Madhya Pradesh High Court
Sagar Singh Damor vs Deepak Sharma on 4 December, 2021
Author: Sujoy Paul
THE HIGH COURT OF MADHYA PRADESH
F.A. No.303/2020
Sagar Singh Damor V/s. Deepak Sharma & Others
-: 1 :-
HIGH COURT OF MADHYA PRADESH:BENCH AT INDORE
Division Bench: Hon'ble Shri Sujoy Paul and Hon'ble Shri
Pranay Verma
First Appeal No.303/2020
Petitioner : Sagar Singh Damor S/o Shankar Damor
Respondent : Deepak Sharma and Others
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Shri Padmanabh Saxena, learned counsel for the appellant.
Shri Jitendra Yadav, learned counsel for respondents No.2 & 3.
Shri Shashank Shrivastava, learned counsel for respondent
No.4/Bank.
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J U D G E M E N T
(Delivered on 04.12.2021)
Per : Pranay Verma,J.
1. This appeal has been preferred by the plaintiff/appellant under
Section 96 of the CPC against the order amounting to a decree dated
21.01.2020 passed in Civil Suit No.160-A/2019 by the 21 st Additional
District Judge, District Indore whereby two separate applications both
under Order 7 Rule 11 of the CPC filed by defendants 2 & 3/respondents
2 & 3 and defendant No.4/respondent No.4 under Order 7 Rule 11 of the
CPC read with Section 34 of the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002
(hereinafter "the Act, 2002") have been allowed and consequently the
plaint has been rejected.
2. The suit giving rise to this appeal has been filed by plaintiff for
declaration of his title to the suit property which is a house constructed
over plot No.1146 and 1147, Pheonix Town Colony, Village Kellod Hala,
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THE HIGH COURT OF MADHYA PRADESH
F.A. No.303/2020
Sagar Singh Damor V/s. Deepak Sharma & Others
Tehsil and District Indore, for declaration that the power of attorneys
dated 10.09.2014 allegedly executed by him in favour of defendant No.1
and the sale deed dated 17.06.2015 executed by defendant No.1 in favour
of defendant No.2 on strength of such power of attorney is null and void
and not binding upon him, for declaration that the loan obtained by
defendant No.2 from defendant No.4 and mortgage of the suit property is
not binding upon him, that defendant No.4 does not have any right to
disposses him from the suit property or alienate the same in favour of any
third person and for declaration that defendant No.4 does not have any
right to recover any amount from the suit property.
3. The plaintiff has submitted that by two registered sale deeds both
dated 24.03.2013 he had purchased two plots from its previous owner. On
12.08.2013 he entered into an agreement with defendant No.1 for raising
construction over the plots. An agreement was also executed between
them upon payment of Rs.9,00,000/- by plaintiff. Defendant No.1 has
eventually taken a sum of Rs.53,64,909/- from plaintiff for construction
of the house but has not completed the same reports regarding which
were made by plaintiff to various authorities. Plaintiff then got
suspicious and made enquiries from the office of Sub Registrar and found
out that defendant No.1 has got executed two power of attorneys on
10.09.2014 allegedly executed by him. Plaintiff has neither signed upon
them nor has affixed his thumb impressions thereupon. The alleged
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THE HIGH COURT OF MADHYA PRADESH
F.A. No.303/2020
Sagar Singh Damor V/s. Deepak Sharma & Others
power of attorneys are forged and fabricated and have been got
manufactured by defendant No.1 by impersonation. On their strength
defendant No.1 has executed a registered sale deed on 17.06.2015 in
favour of defendant No.2 with respect to the suit property.
4. The plaintiff further submitted that on the basis of aforesaid forged
documents defendant No.2 has mortgaged the suit property with
defendant No.4 Bank and has obtained a loan from it. The said loan
transaction is not binding upon him and defendant No.4 is not entitled to
recover any loan amount from him or the suit property. Defendants No.2
to 4 are attempting to alienate the suit property regarding which they do
not have any right and are also threatening to forcibly dispossess the
plaintiff therefrom.
5. Upon service of summons upon them defendants 2 and 3 as well as
defendant No.4 filed separate applications under Order 7 Rule 11 of the
CPC for rejection of the plaint on the ground of the same being barred by
law i.e. by virtue of provisions of Section 34 of the Act, 2002 submitting
that proceedings under Section 13(2) and 13(4) of the Act, 2002 had been
initiated by defendant No.4 against defendants 2 & 3 and symbolic
possession of the suit property has already been taken and proceedings
for taking over actual physical possession are pending. In respect of the
suit property order has already been passed by the Tehsildar and District
Magistrate, Indore under the provisions of the Act, 2002 hence in view of
the bar contained in Section 34 of the said Act, the present claim is
beyond the jurisdiction of the Civil Court and it is only the Debt
Recovery Tribunal which has jurisdiction in the matter. The plaintiff
contested both the applications by filing his reply to the same.
6. By the impugned order the applications under Order 7 Rule 11 of
the CPC filed by defendants 2 & 3 and defendant No.4 have been
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THE HIGH COURT OF MADHYA PRADESH
F.A. No.303/2020
Sagar Singh Damor V/s. Deepak Sharma & Others
allowed by the trial Court and consequentially the plaint has been
rejected finding that the power of attorney executed by plaintiff in favour
of defendant No.1 has not been declared as null and void by any
competent Court and plaintiff can challenge the same before the Debt
Recovery Tribunal or the Tribunal constituted under the Act, 2002. It has
further been held that as per Section 17 of the Act any person can apply
before the Debt Recovery Tribunal against any of the measures taken
under Section 13(4) and the Tribunal shall hear and decide such an
application. The words "any person" are quite wide and shall also include
the plaintiff who had purchased the suit property earlier. If plaintiff was
aggrieved by any order under Section 13(4) he should have approached
the DRT but has not done so. The claim of the plaintiff is hence barred by
virtue of provisions of Section 34 of the Act, 2002 as it would only be the
DRT or the Appellate Tribunal which shall have the jurisdiction to
entertain the same and the jurisdiction of the Civil Court is clearly
barred.
7. Learned counsel for the plaintiff/appellant submits that the
pleadings as contained in the plaint and the reliefs sought for by him
have not been appreciated by the Court below in proper perspective. The
plaintiff had specifically pleaded as regards the fraud having been
committed by defendant No.1 whereby he had got forged and fabricated
power of attorneys executed in his own favour purportedly executed by
plaintiff and on its strength had sold the suit property in favour of
defendant No.2 who subsequently obtained a loan from defendant No.4
for default of payment of which recovery proceedings have been initiated
with respect to the suit property. The claim of plaintiff was hence
founded upon allegations of fraud. He is not a party to the transaction of
obtaining of loan by defendant No.2 from defendant No.4. He has
primarily claimed title to the suit property by virtue of his sale deeds and
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THE HIGH COURT OF MADHYA PRADESH
F.A. No.303/2020
Sagar Singh Damor V/s. Deepak Sharma & Others
by contending the sale deed executed by defendant No.1 in favour of
defendant No.2 to be null and void and for recovery proceedings
instituted against him by defendant No.4 not to be binding upon him for
the said reason. Such a claim would be certainly maintainable before the
Civil Court whose jurisdiction would not be barred under Section 34 of
the Act, 2002. It is further submitted that the plaintiff would not be
covered within the meaning of "any person" as defined under Section 17
of the Act, 2002 hence would not be obliged to prefer any application
under Section 17 of the Act, 2002 before the Tribunal in respect of the
action taken by defendant No.4 for recovery of its dues in respect of the
loan taken by defendant No.2. The Court below has however totally
failed to appreciate these aspects of the matter.
8. Learned counsel for defendants 2 and 3 as well as defendant No.4
have, on the other hand, contended that proceedings which have been
initiated for recovery of loan raised by defendants 2 and 3 from
defendant No.4 are with respect to the suit property and if plaintiff wants
to challenge those proceedings, the only course available to him is to
challenge them as per provisions of Section 17 of the Act, 2002 and a
Civil Suit before the Civil Court for challenging the same would be
clearly barred. In respect of the suit property notices under Section 13(2)
and 13(4) have already been issued subsequent to which orders have
been passed by the District Magistrate, Indore and the Tehsildar
concerned and if plaintiff felt aggrieved by the same, then his only
remedy was under the Act, 2002 and not by way of the present suit.
9. We have considered the rival submissions of the learned counsel
for the parties. The impugned order has been passed by the Trial Court
while considering an application under Order 7 Rule 11 of the CPC
hence presently only the averments in the plaint are to be taken into
consideration as has been held by the Hon'ble Supreme Court in Saleem
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THE HIGH COURT OF MADHYA PRADESH
F.A. No.303/2020
Sagar Singh Damor V/s. Deepak Sharma & Others
Bhai and Others V/s. State of Maharashtra and Others reported in
2003 (1) SCC 557. The averments contained in the plaint are to be taken
to be correct at this stage as has been held by the Hon'ble Supreme Court
in case of Liverpool & London S.P. & I Associated Limited V/s.
M.V.Sea Success I and another reported in (2004) 9 Supreme Court
Cases 512.
10. A perusal of the plaint reveals that the same is founded upon plea
of fraud. The plaintiff has categorically contended that he is the owner of
the suit property but two forged and fabricated power of attorneys have
been got executed from him by defendant No.1, who has on strength of
the same sold the suit property in favour of defendant No.2 who has on
its strength obtained a loan from defendant No.4 for recovery of which
proceedings have been initiated in respect of the suit property. Plaintiff
has pleaded that he is not bound by the transaction whereby defendant
No.2 has obtained loan from defendant No.4 who has no right to recover
the loan from the suit property of which he is the owner since the same
has not been sold by him in favour of defendant No.2. The sale deed has
come into existence as a result of fraud having been practiced upon him.
In view of pleadings of plaintiff, the claim would be well within the
jurisdiction of the Civil Court and would not be barred by virtue of
provisions of Section 34 of the Act, 2002.
11. Section 13 (2) of the Act, 2002 reads as under :-
"Section 13(2) - Where any borrower, who is under a
liability to a secured creditor under a security agreement,
makes any default in repayment of secured debt or any
instalment thereof, and his account in respect of such debt
is classified by the secured creditor as non-performing
asset, then, the secured creditor may require the borrower
by notice in writing to discharge in full his liabilities to the
secured creditor within sixty days from the date of notice
failing which the secured creditor shall be entitled to
exercise all or any of the rights under sub-section (4)."
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THE HIGH COURT OF MADHYA PRADESH
F.A. No.303/2020
Sagar Singh Damor V/s. Deepak Sharma & Others
12. Section 13 (4) of the Act, 2002 reads as under :-
"Section 13 (4) - In case the borrower fails to discharge his
liability in full within the period specified in sub-section
(2), the secured creditor may take recourse to one or more
of the following measures to recover his secured debt,
namely :-
(a) take possession of the secured assets of the borrower
including the right to transfer by way of lease, assignment
or sale for realising the secured asset;"
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13. Section 17 of the Act, 2002 reads as under :-
"[Application against measures to recover secured
debts] - (1) Any person (including borrower), aggrieved by
any of the measures referred to in sub-section (4) of section
13 taken by the secured creditor or his authorised officer
under this Chapter, [may take an application along with
such fee, as may be prescribed] to the Debts Recovery
Tribunal having jurisdiction in the matter within forty-five
days from the date on which such measures had been
taken:"
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14. Section 34 of the Act, 2002 reads 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 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 (51 of 1993)."
15. As per Section 17(1) any person (including borrower), aggrieved
by any of the measures referred to in Sub-Section (4) of Section 13 taken
by the secured creditor can make an application to the Debt Recovery
Tribunal. As per Section 13(4) in case the borrower fails to discharge his
liability, the secured creditor may take possession of the secured assets of
the borrower. This pre-supposes that the asset secured with the secured
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THE HIGH COURT OF MADHYA PRADESH
F.A. No.303/2020
Sagar Singh Damor V/s. Deepak Sharma & Others
creditor by the borrower is owned by him. In that case the secured
creditor can exercise the rights as envisaged therein. However in the
present case the plaintiff has specifically contended that the borrower i.e.
defendant No.2 is not the owner of the suit property and had no right to
secure the same with defendant No.4. This contention of his is based
upon his plea that the sale deed executed in favour of defendant No.2 by
defendant No.1 on strength of forged power of attorney is null and void
and not binding upon him. Hence, whether the asset secured by the
borrower i.e. defendant No.2 is actually owned by him has itself been
questioned by plaintiff. Such a question can certainly not be said to be
falling within the domain of the Tribunal as contemplated under Section
17 of the Act, 2002 and shall primarily be within the consideration of the
Civil Court which has exclusive jurisdiction to entertain and decide the
said dispute.
16. We are fortified in our view by a decision of Division Bench of
this Court in Prabha Jain V/s. Central Bank of India and Others
reported in 2013 (1) MPLJ 385 in which also validity of a sale deed of a
mortgaged property had been questioned before the Civil Court. In
Paragraph 9 it was held as under :-
"9. From the scheme of the SARFAESI Act narrated above
it is apparent that the Debts Recovery Tribunal has no
jurisdiction to decide the question whether persons other
than the mortgager had title in the mortgaged property. In
that context the validity of the sale deed of a property
mortgaged with the Central Bank of India cannot be decided
by the Debts Recovery Tribunal. If the sale deed is held to
be wholly or partially invalid it will immediately affect the
validity of the mortgage of that property. The jurisdiction of
civil court is ousted in respect of matters which the Debts
Recovery Tribunal is empowered to decide. Absence of a
provision to enable the Debts Recovery Tribunal for holding
an enquiry on a particular question is indicative that
jurisdiction of civil courts on that question is not excluded.
The above question relating to the validity of the sale deed
and its consequent effect on the mortgage are matters which
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THE HIGH COURT OF MADHYA PRADESH
F.A. No.303/2020
Sagar Singh Damor V/s. Deepak Sharma & Others
the Debts Recovery Tribunal is not empowered to decide.
The provision for appeal under section17of the SARFAESI
Act by "any person" does not oust the jurisdiction of civil
court on matters which cannot be decided by the Debts
Recovery Tribunal. Therefore, the jurisdiction of the civil
court to decide these matters cannot be held to be ousted
under section 34 of the SARFAESI Act."
17. As the claim of the plaintiff and the reliefs claimed by him are well
within the jurisdiction of the Civil Court, the Trial Court has committed a
gross error of law in allowing the applications under Order 7 Rule 11 of
the CPC filed by defendants No.2 & 3 and defendant No.4 and
consequently rejecting the plaint by holding the same to be barred under
the provisions of Section 34 of the Act, 2002.
18. Consequently the appeal is allowed. The impugned judgment and
decree passed by the Trial Court is set aside and the matter is remanded
back to it for deciding the same on merits in accordance with law. There
shall be no order as to costs.
C.c. as per rules.
(SUJOY PAUL) (PRANAY VERMA)
JUDGE JUDGE
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