IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 20TH DAY OF FEBRUARY 2019 BEFORE THE HON’BLE MR. JUSTICE SREENIVAS HARISH KUMAR REGULAR FIRST APPEAL NO.1762 OF 2014 BETWEEN 1. Sri. D.Kiran, S/o Sri. A.Dandayatham Aged about 40 years.
2. Sri. D.Deepak, S/o Sri.A.Dandayatham, Aged about 30 years.
Both are residing at No.243, 6th Cross, 8th Main, II Block, Jayanagar, Bengaluru-560011. …APPELLANTS (By Sri.S.Subramanya, Adv.) AND 1. Sri. K.Ramesh, S/o Sri.H.Krishnappa, Aged about 50 years, Residing at No.698, 15th Cross, II Phase, JP Nagar, Bengaluru-560078.
2. Sri.Syed Shakavath Hussain, S/o late Sri. Mir Zainulabedin, Aged about 66 years, Residing at Alipur, Gowribidanur Taluk, Kolar District-561224.
Also at:
No.17/2, Leonardo Lane, Richmond Town, Bengaluru-560025.
3. Smt.Farhana Banu, W/o Sri. Syed Zamin Raza, Aged about 33 years, Residing at Alipur, Gowribidanur Taluk, Kolar District-561224.
4. Sri.Syed Zamin Raza, S/o Syed Shakavath Hussain, Aged about 43 years, Residing at Alipur, Gowribidanur Taluk, Kolar District-561224. Also at:
No.17/2, Leonardo Lane, Richmond Town, Bengaluru-560025.
5. Sri.Khali Shakil Anjum, S/o Late Sri. Kalil Ahmed Shariff, Aged about 53 years.
6. Sri.Suhail Anjum, S/o late Sri. Kalil Ahmed Shariff, Aged about 48 years.
7. Smt.Syeda Rahmath Anjum Suhail, W/o Sri.Suhail Anjum, Aged about 40 years, Residing at No.17/2, Leonard Lane, Richmond Town, Bengaluru-560025.
8. M/s. Indian Bank, Ulsoor Branch, Bengaluru. Represented by its Manager.
9. Sri. Nagendra Kaushik, Major in age, Father’s name not known to appellant.
10. Smt.Shruthi Kaushik, W/o Sri.Nagendra Kaushik, Major in age, Respondents 9 and 10 are residing at No.106, Serpentine Road, Kumara Park West Extension, Bengaluru-560020. …RESPONDENTS (By Sri.Kalyan Basavaraj, Adv. for R-4, Sri.A.Keshava Bhat, Adv. for R-8, Sri.S.Srinivasa Rao, Adv. for R-9 and R-10, V/o dated 1.3.2018 notice to R1, R3, R5, R6 & R7 dispensed with) THIS RFA IS FILED UNDER SECTION 96 OF CPC, AGAINST THE JUDGMENT AND DECREE DATED 25.07.2014 PASSED IN O.S.1055/2007 ON THE FILE OF THE VIII ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, BENGALURU, DISMISSING THE SUIT FOR DECLARATION, MANDATORY INJUNCTION AND PERMANENT INJUNCTION.
THIS RFA COMING ON FOR ADMISSION THIS DAY, THE COURT DELIVERED THE FOLLOWING:
JUDGMENT This appeal is by the plaintiffs in O.S.No.1055/2007 on the file of Additional City Civil Judge, Bengaluru. They claimed the following reliefs in the suit:
(i) To declare that no mortgage is created over suit schedule ‘B’ and ‘C’ properties and that the 8th defendant cannot enforce their right of mortgage over the same.
(ii) To declare that the order dated 23.09.2010 passed in C.Misc.No.1690/2010 by the IX Additional CMM, Bengaluru is not binding on them.
(iii) To issue mandatory injunction directing the 8th defendant to put them in possession of ‘B’ and ‘C’ schedule properties.
(iv) Permanent injunction.
2. Precisely stated their pleading is that at the time when they purchased the properties, their verification showed that the mortgage created by defendants 2 to 4 with Indian Bank i.e., 8th defendant had been cleared and that bank had returned all the documents of the property to the mortgagors. After purchasing the properties, the plaintiffs took over possession and got the revenue records mutated to their names. In the month of November 2006, some persons said to be officials of 8th defendant bank came near ‘C’ schedule property and attempted to dispossess the plaintiffs claiming that the properties had stood mortgaged to 8th defendant bank. They got issued a legal notice to the bank requiring to furnish the details of mortgage, but the bank did not respond to the notice. On further enquiry into the matter, they came to know about order passed by IX Additional Chief Metropolitan Magistrate under Section 13(4)(a) r/w Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘Act’ for short) in C.Misc.No.1690/2010. Therefore, they instituted the suit.
3. The defendants 9 and 10 made an application under Order 7 Rule 11(d) of Civil Procedure Code seeking rejection of plaint contending that suit was not maintainable in view of Section 34 of the Act. The trial Court allowed the application and rejected the plaint. Hence, this appeal.
4. The argument of the appellants’ counsel is that the reliefs claimed by the appellants do not come within the ambit of Section 34 of the Act. This section has a limited scope in the sense that the borrower cannot file a suit, challenging the action taken by a creditor. The appellants are third parties. They are the purchasers of the properties that were free of encumbrance. According to the appellants no mortgage was in existence on the date of their purchasing the property and therefore, they want a declaration that the properties are free of encumbrance. In this view of the matter, the suit is maintainable. He has placed reliance on the judgment of the Supreme Court in the case of Mardia Chemicals Ltd., and others Vs. Union of India and others (2004) 4 SCC 311 and a Division Bench of this Court in R.Gopalakrishna Vs. Karnataka State Financial Corporation, Bangalore and another (AIR 2008 KAR 77).
5. The counsel for respondents has argued that even the reliefs that the appellants have claimed can be questioned in the Debt Recovery Tribunal although the appellants were not parties in the proceedings before the Magistrate. Civil Court has no jurisdiction and therefore, the suit is not maintainable.
6. The arguments by both the counsel lead to examination of scope of Section 34 of the Act. A plain reading of Section 34 very clearly shows that the jurisdiction of civil Court is taken away in respect of any matter which can be decided by the Debts Recovery Tribunal or Appellate Tribunal. In the case of Jagdish Singh Vs. Heeralal and others 2014 (1) AKR 97, some of the members of Hindu undivided family questioned the auction sale by filing a suit contending that the auctioned properties belonged to Hindu undivided family. Examining the scope of Sections 17 and 34 of the Act, the Supreme Court held that the suit was not maintainable.
7. In Mardia Chemicals Ltd., also, what the Supreme Court has held is that reading of Section 34 shows that jurisdiction of Civil Court is barred in relation to matters in respect of which Debts Recovery Tribunal or Appellate Tribunal is empowered to determine. Only to a limited extent jurisdiction of civil Court can be invoked, i.e., in a circumstance where action of secured creditor is alleged to be fraudulent or his claim appears to be absurd or untenable.
8. The Division bench of this Court in R.Gopalakrishna actually had to decide the maintainability of the suit in view of bar contained in Karnataka Public Moneys (Recovery of Dues) Act. The decision in Mardia Chemicals was cited before the Division Bench, but the Division Bench mainly examined the question of bar of suit according to Section 3 of Karnataka Public Moneys (Recovery of Dues) Act. This decision is not helpful to the appellants.
9. In the case on hand the question is whether the Debt Recovery Tribunal cannot consider the grievance of the appellants. What they say actually is that the properties that they purchased could not have been subject matter of proceeding before the Magistrate as at the time of their purchase, they were sure or made to know that the loan with Indian Bank had been cleared. The measures available for enforcement of security is dealt within Section 13 of the Act, and according to Section 13(4)(a), the Secured Creditor may take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realizing the secured asset. Now if according to appellants, the Indian Bank could not have initiated proceeding to take possession of the schedule ‘B’ and ‘C’ properties, since according to them loan had been cleared, initiation of proceeding by the bank for taking possession can be questioned under Section 17 of the Act. The appellants are not precluded from preferring an appeal. The proviso to Section 17(1) of the Act reads as below:
17. (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 authorized officer under this Chapter, (may make 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:
(Provided that different fees may be prescribed for making the application by the borrower and the person other than the borrower.) (Explanation.-For the removal of doubts it is hereby declared that the communication of the reasons to the borrower by the secured creditor for not having accepted his representation or objection or the likely action of the secured creditor at the stage of communication of reasons to the borrower shall not entitle the person (including borrower) to make an application to the Debts Recovery Tribunal under sub-section (1) of Section 17.) 10. The words “other than the borrower” make it very clear that a person affected by the measures taken according to Section 13 of the Act can prefer an appeal. Thus seen, the suit brought by appellants is not maintainable. The trial Court has come to right conclusion that the suit is maintainable. I do not see any infirmity in the impugned order. Appeal is dismissed. There is no order to costs.
bkp Sd/- JUDGE