Karnataka High Court

M/S.Tumkur Grain Merchants ... vs Smt. Bhavana S on 6 August, 2024

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                                                        NC: 2024:KHC:31221
                                                     MFA No. 4728 of 2024
                                                 C/W MFA No. 4902 of 2024




             IN THE HIGH COURT OF KARNATAKA AT BENGALURU

                    DATED THIS THE 6TH DAY OF AUGUST, 2024

                                      BEFORE
              THE HON'BLE SMT. JUSTICE LALITHA KANNEGANTI
             MISCELLANEOUS FIRST APPEAL NO. 4728 OF 2024 (CPC)
                                   C/W
               MISCELLANEOUS FIRST APPEAL NO. 4902 OF 2024

             IN MFA No.4728/2024

             BETWEEN:

                 M/S.TUMKUR GRAIN MERCHANTS
                 CO-OPERATIVE BANK LIMITED
                 HAVING THEIR OFFICE AT NO.33
                 HMT MAIN ROAD
                 GOKULA 1ST STAGE
                 NANJAPPA REDDY COLONY
                 MATHIKERE, BENGALURU 560054
                 REP BY ITS AUTHORIZED OFFICER
                 SRI RAJASHEKAR
                                                               ...APPELLANT
             (BY SRI. K.V.LOKESH, ADVOCATE FOR
                 SRI.RAGHAVENDRA C., ADVOCATE)
Digitally
signed by    AND:
MEGHA
MOHAN            SMT. BHAVANA S
Location:        AGED ABOUT 31 YEARS
HIGH COURT       D/O N.SREENIVASA
OF               W/O SANTHOSH KUMAR
KARNATAKA        R/AT NO.296, 16TH CROSS
                 SADASHIVANAGAR
                 BENGALURU- 560 080
                                                             ...RESPONDENT
             (BY SRI.NANDAKUMAR T.M.,- ABSENT)

                  THIS MFA FILED U/O 43 RULE 1(r) R/W SECTION 151 OF CPC,
             AGAINST THE ORDER DATED:12.06.2024 PASSED ON I.A.NO.1 IN
             OS.NO.7855/2023 ON THE FILE OF THE XXII ADDITIONAL CITY
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                                           NC: 2024:KHC:31221
                                        MFA No. 4728 of 2024
                                    C/W MFA No. 4902 of 2024



CIVIL AND SESSIONS JUDGE, BENGALURU, CCH-7, ALLOWING THE
IA.NO.1 FILED UNDER ORDER 39 RULE 1 AND 2 OF CPC.

IN MFA No.4902/2024

BETWEEN:

    M/S. TUMKUR GRAIN MERCHANTS
    CO-OPERATIVE BANK LIMITED
    HAVING THEIR OFFICE AT NO.33
    HMT MAIN ROAD, GOKULA 1ST STAGE
    NANJAPPA REDDY COLONY
    MATHIKERE
    BENGALURU -560 054
    REP. BY ITS AUTHORIZED OFFICER
    SRI RAJASHEKAR
                                                  ...APPELLANT

(BY SRI. K.V.LOKESH, ADVOCATE FOR
    SRI.RAGHAVENDRA C., ADVOCATE)

AND:

    SMT. BHAVANA S.,
    AGED ABOUT 31 YEARS
    D/O N.SREENIVASA
    W/O SANTHOSH KUMAR
    R/AT NO.296, 16TH CROSS
    SADASHIVANAGAR
    BENGALURU -560 080
                                                ...RESPONDENT

(BY SRI.NANDAKUMAR T.M., ADVOCATE- ABSENT)

     THIS MFA FILED U/O.43 RULE 1(r) OF THE CPC, AGAINST THE
ORDER    DATED:   12.06.2024   PASSED    ON    IA  NO.2   IN
O.S.NO.7855/2023 ON THE FILE OF THE XXII ADDITIONAL CITY
CIVIL AND SESSIONS JUDGE, BENGALURU CITY, (CCH-7),
ALLOWING IA NO.2 FILED U/O.39 RULE 1 AND 2 OF CPC.

     THESE APPEALS, COMING ON FOR 'JUDGMENT', THIS DAY,
JUDGMENT WAS DELIVERED THEREIN AS UNDER:

CORAM:   HON'BLE SMT. JUSTICE LALITHA KANNEGANTI
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                                                NC: 2024:KHC:31221
                                             MFA No. 4728 of 2024
                                         C/W MFA No. 4902 of 2024



                         ORAL JUDGMENT

These present two appeals are filed aggrieved by the

order passed in I.A.Nos.1 & 2 in O.S.No.7855/2023 dated

12.06.2024 by the XXII Additional City Civil & Sessions Judge,

Bangalore City, whereby the trial Court had passed a common

order in I.A.Nos.1 & 2 restraining the appellant/defendant -

bank from interfering with the possession of the plaintiff over

the suit schedule property and from alienating the suit schedule

property in any manner pending disposal of the suit. Aggrieved

thereby, two appeals are filed by the appellant/defendant i.e.,

MFA.No.4728/2024 and MFA.No.4902/2024. Hence, this Court

is disposing off these appeals by way of a common order.

2. When this matter came up before this Court on

05.08.2024, this Court had heard the learned counsel for the

appellant at length and there was no representation on behalf

of the respondent. For giving an opportunity to the

respondent/plaintiff, the matter was directed to be listed today.

Today also, there is no representation on behalf of the

respondent/plaintiff. Hence, this Court is proposing to deal with

the case on the merits of the matter.

NC: 2024:KHC:31221

3. The respondent/plaintiff had filed the suit against the

petitioner/defendant - Co-operative Bank seeking the relief to

grant an order of permanent injunction restraining the

defendant - Bank, his heirs, agents, representatives, assignees

and henchmen or anybody claiming through them on the suit

schedule property. It is the case of the plaintiff that the plaintiff

and her father have purchased the property by way of a

registered sale deed dated 17.01.2013. The plaintiff and her

father had obtained loan of Rs.6 crores from the defendant -

bank on 17.01.2013 against the security of the suit scheduled

property for which a mortgage deed was also executed by the

plaintiff in favour of the defendant - bank. It is stated that the

defendant - bank has granted additional loan of an amount of

Rs.2.5 crores on 30.08.2013 and the same schedule property

was mortgaged as a security as the value of the property was

substantial. Due to economic and financial reasons, the plaintiff

could not pay the amount and both the accounts of the plaintiff

were classified as non performing assets. The defendant - bank

initiated proceedings for recovery of the amount before the

Joint Registrar of Co-operative Societies, Bangalore and the

said recovery petition came to be decreed ex-parte by order

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dated 12.01.2017 as the plaintiff could not contest the case

having not been served with the notice. The defendant - bank

after obtaining the ex-parte decree approached for enforcement

of the securities. The plaintiff had requested the defendant -

bank to grant some time to clear the loans. The bank directed

the plaintiff to execute some more documents in favour of the

defendant - bank in order to accommodate time for repayment

of decreetal amount. Then again, the plaintiff has executed a

fresh mortgage deed in favour of the bank for an amount of

Rs.15 crores which was neither transacted nor security interest

was intended to be created by the plaintiff. It is a case of the

plaintiff that the defendant - bank had played fraud on the

plaintiff. It is also stated that the bank has served a notice on

09.06.2021 under Section 13(4) of the SARFAESI Act calling

upon the plaintiff to pay Rs.19.18 crores to the bank. On due

verification, the plaintiff came to know that on 22.06.2017, the

bank fraudulently transferred an amount of Rs.12,51,44,950/-

to another account number which stands in the name of

Vaishnavi Infrastructure Corridor Pvt Ltd., which is not related

to the plaintiff in any manner. Basing on these grounds, the

present suit came to be filed.

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4. The defendant - bank had filed a detailed written

statement and also stated about the earlier suits that were filed

by the father, mother of the plaintiff and the suit that is filed by

the father has been dismissed. Relying on the judgement of the

Hon'ble Apex Court, the defendant had stated that when the

proceedings were initiated under the SARFAESI Act, the Civil

Courts have no jurisdiction under Section 34 of the SARFAESI

Act.

5. The trial Court had held that the suit is maintainable

before the Civil Court even though the proceedings under the

SARFAESI Act are initiated as the plaintiff was pleading fraud

and once fraud is pleaded, it has to be decided by the Civil

Court, but not by the Debt Recovery Tribunal. Considering the

judgement of the Hon'ble Apex Court in the case of Mardia

Chemicals Ltd. and Others Vs. Union of India (UOI) and

Others1, the trial Court had held that the suit is maintainable.

Then coming to the injunction, the trial Court had observed

that from the record it is gathered that the defendant had

taken Commissioner twice in order to get the possession of the

(2004) 4 SCC 311

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scheduled property, at that time whether the defendant - bank

has complied the direction of the learned Magistrate by drawing

a Mahazar and Inventory and same has been submitted to the

Magistrate is again a matter of trial. Considering those facts,

the Court was of the view that till the bank supplied the

Account Statement in respect to the 3rd loan, till confirming the

sanction of loan to the extent of Rs.15 crores and document in

respect of the said loan is verified, it is not proper for the bank

to dispossess the plaintiff from the scheduled property. Thus,

the balance of convenience is also in favour of the plaintiff. If

the ex-parte temporary injunction granted to the plaintiff is not

extended, the plaintiff will be put to great hardship which

cannot be compensated in terms of money. No doubt, the

defendant - bank is dealing with the public money and interest

of the share holders and depositors has to be safeguarded by

the Court. In the meantime, the bank officials have committed

a mistake as contended by the plaintiff that they have created

a loan document has to be verified. Therefore, till that it is just

and proper to restrain the defendant - bank from taking any

action on the basis of the MODTD dated 29.06.2017.

Accordingly, the trial Court had restrained the bank from

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interfering with the possession of the plaintiff over the

scheduled property in any manner. The trial Court had also

restrained the defendant -bank from alienating the suit

scheduled property in any manner pending disposal of the suit.

6. Learned counsel appearing for the defendant - bank

submits that they have initiated the proceedings under the

SARFAESI Act in the year 2019. The plaintiff and her father are

the joint owners of the suit schedule property and they have

obtained the loan by mortgaging the suit schedule property.

The father questioning the very same SARFAESI proceedings

and also alleging fraud had filed O.S.No.401/2022. Initially, an

application that is filed by them seeking interim injunction

came to be dismissed with cost of Rs.20,000/- by order dated

15.02.2023. Thereafter, the suit came to be dismissed by

judgment and decree dated 12.10.2023, wherein the Court had

given a finding that the suit is not maintainable and the Civil

Court has no jurisdiction to entertain the suit. Thereafter, the

mother of the plaintiff, who is the GPA holder of the plaintiff

herein, had filed O.S.No.25123/2023 seeking injunction stating

that the property is purchased from the amount given by her

father and the property belongs to her. In that suit, the Court

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had passed a conditional order on 24.01.2023, wherein the

Court had granted ad-interim injunction restraining defendant

No.3 from alienating the suit property till the next date of

hearing subject to the condition that within a month, plaintiff

shall pay 20% of the outstanding loan to the 3rd defendant and

the plaintiff was also directed to strictly comply with the

provisions of Order 39 Rule 3 (a) and (b) of CPC. Thereafter,

the said suit came to be withdrawn by a memo dated

24.02.2023. Then the father has filed a writ petition i.e.,

W.P.No.4239/2023 before this Court and that came to be

withdrawn. Now, the present suit is filed in 2023.

7. Learned counsel for the appellant/defendant - bank

submits that after withdrawing the suit filed by the mother, the

present suit is filed. It is submitted that they are filing the suits

one after the other and obtaining the interim orders and one of

the suits is already dismissed and the suit filed by the mother is

withdrawn and even the writ petition that is filed by the father

is withdrawn. It is submitted that they have taken the loan long

back and from that time, the defendant - bank could not

recover the said amounts. Just for the purpose of invoking the

jurisdiction of the Civil Court, they have taken this ground fraud

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and very same stand is taken by the father and the said suit is

dismissed. Learned counsel submits that the trial Court ought

not to have granted injunction, particularly, when the Bank

filed all the documents to show the conduct of the plaintiff. It is

submitted that when an equitable relief of injunction is sought,

the party should come to the Court with clean hands and the

manner in which the suit is filed itself goes to show that there

are no bonafides on the part of the plaintiff and only for the

purpose of having an order and restraining the defendant -

bank from proceeding with the proceedings under the

SARFAESI Act, the suit is filed. Learned counsel further submits

that all the grounds that are raised before this Court can as

well be raised before the Debt Recovery Tribunal and the

tribunal would appreciate the same. It is submitted that mere

taking a ground of fraud itself is not sufficient. He had relied on

para No.8 of the judgement of the Hon'ble Apex Court in the

case of Electro Steel Castings Ltd. Vs. UV Asset

Reconstruction Company Ltd. And Others2 which reads

thus:

(2022) 2 SCC 573

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NC: 2024:KHC:31221

"8. Having considered the pleadings and averments in the suit more particularly the use of word 'fraud' even considering the case on behalf of the Plaintiff, we find that the allegations of 'fraud' are made without any particulars and only with a view to get out of the bar Under Section 34 of the SARFAESI Act and by such a clever drafting the Plaintiff intends to bring the suit maintainable despite the bar Under Section 34 of the SARFAESI Act, which is not permissible at all and which cannot be approvede Even otherwise it is required to be noted that it is the case on behalf of the Plaintiff-Appellant herein that in view of the approved resolution plan under IBC and thereafter the original corporate debtor being discharged there shall not be any debt so far as the Plaintiff-Appellant herein is concerned and therefore the assignment deed can be said to be 'fraudulent'. The aforesaid cannot be accepted. By that itself the assignment deed cannot be said to be 'fraudulent'. In any case, whether there shall be legally enforceable debt so far as the Plaintiff-Appellant herein is concerned even after the approved resolution plan against the corporate debtor still there shall be the liability of the Plaintiff and/or the assignee can be said to be secured creditor and/or whether any amount is due and payable by the Plaintiff, are all questions which are required to be dealt with and considered by the DRT in the proceedings initiated under the SARFAESI Act. It is required to be noted that as such in the present case the assignee has already initiated the proceedings Under Section 13 which can be challenged by the Plaintiff-Appellant herein by way of application Under Section 17 of the SARFAESI Act before the DRT on whatever the legally available defences which may be available to it. We are of the firm opinion that the suit filed by the Plaintiff-Appellant herein was absolutely not maintainable in view of the bar contained Under Section 34

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of the SARFAESI Act. Therefore, as such the courts below have not committed any error in rejecting the plaint/dismissing the suit in view of the bar Under Section 34 of the SARFAESI Act."

8. Basing on this judgment, learned counsel submits that

this is not a case where on the ground of fraud the suit can be

entertained by the Court and without considering the

documents filed by him, granting injunction in favour of the

plaintiff is without jurisdiction. He submits that the appeal has

to be allowed by setting aside the order passed by the trial

Court in restraining the defendant - bank from alienating the

property as well as interfering with the possession of the

plaintiff.

9. This Court has already observed, that there was no

representation on behalf of the respondent/plaintiff on

05.08.2024, for giving an opportunity to the respondent, the

matter was directed to be listed under the caption for judgment

today. Today also, there is no representation on behalf of the

respondent/plaintiff.

10. Having heard the learned counsel for the appellant,

this Court has perused the entire material on record. The suit is

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filed for injunction. With regard to the maintainability of the

suit, several grounds are raised by the defendant and filed

several documents. From the order impugned, this Court do not

find that the trial Court had considered any of the contentions

of the defendant or any of the earlier suits that are filed by the

plaintiff. When the plaintiff comes before the Court seeking.

Bare injunction and also an interim injunction, they have to

come before the Court with clean hands, otherwise, they are

not entitled for the equitable relief of injunction. In respect of

the very same suit schedule property, when the father of the

plaintiff has already filed a suit and the said suit is dismissed

and the interim application is dismissed with costs, all those

things were not brought to the notice of the trial Court. The suit

that is filed by the mother was withdrawn later and the

proceedings that are initiated by the father by way of a writ

petition were not pleaded before the Court. On the face of it, it

appears that the suit is filed on the ground of fraud just to get

over the procedural aspect so that they can approach the Civil

Court and the Civil Court will get jurisdiction once the aspect of

fraud is alleged. The Hon'ble Apex Court in the case of Mardia

Chemicals Ltd. referred supra has observed that any

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allegations of fraud, they can only be decided by a competent

Civil Court but not by the Debt Recovery Tribunal. The Court

ought not to have granted injunction in facts and circumstances

of this nature and particularly when the defendant had filed

voluminous documents to show the conduct of the plaintiff and

how they are approaching the Courts by filing one application

or the other. But the order of the trial Court is silent on all

these aspects. It appears that the trial Court had only looked

into or considered the case of the plaintiff and failed to consider

the records that are placed on behalf of the defendant. When

the defendant is a bank and when the public money is involved,

all the more reason that the trial Court should have been more

cautious before granting these kind of orders.

11. Coming to the prima facie case, balance of

convenience and the irreparable loss as discussed by the Court,

in the considered opinion of this Court, the plaintiff could not

make out prima facie case or balance of convenience in his

favour and in fact, if the injunction is granted, the defendant

would be put to irreparable loss being a bank who had lent an

amount of Rs.15 crores to the plaintiff. In that view of the

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matter, this Court is of the considered opinion that the order

impugned has to be set aside. Accordingly, the following:

ORDER

i. Accordingly, MFA.Nos.4728/2024 and 4902/2024 are allowed.

ii. Consequently, the order passed in I.A.Nos.1 & 2 in O.S.No.7855/2023 dated 12.06.2024 by the XXII Additional City Civil & Sessions Judge, Bangalore City, is set aside.