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Civil court has no jurisdiction against the properties covered under Securitisation Act. = Jagdish Singh …….. Appellant Versus Heeralal and others ……. Respondents – http://judis.nic.in/supremecourt/filename=40924

Civil court  has no jurisdiction against the properties covered under Securitisation Act.=

 

English: The supreme court of india. Taken abo...

English: The supreme court of india. Taken about 170 m from the main building outside the perimeter wall (Photo credit: Wikipedia)

 

 

 

 Section 13, as already indicated, deals with the  enforcement  of  the

 

security interest without the intervention of the court or tribunal  but  in

 

accordance with the provisions of the Securitisation Act.

 

 

 

22.   Statutory interest is being created in favour of the secured  creditor

 

on the secured assets and when the  secured  creditor  proposes  to  proceed

 

against the secured assets, sub-section (4) of Section 13 envisages  various

 

measures to secure the borrower’s debt.  

 

One of  the  measures  provided  by

 

the statute is to take  possession  of  secured  assets  of  the  borrowers,

 

including the right to transfer by way of  lease,  assignment  or  realizing

 

the secured assets.  

 

Any person aggrieved by any of the “measures”  referred

 

to in sub-section (4) of Section 13 has got a statutory right of  appeal  to

 

the DRT under Section 17.  

 

The opening portion of Section 34 clearly  states

 

that no civil court  shall  have  jurisdiction  to  entertain  any  suit  or

 

proceeding “in respect of any matter” which a DRT or an  Appellate  Tribunal

 

is  empowered  by  or  under  the  Securitisation  Act  to  determine.   The

 

expression ‘in respect of any matter’ referred to in Section 34  would  take

 

in the “measures” provided under  sub-section  (4)  of  Section  13  of  the

 

Securitisation Act.  

 

Consequently  if  any  aggrieved  person  has  got  any

 

grievance against any “measures” taken by  the  borrower  under  sub-section

 

(4) of Section 13, the remedy open to him is to  approach  the  DRT  or  the

 

Appellate  Tribunal  and  not  the  civil  court.   

 

Civil  Court   in   such

 

circumstances has no jurisdiction to entertain any suit  or  proceedings  in

 

respect of those matters which fall under sub-section (4) of Section  13  of

 

the Securitisation Act because those matters fell  within  the  jurisdiction

 

of the DRT and the  Appellate  Tribunal.  

 

 Further,  Section  35  says,  the

 

Securitisation Act overrides other laws, if they are inconsistent  with  the

 

provisions of that Act, which takes in Section 9 CPC as well.

 

 

 

“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).

 

 

 

 

 

20.   The scope of Section 34 came up for consideration  before  this  Court

 

in Mardia Chemicals Ltd. (supra) and this court held as follow:

 

         “50. 

 

It has also been submitted that an  appeal  is  entertainable

 

        before the Debts Recovery Tribunal  only  after  such  measures  as

 

        provided in sub-section (4) of Section 13 are taken and Section  34

 

        bars to entertain any proceeding in respect of a matter  which  the

 

        Debts Recovery Tribunal or the Appellate Tribunal is  empowered  to

 

        determine. 

 

Thus before any action or measure is  taken  under  sub-

 

        section (4) of Section 13, it is submitted by Mr Salve, one of  the

 

        counsel for the respondents that there would be no bar to  approach

 

        the civil court. 

 

Therefore, it cannot be said  that  no  remedy  is

 

        available to the borrowers. We, however, find that this  contention

 

        as advanced by Shri Salve is not correct. 

 

A full reading of Section

 

        34 shows that the jurisdiction of the  civil  court  is  barred  in

 

        respect of matters which a Debts Recovery Tribunal or an  Appellate

 

        Tribunal is empowered to determine in respect of any  action  taken

 

        “or to be taken in pursuance of  any  power  conferred  under  this

 

        Act”. 

 

That is to say, the prohibition covers even matters which can

 

        be taken cognizance of by the Debts  Recovery  Tribunal  though  no

 

        measure in that direction has so far been taken  under  sub-section

 

        (4) of Section 13. 

 

It is further  to  be  noted  that  the  bar  of

 

        jurisdiction is in respect of a  proceeding  which  matter  may  be

 

        taken to the Tribunal. 

 

Therefore, any matter in respect of which an

 

        action may be taken even later on, the civil court  shall  have  no

 

        jurisdiction to entertain any proceeding thereof. 

 

The bar of  civil

 

        court  thus  applies  to  all  such  matters  which  may  be  taken

 

        cognizance of by the Debts  Recovery  Tribunal,  apart  from  those

 

        matters in which measures have already been taken under sub-section

 

        (4) of Section 13.”

 

 

 

 

 

We are of the view that 

 

the civil  court  jurisdiction  is  completely

 

barred, so far as the “measure” taken  by  a  secured  creditor  under  sub-

 

section (4) of Section 13  of  the  Securitisation  Act,  against  which  an

 

aggrieved person has a right of appeal  before  the  DRT  or  the  Appellate

 

Tribunal. to determine as to whether there has been any  illegality  in  the

 

“measures” taken.  

 

The  bank,  in  the  instant  case,  has  proceeded  only

 

against secured assets of the borrowers on which  no  rights  of  Respondent Nos.6 to 8 have been  crystalised,  before  creating  security  interest  in respect of the secured assets.  

 

In such circumstances, we are  of  the  view

 

that the High Court was  in error in  holding  that  only  civil  court  has jurisdiction to examine as to whether the “measures” taken  by  the  secured creditor under sub-section (4) of Section 13 of the Securitisation Act  were legal or not.   

 

In  such  circumstances,  the  appeal  is  allowed  and  the

 

judgment of the High Court is set aside.   There shall be  no  order  as  to

 

costs.

 

 

 

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 9771 OF 2013
(Arising out of Special Leave Petition (Civil) No.18 of 2011)

 
Jagdish Singh …….. Appellant

 

Versus

 

Heeralal and others ……. Respondents

 

 

 

J U D G M E N T

 
K.S. Radhakrishnan, J.

 

Leave granted.

 
2. The appellant herein was the auction purchaser, being the highest
bidder for Rs.18,01,000/-, in respect of the land admeasuring one acre in
Khasra Nos.104/3 and 105/2, Patwari Halka No.4, Village Segaon, Anjad Road,
Barwani, M.P., which was brought to sale for recovery of loan amounts under
the provisions of the Securitisation and Reconstruction of Financial Assets
and Enforcement of Security Interest Act, 2002 (for short “the
Securitisation Act”). The auction was confirmed by the bank on 08.11.2005
on the appellant’s depositing Rs.2,90,250/- by 09.11.2005 and remaining 75%
within 15 days. The appellant was not put in possession of the property in
question even though the auction was confirmed.

 

3. The appellant – auction purchaser then came to know that Respondent
Nos.1 to 5 herein have filed a Civil Suit No.16A/07 in the Court of
District Judge, Barwani District for a declaration of title, partition and
permanent injunction against Respondent Nos.7 to 9 and others in which the
appellant and the bank were also made parties. Following are the reliefs
sought for in the said civil suit:
“(A) Decree may be passed in favour of the plaintiff and
against the defendants for declaration of title to this effect that
one acre land in survey No.104/3 and 105/2 described in plaint para
4 (a) is undivided joint family property of plaintiff and
defendants No.1 to 4 and the defendants have no right to mortgage
it or attachment and auction of the same against any loan recovery
by defendant No.5 and if defendants No.1 to 5 might have created
any charge on the said land then it is not binding on the
plaintiff.

 
(B) Decree of partition may be passed in favour of the
plaintiffs and against the defendants for division of the suit land
by metes and bounds and decree may be passed for separating the
land of title of the plaintiffs and mutation effected in revenue
papers.

 
(C) Decree of permanent injunction may be passed in favour of
the plaintiffs against the defendant that the defendants shall not,
directly or indirectly, transfer, auction or interfere over the
suit land of the plaintiff in any manner.

 
(D) Costs of the suit may be awarded against the defendants.

 
(E) Other relief which the Hon’ble Court may deem proper may
be granted to the plaintiff against the defendants.”

 

4. Respondent Nos.7 to 9 herein, in the meanwhile, filed an application
before the Debt Recovery Tribunal (for short “the DRT”), Jabalpur under
Section 17 of the Securitisation Act challenging the sale notice dated
08.11.2005. The application was opposed by the bank and the same was
dismissed by the DRT vide its order dated 21.07.2006.

 

5. Respondent Nos.6 and 7 (the Bank) filed a preliminary objection
before the civil court stating that in view of Section 13 read with Section
34 of the Securitisation Act, the civil court has no jurisdiction to
entertain the suit. The court, therefore, framed the following issues:
“Whether under the provisions of Section 34 & 35 of SARFAESI Act
2002 this court does not have the jurisdiction to decide the suit as
mentioned in special pleadings in para 10 of the written statement
of defendant No.10 and also mentioned in para 15 of the written
statement of defendant Nos.6 & 7.”

 

6. The civil court upheld the preliminary objection stating that if the
plaintiffs had any right, they ought to have filed an appeal under Section
17 of the DRT Act and not a suit in view of the specific bar contained in
Section 34 of the Securitisation Act. Civil court, therefore, passed an
order on 18.01.2008 holding that the suit is not maintainable and, hence,
the application preferred by the bank under Order 7 Rule 11 of the Civil
Procedure Code (for short “the CPC”) was allowed.

 
7. Aggrieved by the said order, Respondent Nos.1 to 5 herein filed Civil
First Appeal No.130/08 before the High Court of Madhya Pradesh at Indore.
The High Court, however, allowed the appeal. The operative portion of the
judgment reads as follow:
“I have perused the contents of the plaint from the record of the
case. A bare perusal of the plaint indicates that the plaintiffs
have raised the question of title, on the basis of Joint Hindu
Family property and they being the members of the Joint Hindu
Family, it has been pleaded by them that the property in question
had been acquired through the earnings of the joint family
property. On that basis, it has been maintained by them that the
property in question was liable to be treated as Joint Hindu Family
property, and not the exclusive property of the defendants. In
these circumstances, on the bare perusal of the contents of the
plaint, it cannot be suggested at all that the civil suit, filed by
the plaintiffs, is barred under any provisions of the
Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2000, or that civil court has
no jurisdiction in the matter.”

 

8. Aggrieved by the same, this appeal has been preferred. Shri A.K.
Chitale, learned senior counsel appearing for the appellant, submitted that
the High Court has not properly appreciated the scope of Section 34 of the
Securitisation Act and has completely over-looked the principle laid down
by this Court in various Judgments with regard to the scope of Section 9
CPC vis-à-vis Section 34 of the Securitisation Act. Reference was made to
the Judgments of this court in Mardia Chemicals and others v. Union of
india and others (2004) 4 SCC 311, Central Bank of India v. State of Kerala
and others (2009) 4 SCC 94, United Bank of India v. Satyavati Tondon and
others (2010) 8 SCC 110 and Authorised Officer, Indian Overseas Bank and
others v. Ashok Saw Mill (2009) 8 SCC 366. Learned senior counsel
submitted that the appellant is a bona fide purchaser for value and the
sale was confirmed in his favour as early as on 08.11.2005. Further, it
was pointed out that the application preferred by Respondent Nos.7 to 9
before the DRT, challenging the sale notice dated 08.11.2005, was also
dismissed by the DRT on 21.07.2006. Consequently, the High Court was not
justified in interfering with the order passed by the District Judge.

 

9. Shri Sanjay Parikh, learned counsel appearing for the respondents, on
the other hand, submitted that the High Court has rightly interfered with
the order of the District Judge after having found that the civil court has
got the jurisdiction to deal with the rights of the respondents –
plaintiffs. Learned counsel submitted that the High Court has correctly
appreciated the scope of Section 34 of the Securitisation Act. Reference
was made to the Judgments of this Court in Nahar Industrial Enterprises
Limited v. Hongkong Shanghai Banking Corporation (2009) 8 SCC 646, Indian
Bank v. ABS Marine Products Pvt. Ltd. (2006) 5 SCC 72 and also to the
Mardia Chemicals Ltd. (supra). Learned counsel submitted that the DRT,
exercising powers under Section 17 of the Securitisation Act, cannot decide
the rights of Respondent Nos.1 to 5 vis-à-vis Respondent Nos.7 to 9 in a
proceeding under Section 17 of the Securitisation Act and civil court is
the right forum to decide as to whether the secured assets are ancestral
properties of a Hindu Undivided Family (HUF) and they were acquired through
the earnings out of the joint family properties.

 

Discussion

 

10. The Bank of India had advanced a loan of Rs.25 lakhs to M/s Guru Om
Automobiles, 10th respondent herein, through its proprietor, the 6th
respondent on 17.02.2000. The loan was secured by equitable mortgage
executed by Respondent Nos.7 to 9 in respect of land measuring one acre in
Khasra No.104/3 and 105/2, Patwari Halka No.5, Village Seagon, Anjad Road,
Barwani, MP. Respondent Nos.6 to 8 had also created equitable mortgage on
three houses, which were in their respective names. Original title deeds
of all the above-mentioned properties were duly deposited with the bank at
the time of availing of the loan. Since they committed default in re-
paying the loan, the bank issued notice under Section 13(2) of the
Securitisation Act and took steps under Section 13(4) of the Securitisation
Act in respect of properties on 01.03.2004. Auction notice was duly
published in the newspapers on 30.09.2005. No objection was raised by the
plaintiffs and the suit land was auctioned on 08.11.2005, which was settled
in favour of the highest bidder – the appellant herein. The entire auction
price was paid by the auction purchaser and the sale in his favour was duly
confirmed. Respondent Nos.7 to 9 challenged the sale notice, as already
indicated, by filing an application No.19/2005 before the DRT, Jabalpur,
which was dismissed on 21.07.2006. No appeal was preferred against that
order and that order has attained finality.

 

11. We notice, at this juncture, Respondent Nos.1 to 5 filed Civil Suit
No.16A/07 in the Court of the District Judge, Barwani against the
appellant, as well as the bank and Respondent Nos.6 to 9, alleging that the
family members of Respondent Nos.1 to 9 herein being sons/grandsons of
deceased Premji, constituted a HUF engaged in agriculture. It was stated
that the said properties were purchased in the names of Respondent Nos.7 to
9 out of the funds of HUF and house Nos.41/1, 42/3 and 42/2 were also
purchased in the names of Respondent Nos.6 to 8 respectively, out of the
funds of HUF and, therefore, the properties of HUF. But, the facts would
clearly indicate that the properties referred to above were purchased by
Respondent Nos.6 to 8 in their individual names, long after the death of
Premji and that too by registered sale deeds and no claim was ever made at
any stage by any member of the HUF that the suit land was a HUF property
and not the individual property. Respondent Nos.7 to 9 had purchased those
lands vide sale deed dated 14.09.1999 and the 6th respondent had also
purchased in his individual name House No.42/1 on 31.03.1998 vide
registered sale deed. Similarly, Respondent No.7 had also purchased House
No.42/3 in his individual name. No claim, whatsoever, was made at any
stage by any member of the family that those properties and buildings were
HUF properties and not the individual properties of Respondent Nos.6 to 8
herein.

 

12. We find that the bank had advanced loans on the strength of the
above-mentioned documents which stood in the names of Respondent Nos.6 to
9. Due to non-repayment of the loan amount, the Bank can always proceed
against the secured assets.

 

13. Security interest, within the meaning of Section 2(zf) has been
created in respect of the above mentioned properties which are secured
assets within the meaning of Section 2(zc), in favour of the secured
creditor (the bank) within the meaning of Section 2(zd). On failure to re-
pay, the bank, secured creditor can always enforce its security interest
over the secured assets.

 

14. Secured asset is defined under Section 2(zc) of the Securitisation
Act to mean the property on which security interest is created. Section
13(1) of the Securitisation Act states that notwithstanding anything
contained in Section 69 or 69A of the Transfer of Property Act, 1882, any
security interest created in favour of any secured creditor may be
enforced, without the intervention of the court or tribunal by such
creditor, in accordance with the provisions of the Act. In case the
borrower fails to discharge his liability, the bank can take the measures
provided in Section 13(4) of the Securitisation Act for recovery of the
loan amount. The “measures” available for enforcement of security interest
is dealt with in the following provision:
13. Enforcement of security interest –
(1) to (3) xxx xxx xxx
(4) In case the borrower fails to discharge his liability in full
within the period specified in sub-section (2), the secured
creditor may take recourse to one or more of the following measures
to recover his secured debt, namely:–

 
(a) take possession of the secured assets of the borrower including
the right to transfer by way of lease, assignment or sale for
realising the secured asset;

 
(b) take over the management of the business of the borrower
including the right to transfer by way of lease, assignment or sale
for realising the secured asset:

 
PROVIDED that the right to transfer by way of lease,
assignment or sale shall be exercised only where the substantial
part of the business of the borrower is held as security for the
debt:

 
PROVIDED further that where the management of whole of the
business or part of the business is severable, the secured creditor
shall take over the management of such business of the borrower
which is relatable to the security or the debt;

 
(c) appoint any person (hereafter referred to as the manager), to
manage the secured assets the possession of which has been taken
over by the secured creditor;

 
(d) require at any time by notice in writing, any person who has
acquired any of the secured assets from the borrower and from whom
any money is due or may become due to the borrower, to pay the
secured creditor, so much of the money as is sufficient to pay the
secured debt.”

 
15. Section 17 of the Securitisation Act confers a right of appeal to any
person, including the borrower, if that person is aggrieved by any of the
“measures” referred to in sub-section (4) of Section 13 taken by the
Secured Creditor. The operative portion of Section 17 is extracted
hereinbelow for ready reference:
“17. Right to appeal : (1) Any person (including borrower),
aggrieved by any of the measures referred to in sub-section (4) of
section 13 taken by the secured creditor or his authorised officer
under this Chapter, may make an application along with such fee, as
may be prescribed to the Debts Recovery Tribunal having
jurisdiction in the matter within forty-five days from the date on
which such measure had been taken:

 
PROVIDED that different fees may be prescribed for making the
application by the borrower and the person other than the borrower.

 

 

 
Explanation : For the removal of doubts, it is hereby declared that
the communication of the reasons to the borrower by the secured
creditor for not having accepted his representation or objection or
the likely action of the secured creditor at the stage of
communication of reasons to the borrower shall not entitle the
person (including borrower) to make an application to the Debts
Recovery Tribunal under sub-section (1) of Section 1.

 
(2) The Debts Recovery Tribunal shall consider whether any of the
measures referred to in sub-section (4) of section 13 taken by the
secured creditor for enforcement of security are in accordance with
the provisions of this Act and the rules made thereunder.

 
(3) If, the Debts Recovery Tribunal, after examining the facts and
circumstances of the case and evidence produced by the parties,
comes to the conclusion that any of the measures referred to in sub-
section (4) of section 13, taken by the secured creditor are not in
accordance with the provisions of this Act and the rules made
thereunder, and require restoration of the management of the
secured assets to the borrower or restoration of possession of the
secured assets to the borrower, it may by order, declare the
recourse to any one or more measures referred to in sub-section
(4) of section 13 taken by the secured assets as invalid and
restore the possession of the secured assets to the borrower or
restore the management of the secured assets to the borrower, as
the case may be, and pass such order as it may consider appropriate
and necessary in relation to any of the recourse taken by the
secured creditor under sub-section (4) of section 13.

 
(4) If, the Debts Recovery Tribunal declares the recourse taken by
a secured creditor under sub-section (4) of section 13, is in
accordance with the provisions of this Act and the rules made
thereunder, then, notwithstanding anything contained in any other
law for the time being in force, the secured creditor shall be
entitled to take recourse to one or more of the measures specified
under sub-section (4) of section 13 to recover his secured debt.

 
(5) Any application made under sub-section (1) shall be dealt with
by the Debts Recovery Tribunal as expeditiously as possible and
disposed of within sixty days from the date of such application:

 
PROVIDED that the Debts Recovery Tribunal may, from time to time,
extend the said period for reasons to be recorded in writing, so,
however, that the total period of pendency of the application with
the Debts Recovery Tribunal, shall not exceed four months from the
date of making of such application made under sub-section (1).

 
(6) If the application is not disposed of by the Debts Recovery
Tribunal within the period of four months as specified in sub-
section (5), any party to the application may make an application,
in such form as may be prescribed, to the Appellate Tribunal for
directing the Debts Recovery Tribunal for expeditious disposal of
the application pending before the Debts Recovery Tribunal and the
Appellate Tribunal may, on such application, make an order for
expeditious disposal of the pending application by the Debts
Recovery Tribunal.

 
(7) Save as otherwise provided in this Act, the Debts Recovery
Tribunal shall, as far as may be, dispose of application in
accordance with the provisions of the Recovery of Debts Due to
Banks and Financial Institutions Act, 1993 and the rules made
thereunder.”

 
16. Any person aggrieved by any order made by the DRT under Section 17
may also prefer an appeal to the Appellate Tribunal under Section 18 of the
Act.

 

17. The expression ‘any person’ used in Section 17 is of wide import and
takes within its fold not only the borrower but also the guarantor or any
other person who may be affected by action taken under Section 13(4) of the
Securitisation Act. Reference may be made to the Judgment of this Court in
Satyavati Tondon’s case (supra).

 

18. Therefore, the expression ‘any person’ referred to in Section 17
would take in the plaintiffs in the suit as well. Therefore, irrespective
of the question whether the civil suit is maintainable or not, under the
Securitisation Act itself, a remedy is provided to such persons so that
they can invoke the provisions of Section 17 of the Securitisation Act, in
case the bank (secured creditor) adopt any measure including the sale of
the secured assets, on which the plaintiffs claim interest.

 

19. Section 34 of the Securitisation Act ousts the civil court
jurisdiction. For easy reference, we may extract Section 34 of the
Securitisation Act, which is as follow:
“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).

 
20. The scope of Section 34 came up for consideration before this Court
in Mardia Chemicals Ltd. (supra) and this court held as follow:
“50. It has also been submitted that an appeal is entertainable
before the Debts Recovery Tribunal only after such measures as
provided in sub-section (4) of Section 13 are taken and Section 34
bars to entertain any proceeding in respect of a matter which the
Debts Recovery Tribunal or the Appellate Tribunal is empowered to
determine. Thus before any action or measure is taken under sub-
section (4) of Section 13, it is submitted by Mr Salve, one of the
counsel for the respondents that there would be no bar to approach
the civil court. Therefore, it cannot be said that no remedy is
available to the borrowers. We, however, find that this contention
as advanced by Shri Salve is not correct. A full reading of Section
34 shows that the jurisdiction of the civil court is barred in
respect of matters which a Debts Recovery Tribunal or an Appellate
Tribunal is empowered to determine in respect of any action taken
“or to be taken in pursuance of any power conferred under this
Act”. That is to say, the prohibition covers even matters which can
be taken cognizance of by the Debts Recovery Tribunal though no
measure in that direction has so far been taken under sub-section
(4) of Section 13. It is further to be noted that the bar of
jurisdiction is in respect of a proceeding which matter may be
taken to the Tribunal. Therefore, any matter in respect of which an
action may be taken even later on, the civil court shall have no
jurisdiction to entertain any proceeding thereof. The bar of civil
court thus applies to all such matters which may be taken
cognizance of by the Debts Recovery Tribunal, apart from those
matters in which measures have already been taken under sub-section
(4) of Section 13.”

 

21. Section 13, as already indicated, deals with the enforcement of the
security interest without the intervention of the court or tribunal but in
accordance with the provisions of the Securitisation Act.

 

22. Statutory interest is being created in favour of the secured creditor
on the secured assets and when the secured creditor proposes to proceed
against the secured assets, sub-section (4) of Section 13 envisages various
measures to secure the borrower’s debt. One of the measures provided by
the statute is to take possession of secured assets of the borrowers,
including the right to transfer by way of lease, assignment or realizing
the secured assets. Any person aggrieved by any of the “measures” referred
to in sub-section (4) of Section 13 has got a statutory right of appeal to
the DRT under Section 17. The opening portion of Section 34 clearly states
that no civil court shall have jurisdiction to entertain any suit or
proceeding “in respect of any matter” which a DRT or an Appellate Tribunal
is empowered by or under the Securitisation Act to determine. The
expression ‘in respect of any matter’ referred to in Section 34 would take
in the “measures” provided under sub-section (4) of Section 13 of the
Securitisation Act. Consequently if any aggrieved person has got any
grievance against any “measures” taken by the borrower under sub-section
(4) of Section 13, the remedy open to him is to approach the DRT or the
Appellate Tribunal and not the civil court. Civil Court in such
circumstances has no jurisdiction to entertain any suit or proceedings in
respect of those matters which fall under sub-section (4) of Section 13 of
the Securitisation Act because those matters fell within the jurisdiction
of the DRT and the Appellate Tribunal. Further, Section 35 says, the
Securitisation Act overrides other laws, if they are inconsistent with the
provisions of that Act, which takes in Section 9 CPC as well.

 

23. We are of the view that the civil court jurisdiction is completely
barred, so far as the “measure” taken by a secured creditor under sub-
section (4) of Section 13 of the Securitisation Act, against which an
aggrieved person has a right of appeal before the DRT or the Appellate
Tribunal. to determine as to whether there has been any illegality in the
“measures” taken. The bank, in the instant case, has proceeded only
against secured assets of the borrowers on which no rights of Respondent
Nos.6 to 8 have been crystalised, before creating security interest in
respect of the secured assets. In such circumstances, we are of the view
that the High Court was in error in holding that only civil court has
jurisdiction to examine as to whether the “measures” taken by the secured
creditor under sub-section (4) of Section 13 of the Securitisation Act were
legal or not. In such circumstances, the appeal is allowed and the
judgment of the High Court is set aside. There shall be no order as to
costs.

 
……..……………………..J.
(K.S. Radhakrishnan)

 

 

 

……………………………J.
(A.K. Sikri)
New Delhi,
October 30, 2013.

 

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