Saha (supra), this Court had made certain observations on the maintainability of a civil suit in matters pertaining to the SARFAESI Act where there are serious allegations of fraud. In the said case, this Court had extensively discussed the observations of the Hon'ble Supreme Court in the case of Mardia Chemicals (supra).

14. The learned counsel for the respondents/plaintiffs has accordingly justified the order dated 18.11.2023 and has prayed for dismissal of the petition.

15. Shri M. Sarmah, learned counsel for the Bank has however supported the Page No.# 8/11

petitioner in the present case. He has categorically denied the allegation of fraud made in the plaint and has submitted that such allegations have been made only to overcome the aspect of the bar on a Civil Court laid down by Section 34 of the Act.

16. The rival submissions have been duly considered and the materials placed before this Court have been carefully examined.

17. The approach to the Civil Court was only after the approach to this Court by filing a writ petition being WP(C) No. 6015/2014. It is not in dispute that the subject matter of challenge in the writ petition was the auction purchase. The writ petition was pending before this Court for a period of about 4 years and was disposed of only on 21.05.2018 in which period the respondents had enjoyed an interim protection. The disposal of the writ petition was with a direction to the respondents to approach the DRT by filing an appropriate application under Section 17 of the SARFAESI Act within a prescribed time. However, the respondents did not file any such application within the prescribed time and the application which was filed beyond the said prescription was rejected by the learned DRT. The subsequent IA(C) No. 3157/2018 was also dismissed by the Hon'ble Division Bench on 03.09.2018 wherein the Division Bench had made serious observations doubting the bona fide and lack of the due diligence of the respondents. It is only thereafter that the civil suit has been instituted on 12.10.2018.

18. Though an allegation of suppression of material facts has been raised qua the order dated 03.09.2018 not being disclosed in the plaint, even if the aforesaid aspect is overlooked, what is apparent to note is that if there was any actual fraudulent action, there was no action taken by the respondents as Page No.# 9/11

plaintiffs to bring such fraudulent activities to light before any forum till filing of the Civil Suit. This Court has also carefully examined the relevant pleadings in the plaint which is found in paragraph 7. For ready reference, the aforesaid pleadings are extracted herein below:-

"7. That in course of business of Maa Shanti Rice Mill, the Plaintiff No. 1 was suffering from loss for which there was also loan taken from outsider/different persons and to refund the loan to the bank as well to the creditors sold out the land and asset of Maa Shanti Rice Mill in a consideration of Rs. 75,00,000.00 (Rupees Seventy Five Lakh) to one Aarti Jain, W/O Rajiv Jain, sale deed executed but an amount of Rs. 26,00,000.00 (Rupees Twenty Six Lakh) paid through cheque by her husband against the sale consideration which got dishonoured due to insufficient of fund and for that the entire loan could not be liquidated. The Bank also filed an objection against the mutation case filed by Aarti Jain beside objection of the Plaintiff which initially the mutation was rejected but subsequently Aarti Jain and Rajiv Jain managed the authority to get the name of Aarti Jain recorded in the Jamabandi, which the Plaintiff could come to know recently.

A copy of the Jamabandi is annexed herewith being Annexure No. 1."

19. A bare reading of the said pleadings will not bring this Court to any conclusion that there has been any substantive allegation of fraud and it appears that only to overcome the bar under Section 34 of the Act of 2002, such allegations have been made in terms of the exceptions carved out by the Hon'ble Supreme Court in the case of Mardia Chemicals (supra).

20. The observations made in paragraph 51 by the Hon'ble Supreme Court in the aforesaid case of Mardia Chemicals (supra) is an exception which is to be applied only in cases wherein there are serious allegations of fraud and not in a routine manner as the objective of inclusion of the bar in the form of Section 34 would otherwise be defeated.

21. So far as the aspect of adjudication of an application filed under Order 7 Page No.# 10/11

Rule 11 CPC is concerned, the same has to be adjudicated on the basis of the averments made in the plaint itself and when the Court notices that such suit is barred by any law, it would be duty of the Court to reject such plaint. In the instant case, a clear bar has been made by the SARFAESI Act of 2002 in the form of Section 34. This Court has also noticed that the party concerned is not remediless and in fact, the Act of 2002 itself gives the party an opportunity to approach the DRT by invoking Section 17 of the Act. The Act in question also provides for an appeal under Section 18 and the said remedy to prefer an appeal is yet to be exhausted.

22. So far as the case laws relied upon by the respondents, this Court has noticed that in the case of Srihari Hanumandas Totala (supra), the refusal to reject the plaint was on the ground that the defendant, in their petition had raised the issue of res judicata. The Hon'ble Supreme Court has however held that such issue can be decided only in a trial and not on an ex facie pleading or the averments in the plaint itself. Therefore, in the considered opinion of this Court, the aforesaid judgment may not come to the aid of the respondents. At this stage, this Court remind of the fact that though the bar under Section 34 of the Act is only qua the Civil Court even recourse to the writ jurisdiction has been sternly discouraged by the Hon'ble Supreme Court in a series of judgments. The said view has been reiterated in a recent judgment dated 10.04.2024 in S.L.P. (C)/8867/2022 (PHR Invent Educational Society Vs. UCO Bank and Ors.). The relevant portion of which is extracted hereinbelow-

"33. While dismissing the writ petition, we will have to remind the High Courts of the following words of this Court in the case of Satyawati Tondon (supra) [United Bank of India Vs Satyawati Tondon and Ors. reported in (2010) 8 SCC 110] since we have come across various matters wherein the High Courts have been entertaining petitions arising out of the DRT Act and the SARFAESI Act in spite of availability of an effective alternative remedy:

Page No.# 11/11

55. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection."

23. In view of the aforesaid discussions, this Court is of the opinion that the impugned order dated 18.11.2023 is unsustainable in law and accordingly interfered with. This Court is also of the opinion that since a case of a clear bar under Section 34 of the Act of 2002 is made out, the application filed under Order 7 Rule 11, which was registered as Misc. (J) Case No. 279/2023 stands allowed and consequently, the plaint stands rejected.

24. Since this Court has already observed the availability of an appellate forum under Section 18 of the Act of 2002, the respondents herein may avail the same remedy, however, strictly in accordance with law.

25. Petition accordingly stands allowed.

JUDGE

Comparing Assistant