Final Order 1

Order Details: Notice of Motion
Pdf Text: Order in Notice of Motion No. 3844 of 2019
in Suit No. 3204 of 2018.
MHCC010104742019
IN THE BOMBAY CITY CIVIL COURT FOR
GREATER MUMBAI
NOTICE OF MOTION NO.3844/2019.
IN
S. C. SUIT NO.3204/2018
1. The Cosmos Cooperative Bank Ltd.
2. The Authorised Officer. ...Applicants./
Defendant Nos.1&2
In the matter of :
Gulab Shankar Bhadlekar. ..Plaintiff.
V/s.
1. The Cosmos Cooperative Bank Ltd. and Ors ...Defendants.
Appearances :
Adv. Mr. Mathew a/w Ms. Maria Nedompara for plaintiff.
Adv. Shri Sukrit Paraskar a/w Harjot Singh i/b Rawat Shah and Co.for
Defendants
Coram : His Honour Judge
Shri. S. B. Pawar.
CR No. : 59.
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Order in Notice of Motion No. 3844 of 2019
in Suit No. 3204 of 2018.
Date : 11/08/2022
ORDER
Defendant No.1 and 2 have taken out this Notice of Motion
under Order 7 Rule 11 of the Code of Civil Procedure, 1908 (In short
‘CPC’) for rejection of plaint.
2. Despite of giving sufficient opportunity, plaintiff failed to
file reply to the Notice of Motion. Therefore, Notice of Motion is
proceeded and decided without reply of the plaintiff.
3. Heard Ld. advocate Mr. Shri Sukrit Paraskar a/w Harjot
Singh for defendant Nos. 1 and 2 and Ld. advocate Mr. Mathew
alongwith Ms. Maria Nedompara for the plaintiff.
4. Ld. advocate for defendant Nos. 1 and 2 submits that
plaintiff is guarantor of the loan facilities provided by the defendant –
Bank and plaintiff's property is mortgaged with defendant Bank.
Demand Notice under Section 13(2) of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002 (In short ‘SARFAESI Act’) is issued to the plaintiff. Under
Section 13(4), the bank can exercise the power to take suitable
measures. Before obtaining any order under Section 14 of the
SARFAESI Act, the bank is required to fulfil the conditions, which
accordingly bank has fulfilled and possession of the plaintiff's property
is taken. Action by defendantBank is completed three to four years
ago. The remedy under Section 17 of SARFAESI Act is available to the
plaintiff before Debt Recovery Tribunal (In short 'DRT'). The suit is not
maintainable as it is barred under Section 34 of the SARFAESI Act.
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Order in Notice of Motion No. 3844 of 2019
in Suit No. 3204 of 2018.
Therefore, he prayed that plaint be rejected.
5. Ld. advocate for the plaintiff submitted that plaintiff has
multiple remedies available. He can approach either DRT or Civil Court
and being Dominos litus, can choose the forum. Plaintiff can approach
DRT only if bank has approached the DRT. In the present case, bank
has not approached the DRT. Therefore, only remedy available to the
plaintiff is to file civil suit. Section 34 of The Recovery of Debts Due to
Banks and Financial Institution Act, 1993 (In short, the RDDBFI Act)
has overriding effect. Plaintiff has pleaded fraud upon him. Therefore,
suit is not barred under Section 34 of the SARFAESI Act. Notices under
Section 13(2) and 13(4) of SARFAESI Act are not served upon the
plaintiff. As per submissions of Ld. advocate for the plaintiff, except for
security interest, jurisdiction of Civil Court is not barred to decide other
issues between the bank and borrowers.
6. Following points arise for my consideration to which I
record my findings for the reasons to follow:
Sr. No. POINTS FINDINGS
1. Whether the suit is
barred under Section 34
of the SARFAESI Act?
Yes
2. Whether the plaint is
liable to be rejected?
Yes
3. What Order Notice of Motion is
allowed.
REASONS
As to Point Nos. 1 to 3
7. Plaintiff has filed the suit for declaration, injunction and
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Order in Notice of Motion No. 3844 of 2019
in Suit No. 3204 of 2018.
issuance of various directions. It is the case of the plaintiff that
defendant No. 3 is purported borrower of defendant No.1 Bank. Fraud
is played by defendant No.3 and its proprietor in collusion with
defendant Nos.1 and 2 in respect of the residential home of the plaintiff
and purported charge is created in favour of defendant No.1 to secure
the agreed facilities extended to defendant No.3. Defendants have not
followed procedure and has initiated proceeding under Section 13(4)
and 14 of SARFAESI Act against the plaintiff. Opportunity of hearing is
not given to the plaintiff. It is pleaded that bank proceeding under
Section 13 of SARFAESI Act is vitiated by fraud. It is nullity and
jurisdiction of Civil Court is not barred. Plaintiff has challenged various
circulars and guidelines issued by the Reserve Bank of India and sought
declaration that bar under Section 17 and 34 of the RDDBFI Act read
with Sections 34, 35 and 37 of the SARFAESI Act does not constitute to
be a complete Code for Procedure for adjudication of interse dispute of
civil nature between the bank and borrower. The circulars issued by the
Reserve Bank of India are void, Rule 8(5) of the SARFEASI Act is
inconsistent and void. Alongwith other declarations, plaintiff has further
sought injunction against the defendants from interfering with peaceful
possession of the plaintiff over the suit property. Plaintiff has also
sought various directions to be given to the defendant bank and has
challenged the order dated 20.03.2015 of Ld. C.M.M. passed under
Section 14 of the SARFAESI Act.
8. Plaintiff is a guarantor to the loan facilities advanced by the
defendant No.1Bank to defendant No.3. He has come with the case
that he has no connection with the borrower and has pleaded fraud
played by defendant Nos. 1 and 2 in collusion with defendant No.3.
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Order in Notice of Motion No. 3844 of 2019
in Suit No. 3204 of 2018.
9. Both sides have placed reliance upon the the judgment of
Hon'ble Bombay High Court in Bank of Baroda Through its branch
Manager V/s. Gopal Shriram Panda and Another (2021) 4 AIR Bom
R 6. In the said authority, the Hon'ble Bombay High Court has
answered the question as to whether the jurisdiction of Civil Court to
decide all the matters of civil nature excluding those to be tried by the
Debts Recovery Tribunal under Section 17 of the SARFAESI Act in
relation to enforcement of security interest of a secured creditor is
barred by Section 34 of SARFAESI, as under :
(A) Jurisdiction of the Debt Recovery Tribunal (DRT) to decide
all the matters relating to Section 13 and 17 of Securitisation Act is
exclusive.
(B) In all cases, whether the title of the property in respect of
which the security interest has been created in favour of Bank or
Financial Institution stands in the name of the borrower or in the name
of guarantor and the borrower has availed financial assistance, it would
be only the DRT which would have exclusive jurisdiction to try such
matters to the total exclusive of Civil Court. Any pleas as raised by the
guarantor or borrower visavis the security interest, will have to be
determined by the DRT.
(C) The jurisdiction of the civil Court to decide all the matters of
civil nature excluding those to be tried by the DRT under Sections 13
and 17 of SARFAESI Act in relation to the enforcement of security
interest of secured creditors is not barred by Section 34 of SARFAESI
Act.
(D) Whether civil rights of persons other than borrower(s) or
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Order in Notice of Motion No. 3844 of 2019
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guarantor(s) are involved, the Civil Court would have jurisdiction that
too, when it is prima facie apparent from the face of record that the
relief claimed is incapable of being decided by DRT under Section 17 of
RDDBFI Act 1993 read with Section 13 and 17 of SARFAESI Act.
10. Ld. advocate for the plaintiff placed reliance upon above
clause (C) to submit that jurisdiction of Civil Court is not barred.
Whereas, Ld. advocate for the defendants by placing reliance upon
clause (A) submitted that the plaintiff being guarantor, the civil Court
has no jurisdiction and DRT can decide the issue pressed by the plaintiff
as it has exclusive jurisdiction to try the matter.
11. Ld. advocate for the plaintiff by relying upon the Judgment
of the Hon'ble Supreme Court in Dhulabhai V/s. State of Madhya
Pradesh, 1969 AIR 78 submitted that the exclusion of jurisdiction of
Civil Court is not to be readily interfered. Further by relying upon the
Judgment in Nahar Industrial Enterprises Limited and Others V/s.
Hongkong Shanghai Banking Corporation, (2009) 8 S.C.C.646, he
submitted that the jurisdiction of Civil Court is not completely oust
under Section 17 and 18 of RDDBFI Act. As per his submissions, when
fraud is pleaded in the plaint, civil Court has jurisdiction to try and
entertain the suit.
12. Per Contra, Ld. advocate for the defendant Nos. 1 and 2, by
relying upon the Judgment in Authorised Officer State Bank of India
V/s. Allwyn Alloys Private Limited and Other, (2018) 8 SCC 120,
submits that mandate of Section 34 of SARFAESI Act clearly bars filing
civil Suit. It is observed in the above authority that no Civil Court can
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Order in Notice of Motion No. 3844 of 2019
in Suit No. 3204 of 2018.
exercise the jurisdiction to entertain the suit or any proceeding in
respect of any matter which DRT/DRAT is empowered by or under Act
to determine and no injunction can be granted by any Court in respect
of any action taken or to be taken in pursuance of any power conferred
by or under the Act.
13. I have gone through the authorities referred by both the
parties. In the present suit, by claiming relief of declaration, plaintiff
has challenged constitutionality of certain circulars and guidelines
issued by Reserve Bank of India and Rules of SARFEASI Act. Plaintiff
has also challenged the proceeding of defendant Bank under Section
13(2) and 13(4) of SARFAESI Act as well as order passed by the
Learned Chief Metropolitan Magistrate under Section 14 of the
SARFAESI Act. The plaintiff is also seeking injunction to restrain the
defendant from interfering in the possession of the plaintiff over the
property, which is claimed to be a security interest by the defendant
Bank and from proceeding further to conduct auction, confirming the
same and for restoring the physical possession of the property.
14. The prayer of injunction sought by the plaintiff is basically
to restrain the defendant Bank from taking action under provisions of
SARFAESI Act. Therefore, Section 34 of SARFAESI Act, which bars the
jurisdiction of Civil Court, clearly bars the jurisdiction of this Court to
grant any such injunction which can affect the proceeding of the bank
under SARFAESI Act. If the plaintiff, being a guarantor, has any
grievance against any action of the defendant Bank, Section 17 of the
SARFAESI Act provides the remedy to file application to DRT, if the
plaintiff is aggrieved by any of the measures taken by the bank under
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Order in Notice of Motion No. 3844 of 2019
in Suit No. 3204 of 2018.
Section 13(4) of the SARFAESI Act.
15. As regards the claim of fraud pleaded by the plaintiff, there
is vague pleading in the plaint. Hence, on the basis of the said pleading,
it cannot be said that Civil Court has jurisdiction to grant the reliefs
prayed by the plaintiff. As per the ratio laid down by the Hon'ble
Bombay High Court in Bank of Baroda Through its branch Manager
V/s. Gopal Shriram Panda and Another (Supra) in clause (B) of the
judgment, jurisdiction of this Court is barred under Section 34 of
SARFAESI Act. Therefore, the plaint is liable to be rejected under Order
VII Rule 11 (d) of CPC. Accordingly Point Nos.1 and 2 are answered in
the affirmative and following order is passed:
ORDER
1. Notice of Motion No. 3844 of 2018 is allowed.
2. The plaint is rejected under Order VII Rule 11 (d) of the
Code of Civil Procedure, 1908.
3. Notice of Motion No. 3844 of 2018 is disposed of
accordingly.
(SHRI S.B.PAWAR )
Judge
Dt.:11/08/2022 City Civil Court, Gr. Mumbai
Declared on : 11.08.2022
Dictated on : 11.08.2022
Transcribed on : 27.08.2022
Checked & Signed on:
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Order in Notice of Motion No. 3844 of 2019
in Suit No. 3204 of 2018.
CERTIFIED TO BE TRUE AND CORRECT COPY OF THE ORIGINAL
SIGNED JUDGMENT/ORDER”
16.09.2022 at 05.45 p.m. Mrs. P.R.Wagh
UPLOAD DATE AND TIME NAME OF STENOGRAPHER
Name of the Judge (with Court
Room No.)
HHJ SHRI.S.B.Pawar,(C.R.No.59)
Judge.,City Civil & Sessions Court,
Date of pronouncement of /Order 11.08.2022
Order signed by P.O. on 11.08.2022
order uploaded on 16.09.2022
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