Allowed

Bank of India and Ors. v. M/S Banawar Agro Works P Ltd.

Patna HC15 Jul 2013MA/26/2012

Case brief

AI extract

What is this about?

The High Court allowed the appeal filed by a bank against an order granting an injunction that restrained the bank from taking action under the SARFAESI Act. The court held that Section 34 of the Act bars civil court jurisdiction and no restraint can be placed on a party's right to seek judicial remedies.

What did the court decide?

The order of the Subordinate Judge granting injunction against the appellant-bank under SARFAESI Act is set aside.

Bank of India and Ors. Vs M/S Banawar Agro Works P Ltd. — Banking and Recovery | Patna HC (2013)

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IN THE HIGH COURT OF JUDICATURE AT PATNA Miscellaneous Appeal No.26 of 2012

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====================================================== 1. Bank of India, Makhdumpur Branch represented through its Manager situated at Makhdumpur, P.O. & P.S.- Makhdumpur, DistrictJehanabad. 2. Zonal Manager, Bank of India, Zonal Office, Bir Chand Patel Path, P.S.- Secretariat, District- Patna. ....Defendants 1^st set incourt below .... Appellant/s Versus 1. M/S Banawar Agro Works (P) Ltd, a registered company under Companies Act represented through its Managing Director Amrendra Kumar, resident of Paleya, P.O. Makhdumpur, P.S.- Makhdumpur, District- Jehanabad. (Plaintiff in the court below).

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National Insurance Company through its Regional Manager, Gaya. (Defendant no.3 in the court below )

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.... .... Respondent/s ====================================================== Appearance : For the Appellant/s : Mr. Ajay Kumar Sinha For the Respondent/s : Mr. Ashok Priyadarshi

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====================================================== CORAM: HONOURABLE MR. JUSTICE JYOTI SARAN ORAL ORDER

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14 15-07-2013 Heard Mr. Ajay Kumar Sinha, learned counsel appearing for the appellant-Bank and Mr. Ashok Priyadarshi, learned counsel appearing for respondent no.2, the insurance company. Though served and having appeared through counsel, there is no representation on behalf of the plaintiff-respondent no.1.

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This appeal is directed against the order dated 10.6.2011 passed by the learned Subordinate Judge 1^st , Jehanabad in Money Suit No.3 of 2010, whereby the learned court below has been pleased to order for injunction against the appellant-Bank restraining them from taking any harsh action

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Patna High Court MA No.26 of 2012 (14) dt.15-07-2013

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against respondent nos.1 even under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2001 (hereinafter referred to as „the SARFAESI Act‟).

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It is submitted on behalf of the appellant-Bank that plaintiff-respondent no.1 had been sanctioned a loan of rupees 164.48 lacs by the appellant-Bank in its Madhdumpur Branch, district- Jehanabad and out of which a sum of Rs.148 lacs has already been disbursed. It is stated that to pre-empt the Bank from taking any step the plaintiff-respondent no.1 filed the suit in question giving rise to Money Suit No.3 of 2010 in court of Sub-Judge 1^st , Jehanabad praying for the following reliefs:

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(a) On adjudication of the fact and circumstances a decree for compensation against Defendant 1^st set as detailed in schedule-I of the plaint be passed in favour of the plaintiff and against the defendant.

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(b) By the order of temporary injunction defendants be restrained from taking any kind of action against the plaintiff and further they be directed to maintain status quo.

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Patna High Court MA No.26 of 2012 (14) dt.15-07-2013

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With reference to the overriding effect of the provisions of section 34 of the SARFAESI Act ousting the jurisdiction of the Civil Court it is submitted that the order is without jurisdiction. It is further submitted that by a judicial order the learned trial court could not have restrained the appellant-Bank from taking recourse to judicial remedy which also would be violative of his constitutional rights.

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Having heard learned counsel for the parties this Court vide order dated 9.8.2012 while issuing notice had stayed the operation of the impugned order. In absence of any representation on behalf of the plaintiff-respondent no.1 the arguments set forth on behalf of the appellant-Bank remains uncontested. Mr. Priyadarshi, learned counsel appearing for the insurance company submits that the impleadment of insurance company is formal in the matter.

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Section 34 of the SARFAESI Act reads as under:

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“ 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 (51 of 1993).

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Patna High Court MA No.26 of 2012 (14) dt.15-07-2013

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Objects and Reasons .- Clause 34—This clause provides that 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 the proposed legislation 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 the proposed legislation or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

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Section 34 of the Recovery of Debts Due to Banks and Financial Institution Act, 1993 (hereinafter referred to as „the Recovery of Debts Act, 1993) has a overriding effect over any action done pursuant to any other enactment of similar nature and reads as under:

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“ 34. Act to have overriding effect. (1) Save as provided under sub-section (2), the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being inforce or in any instrument having effect by virtue of any law other than this Act.

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(2) The provisions of this Act or the rules made thereunder shall be in addition to, and not in derogation of, the Industrial Finance Corporation Act, 1948 (15 of 1948) the State Financial Corporation Act, 1951 (63 of 1951), the Industrial Reconstruction Bank of India Act, 1984 (62 of 1984) and the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) [and the Small Industrial Development Bank of India Act, 1989].”

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Mr. Sinha, learned counsel appearing for the

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Patna High Court MA No.26 of 2012 (14) dt.15-07-2013

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appellant-Bank in the light of the provisions aforementioned has submitted that in view of the legislative intendment of the two enactments, the order impugned cannot be upheld.

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I have heard learned counsel for the parties and have perused the materials on record. The suit in question primarily rests on a decree of compensation and an order of temporary injunction has been prayed by way of an ad-interim relief. Considering the nature of the relief sought in the suit, and in view of the statutory provisions underlying the SARFAESI Act and the Debts Recovery Act, 1993 it leaves no room for confusion that the order is patently illegal and without jurisdiction. The order also cannot be sustained for the reason that no restraint can be put on a party from taking recourse to any judicial remedy that may be available to him in law. The order impugned pre-empts any such action.

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For the reasons aforementioned, the order cannot be sustained and is accordingly set aside. This appeal is allowed.

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SKPathak/-

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(Jyoti Saran, J)

Bank of India and Ors. v. M/S Banawar Agro Works P Ltd.

Case brief

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Bank of India and Ors. v. M/S Banawar Agro Works P Ltd.

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