Dismissed

Smt.G.R.Padmashree v. Sri.M.Huchappa

Karnataka HC10 Dec 2024RFA/1630/2022

Case brief

AI extract

What is this about?

In an appeal against an order rejecting the plaint, the High Court held that Section 34 of the SARFAESI Act bars civil court jurisdiction when the dispute is sub judice before a Debts Recovery Tribunal. Consequently, the trial court correctly rejected the plaint, and the appeal was dismissed.

What did the court decide?

The appeal was dismissed; the order of the trial court rejecting the plaint was upheld.

Smt.G.R.Padmashree Vs Sri.M.Huchappa — Contract and Commercial Disputes | Karnataka HC (2024)

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NC: 2024:KHC:51155 RFA No. 1630 of 2022

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 10^TH DAY OF DECEMBER, 2024

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BEFORE

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THE HON'BLE MR JUSTICE K.NATARAJAN REGULAR FIRST APPEAL NO. 1630 OF 2022 (INJ-)

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BETWEEN:

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SMT. G. R. PADMASHREE W/O SITARAM, AGED ABOUT 53 YEARS, R/AT NO.2099, 8^TH MAIN, 3^RD CROSS, JUDICIAL LAYOUT, YELAHANKA NEW TOWN, BENGALURU - 560 064.

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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 VEDAVATHI A K Location: High Court of Karnataka

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SRI. M. HUCHAPPA S/O LATE MARIAPPA, AGED ABOUT 52 YEARS, MAHARASHTRA STREET, ADEPETE TOWN, NELAMANGALA TOWN, BENGALURU - 562 123.

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…RESPONDENT

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(BY SRI. SHIVASHANKARA A., ADVOCATE)

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THIS RFA IS FILED UNDER SECTION 96 R/W ORDER 41 RULE 1 OF CPC AGAINST THE ORDER DATED 16.09.2022 PASSED ON IA No.III IN OS.No.1389/2022 ON THE FILE OF THE VIII ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, BENGALURU, ALLOWING THE IA No.III FILED UNDER ORDER VII RULE 11(d) OF CPC FOR PERMANENT INJUNCTION.

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

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NC: 2024:KHC:51155 RFA No. 1630 of 2022

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CORAM: HON'BLE MR JUSTICE K.NATARAJAN

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ORAL JUDGMENT

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This appeal is filed by the plaintiff under Section 96 of CPC for setting aside the order passed on I.A. No.III filed under Order VII Rule 11(d) of CPC, by the VIII Additional City Civil and Sessions Judge, Bangalore, in O.S. No.1389/2022 dated 16.09.2022, whereby the trial Court has rejected the plaint.

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Heard the arguments of learned counsels appearing for the parties.

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The appellant was the plaintiff and the respondent was

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the defendant before the trial Court. For the sake of convenience, the rank of the parties is retained as before the trial Court.

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The case of the plaintiff before the trial Court is that the plaintiff filed the aforesaid suit seeking permanent injunction restraining the defendant from interfering with the plaintiff's peaceful possession and enjoyment over the suit schedule property. It is contended that a known person to the

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NC: 2024:KHC:51155 RFA No. 1630 of 2022

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plaintiff obtained loan from the Bank without any security and the plaintiff acted as the guarantor for the said loan. It is contended that the Banker by playing fraud on the plaintiff said to be sold the property to the defendant by public auction. Hence, the defendant is trying to interfere with the enjoyment of the suit schedule property. The plaintiff also approached Debts Recovery Tribunal by filing an application under Section 7 which came to be dismissed and the plaintiff has already approached Appellate Debts Recovery Tribunal challenging the order of the Debts Recovery Tribunal. Hence, prayed for decreeing the suit.

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The defendant appeared through his Counsel and filed Interlocutory Application No.III under Order VII Rule 11(d) of the CPC taking the contention that he has purchased the suit property in e-Auction sale made by the Bank. The Banker has already took the possession of the property by filing a petition under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (hereinafter referred to as 'SARFAESI Act') before the Magistrate and a sale deed was also executed in favour of the

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NC: 2024:KHC:51155 RFA No. 1630 of 2022

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defendant and he is in possession. Therefore, the suit is barred under Section 34 of the SARFAESI Act, and therefore, prayed for rejecting the plaint.

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After hearing the arguments of the learned counsel for

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the parties, the trial court accepted the contention of the defendant and allowed I.A. No.III filed by the defendant Order VII Rule 11(d) of CPC and rejected the plaint of the plaintiff. Hence, the plaintiff is before this Court by filing the present appeal.

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Learned counsel for the appellant-plaintiff has contended that the plaintiff is the absolute owner and he is in possession and enjoyment of the suit schedule property. The plaintiff has purchased the suit schedule property under a registered sale deed dated 04.12.2001 in the Office of Sub Registrar, Yelahanka, Bengaluru. The plaintiff is not aware of selling the same by the bank to the defendant and they have played fraud on the plaintiff. The plaintiff approached Debt Recovery Tribunal by filing an application, which came to be dismissed. Now, the case is pending before the Appellate Debt

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5 - NC: 2024:KHC:51155 RFA No. 1630 of 2022

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Recovery Tribunal. The defendant is interfering with the possession and enjoyment of the suit schedule property. Therefore, the trial Court has committed an error in rejecting the plaint. Hence, prayed for allowing the appeal and remanding the matter back to the trial court.

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Having heard the learned counsel appearing for the parties, perused the records.

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The points that arise for consideration in this appeal

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are :

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(i) Whether the suit filed by the plaintiff is barred under Section 34 of SARFAESI Act ? (ii) Whether the order passed by the trial Court calls for interference ?

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On perusal of the records, it is not in dispute that the plaintiff is said to be the guarantor to the loan said to be borrowed by a known person to the plaintiff. The plaintiff has acted as a guarantor. The principal borrower was a defaulter in the payment of the loan. Therefore, the loan was cancelled, and for the purpose of recovery of the loan amount, the Bank

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6 - NC: 2024:KHC:51155 RFA No. 1630 of 2022

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approached the Magistrate under Section 14 of the SARFAESI Act and it is said to be obtained an order by taking over the possession under due process of law. The document is produced by the learned counsel for the respondent in C. Miscellaneous No.2439/2021, wherein an order was passed by

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the Magistrate directing the police to give security and the Court Commissioner was also appointed to hand over the possession of the suit schedule property to the Bank. By way of inventory and Panchanama, the property was handed over to the Bank. The photographs reveal that the suit schedule property was sold by the Banker by taking over the possession.

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Admittedly, the plaintiff filed an application before Debt Recovery Tribunal in SA No.364/2021 where the said Tribunal has already rejected the claim of the plaintiff by an order dated 28.06.2024. It is submitted by the learned Counsel for the appellant that, against the order of the Debt Recovery Tribunal, the plaintiff has approached Appellate Debt Recovery Tribunal, where the matter is pending consideration. Learned counsel for the respondent-defendant has also contended that, except making the purchaser of the suit schedule property as a

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party, the plaintiff has not made the Banker as a party in the suit. Of course, the plaintiff has made the present respondentdefendant and the Banker as parties in the Debt Recovery Tribunal proceedings. But, while filing the suit, purposefully, left out the Banker and made only the purchaser of the suit schedule property as the party in the suit.

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Apart from that, Section 34 of the SARFAESI Act, reads as under:

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34. Civil Court Not To Have Jurisdiction:

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— 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 (51 of 1993).

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Perusal of Section 34 of the SARFAESI Act, it is clear that the said provision has expressly barred the civil Court for taking and entertaining any proceedings or the suit in respect of any matter which was barred by the Debts Recovery Tribunal

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or the Appellate Tribunal, who has empowered to entertain the dispute. Admittedly, the plaintiff approached the Debts Recovery Tribunal and failed, and now the appeal has been filed before the Appellate Debts Recovery Tribunal. Therefore, the civil Court is barred for taking the suit as per Order VII Rule 11(d) of CPC. If any suit is barred under any law, it cannot be entertained and therefore, the plaint is required to be rejected. In this background, the trial court has rejected the plaint as not maintainable under Order VII Rule 11(d) of CPC as it is barred by law. The appellant has already approached Appellate Debts Recovery Tribunal, where the case is pending. Therefore, the question of filing the suit for injunction or declaration is not maintainable. Therefore, the impugned order does not require for any interference.

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Accordingly, the appeal stands dismissed.

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Sd/(K.NATARAJAN) JUDGE

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CS List No.: 1 Sl No.: 42 CT:SK

Smt.G.R.Padmashree v. Sri.M.Huchappa

Case brief

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Smt.G.R.Padmashree v. Sri.M.Huchappa

Case brief

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