IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 13.07.2009 CORAM THE HONOURABLE MR.JUSTICE K.CHANDRU APPLICATION NO.2258 OF 2009 AND O.A.NO.765 OF 2008 IN C.S.NO.48 OF 2008 AND APPLICATION NO.2257 OF 2009 AND O.A.NO.764 OF 2008 IN C.S.NO.49 OF 2008 G.V.Films Limited rep. By its Director P.Raghuraman, FO-Whispering Heights, No.132, St. Mary's Road, Alwarpet, Chennai-600 018 .. Applicant in all these petitions Vs. 1.Indian Bank, Assets Recovery Management Branch-II, 55,Wellington Estate, Ethiraj Salai, Chennai-600 008. 2.M/s.Parsn Holiday Resorts Private Limited, rep. By its Director K.L.Srihari, No.33, Pasumarthy Street, Kodambakkam, Chennai-600 024. 3.M/s.Coconut Groves Holiday Resorts Private Limited, rep. By its Director K.L.Srihari, No.33, Pasumarthy Street, Kodambakkam, Chennai-600 024. 4.S.Martin, No.355-359, 4th Street, Gandhipuram, Coimbatore-12 .. Respondents in (impleaded vide order dt.24.6.09 all these petitions (A.Nos.2602 to 2605/09) For Applicant : Mr.K.Ravi for M/s.Rugan & Arya For Respondents: Mr.G.Masilamani, Advocate General for M/s.King & Partridge for R-1 Mr.Srinatrh Sridevan for RR2 and 3 Mr.R.Srinivas for R4 - - - - ORDER Heard both sides. 2.The applicant M/s.G.V.Films Limited is also the plaintiff in both the suits. While C.S.No.48 of 2008 has been instituted for redemption of the mortgage, C.S.No.49 of 2008 has been instituted for a declaration that the provisions of the SARFAESI Act do not apply to the security interest created on 8.2.1989 and for a consequential permanent injunction. The plaintiff in both the suits is a Company by name G.V.Films Limited and the Bank against whom the relief is claimed in both the suits, is the Indian Bank. The properties which form the subject matter of both the suits is also the same. 3.Pending the suit, O.A.No.765 of 2008 is filed by the applicant/plaintiff, seeking for an interim injunction restraining the first respondent, its agents, servants or men from in any way disturbing the applicant's peaceful possession of the property described in the schedule attached to the judge's summons pending disposal of the suit. 4.Application No.2258 of 2009 is filed by the plaintiff seeking for a direction to the first respondent Bank and its officers and all persons claiming under or through them to maintain status quo with reference to the suit property, pending disposal of O.A.No.765 of 2008 in C.S.No.48 of 2008. 5.Likewise, O.A.No.764 of 2008 is filed is filed by the applicant/plaintiff seeking for an interim injunction, restraining the first respondent, its agents, servants or men from in any way disturbing the applicant's peaceful possession of the property described in the schedule attached to the judge's summons pending disposal of the suit. 6.Application No.2257 of 2009 is filed seeking for a direction to the first respondent-Bank and its officers and all persons claiming under or through them to maintain status quo with reference to the suit property pending disposal of O.A.No.764 of 2008 in C.S.No.49 of 2008. 7.The brief facts leading to the case are as follows: 7.1.On 8.2.1989, a Company by name Sujatha Films Limited and its promoter-Directors G.Venkateswaran and Sujatha Venkateswaran availed a loan of Rs.1.50 crores from the Indian Bank and executed necessary documents. The promoter-Directors also executed Letters of Guarantee. The said company Sujatha Films Limited shall hereinafter be referred to as "the borrower company' for easy reference. For the loan availed by the borrower company, two other Companies by name M/s.Parsn Medicinal Plants Private Ltd. (R2) and M/s.Coconut Grobves Private Ltd.(R3) promoted by the very same promoter-Directors, stood guarantee. These two Companies, owned a large extent of land in Mamallapuram Village and they deposited the original title deeds relating to those lands with the first respondent-Bank as security for the loan availed by Sujatha Films Limited. These two respondents shall hereinafter be referred to as the 'guarantor/mortgagor-companies'. It is those lands in Mamallapuram Village, over which a mortgage by deposit of title deeds was created, that form the subject matter of both the present suits. 7.2.Mr.G.Venkateswaran and Mrs.Sujatha Venkateswaran happened to be the promoter-Directors of the borrower Company Sujatha Films Limited as well as the guarantor/mortgagor-Companies M/s. Parsn Medicinal Plants Pvt Ltd (R2) and M/s.Coconut Groves Pvt Ltd.(R3). 7.3.Since the borrower committed default in repayment, the Indian Bank (respondent No.1) filed an application under Section 19 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 before the Debts Recovery Tribunal, Chennai in the year 1997, in O.A.No.552 of 1997 for recovery of a sum of Rs.7,95,67,088/- together with interest at the contractual rate of 20.75% with quarterly rests. The said application subsequently got renumbered as O.A.No.2018 of 2001 and later as O.A.No.81 of 2007 and it is now pending on the file of the Debts Recovery Tribunal-III, Chennai. The borrower Company, its promoter-Directors and the guarantor/mortgagor Companies are cited as defendants 1,2,3,5 and 6 in the OA before DRT. 7.4.On 3.5.2003, one of the promoter-Directors (G.Venkateswaran), died by committing suicide. In the meantime, the SARFAESI Act, 2002, came into force and hence the Bank issued a notice under Section 13 (2) of the Act, on 30.6.2004, calling upon the borrowers, guarantors and mortgagors to pay a sum of Rs.32,47,05,634.76 and threatened to initiate further action if the amount was not paid within 60 days. 7.5.Though a reply was sent by the second and third respondents on 13.9.2004, the Bank issued a possession notice under Section 13 (4) of the SARFAESI Act, 2002, on 4.12.2004. 7.6.Challenging the proceedings initiated under Section 13 (4) of the Act, one Abdul Hameed, filed an appeal under Section 17 of the SARFAESI Act, 2002, in S.A.No.1 of 2005, before the Debts Recovery Tribunal-I, Chennai, claiming to be a Lessee of the suit property, under M/s.Coconut Groves Pvt Ltd (R3) (one of the guarantor/ mortgagor companies). But the said application was dismissed by an order dated 17.11.2005 and it became final. 7.7.In the meantime, the shares held by the promoters in those two guarantor/mortgagor Companies (R2 and R3) changed hands. Therefore the guarantor/ mortgagor companies attempted to stall the sale of the properties under Section 13(4) of the SARFAESI Act, 2002, by taking recourse to the Debts Recovery Tribunal, not under section 17 of the SARFAESI Act, but by filing an Interlocutory Application in I.A.No.640 of 2004 in the pending O.A.No.2018 of 2001 (presently OA No.81/2007). Then they moved the Debts Recovery Appellate Tribunal (DRAT) by filing an appeal in S.A.No.32 of 2006. Against the dismissal order, dated 13.12.2006, they came to this Court by filing W.P.Nos.5694 and 5695 of 2006. That was also dismissed on 1.3.2006. They also went to the Supreme Court, by filing S.L.P.(C). Nos.5177 and 5179 of 2006. It was also dismissed on 31.3.2006. Thus, the R2 and R3 companies failed in all their attempts. 7.8.Thereafter the guarantor/mortgagor companies filed an appeal under Section 17 of the SARFAESI Act, 2002, in S.A.No.23 of 2006, as against the measures taken by the Bank under section 13(4) of the Act. In the said application, the Debts Recovery Tribunal-II passed a conditional order directing them to deposit a sum of Rs.160 lakhs, for the stay of auction. The guarantor/mortgagor companies complied with the said conditional order. 7.9.Upto this point of time, the dispute was only between (1) the borrower company Sujatha Films Limited and its promoter-Directors on the one hand, (2) the guarantor/mortgagor companies (in whose names the properties stood), on the other hand and (3) the Indian Bank on the third hand, though a person by name Abdul Hameed was also staking a claim as the Lessee under one of the guarantor/ mortgagor companies. 7.10.However, at this stage, another company by name G.V.Films Ltd. (applicant), the plaintiff in the present suits, entered the fray. They filed a suit in O.S.No.115 of 2006 before the Sub Court, Chengalpattu against M/s.Parsn Medicinal Plants Pvt Ltd (R2) and M/s.Coconut Groves Pvt Ltd (R3) (guarantor/mortgagor Companies) as well as the Indian Bank (R1), seeking a declaration that they have perfected title to the suit properties by adverse possession and also for a consequential decree of permanent injunction to protect their possession. Though in the said suit, the plaintiff G.V.Films Ltd obtained an interim order of injunction in I.A.No.446 of 2006 protecting their possession, the suit was subsequently withdrawn as against the Bank alone on 21.8.2006. 7.11.But before the withdrawal of the suit O.S.No.115 of 2006 against the Indian Bank, the applicant/plaintiff G.V.Films Ltd filed another suit in O.S.No.6757 of 2006 on the file of the III Assistant City Civil Court, Chennai against the Bank and obtained an interim injunction in I.A.No.14152 of 2006 on 10.8.2006. However, the plaintiff G.V.Films Ltd later withdrew the suit O.S.No.6757 of 2006, when the Bank filed a Civil Revision Petition under Article 227 of the Constitution (C.R.P.No.1266 of 2006) before this Court for striking out the plaint in O.S.No.6757 of 2006 from the Suit Register. 7.12.In the meantime, the appeal filed under Section 17 of the SARFAESI Act, 2002, by the guarantor/mortgagor Companies in S.A.No. 23 of 2006 on the file of the Debts Recovery Tribunal-II, Chennai (in which the guarantor/mortgagor Companies had deposited Rs.160 lakhs in compliance with the conditional order of stay), was dismissed on 13.12.2006. Their subsequent Review Application in RA No.1 of 2008 filed against this order was also dismissed by the DRT-II by a speaking order dated 26.2.2009. 7.13.After the dismissal by the DRT, an auction/Tender notice was issued by the Bank on 26.2.2009. As against the said order, a writ petition was filed by R2 and R3. The Writ Petition filed by them in W.P.No.4686 of 2009 was dismissed by a Division Bench of this court vide an order dated 26.3.2009. Liberty was given to move the DRAT by filing an appeal. 7.14.Thereafter, an appeal was filed before the DRAT in SA No.95 of 2009. The DRAT by its order, dated 27.3.2009 dismissed the application for interim stay of further proceedings taken by the Indian Bank in the Tender-cum-Auction notice. But, in the main appeal, notice was ordered to the Bank. As against the dismissal of interim application, R2 and R3 moved the Supreme Court in SLP(C) No.7707 of 2009. The said SLP was dismissed, by an order, dated 8.5.2009. But, liberty was given to them to move the DRAT to pursue their appeal. 7.15.In the meanwhile, the fourth respondent became the successful bidder and paid a sum of Rs.55 crores and 25 lakhs towards the sale consideration. A sale certificate dated 7.5.2009 was also issued to the 4th respondent by the Indian Bank. 7.16.Even before these proceedings, G.V.Films Ltd (plaintiff in both the present suits) filed an appeal under Section 17 of the SARFAESI Act, 2002, in S.A.No. 49 of 2007 challenging the action taken by the Bank under Section 13 (4) of the SARFAESI Act, 2002. They raised two contentions viz., (i) that they have acquired prescriptive title to the property and (ii) that in any case, the properties are agricultural lands exempt from the operation of the provisions of the SARFAESI Act, 2002, by virtue of Section 31 (f) of the Act. 7.17.On 29.12.2006, the Debts Recovery Tribunal-I granted an interim stay of all further proceedings pursuant to the action initiated under Section 13 (4) of the Act. But ultimately the said appeal S.A.No.49 of 2007 filed by G.V. Films Ltd (the plaintiffs herein) was dismissed by the Debts Recovery Tribunal-I on 4.1.2008. While dismissing the appeal, the Tribunal granted stay of further proceedings for a period of two weeks, to enable the plaintiff herein (G.V. Films Ltd) to take up the matter on appeal to the Debts Recovery Appellate Tribunal (DRAT). 7.18.However, without filing a regular appeal to the DRAT under Section 19 of the SARFAESI Act, 2002, against the order of the Debts Recovery Tribunal dated 4.1.2008 passed in S.A.No.49 of 2006, the plaintiff herein has come up with the present suits. 7.19.Pending the suit, the applicant filed OA Nos.61 and 62 of 2008 seeking for interim order. This Court by its order, dated 23.4.2008 granted a conditional interim order. The applicant was directed to deposit certain sums as a condition precedent for the grant of injunction. 7.20.As against the said order, the applicant filed appeals being OSA Nos.211 and 212 of 2008. They were disposed of by a common order, dated 7.7.2008. Paras 3(a) and 4 of the said order may be reproduced below: "3.(a)After some hearing for a few days, learned counsel for the appellant submits that this Court, without deciding the various controversies raised, may set aside the order appealed against on the limited ground that the injunction petition is defective as the ostensible owners and the mortgagors were not impleaded in the injunction petition, on which an injunction order was obtained in respect of the property in question. 4.In view of such a stand being taken, this Court without going into the submissions and counter submissions made by the parties, hereby sets aside the order dated 23.04.2008 only on the limited point indicated herein above." 7.21.It was thereafter, R2 and R3 came to be impleaded in the suit as well as in the applications. R4 who has a Sale certificate in his hand, having parted with substantial amounts to the Bank, also got himself impleaded in the suits as well as in the applications. 8.Mr.K.Ravi, the counsel for the applicant principally raised two contentions in their applications. The first contention was that notwithstanding the enactment of SARFAESI Act, the civi court has power to go into the issue raised in the suit. The second contention was that inasmuch as the suit land is an "Agricultural land", any proceedings instituted by the first respondent Bank will be null and void. In terms of Section 2(zf) read with Section 31(f), for any "security interest" created in agricultural land, the provisions of the SARFAESI Act will not apply and hence all the proceedings instituted by the Bank under SARFAESI Act will be void ab-initio. Apart from these two main contentions, he also submitted that the possession of the suit land is still with the applicant/plaintiff and therefore, on grounds of prima facie case and balance of convenience, the applications should be ordered in favour of the plaintiff. Such protection can be given by the courts even to a trespasser in the land. 9.The learned counsel for the applicant relied upon the following decisions in support of his first contention that the civil court's jurisdiction to try his suit cannot be ousted in view of Sections 34 and 35 of the SARFAESI Act, 2002. 1.1961 (1) MLJ 335 (Madras HC - DB) (M.S.Ramachandran Sastrigal Vs. Kuppuswami Vanniar) 2.AIR 1964 SC 807 (Adanki Thirunkat Thata Desika Charyarulu (deceased) Vs. State of Andhra Pradesh and others) 3.AIR 1966 SC 893 (Ram Swarup and others Vs. Shikar Chand and another) 4.AIR 1969 SC 78 (Dhulabai etc. vs. State of M.P. and another) 5.AIR 1970 SC 1727 (Smt.Munni Devi and another Vs. Gokul Chand and another) 6.AIR 1974 SC 1069 (Katikara Chintamani Dora and others Vs. Guatraddi Annamanaidu and others) 7.AIR 1980 Madras 180 (Full Bench) (Periathambi Gounden Vs. District Revenue Officer, Coimbatore and others) 8.1985 (4) SCC 10 (State of Tamil Nadu Vs. Ramalinga Swamigal Madam) 9.2005 (10) SCC 760 (Church of North India Vs. Lavajibhai Ratanjibhai and others) 10.In the light of the above decision, the learned counsel wanted to contend that the embargo placed by Sections 34 and 35 of the SARFAESI Act will not oust the jurisdiction of this court. However, it cannot be denied that the civil court's jurisdiction can never be ousted at any time by a valid law made by the legislature. Whenever the jurisdiction of a Civil court is sought to be excluded, the court will have to decide the issue in respect of a particular provision found in the special enactment. The Courts have always held that if the special laws creates a new right and obligation, the remedy will have to be found only in terms of that Law and the jurisdiction of the civil court can be impliedly ousted by such legislation. 11.However, in its latest decision in Rajasthan SRTC Vs. Bal Mukund Bairwa (2) reported in (2009) 4 SCC 299, the Supreme Court held that in certain circumstances, the Civil Court's jurisdiction will still be available. The said judgment rendered in terms of the provisions of the Industrial Disputes Act vis a vis Civil Procedure Code, the following observations were made in paragraphs 48 and 49 of the said judgment: "48.In a case where no enquiry has been conducted, there would be a violation of the statutory regulation as also the right of equality as contained in Article 14 of the Constitution of India. In such situation, a civil suit will be maintainable for the purpose of declaration that the termination of service was illegal and the consequences flowing therefrom. However, we may hasten to add that if a suit is filed alleging violation of a right by a workman and a corresponding obligation on the part of the employer under the Industrial Disputes Act or the Certified Standing Orders, a civil suit may not lie. However, if no procedure has been followed as laid down by the statutory regulation or is otherwise imperative even under the common law or the principles of natural justice, which right having arisen under the existing law, sub-para (2) of para 23 of the law laid down in Premier Automobiles Ltd. Shall prevail. 49.An assumption on the part of this Court that all such cases would fall only under the Industrial Disputes Act or sister laws and thus, the jurisdiction of the civil court would be barred, in our opinion, may not be the correct interpretation of Premier Automobiles Ltd. Which being a three- Judge Bench judgment and having following Dhulabhai, which is a Constitution Bench judgment, is binding on us." (Emphasis added) 12.The supreme Court while dealing with the SARFAESI Act, dealt with the scope of Sections 34 and 35 vide its judgment in Mardia Chemicals Ltd. and others Vs. Union of India and others reported in (2004) 4 SCC 311. The following passages found in paragraphs 50, 51 and 80.5 may be extracted below: "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. 51. However, to a very limited extent jurisdiction of the civil court can also be invoked, where for example, the action of the secured creditor is alleged to be fraudulent or his claim may be so absurd and untenable which may not require any probe whatsoever or to say precisely to the extent the scope is permissible to bring an action in the civil court in the cases of English mortgages. We find such a scope having been recognized in the two decisions of the Madras High Court which have been relied upon heavily by the learned Attorney General as well appearing for the Union of India, namely, V. Narasimhachariar5, AIR at pp. 141 and 144, a judgment of the learned Single Judge where it is observed as follows in para 22: (AIR p. 143) 22. The remedies of a mortgagor against the mortgagee who is acting in violation of the rights, duties and obligations are twofold in character. The mortgagor can come to the court before sale with an injunction for staying the sale if there are materials to show that the power of sale is being exercised in a fraudulent or improper manner contrary to the terms of the mortgage. But the pleadings in an action for restraining a sale by mortgagee must clearly disclose a fraud or irregularity on the basis of which relief is sought: Adams v. Scott11. I need not point out that this restraint on the exercise of the power of sale will be exercised by courts only under the limited circumstances mentioned above because otherwise to grant such an injunction would be to cancel one of the clauses of the deed to which both the parties had agreed and annul one of the chief securities on which persons advancing moneys on mortgages rely. (See Ghose, Rashbehary: Law of Mortgages, Vol. II, 4th Edn., p. 784.) ....... 80.5.As discussed earlier in this judgment, we find that it will be open to maintain a civil suit in civil court, within the narrow scope and on the limited grounds on which they are permissible, in the matters relating to an English mortgage enforceable without intervention of the court. 13.In the same context, Mr.K.Ravi, learned counsel for the applicant also referred to the judgment of the Supreme Court in United Bank of India, Calcutta Vs. Abhijit Tea Co. Pvt. Ltd. And others reported in (2000) 7 SCC 357 and referred to the following passages found in paragraphs 25 and 26 of the said judgment, which reads as follows: "25.In regard to purposive interpretation, Justice Frankfurter observed as follows: Legislation has an aim, it seeks to obviate some mischief, to supply an inadequacy, to effect a change of policy, to formulate a plan of government. That aim, that policy is not drawn, like nitrogen, out of the air; it is evidenced in the language of the statute, as read in the light of other external manifestations of purpose [Some Reflections on the Reading of Statutes, 47 Columbia LR 527, at p.538 (1947)]. 26. That principle has been applied to this very Act by this Court recently in Allahabad Bank v. Canara Bank. If the said principle is applied, it is clear that the provision in Section 31 must be construed in such a manner that, after the Act, no suit by the Bank is decided by the civil court and all such suits are decided by the Tribunal." 14.The said judgment came to be referred and explained by the subsequent judgment in Indian Bank Vs. ABS Marine Poroducts (P) Ltd. reported in (2006) 5 SCC 72. The following passages found in paragraphs 25 and 26 may be extracted below: 25.Though there appears to be some merit in the first respondents submission, we do not propose to examine that aspect. Suffice it to clarify that the observations in Abhijit1 that an independent suit of a defendant (in the banks application) can be deemed to be a counter claim and can be transferred to the Tribunal, will apply only if the following conditions were satisfied: (i) The subject-matter of the banks suit, and the suit of the defendant against the bank, should be inextricably connected in the sense that decision in one would affect the decision in the