Madras High Court
Suganya Selvaraj vs Canara Bank on 18 October, 2022
A.S.No.159 of 2017
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATE : 18.10.2022
CORAM
THE HONOURABLE MS.JUSTICE V.M.VELUMANI
and
THE HONOURABLE MR.JUSTICE SUNDER MOHAN
A.S.No.159 of 2017
1. Suganya Selvaraj
2. Sumathi Nandakumar
3. Santhosh ... Appellants
Vs.
1.Canara Bank
Rep. By its Branch Manager
SAF Branch
No.121, May Flower Complex
11th Street, Tatabad
Coimbatore.
2.Leela Krishnan ... Respondents
Prayer:- First Appeal has been filed under Section 96 r/w. Order 41 Rule I of
Civil Procedure Code against the Judgment and Decree dated 05.12.2015 made
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in I.A.No.1119 of 2011 in O.S.No.177 of 2009 on the file of the II Additional
District and Sessions Court, Tiruppur.
For Appellants : Mr.S.Mukunth
For R1 : Mr.P.Raghunathan
for Mr.T.S.Gopalan
For R2 : No Appearance
JUDGMENT
(Judgment of the Court was delivered by SUNDER MOHAN,J.)
The Appeal is directed against the order dated 05.12.2015 passed in
I.A.No.1119 of 2011 in O.S.No.177 of 2009 filed by the first Respondent
under Order 7 Rule 11 of Civil Procedure Code for rejection of plaint.
2.The facts leading to the filing of the above Appeal are as follows:-
(a) The Appellants filed a suit for partition against the second Respondent
herein claiming 3/4th share in the suit schedule property. The first Respondent
was also shown as Defendant in the said suit.
(b) Their case in the suit was that the second Respondent had obtained
credit facility from the first Respondent. He had no right to mortgage the suit
schedule property as it was an ancestral property. He had right to
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A.S.No.159 of 2017
mortgage only his 1/4th share in the property and the mortgage in respect of
whole of the property is not binding on the Appellants.
(c) In the said suit, the first Respondent herein filed an application in
I.A.No.1119 of 2011 under Order 7 Rule 11 and Section 151 C.P.C praying for
rejection of plaint. The first Respondent contended in the said I.A., that the suit
was not maintainable since Section 34 of SARFAESI Act bars the jurisdiction of
Civil Court. The first respondent further stated that if the Appellants were
aggrieved over the initiation of the SARFAESI proceedings taken by the first
Respondent, it was open to them to approach the Debts Recovery
Tribunal by filing an Appeal/Application under Section 17 of the said Act. The
suit filed by the Appellants by suppressing all the above legal aspects is liable to
be dismissed and hence prayed for rejection of plaint.
(d) The first Appellant filed a counter to the said petition stating that the
suit is maintainable and Section 34 of the SARFAESI Act does not bar the suit
of the nature filed by the Appellants. The suit for partition can only be decided
by the Civil Court and the Debts Recovery Tribunal has no jurisdiction to decide
the suit for partition. The second Respondent herein had unlawfully mortgaged
the entire property in favour of the first Respondent and the same is not binding
on the Appellants. He has no right over the entire extent of land and the
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A.S.No.159 of 2017
Appellants are entitled to 3/4th share in the land.
(e) The trial Court found that the Appellants if aggrieved by the action of
the second Respondent in mortgaging the entire land in favour of the first
respondent and are aggrieved by the action of the first respondent in initiating
proceedings under SARFAESI Act have a remedy to file an Application under
Section 17 of the SARFAESI Act before the Debts Recovery Tribunal. The trial
Judge further held that Section 34 of the SARFAESI Act prohibits Civil Courts
from entertaining any suit or proceedings in respect of any matter which are
Debts Recovery Tribunal is empowered to determine under the SARFAESI Act.
The learned Judge therefore found that since the Appellants had a remedy to file
an Application under Section 17 of the SARFAESI Act, the suit is not
maintainable and hence allowed the application for rejection of plaint.
3.Heard Mr.S.Mukunth, learned counsel for the Appellants and
Mr.P.Raghunathan, learned counsel for the first Respondent.
4.The learned counsel for the Appellants submitted that the SARFAESI
Act did not provide for determining the issues such as whether the properties are
ancestral in nature and as to whether the Appellants are entitled to partition of
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A.S.No.159 of 2017
the suit schedule property. Section 34 of the SARFAESI Act does not bar the
suit for partition in a Civil Court. The Debts Recovery Tribunal has no right to
decide the nature and character of the property and it is only for the Civil Court
to adjudicate such an issue. The learned counsel further submitted that the
mortgage created by the second Respondent in favour of the first Respondent is
not binding on the Appellants and they cannot be asked to approach the Debts
Recovery Tribunal to determine their rights.
5.The learned counsel for the first Respondent submitted that the Hon'ble
Apex Court has held in a catena of decisions that the Civil Court shall not
entertain any issue that can be determined by the Debts Recovery Tribunal under
the SARFAESI Act. The Appellants if aggrieved by the mortgage of their
property by the second respondent in favour of the first Respondent have a
remedy under the SARFAESI Act by filing an Application under Section 17. The
Debts Recovery Tribunal is empowered to determine all issues including the
issues raised by the Appellants in the suit.
6.We have considered the contentions raised by the learned counsels on
either side and the documents and pleadings on record. Section 34 of the
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SARFAESI Act which bars the jurisdiction of the Civil Court reads as follows:-
“34.No civil court shall have jurisdiction to entertain any
suit or proceedings 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 (51 of 1993).”
7.The question therefore is whether the Debts Recovery Tribunal is
empowered to determine the issues raised by the Appellants in the suit. If the
Debts Recovery Tribunal is empowered under Section 17 of the SARFAESI Act
to determine the issues then the suit is barred. The second Respondent had
mortgaged the suit schedule property in favour of the first Respondent. The first
Respondent had initiated proceedings under the SARFAESI Act against the
second Respondent. The Appellants are claiming 3/4th share in the said property
stating that the properties are ancestral and they are entitled to 3/4 th share in the
property and prayed for partition of the suit schedule property.
8.It is well settled that the SARFAESI Act is a self contained code. Any
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A.S.No.159 of 2017
person who is aggrieved by the action taken by the creditor under the
SARFAESI Act can only approach the Debts Recovery Tribunal under
Section 17. The Debts Recovery Tribunal is empowered to decide all such
issues.
9.The Hon'ble Supreme Court in Jagdish Singh vs. Heeralal and others
reported in (2014) 1 SCC 479 held that in a case where a suit was filed by
certain persons claiming right over the property mortgaged by another person in
favour of the Bank held as follows:
“25. We are of the view that the civil court jurisdiction is
completely barred, so far as the “measures” taken by a secured
creditor under sub-section (4) of Section 13 of the Securitisation
Act, against which an aggrieved person has a right of appeal
before the DRT or the Appellate Tribunal, to determine as to
whether there has been any illegality in the “measures” taken.
The Bank, in the instant case, has proceeded only against
secured assets of the borrowers on which no rights of
Respondents 6 to 8 (sic Respondents 1 to 5) have been
crystallised, before creating security interest in respect of the
secured assets.
26. In such circumstances, we are of the view that the
High Court was in error in holding that only civil court has the
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A.S.No.159 of 2017
jurisdiction to examine as to whether the “measures” taken by
the secured creditor under sub-section (4) of Section 13 of the
Securitisation Act were legal or not. In such circumstances, the
appeal is allowed and the judgment of the High Court is set
aside. There shall be no order as to costs.”
10.The Hon'ble Supreme Court in the very same judgment held that any
person in Section 17 is of wide import and takes within its fold not only the
borrower but also the guarantor or any other person held as follows:
“19. The expression “any person” used in Section 17 is of
wide import and takes within its fold not only the borrower but also
the guarantor or any other person who may be affected by action
taken under Section 13(4) of the Securitisation Act. Reference may
be made to the judgment of this Court in Satyawati Tondon case.”
11.The Hon'ble Supreme Court in Authorised Officer, State Bank of
India vs. Allwyn Alloys Private and others reported in (2018) 8 SCC 120 held
as follows:
“8. After having considered the rival submissions of the
parities, we have no hesitation in acceding to the argument
urged on behalf of the Bank that the mandate of Section 13 and,
in particular, Section 34 of the Securitisation and Reconstruction
of Financial Assets and Enforcement of Security Interest Act,
2002 (for short “the 2002 Act”), clearly bars filing of a civil suit.
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A.S.No.159 of 2017
For, no civil court can exercise jurisdiction to entertain any suit
or proceeding in respect of any matter which a DRT or DRAT is
empowered by or under this Act to determine and no injunction
can be granted by any court or authority in respect of any action
taken or to be taken in pursuance of any power conferred by or
under the Act.”
12.This Court after considering the Judgments of the Hon'ble Supreme
Court in G.Senthil vs. Authorized Officer/Chief Manager reported in
2019 SCC Online Mad 15396 held as follows:
“10. Therefore, in view of the overriding effect of the
provisions of the SARFAESI Act and a clear bar under Section
34 of the said Act, the Civil Suits filed by the present respondent
Nos. 5 and 6 are not maintainable, but it seems that the learned
trial Court has continued with the trial of the said suits
although illegally. The trial Courts must, therefore, take
suitable steps for rejection or return of such plaints immediately
in view of the bar of law under Section 34 of SARFAESI Act and
the overriding effect of the provisions of the SARFAESI Act
provided under Section 35 of the said Act. The remedial
measures provided to such persons is only before the Debts
Recovery Tribunal or the Debt Recovery Appellate Tribunal.
After such orders are passed by the concerned Tribunal,
including the Appellate Tribunal, only the concerned aggrieved
party can avail constitutional remedies under the Constitution
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A.S.No.159 of 2017
of India. Filing and maintaining of such suits in Civil Courts
are, therefore, in clear abuse of process of law and we strongly
deprecate the same.”
13.From the Judgments of the Hon'ble Supreme Court and this Court, it is
clear that the Debts Recovery Tribunal is empowered to determine the issues
raised by the Appellants and hence, the suit is barred in view of Section 34 of
the SARFAESI Act.
14.We are therefore of the view that the order passed by the trial Court
rejecting the plaint filed by the Appellants is in accordance with law and does
not call for any interference. Hence, the First Appeal is dismissed. No costs.
(V.M.V., J) (S.M.,J)
18.10.2022
Index : Yes / No
Internet : Yes / No
dk
To
The II Additional District and Sessions Judge
Tiruppur
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A.S.No.159 of 2017
V.M.VELUMANI, J.
AND
SUNDER MOHAN,J.
dk
A.S.No.159 of 2017
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