The High Court dismissed the appeal against a rejection of plaint under Order 7 Rule 11 CPC. Holding that Section 17 of the SARFAESI Act provides a remedy, the Court barred civil court jurisdiction via Section 34 of the Act.
The appeal was dismissed; no ground to interfere.
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CR No.3831 of 2008 (O&M)
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
CR No.3831 of 2008 (O&M) Decided on : 24-09-2010
Ravinder Pal Singh and another
....Petitioners
VERSUS
State Bank of India and others
....Respondents
CORAM:- HON'BLE MR. JUSTICE MAHESH GROVER
Present:Mr.Sudeep Mahajan, Senior Advocate with Mr. Amit Kohar, Advocate for the petitioners.
Mr. Yogesh Jain, Advocate for respondent nos. 1 and 2 Mr.Puneet Jindal, Advocate for the respondent no.3
MAHESH GROVER, J
There is no infirmity in the impugned order. The petitioners are aggrieved by the impugned order dated 14.3.2008 by which the their plaint has been rejected under Order 7 Rule 11 . Respondent nos. 1 and 2 (Bank) initiated proceedings against respondent no.3 for recovery of its debts and took recourse to provisions of Section 13 of Securitization & Reconstruction of Financial Assets and Enforcement Interest Act, 2002 (hereinafter referred to as the 'Act'). The petitioners claim to be in possession of the property which has been taken over by the Bank pursuant to the provisions of Section 34 o the Act. Learned counsel for the petitioners contends that their possession cannot be disturbed and that the action of the Bank is erroneous and contrary to the Act and is liable to
CR No.3831 of 2008 (O&M) 2
be set aside.
The respondent nos. 1 and 2 ( Bank) while defending the order of the Trial Court refers to Section 17 and 34 to contend that the petitioners have a remedy to move Debt Recovery Tribunal in the eventuality of their being aggrieved by the said order and further Section 34 of the Act clearly debars the jurisdiction of the Civil Court. The petitioners in order to substantiate his argument relies on judgment of Hon'ble Supreme Court titled as Nahar Industrial Enterprises Limited versus HongKong And Shanghai Banking Corporation 2009(8) SCC 646 while on the other hand, learned counsel for the respondents relied on judgment of this Court reported as Jammu and Kashmir Bank versus Jai Lakshmi Dravid 2006(3) RCR (civil) 835 .
I have heard learned counsel for the parties and have perused the impugned order and also the material which has been shown to this Court during the course of proceedings.
The provisions of Section 17 are amply clear. They visualize filing of an appeal by any person (including borrower). To say that the petitioners who are not the borrowers are precluded from having recourse to Section 17 of the Act is erroneous. The Legislature in its wisdom visualized a situation to include in the ambit of provisions of Section 17 (4) a contingency where fall out of the action is on some other person apart from the borrower and it is for this reason that the right to appeal has been provided to “any person including borrower”. The contention of the learned counsel for the petitioners is that any person cannot be construed to include the persons who are indirectly affected by the action of the financial institutions taking recourse to Section 17(4) therefore, the
CR No.3831 of 2008 (O&M) 3
findings are erroneous, is thus misplaced. Besides there is distinct bar under Section 34 which precludes jurisdiction of Civil Court to entertain such proceedings to challenge the action of the financial institutions taken under the Act. There is no doubt about the fact that the jurisdiction of the Civil Court is plenary and cannot be ousted unless the statute itself prohibits it. Judgment of the Hon'ble Supreme Court is amply clear on this, but they emanate from the controversy in a case where the suit was filed to question foreign exchange derivative contracts between Bank and the appellant therein. But in the instant case, the petitioners are alien to the arrangement between the Bank and the borrower. Before this Court it is contended by them that they are the owners of the suit property. If that be so, then this Court is unable to envision as to how the property was mortgaged with Bank (respondent nos. 1 and 2) by someone else. However, the Court does not wish to comment on this aspect of the controversy and holds that the jurisdiction of the Civil Court is barred and petitioners have a remedy under Section 17 of the Act.
No ground to interfere.
Hence, dismissed.
September 24, 2010 (Mahesh Grover) rekha Judge
2 issues framed by the court
Whether an appellant aggrieved by an order rejecting a plaint under Order 7 Rule 11 CPC has a remedy under Section 17 of the SARFAESI Act, 2002.
Whether the civil court has jurisdiction to entertain proceedings challenging action taken by financial institutions under Section 17(4) of the SARFAESI Act, 2002.
Colour shows how this judgement treated each authority
Jammu and Kashmir Bank versus Jai Lakshmi DravidReferred¶17
2006(3) RCR (civil) 835
3 provisions across 2 enactments
Ravinder Pal Singh and another
State Bank of India
Mahesh Grover
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
