Karnataka High Court

Sri. K. Siddappa vs The Director on 3 January, 2024

Author: H.T. Narendra Prasad

Bench: H.T. Narendra Prasad

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                                                       RFA No. 1582 of 2016




                        IN THE HIGH COURT OF KARNATAKA AT BENGALURU

                           DATED THIS THE 3RD DAY OF JANUARY, 2024

                                            BEFORE
                        THE HON'BLE MR JUSTICE H.T. NARENDRA PRASAD
                    REGULAR FIRST APPEAL NO. 1582 OF 2016 (DEC/INJ)


                   BETWEEN:

                   SRI. K. SIDDAPPA
                   S/O SRI KONDAPPA
                   AGED ABOUT 61 YEARS
                   R/AT NO. 126, OPPOSITE TO
                   HOUSE NO. 161/X, 4TH MAIN ROAD
                   4TH PHASE,BANASHANKARI 3RD STAGE
                   KATHRIGUPPE EAST
                   BENGALURU - 560 085.
                                                                   ...APPELLANT
                   (BY SRI. NAIK N R.,ADVOCATE)

                   AND:

                   1.    THE DIRECTOR
Digitally signed         M/S CAN FIN HOMES LIMITED
by
DHANALAKSHMI             NO. 29/1, SIR M.N.KRISHNA RAO ROAD
MURTHY
                         BASAVANAGUDI, BENGALURU - 560 004.
Location: High
Court of
Karnataka
                   2.    THE ASSISTANT GENERAL MANAGER
                         M/S CAN FIN HOMES LIMITED
                         NO. 69 (OLD NO. 35, 12TH MAIN
                         3RD BLOCK EAST, JAYANAGAR
                         BENGALURU - 560 011.
                                                              ...RESPONDENTS
                   (BY SRI. S K M SHETTY., ADVOCATE FOR R1 & R2)

                          THIS RFA IS FILED UNDER SECTION 96 OF CPC.,
                   AGAINST THE JUDGMENT AND DECREE DATED 16.08.2016
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                                        RFA No. 1582 of 2016




PASSED IN OS NO.7020/2013 ON THE FILE OF THE 24TH
ADDL. CITY CIVIL AND SESSIONS JUDGE, BENGALURU CITY
(CCH 6), DISMISSING THE SUIT FOR DECLARATION AND
PERMANENT INJUNCTION.

      THIS APPEAL, COMING ON FOR         HEARING, THIS DAY,
THE COURT DELIVERED THE FOLLOWING:

                         JUDGMENT

1. This appeal under Section 96 of CPC is filed by the

appellant-plaintiff challenging the judgment and decree

dated 16.08.2016 passed by the XXIV Addl. City Civil

and Sessions Judge, Bangalore City in

O.S.No.7020/2013, whereby the suit filed by the plaintiff

has been dismissed with costs.

2. For the sake of convenience, the parties are

referred to as per their ranking before the Trial Court.

3. Brief facts of the case of the plaintiff:

a) The plaintiff was working as Assistant General

Manager (Purchase) in Hindustan Machine Tools (HMT)

and he had availed loan from the defendants-Bank and

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loan was sanctioned on 10.7.1995 and he was to pay

the same by monthly installment from 1.10.1995

through salary deduction. He has paid the entire loan

amount by way of cash, cheques and amount received

from maturity of LIC bonds.

b) It is further case of the plaintiff that even after

repayment of the entire loan amount, the defendants-

Bank has initiated proceedings against the plaintiff

under the Securitization and Reconstruction of Financial

Assets and Enforcement of Security Interest Act, 2002

(for short the 'SARFAESI Act') calling upon the plaintiff

to pay the outstanding due of Rs.4,17,286/-. Since the

plaintiff has paid the entire loan amount, he has filed the

suit before the Trial Court for declaration seeking for the

following reliefs:

a) Declare that the plaintiff has cleared all dues in respect of loan A/c No.3703 and 5226 availed by the plaintiff, by due payments made by cash, cheques and LIC Maturity bonds. Thus further declared that the claim made by the Defendants in

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a sum of Rs.4,17,130/- for loan A/c No.3703 and Rs.3,56,134/- for loan A/c No.5226 stands discharged by payments made and the amount claimed by the defendants is illegal, Consequently, pass decree that the action taken over SARFAESI ACT is illegal.

b) Pass a judgment and decree against the defendant to pay the excess amount of Rs.20,252/- collected as loan liability of loan account No.3703 with interest at the rat of 16% per annum from the date of plaint till realization.

c) Issue a decree of Permanent Injunction against the Defendants/Agents or anybody claiming under them from interfering from the peaceful possession of the plaintiff in respect of the plaintiff schedule in the interest of justice and equity.

d) Pass such other relief or reliefs as this Hon'ble Court may deem fit to grant in the circumstances of the case including the cost of the above proceedings in the interest of justice and equity.

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4. On service of suit summons, the defendants-Bank

has appeared through counsel and filed written

statement denying the entire plaint averments. It was

contended that the plaintiff has not paid the loan

amount and hence, proceedings have been initiated

under the SARFAESI Act. It was further contended that

they have issued and affixed and published possession

notice under Section 13(4) of the SARFAESI Act. Hence,

the suit filed by the plaintiff is not maintainable and it is

barred under Section 34 of the SARFAESI Act.

5. On the basis of the pleadings of the parties, the

Trial Court framed the following issues:

1. Whether the plaintiff proves that plaintiff has cleared all the dues in respect of Loan Account No.3703 and 5226 availed by the plaintiff by making due payment by way of cash, cheque and LIC maturity Bond as stated in the plaint?.

2. Whether the plaintiff further proves that the claim made by the defendants in a sum of Rs.4,17,130/- in respect of Loan Account No. 3703

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and 5226 is illegal as the same already stands discharged as stated in the plaint?.

3. Whether the plaintiff further proves that the action taken by the defendants under SARFAESI ACT is illegal?.

4. Whether the plaintiff further proves that he has made excess payment to the defendants to an extent of Rs.20,252/- in respect of Loan Account No.3703 as stated in the plaint?.

5. Whether the plaintiff further proves that he is in lawful possession of the plaint schedule property as on the date of suit?.

6. Whether the plaintiff further proves that alleged interference of the defendants as stated in the plaint?.

7. Whether the defendants prove that the suit as brought by the plaintiff is barred under Section 34 of SARFAESI ACT 2002 as contended in Para 12 of the written statement?.

8. Whether the defendants further prove that this court has no jurisdiction to entertain the present suit as contended in Para 12 of written statement?.

9. Whether plaintiff is entitled for the relief as prayed for?

10. What decree or order?.

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6. To prove the case, the plaintiff has examined

himself as PW-1 and produced 32 documents, marked

as Exs.P-1 to 32. On behalf of the defendants, the

Manager of the defendants-Bank has been examined as

DW-1 and produced 25 documents marked as Exs.D-1

to 25. On appreciation of oral and documentary

evidence, the Trial Court has answered issue Nos.1 to 6

and 9 in the negative and issue Nos.7 and 8 in the

affirmative and accordingly dismissed the suit with costs

of Rs.15,000/-. Being aggrieved by the same, the

plaintiff has filed this present appeal.

7. The learned counsel for the appellant-plaintiff has

contended that the plaintiff has repaid the entire loan

amount by way of monthly installment through salary

deductions and also by way of cash, cheques and

amount received from maturity of LIC bonds. After

clearing the loan amount, the plaintiff requested the

Bank Manager of the defendants-Bank by name

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Mr.P.Vijaya Sekhara Raju on 6.5.1998 to close the Loan

Account No.3703 and accordingly, he issued copy of

loan closure letter dated 6.5.1998 to the plaintiff.

Therefore, it is clear that the plaintiff has no dues of

loan amount to the Bank. Contrary to the materials

available on record, the Bank has issued notice under

the SARFAESI Act to the plaintiff. The Trial Court without

considering this aspect of the matter, has erred in

dismissing the suit with costs. Hence, he sought for

allowing the appeal.

8. The learned counsel for the respondents-defendants

has contended that the plaintiff has not paid the entire

loan amount. Since there was due of amount to the

defendants-Bank, the Bank initiated proceedings under

the SARFAESI Act. The suit filed by the plaintiff is not

maintainable and it is barred under Section 34 of the

SARFAESI Act. The Trial Court has rightly dismissed the

suit and there is no error in the judgment and decree

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passed by the Trial Court. Hence, he sought for

dismissal of the appeal.

9. Heard the learned counsel for the parties and

perused the judgment and decree of the Trial Court and

original records.

10. After hearing the learned counsel for the parties,

the point that arises for consideration in this appeal is:

"Whether the Trial Court is justified in dismissing the suit as it is barred under Section 34 of the SARFAESI Act, 2002 ?".

11. It is not in dispute that the plaintiff has availed

loan from the defendants-Bank. The specific contention

of the plaintiff is that he has repaid the entire loan

amount by way of monthly installments through salary

deductions, cash, cheques and amount received from

maturity of LIC bonds. Thereafter, he requested the

Bank Manager to close the Loan Account No.3703. The

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defendants-Bank has denied the same and contended

that the plaintiff is due of loan amount and he has to

pay a sum of Rs.4,17,286/-. Therefore, the Bank has

initiated proceedings against the plaintiff under the

SARFAESI Act. It is the specific contention of the

defendants that the suit is not maintainable and it is

barred under Section 34 of the SARFAESI Act.

12. Section 34 of the SARFAESI Act contemplates as

under:

34. Civil court not to have jurisdiction: No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

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13. In the case on hand, the plaintiff has challenged

the proceedings initiated by the defendants-Bank under

the SARFAESI Act. If the plaintiff has any grievance

against the proceedings initiated by the defendants-

Bank under the SARFAESI Act, his remedy is before the

Debt Recovery Tribunal. Hence, the Trial Court

considering the materials available on record has rightly

answered issue No.7 in the affirmative and held that the

suit is not maintainable and is barred under Section 34

of the SARFAESI Act and accordingly dismissed the suit.

14. The Trial Court has assessed the entire evidence on

the basis of broad preponderance of probabilities and

has come to a proper conclusion. There is no perversity

or illegality in the approach adopted by the Trial Court

and hence no interference is called for. Consequently,

the appeal is liable to be dismissed. Hence, the point

raised by this Court is answered accordingly. However,

this court is of the opinion that the Trial Court is not

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justified in imposing cost of Rs.15,000/- on the plaintiff

and hence, only that portion of the judgment and decree

is liable to be set aside. Hence, the following order is

passed:

ORDER

a) The appeal is allowed in part.

b) The judgment and decree dated 16.08.2016

passed by the XXIV Addl. City Civil and

Sessions Judge, Bangalore City in

O.S.No.7020/2013 is confirmed. However, the

judgment and decree only in respect of

imposing cost of Rs.15,000/- on the plaintiff, is

set aside.

d) It is made clear that if the plaintiff

approaches the Debt Recovery Tribunal, the

Tribunal is directed to consider the case of the

plaintiff in accordance with law, without being

influenced by any observations made by the