Punjab-Haryana High Court
State Bank Of Patiala vs M/S Shri Balaji Contractor &Suppliers on 5 March, 2025
Author: Anil Kshetarpal
Bench: Anil Kshetarpal
Neutral Citation No:=2025:PHHC:031754
CR No. 2624 of 2016 1
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
229 CR No. 2624 of 2016
DATE OF DECISION :- 05.03.2025
State Bank of Patiala ...Petitioner
Versus
M/s Shri Balaji Contractor & Suppliers and another
...Respondents
CORAM: HON'BLE MR. JUSTICE ANIL KSHETARPAL
Present:- Mr. R.S. Bhatia, Advocate for the petitioner.
Mr. Nandan Jindal, Advocate for respondent No. 2.
***
ANIL KSHETARPAL, J. (ORAL)
1. In this revision petition, State Bank of Patiala (defendant)
assails the correctness of trial Court's order dismissing its application under
Order 7 Rule 11 of the Code of Civil Procedure, 1908 (in short 'CPC') for
rejection of the plaint on the ground that the Civil Court's jurisdiction is
excluded in view of Section 34 of the Securitization and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter
referred to as the'SARFAESI Act'). Plaintiffs have filed suit as indigent
persons for adjustment of value of goods worth Rs.21 lakh or in the
alternative recovery of the aforesaid amount. Admittedly, the plaintiff filed
proceedings before Debt Recovery Tribunal under Section 17 of the
SARFAESI Act, 2002, which was dismissed for non-prosecution.
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Neutral Citation No:=2025:PHHC:031754
2. At this stage, it would be appropriate to notice Section 34 of the
2002 Act, which is extracted 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."
3. It is evident that the Civil Court's jurisdiction is excluded as the
borrower, guarantors and any other interested person is entitled to invoke the
jurisdiction of Debt Recovery Tribunal.
4. This Court in 'State Bank of Patiala versus Nalini Sood (since
deceased) through her LRs' CR-6831-2016 (O&M) decided on 05.05.2022
examined the matter in detail and held as under :-
"The judgment passed in Mardia Chemicals Limtied(supra) is
a three judge Bench judgment and in para 51 of the SCC report,
the Court observes that where the action of the secured
creditors is alleged to be fraudulent or his claim is so absurd
and untenable and requires no probe whatsoever then the Civil
Court has the jurisdiction in that matter. Primarily, in Mardia
Chemicals Limited (supra), the Supreme Court opined that
requirement of pre-deposit of 75% of the amount demanded by
the secured credits by notice under Section 13, is bad. It may be
noted here that after the judgment, there is an amendment in the
language of Section 17 of the 2002 Act by Act no.44 of 2016.
Section 17 has been extensively amended. Section 17 (1) starts
with a phrase "any person (including the borrower)". Thus it is
evident that the application under Section 17 of the 2002 Act
can be filed by any person, who is aggrieved of the action.
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Furthermore, in a recent judgment passed by the Supreme
Court in Electrosteel Castings Ltd. Vs. UV Asset
Reconstruction Company Ltd. &Ors., (2022) 2 SCC 573, it has
been held that mere allegations of fraud without supplying
material particulars of the fraud as required in terms of Order
6 Rule 4, do not result in ousting the jurisdiction of the
Tribunal. The Debt Recovery Tribunal has sufficient
jurisdiction under Section 17 to consider whether the
respondent was not a secured creditor. Thus, the Court held that
the proper forum whose doors should be knocked is the Debt
Recovery Tribunal. Similar is the position in M/S. Sree
Anandhakumar Mills Ltd. vs M/S. Indian Overseas Bank And
Ors. (2019)14 SCC 788. Similarly, in Authorised Officer, State
Bank Of India vs M/S Allwyn Alloys Pvt. Lt. (2018) 8 SCC 120,
the Supreme Court once again explained the scope of section 34
once again. In view of the recent judgment of the Supreme
Court, it is evident that the judgment passed in Mardia
Chemicals Limtied(supra) is to be understood in the aforesaid
context. The facts of the case clearly indicate that the plaintiff
has taken the plea of fraud only to confer jurisdiction on the
civil court. It is also evident that the application for getting
loan and the documents required to be signed by the guarantors
are different. In any case, when the plaintiff-respondent has the
jurisdiction before the Debt Recovery Tribunal which has
sufficient jurisdiction under Section 17 to consider and decide
the matter, it will not be appropriate to entertain the civil suit."
5. The trial Court has dismissed the Bank's application on the
ground that it was filed at a late stage. In the opinion of the Court, the trial
Court erred in dismissing the application as the question was of jurisdiction
of the Civil Court. The plaintiff though alleges excess use of power by the
bank while taking over the goods, however, the plaintiff does not allege any
fraud on the part of the bank at the time when the loan was borrowed.
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6. Additionally, the trial Court has erred in side-stepping the
pivotal issue with respect to jurisdiction of the Civil Court while observing
that the subject matter in proceedings before Debt Recovery Tribunal is
different from civil suit.
7. Consequently, the impugned order passed by the trial Court is
set aside and plaintiff's plaint shall stands rejected.
8. With the these observations, the petition is allowed.
(ANIL KSHETARPAL )
JUDGE
05.03.2025
P.Singh
Whether speaking/reasoned Yes/No
Whether Reportable Yes/No
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