1 lpa333.10 IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD LETTERS PATENT APPEAL NO.333 OF 2010 WITH CIVIL APPLICATION NO.18209 OF 2010 IN WRIT PETITION NO.2337 OF 2010 Smt. Laxmibai w/o Laxminarayan Appellant/ Zawar, age major, occup.household Orig. Resp. Sita Sada, Opp. Gangopi Apartment No.1. Ring Road, Jalgaon. versus 01. The Jalgaon Merchant Co-operative Bank Ltd., Jalgaon, Address-82, Merchant Sahkar Bhavan, Navi Peth, Bank Street, Jalgaon, Taluka and Dist.Lalgaon, through its Manager Sunil s/o Laxminiwas Baheti. 02. Sou. Kiran Ashok Zawar, age major, occup. Business, 03. Shri Ashok Laxminarayan Zawar, age Major, occupatioin:business, Nos.2 & 3 r/of 113, Polan Peth, Jalgaon. 04. Shri Sunil Laxminarayan Baheti, Assistant Manager, age major, occup. service. 05. Shri Narendra Narayandas Rathi, age major, occupation business, r/of H-13, MIDC, Ajanatha Road, Jalgaon. 06. Shri Sudhirchandra Laxminarayan Baheti,age major,occup.business and agriculture, r/o Girad, Tq. Pachora, District Jalgaon. Respondents ------------------------------------------------------------ Shri Dhananjay B. Thoke, Advocate, for the appellant. Shri V.D. Sapkal, Advocate, holding for Shri D.D.Pokhrankar Advocate for Respondent Nos.1 and 4. ------------------------------------------------------------ 2 lpa333.10 Quorum:Naresh H.Patil and Shrihari P.Davare,JJ. Date: 20.12.2010. Judgment (Per: Shrihari P. Davare, J.) 01. Rule. Rule made returnable forthwith and with the consent of learned counsel for the parties, taken up for final hearing at the admission stage itself. 02. Heard learned Counsel for the respective parties. 03. The challenge in this Letters Patent Appeal is to the judgment and order passed by the learned Single Judge of this Court in Writ Petition No. 2337 of 2010, on 18.10.2010, thereby allowing the said writ petition, resulting into quashing and setting aside the order dated 11.8.2008 passed by the Cooperative Court, Jalgaon, below Exhibit 30 in Dispute No.1057 of 2007, restraining the opponents therein from putting the property in dispute for sale, and also resulting into setting aside the judgment and order dated 15.11.2008 passed by the learned Member, Maharashtra State Cooperative Appellate Court, Mumbai, Bench at Aurangabad, in Appeal No. 169 of 2008, thereby dismissing the said appeal. 04. Respondent No.1 herein is the Cooperative Bank and the appellant herein is alleged to be the guarantor to the loan advanced by the said Bank to her close relatives i.e. the parties named in the Writ 3 lpa333.10 Petition. Respondent No.1 bank has assailed the order passed by the learned Judge, Cooperative Court, in Dispute No.1057 of 2007, dated 11.8.2007 which was confirmed by the learned Member, Cooperative Appellate Court, Aurangabad, by an order dated 15.11.2008 passed in Appeal No.169 of 2008, by filing Writ Petition No.2337 of 2007 which came to be allowed by the learned Single Judge of this court by the impugned order dated 18.10.2010 as afore-stated. 05. On the aforesaid background, learned Counsel Shri Dhananjay Thoke for appellant-Laxmibai, canvassed that the appellant never stood as guarantor for the loan which was renewed from time to time and submitted that she fairly admits the liability towards the loan which was originally advanced and renewed upto 31.10.2002 only, but stated that subsequent renewals were done without the consent and signature of the appellant herein. According to the learned Counsel for the appellant, the provisions of the Indian Contract Act would also restrain the bank to recover the said loan amount from the appellant, since the liability after renewal is not full-fledged liability. It is also submitted that as per Section 62 of the Contract Act, it amounts to novation which has been admitted by the officers of the bank during cross examination before the Cooperative Court. 06. Learned Counsel for the appellant also argued that the Debt Recovery Tribunal is having inherent lack of jurisdiction, so far as matter of fraud, or other disputed questions of facts are concerned and, 4 lpa333.10 therefore, perhaps the Debt Recovery Tribunal ("DRT" for short) did not go into the said questions of disputed facts since there is inherent lack of jurisdiction under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, "the Securitization Act"). It is submitted by learned counsel for the appellant that according to Section 17 of the Securitization Act, the DRT is required to look into whether the procedure is properly adopted or not. and the DRT is not bound to conduct the full fledge trial under the said provision. it is further submitted that sofar as allegations of fraud are concerned, the same are required to be adjudicated before the Cooperative Court as the Cooperative Court is empowered under Section 91 of the Maharashtra Cooperative Societies Act ("MCS Act" for short) to look into the disputed questions of facts and to conduct full- fledge trial and to come to the conclusion whether the loan documents are false and fabricated. 07. The learned Counsel for the appellant also canvassed that bar under section 34 of the Securitization Act is not absolute bar and Section 34 specifically states, " No Civil Court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debt 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 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". Accordingly, it is 5 lpa333.10 submitted that bar under Section 34 of the Securitization Act is related to matters, cognizance of which is to be taken by the DRT or the Appellate Tribunal and the matters which are pertaining under this Act only. Thus, the bar is limited only to the actions sought to be taken under Section 13 of the Securitization Act. It is further canvassed that the learned Single Judge has not considered that bar under Section 34 of the Securitization Act cannot come in the way of the appellant, as the present appellant has challenged the action of the Respondent-bank on the ground that the bank has committed fraud on the appellant and fabricated the documents. 08. Learned Counsel for the appellant also argued that the learned Single Judge has not considered the fact that the dispute which was filed by the appellant under Section 91 of the MCS Act, was maintainable and as such, it is the contention of the appellant that there is no security interest created over the properties of the appellant and, therefore, the provisions of the Securitzation Act are not applicable. 09. It is further submitted by the learned Counsel for the appellant that the learned Single Judge has not considered the law laid down by the Hon'ble Apex Court in the case of Mardia Chemical vs. Union of India and others, AIR 2004 SC 2371. 6 lpa333.10 10. To substantiate his contentions, learned Counsel for the appellant has relied upon following cases; (A) Khamgaon Urban Coop. Bank Ltd. vs. Karunashankar Ramkishore Tiwari and others, 2007 (2) ALL MR 44. (B) Authorized Officer, Indian Overseas Bank and another vs. M/s Ashok Saw Mill, 2009 (SCW) 4949. (C) M/s Rama Steel Industries and others vs. Union of India and another, 2007 (6) ALL MR 739. (D) M/s Asha Oil Foods Pvt. Ltd. vs. The Jalgaon Janta Sahakari Bank Ltd. and ors. 2005 (2) ALL MR 721. 11. Accordingly, learned counsel for the appellant urged that the impugned order dated 18.10.2010 is erroneous and unsustainable and hence, it be quashed and set aside by allowing the present Letters patent Appeal. 12. Shri V.D.Sapkal, learned counsel i/by Shri D.D.Pokhrankar, learned Advocate for Respondent Nos.1 and 4, countered the arguments advanced by the learned Counsel for the appellant, and opposed the present appeal, vehemently. It is pointed out by learned counsel for Respondent no.1 that the appellant herein had filed Writ Petition No. 4168 of 2007 before this Court which was ultimately withdrawn by her on 27.7.2007. Thereafter, the Appellant had filed Dispute before the 7 lpa333.10 Cooperative Court under Section 91 of the MCS Act, on 6.9.2007 and also approached the DRT, by filing proceedings before it, on 2.11.2007 and the law of election expects that once a particular remedy is resorted to, it has to be pursued till its conclusion. It is also submitted that the Securitization Act is a complete code in itself and everything can be considered under section 17 thereof. 13. It is further submitted by learned counsel for the respondent that since the appellant approached the DRT, the said remedy has to be taken to its logical end. In the said context, it is pointed out that the appeal filed by the present appellant before the Debt Recovery Appellate Tribunal is still pending before the said forum and since the appellant is not pursuing the said appeal, action of the appellant to file dispute under section 91 of the MCS Act before the Cooperative Court is unwarranted and barred by Section 34 of the Securitization Act, since notice under Section 13(4) of the said Act was issued by Respondent No. 1 to the appellant. In the said context, learned counsel for Respondent No.1 placed reliance on National Insurance Company Ltd. vs. Mastan, 2005 AIR (SCW) 6305. 14. Moreover, the learned counsel Shri V.D.Sapkal for Respondent No.1 submitted that Writ Petition No.2337 of 2010 filed by present Respondent No.1 was under Article 227 of the Constitution of India wherein the impugned order dated 18.10.2010 was passed by learned Single Judge and hence, present Letters Patent Appeal is not 8 lpa333.10 maintainable. Accordingly, learned Counsel for Respondent No.1 urged that present appeal bears no substance and same is devoid of any merits and, therefore, same deserves to be dismissed. 15. We have perused the contents of present Letters Patent Appeal, its annexures, impugned order dated 18.10.2010 passed in Writ Petition No.2337 of 2010 passed by learned Single Judge, and also considered the submissions advanced by both the learned counsel for the parties, as well as perused the judgments cited by the learned counsel for the parties, carefully and at the outset, it is manifestly clear that the impugned order dated 18.10.2010 was passed by the learned Single Judge in Writ Petition no. 2337 of 2010 filed by Respondent No.1-Bank herein under Article 227 of the Constitution of India, as well as the averments made therein and its nature also appear to be under the purview of the said Article and, therefore, apparently, there is substance in the submission advanced by learned Counsel for Respondent No.1 in respect of maintainability of the present Letters Patent Appeal. 16. Moreover, it is explicitly clear from the very language of Section 17 of the Securitization Act that any person (including borrower- emphasis supplied) aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorized officer under II Chapter of the Securitization Act, is entitled to approach the Debt Recovery Tribunal and, therefore, there is no 9 lpa333.10 substance in the arguments canvassed by the learned counsel for the appellant that the DRT is required only to look into the aspect, whether the procedure is properly adopted or not and the DRT is not bound to conduct full-fledge trial under the said provisions, and the allegations of fraud are required to be adjudicated before the Cooperative Court. At this juncture, it is material to note that the appeal filed by the present appellant is pending before the Debt Recovery Appellate Tribunal and, therefore, it is explicitly clear that the appellant has to pursue the said adopted remedy to its logical end and she has no scope to advert and agitate the alleged grievances before the Cooperative Court. 17. Besides that, there is clear embargo of Section 34 of the Securitization Act and the said Section 34 is reproduced herein for ready reference. "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 Debt 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." 10 lpa333.10 18. Section 34 provides that no civil court shall have jurisdiction to entertain any suit or proceedings in respect of any matter which a DRT or Debt Recovery Appellate Tribunal is empowered by or under the said legislation to determine and no injunction shall be granted by any court or any other authority in respect of any action taken or to be taken in pursuance of the powers conferred by or under the said legislation or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. Moreover, Section 35 of the Securitization Act provides that the provisions of the said legislation shall override other laws and shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. 19. Applying the parameters of Sections 34 and 35 of the Securitization Act in the instant case, it is amply clear that since notice under Section 13(4) of the Act was issued by Respondent No.1-Bank to the appellant herein, the remedy available to the appellant is under Section 17 of the Act and there is complete bar of Section 34 of the Securitization Act to the appellant to approach the Cooperative Court and hence, consequently, the acts of entertaining the dispute filed by appellant herein before the Cooperative Court i.e. Dispute no. 1057 of 2007 and issuance of order therein 11.8.2007 by the said Court, thereby injuncting Respondent No.1-Bank herein and dismissal of the appeal preferred by Respondent No.1 herein against the said order, i.e. appeal No.169 of 2007 dated 15.11.2008 by Member, Maharashtra State 11 lpa333.10 Cooperative Court, Bench at Aurangabad, were dehors the provisions of law which were set right by the learned Single Judge of this court by impugned order dated 18.10.2010 in Writ Petition No.2337 of 2007, correctly. 20. Thus, we are of the considered view that there is no flaw in the impugned order dated 18.10.2010 passed by the learned Single Judge of this Court and same cannot be faulted with and hence, this Letters Patent Appeal deserves to be dismissed. 21. In the result, present Letters Patent Appeal, which is sans merits, stands dismissed. No order as to costs. 22. In view of dismissal of Letters Patent Appeal, Civil Application for stay does not survive and hence, dismissed as such. (SHRIHARI P. DAVARE, J.) (NARESH H. PATIL, J.) pnd/lpa333.10