VENKATESHWARAN J. TIRUNILLAI Vs. PRADEEP MANSUKHANI

JUDGEMENT

(1.) Sec. 13 of the SARFAESI Act deals with enforcement of security interest without intervention of the Court or Tribunal but in accordance with the provisions of the said Act. In the case of Jagdish Singh v. Hiralal 2014 1 SCC 479 , the Apex Court has held that, when the secured creditors proposed to proceed against secured assets, Sub-sec. (4) of Sec. 13 envisages various measures to secure the borrowers ' debt. One of the measures provided by the Statute is, to take possession of secured assets of the borrower including the right to transfer by way of lease, assignment for realising secured assets. Any person aggrieved by any of the measures referred to in Sub-sec. (4) of Sec. 13 has got the statutory right to Debts Recovery Tribunal ( 'DRT ' for short) under Sec. 17. Therefore, if any aggrieved person has got any grievance against any "measure " taken by the borrower under Sub-sec. (4) of Sec. 13, remedy is to approach the DRT and not the Civil Court. The Civil Court in such circumstances has no jurisdiction to entertain any suit or proceeding in respect of those matters, which fall under sub-sec. (4) of Sec. 13 of the Securitisation Act. Taking note of this settled law, trial Court declined to restrain Secured Creditors, from enforcing, security interest in the suit property. That order is challenged herein under Order 43 Rule 1(r) read with 104 of the Civil Procedure Code, 1908 passed by the learned Judge, City Civil Court at Greater Bombay.

(2.) Briefly stated, undisputed facts of the case are as under; Plaintiffs are borrowers within the meaning of Sec. 2(f) of the SARFAESI Act ( 'Act ' for short). They created a 'security interest ' in the suit property, in favour of State Bank of India ( 'Bank ' for short), by executing security agreement. Whereupon, bank had sanctioned and disbursed loan to them. Plaintiffs ' account was, categorised, under stressed asset and transferred to asset recovery branch at Thane. Thereafter, on 15/5/2019, notice under Sec. 13(2) under SARFAESI Act was issued, by which plaintiffs were called upon to pay Rs.1,69,00,299.00. Despite, several reminders, plaintiffs failed and neglected to pay the dues to the bank. Thus, to enforce security interest, the bank (Secured Creditor) after complying with the mandatory provisions and rules of the SARFAESI, E-auctioned the suit property, on 25/10/2021. Before auctioning, bank had published sale notices, in five newspapers, in various places. That apart, notice was also uploaded on NSTCE web-site. E-Auction was conducted through Government agency. As such, bank was not aware, about bidders, who had participated in auction before confirmation of sale. Respondent nos. 1 and 2- "Defendant Nos.1 and 2 ", were successful bidders. Whereafter on 27/10/2021, sale certificate was issued in favour of defendant nos.1 and 2, in terms of Rule 9(6) of the Security Interest (Enforcement) Rules, 2002.

(3.) Plaintiffs instituted suit on 12/10/2021 in the City Civil Court at Greater Bombay. They pleaded, the defendant nos.1 and 2 approached them and offered to purchase the suit property, although, they were informed about outstanding loan on the said property and ongoing One Time Settlement talks (OTS) with the Bank. Whereafter, on 11/2/2021, Memorandum of Understanding ( 'MOU ' for short) was executed between plaintiffs and defendant nos.1 and 2. In terms of the MOU, defendant nos.1 and 2 agreed to purchase suit property for Rs.2,72,00,000.00 (Rupees Two Crores and Seventy-two Lacs Only). Out of which Rs.13.00 Lakhs were paid by defendant nos.1 and 2 to the plaintiffs to initiate settlement process with the bank. It was agreed that the settlement amount payable by the plaintiffs to the bank for settlement of their dues was to be paid by the defendant nos.1 and 2 and finally, the balance amount out of 2,72,00,000/- minus monies already paid (to bank and the plaintiff) would be paid to the plaintiffs. Under the MOU, it was plaintiffs ' obligation to reach the settlement, with bank and once, the settlement was reached, defendant nos.1 and 2 were required to pay settlement amount to the State Bank of India on behalf of the plaintiffs and all the obligations were to be met with by the respective parties on or before 11th MOU, the plaintiffs made five to six, April, 2021. Pursuant to the OTS proposals to the bank and last one was on 30/7/2021. Plaintiffs pleaded, that, in response to proposals, once bank had offered to, settle the dues, for Rs.1,31,00,000.00 (Rupees One Crore and Thirty-one Lacs Only). Plaintiffs would plead that on 30/7/2021, they offered to pay 1,22,00,000/- (Rupees One Crore and Twenty-two Lacs Only) to the bank on the suggestion of officer of defendant-Bank. However, it was not responded. Plaintiffs pleaded, that, defendant nos.1 and 2 began to establish contacts with officers of the bank, to discuss the settlement of loan, although they were instructed not to contact the bank since same would jeopardise the settlement talks. Plaintiffs would thus, allege, in spite of the same, defendant nos.1 and 2 began to speak directly with the officers of bank to the exclusion of the plaintiffs and due to that, chances of said loan being settled was getting bleak. It is Plaintiffs ' case, that on 13/9/2021, his last OTS proposal was rejected and five days later, the bank issued, sale notice dtd. 18/9/2021. Thereafter, on 24/9/2021, the plaintiff no.1 received termination notice dtd. 20/9/2021 from Advocate of the defendant nos.1 and 2 inter-alia terminating MOU. Thus, according to the plaintiffs, defendant nos.1 and 2 in collusion with officers of the bank, bye-passed the plaintiffs, firstly, by establishing contacts with the Bank Officers; thereafter terminated the MOU; Whereafter they managed to auction the suit property for Rs.1,90,50,000.00 (Rupees One Crore Ninety Lacs and Fifty Thousand Only), which was much lower than the price for which they had agreed to purchase the Suit Property and further purchased the same in auction held by the Bank. Plaintiffs would, therefore, plead that defendant nos.1 and 2 in collusion with officers of the Bank managed to purchase the suit property at undervalued rate, which was just Rs.20.00 Lakhs above the cost of which purchased by the plaintiffs in November, 2010. Therefore, it is plaintiff 's case that conspiracy between the defendants was writ large in-as-much as they by their act by commission or omission, extinguished plaintiffs ' right over the suit property by wrongfully bye-passing the plaintiffs and thereby caused unlawful losses to them and unjust and unlawful gains to the defendant nos.1 and 2. On these set of allegations, plaintiffs instituted a suit on 12/10/2021 seeking following reliefs;