BANK OF INDIA Vs. VATSALABAI

JUDGEMENT

(1.) Heard Mr. Purohit, learned counsel for the applicant and Mr. Sohoni, learned counsel for the non- applicants. The present revision challenges the order dtd. 17/03/2022, passed below Exh.16 - an application under Order VII Rule 11 of the Code of Civil Procedure, for rejection of the plaint on account of the bar under Sec. 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, which has been rejected (page 306). Mr. Purohit, learned counsel for the applicant by inviting my attention to the plaint contends that, it is the result of clever drafting and suppression of material facts which has led to the filing of the suit. It is submitted by him that even though the plaintiff no.1 was the partner of the defendant no.1 along with the defendant Nos. 2, 3 and 5 and was a borrower of the loan in favour of the defendant no.1 which was secured by creating an equitable mortgage created in favour of the Bank on 26/10/2017, which was declared as NPA on 31/3/2021, notices under Sec. 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, having been issued on 08/4/2021, the suit has only been filed on 20/11/2021 for the purpose of thwarting the proceedings initiated by the defendant no.7 / applicant Bank under Sec. 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, before the District Magistrate for taking of possession and consequent sale of the property. It is contended, that since the plaintiff no.1, is a signatory to the loan and is a principal borrower and guarantor, a suit at her behest even questioning the mortgage as well as creation of the partnership deed would be beyond the purview of the Civil Court in view of the bar created under Sec. 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act , 2002. It is therefore, submitted, that the impugned order, does not consider this position in its proper perspective and is required to be quashed and set aside.

(2.) Mr. Sohoni, learned counsel for the non- applicant Nos. 1 and 2 (original plaintiffs) submits, that the plaint averments clearly point out a case of fraud being practiced upon the plaintiff no.1 in the matter of execution of the loan agreements as well as the mortgage created in favour of the defendant no.7 / Bank in collusion with the defendant no.2 and therefore, this is a suit which can be decided by the Civil Court and bar under Sec. 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, would not come under picture.

(3.) Sec. 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, creates an express bar holding that no Civil Court has jurisdiction to entertain and try the proceeding in respect of any matter which the Debts Recovery Tribunal is entitled to entertain and determine. Perusal of the plaint indicates that the relief which is being claimed is regarding the mortgage created in favour of the defendant No.7 - Bank of the suit property as a security interest, in respect of which a declaration is being sought. This is a plea which can be considered before the Debts Recovery Tribunal in proceedings filed under Sec. 17 of the aforesaid Act by the defendant no.7 Bank in O.A. No. 3/2022 in which by virtue of provisions of Sec. 19(5) of the aforesaid Act, a counter claim can be raised. Since the plaint averments itself indicates a security interest has been created, in favour of the defendant no. 7 Bank, though there are no specific details in the plaint, that obviously can be considered to be on account of clever drafting of the plaint, so as to keep away the details regarding the creation of security interest in order to obviate the applicability of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and bar under Sec. 34 of the Act thereof. In Bank of Baroda through its Branch Manager Vs. Gopal Shriram Panda and another 2021 SCC OnLine Bom 466, while considering the nature of the bar under Sec. 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the jurisdiction of the Debts Recovery Tribunal, under Ss. 13 and 17 of the aforesaid Act, it has been held that in all cases where the title in properties in respect of which security interest has been created in favour of the Bank or financial institution, stand in the name of the borrower / guarantor and the borrower has availed the financial assistance it would only be the Debts Recovery Tribunal, which would have exclusive jurisdiction to entertain any plea in that regard to the total exclusion of the Civil Court. In the instant case, it is not in dispute that the plaintiff no.1 has a title to the property. It is also not in dispute that the security interest has been created in favour of the defendant No. 7 bank. It is also not in dispute that the plaintiff no.1 is a signatory to such interest, on account of which a declaration as claimed in prayer clause (ii) of the plaint has been sought. That being the position, requirements as contemplated by answer (b) in Bank of Baroda through its Branch Manager Vs. Gopal Shriram Panda (supra) clearly stands satisfied in view of which it would have to be held that the Civil Court in the facts of the present matter would not have jurisdiction. The learned trial Court, however, does not consider this position as the entire reasoning is based upon a plea of fraud being taken by the plaintiff no.1. For the purpose of ousting the jurisdiction of the Debts Recovery Tribunal in view of Sec. 34 of the aforesaid Act, the fraud is to be of such a nature as has been held by the learned constitution Bench in Mardia Chemicals Vs. Union of India 2004 (4) SCC 311 (para 51). All the pleas which are being raised in the suit are capable of being raised before the Debts Recovery Tribunal.