Allowed

Vysya Co. Operative Bank Ltd., v. R. Nagaraja

Karnataka HC16 Oct 2024MFA/3952/2024

Case brief

AI extract

What is this about?

The High Court allowed an appeal against an interim injunction order granted by the Trial Court in a recovery suit. The Court held that once proceedings under the SARFAESI Act were initiated, the Trial Court lacked jurisdiction to restrain the debtor bank.

What did the court decide?

Set aside the order passed by the Trial Court restraining the appellant bank; consequential dismissal of IA No.1 and 2.

Vysya Co. Operative Bank Ltd., Vs R. Nagaraja — Banking and Recovery | Karnataka HC (2024)

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1 - NC: 2024:KHC:41735 MFA No. 3952 of 2024

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 16^TH DAY OF OCTOBER, 2024

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BEFORE

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THE HON'BLE MR JUSTICE H.P.SANDESH

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MISCELLANEOUS FIRST APPEAL NO. 3952 OF 2024 (CPC)

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BETWEEN:

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VYSYA CO-OPERATIVE BANK LTD., ADMINISTRATIVE OFFICER, B.H. ROAD, TUMKUR-572102 HAVING ITS BRANCH AT NUMBER 106, 1^ST FLOOR, 4^TH MAIN, YESHWANTHPUR, BENGALURU-560022 REP. BY ITS MANAGER, SRI K.S. SAINATH BABU

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…APPELLANT

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(BY SRI. G. BALAKRISHNA SHASTRY, ADVOCATE)

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AND:

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Digitally signed by DEVIKA M 1. R. NAGARAJA Location: HIGH S/O R. RAMAIAH, COURT OF AGED ABOUT 56 YEARS, KARNATAKA R/AT NO.005, MANITO COMMANDER MARVEL, APARTMENT DUO MARVEL LAYOUT, ANANTAPURA MAIN ROAD, YELAHANKA, BANGALORE-560064.

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M/S. NAG CONSTRUCTIONS A REGISTERED PARTNERSHIP FIRM R/AT NO.005, MANITO COMMANDER MARVEL, APARTMENT DUO MARVEL LAYOUT, ANANTAPURA MAIN ROAD, YELAHANKA, BANGALORE-560064. REP. BY ITS PARTNER R. NAGARAJA.

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2 - NC: 2024:KHC:41735 MFA No. 3952 of 2024

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UMA S. W/O N. SREENIVASA, AGED ABOUT 56 YEARS, R/AT 296, 16TH CROSS, SADHASIHIVANAGAR, BENGALURU-560080.

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…RESPONDENTS

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(BY SRI. SHERVIL ADAPPA, ADVOCATE FOR R1)

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THIS MFA IS FILED UNDER ORDER 43 RULE 1(r) OF CPC, AGAINST THE ORDER DATED 14.03.2024 PASSED ON I.A. NOS.1 AND 2 IN O.S.NO.986/2024 ON THE FILE OF THE XXII ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, BENGALURU CITY (CCH.7), PARTLY ALLOWING THE I.A. NOS.1 AND 2 FILED UNDER ORDER 39 RULE 1 AND 2 READ WITH SECTION 151 OF CPC.

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THIS APPEAL COMING ON FOR ADMISSION THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

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CORAM: HON'BLE MR JUSTICE H.P.SANDESH

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ORAL JUDGMENT

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Heard the learned counsel for appellant and learned

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counsel appearing for respondent No.1.

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The present miscellaneous first appeal is filed against the order passed by the Trial Court on I.A.Nos.1 and 2 in O.S.No.986/2024 which have been allowed in part, restraining defendant No.1-Bank i.e., the appellant herein from interfering or alienating the suit schedule properties i.e., ‘A’ to ‘C’ schedule properties. However, the plaintiffs and guarantors

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3 - NC: 2024:KHC:41735 MFA No. 3952 of 2024

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are directed to sell suit ‘A’ to ‘C’ suit schedule properties with the active participation of the defendant No.1-Bank at each and every stage and sale consideration shall be appropriated to the loan account of plaintiffs. If any excess amount remains with the defendant No.1-Bank, the same shall be returned to the plaintiffs/guarantors, in accordance with law.

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Learned counsel appearing for the appellant would vehemently contend when the proceeding was initiated against the respondents herein under the SARFAESI Act, the Trial Court ought not to have invoked the jurisdiction of SARFAESI Act. Learned counsel for the appellant brought to notice of this Court the observation made by the Trial Court in coming to the conclusion that the plaintiffs have not made out any prima facie case. However, granted the relief by allowing the applications in part and such order ought not to have been passed by the Trial Court.

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Learned counsel appearing for the respondent No.1 would submit that the appellant-Bank is intending to sell the property and clear the loan taken by the appellant and the respondent would make earnest effort to clear the loan, if time

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NC: 2024:KHC:41735 MFA No. 3952 of 2024

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is granted. This Court heard the matter two days ago and directed to make part payment to the appellant-Bank to show their bonafides with regard to their submission that they are going to clear the loan amount. But the counsel expresses his inability to make such payment, inspite of time being granted to make payment.

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Having heard the learned counsel appearing for the appellant and learned counsel appearing for respondent No.1 and having taken note of the material on record, admittedly, the proceeding has been initiated under the SARFAESI Act by the appellant-Bank herein and when the proceeding has been initiated under the SARFAESI Act and so also under Section 14 of the SARFAESI Act, the Trial Court ought not to have exercised its jurisdiction and there is a clear bar under Section 34 of the SARFAESI Act in entertaining the suit and inspite of the same, observation is made that plaintiffs/respondents have not made out any case to grant the relief of temporary injunction, but committed an error in passing such order by allowing applications, restraining the appellant-Bank from proceeding against the respondents and the said order is

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5 - NC: 2024:KHC:41735 MFA No. 3952 of 2024

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without jurisdiction and ought not to have passed such order.

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Hence, the impugned order is liable to be set aside.

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In view of the discussion made above, I pass the

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following:

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ORDER

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(i) The miscellaneous first appeal is allowed.

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(ii) The order passed by the Trial Court on I.A.Nos.1 and 2 in O.S.No.986/2024 is set aside. Consequently, I.A.Nos.1 and 2 are dismissed.

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Sd/(H.P.SANDESH) JUDGE

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ST List No.: 1 Sl No.: 31

Vysya Co. Operative Bank Ltd., v. R. Nagaraja

Case brief

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Vysya Co. Operative Bank Ltd., v. R. Nagaraja

Case brief

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