-1- IN THE HIGH COURT OF BOMBAY AT GOA SECOND APPEAL NO. 140 OF 2011 1. Durga, Premanand Navelkar, 68 years of Age, R/o. Ganesh Krupa. Behind ESI Hospital, Colmorod, Navelim, Margao-Goa. 2. Premanand Ganesh Prabhu Navelkar, 79 years of age, R/o. Ganesh Krupa Behind ESI Hospital, Colmorod, Navelim, Margao, Goa. …... Appellants V e r s u s 1. The Goa Urban Co-operative Bank Limited, through its Chairman, having Head Office at, Dr. Atmaram Borkar Road, Panaji-Goa. 2. Shri V. M.Narkar, General Manager/Secretary (Authorised Officer), the Goa Urban Co-operative Bank Ltd., having Head Office at Dr. Atmaram Borkar Road, Panaji-Goa. 3. The Goa Urban Co-operative Bank Limited, Margao Branch, through its Branch Manager, Opposite Margao Municipal Council Building, Margao, Goa. (The above mentioned addresses are the Registered addresses of the Parties) …... Respondents Mr. S. G. Bhobe, Advocate for the Appellants. Mr. R. G. Ramani, Advocate for the Respondents. Coram :- F. M. REIS, J Date : 30 th November, 2011. SA No. 140-11 -2- ORAL JUDGMENT Heard Shri S. G. Bhobe, learned Counsel appearing for the Appellants and Shri R. G. Ramani, learned Counsel appearing for the Respondents. 2. The above Appeal challenges the Judgments passed by the Courts below whereby the suit filed by the Appellants came to be disposed by deciding the preliminary issue that the Civil Court had no jurisdiction to decide the suit filed by the Appellant. 3. Shri Bhobe, learned Counsel appearing for the Appellants has assailed the impugned Judgments by pointing out that the Courts below have erroneously come to the conclusion that merely because there were some prima facie findings arrived at whilst disposing of the interlocutory application, the finding therein would become resjudicata. The learned Counsel has further pointed out that it is well settled that prima facie findings are not binding whilst disposing of the suit on merits. Learned Counsel further pointed out that the Respondents had played a fraud and, as such, the Civil Court had jurisdiction to decide such dispute. The learned Counsel as such submitted that the impugned Judgment deserves to be quashed and set aside and the suit field by the Appellants be ordered to be decided on merits. 4. Shri Ramani, learned Counsel appearing for the Respondents has disputed the contention of the learned Counsel appearing for the Appellant. SA No. 140-11 -3- Learned Counsel has pointed out that no particulars of alleged fraud have been furnished by the Appellant in the plaint and, as such, the question of claiming any such fraud does not arise at all. Learned Counsel further pointed out that the Courts below have rightly considered the pleadings of the Appellant and have come to the right conclusion that no such particulars of fraud are found in the pleadings of the Appellants. Learned Counsel further pointed out that the findings arrived at the time of the disposal of the interlocutory applications are not resjudicata and fairly accepted the legal position on that count. Learned Counsel further pointed out that there are no substantial question of law arising in the present Appeal and as such the Appeal deserves to be dismissed. 5. Having heard the learned Counsel and on perusal of the pleadings of the Appellants, the Courts below have rightly come to the conclusion that the Civil Court has no jurisdiction to entertain the suit filed by the Appellants. The particulars of the alleged fraud are not found in the plaint filed by the Appellants. Apart from that, though the Courts below are not justified to hold that prima facie findings can be resjudicata, nevertheless, in view of the provisions of Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the Civil Court has no jurisdiction to decide the grievances raised by the Appellants in the suit. The Division Bench of this Court in 2011 (2) Mh. L.J. 342 in the case of State Bank of India vs. Jigishaben B. Sanghavi & Ors., has held at para 13, 14, 19 and 20 thus : “13. Section 17 provides a right of appeal to the Debts Recovery Tribunal to any person, including a borrower, aggrieved by any of the SA No. 140-11 -4- measures referred to in subsection 4 of Section 13 taken by the secured creditor or his authorized officer. While construing the provisions of Section 34, the crucial words which have a bearing on the bar of jurisdiction of the civil court to entertain a suit or proceeding are "in respect of any matter which the Tribunal or Appellate Tribunal is empowered by or under this Act to determine". Once a matter is of a description which the Tribunal or Appellate Tribunal is empowered to determine by or under the provisions of the Act, the jurisdiction of the civil court to entertain a suit in respect of that matter is barred. Similarly, no Court or authority can grant an injunction in respect of an action taken or which is to be taken under the Act or the RDDB Act. The powers of the Debts Recovery Tribunal under Section 17 are powers of width and amplitude. If the Tribunal comes to the conclusion that any of the measures referred to in subsection (4) of Section 13 have not been taken by the secured creditor in accordance with the Act and the Rules, the Tribunal may require the restoration of the management of the business of the borrower or the restoration of the possession of the secured assets to the borrower. The Tribunal is empowered to pass such orders as it may consider appropriate and necessary in relation to the recourse taken by the secured creditor under Section 13(4). This power of the Tribunal includes a power to SA No. 140-11 -5- direct the restoration of the status quo ante in order to provide relief to the borrower against an action which is not in accordance with law. 14. On behalf of the Appellant, it is urged that (i) The Learned Single Judge has erred in coming to the conclusion that the averments contained in paragraphs 3, 4, 12 and 15 of the plaint brought the case of the Plaintiffs within the ambit of the exception carved out by the Supreme Court in paragraph 51 of the judgment in Mardia Chemicals (supra); (ii) Clearly in view of the law laid down by the Supreme Court in Mardia Chemicals, until the Bank had taken recourse to a measure under Section 13(4) no cause of action would have accrued to the borrower or to a third person and the provisions of the Act cannot be rendered nugatory by taking recourse to the Civil Court on the basis that no measure under Section 13(4) has yet been adopted; (iii) Section 17 of the Act confers a remedy of an appeal to any person, including a borrower. The remedy would, therefore, be available even to the Plaintiffs once possession was taken over under Section 13(4); (iv) admittedly; the Second Defendant is the Karta of the HUF. Whether the mortgage by deposit of title deeds executed by the Second Defendant was for the benefit of the HUF or for compelling legal necessity, is a matter which could and ought to be decided by the Debts Recovery Tribunal SA No. 140-11 -6- under Section 17. The Debts Recovery Tribunal is competent to decide whether there was a mortgage at all and whether, if a mortgage existed, it would govern the alleged share of the HUF in the residential flat. The averments contained in the plaint, would show that there was both a challenge to the validity of the securitization notice under Section 13(2) besides which, the Plaintiffs claim that there was no valid basis to invoke the provisions of Section 13(4). These are all matters which have to be exclusively decided by the Debts Recovery Tribunal; (v) The Supreme Court in its judgment in Mardia Chemicals carved out a limited exception in respect of the maintainability of a civil suit in cases involving fraud on the part of the secured creditor or where the claim is so absurd or untenable that it does not require any probe whatsoever. The mere use in a stray averment in the plaint of the expression "systematic fraud", would not be sufficient to bring the case within the scope of the exception carved out in Mardia Chemicals since the plaint has to be read and construed as a whole. So construed, it is clear that the case of the Plaintiffs clearly falls within a matter which the Debts Recovery Tribunal is empowered by and under the Act to determine. Moreover, no injunction of the nature sought could be granted by the Court in respect of any action taken or to be taken in pursuance of the Act. SA No. 140-11 -7- 15. … 16. … 17. … 18. ... 19. The Securitization Act provides a comprehensive scheme, under which initially upon a notice being served under Subsection (2) of Section 13, a remedy is provided, to raise an objection, to the borrower. The objection has to be considered by the secured creditor and reasons for nonacceptance have to be communicated. No cause of action accrues to challenge the action of the secured creditor at that stage. Once a measure is adopted Subsection (4) of Section 13, the Act provides for a remedy of an appeal under Section 17. The scheme which is enunciated under the Act cannot be rendered nugatory by seeking recourse to the jurisdiction either of a Civil Court or, for that matter, in adopting a writ proceeding under Article 226 of the Constitution at the stage where notice is issued under Section 13(2). A challenge at the stage of a notice under Section 13(2) is not envisaged by the legislation and to allow it at that stage is to defeat the law. Such a challenge is barred. When the law expressly contemplates a challenge to a measure taken under Section 13(4) and a challenge before the Tribunal, it bars a challenge at an anterior stage and a challenge before any forum other than that created for hearing an appeal under SA No. 140-11 -8- Section 17 after a measure is taken. Once a measure is adopted under Section 13(4), a statutory remedy is provided not only to the borrower but to any person aggrieved by the taking of a measure. While enquiring into an appeal under Section 17, the Tribunal is empowered to determine whether the action which is taken by the secured creditor is in accordance with the provisions of the Act and the Rules made there under. If the Tribunal comes to the conclusion that the action was invalid, it is vested with wide powers, including both to restore the management of the business or restoration of the possession to the borrower and to pass such orders as it may consider appropriate and necessary in relation to the recourse taken by a secured creditor under Subsection (4) of Section 13. When a person other than a borrower is aggrieved by a measure taken by the secured creditor under Subsection (4) of Section 13, a remedy is equally made statutorily available to such a person. 19A. In a recent judgment of the Supreme Court in Authorized Officer, Indian Overseas Bank v Ashok Saw Mill, the Supreme Court adverting to the wide powers conferred upon banks and financial Institutions observed that in order to 6 2009(2) BJ 721 prevent a misuse of those powers and to prevent prejudice to a borrower on account of an error on the part of SA No. 140-11 -9- a bank or financial Institution, certain checks and balances have been introduced in Section 17 which allow any person, including a borrower, who is aggrieved by the measures taken under Section 13(4) by the secured creditor to make an application before the Debts Recovery Tribunal. In that context, the Supreme Court held as follows : “The intention of the legislature is, therefore, clear that while the Banks and Financial Institutions have been vested with stringent powers for recovery of their dues, safeguards have also been provided for rectifying any error or wrongful use of such powers by vesting the DRT with authority after conducting an adjudication into the matter to declare any such action invalid and also to restore possession even though possession may have been made over to the transferee. The consequences of the authority vested in DRT under subsection (3) of Section 17 necessarily implies that the DRT is entitled to question the action taken by the secured creditor and the transactions entered into by virtue of Section 13( A) of the Act. The Legislature by including subsection (3) in Section 17 has gone to the extent of vesting the DRT with authority to even set aside a transaction including sale and to restore possession to the borrower in appropriate cases. .... The action taken by a secured creditor in terms of Section 13(4) is open to scrutiny and cannot only be set aside but even the status quo ante can be restored by the DRT.” 20. Where as in the present case, the grievance by a third person is that : (i) There SA No. 140-11 -10- was no mortgage; (ii) There was no mortgage by the HUF; (iii) The mortgage, if any, is illegal in relation to the share alleged to be that of the HUF; and (iv) No action had been instituted against the HUF before the Tribunal; these are all grounds of challenge which, in substance, can be asserted before the Debts Recovery Tribunal. These are matters which the Debts Recovery Tribunal is empowered by or under the Act to determine. None of the grounds which are sought to be urged in the plaint fall outside the province and jurisdiction of the Debts Recovery Tribunal. Once we come to that conclusion, the necessary corollary is that recourse to proceedings in the form of a civil suit is barred by Section 34.” Considering the said Judgment of the Division Bench of this Court, I find that the grievances raised by the Appellants in the suit cannot be decided by the Civil Court. The Courts below have rightly come to the conclusion that the Civil Court has no jurisdiction to entertain the suit filed by the Appellants. No substantial question of law therefore arises in the present Appeal. 6. In view of the above, the Appeal stands dismissed. F .M. REIS, J. arp/* SA No. 140-11