Case: State Bank of Patiala Vs. Mukesh Jain &amp; Another

The appellant is a nationalized bank which had lent Rs.8,00,000/- (Rupees eight lakh) to respondent no.1 by way of a term loan on certain conditions and so as to secure the said debt, respondent no.1 debtor had mortgaged his immovable property forming part of premises bearing no.C-8/298, Yamuna Vihar, Delhi. As respondent no.1 committed default in re-payment of the said loan, the appellant initiated proceedings under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘theWhen notice under Section 13(2) of the Act had been issued and further proceedings were sought to be initiated by the appellant against respondent no.1, the said proceedings had been challenged by respondent no.1 by filing Civil Suit No.4 of 2003 in the Court of Civil Judge, Delhi.3. In the said suit, the appellant filed an application under Order VII Rule 11 of the CPC contending that the Court had no jurisdiction to entertain the suit in view of the provisions of Section 34 read with Section 13(2) of the Act, which prohibits a Civil Court from dealing with the matters arising under the provisions of the Act. After considering the averments made in the application as well as the reply given by respondent no.1 and upon hearing the concerned counsel, the said application had been rejected by the trial Court by an order dated 9th February, 2004.4. Being aggrieved by the rejection of the said application, the appellant filed Civil Revision Petition No.242 of 2004 in the High Court of Delhi. The said petition was also rejected by the impugned judgment dated 8th April, 2005 and being aggrieved by the said judgment, the present appeal has been filed by the appellant.5. The reason for which the application filed under Order VII Rule 11 of the CPC had been rejected by the trial Court was that the suit was maintainable in view of the fact that the subject matter of the suit i.e. the amount which was sought to be recovered by the appellant from respondent no.1 (original plaintiff) was less than Rs.10,00,000/- (Rupees Ten lakh) and according to the provisions of Section 1(4) of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as ‘the DRTthe provisions of the DRT Act would not apply, where the amount of debt due to any bank or financial institution is less than Rs.10 lakh and therefore, it was not open to the Debt Recovery Tribunal (hereinafter referred to as) to entertain the matter as the amount claimed in the suit was less than Rs.10 lakh.6. In the aforestated circumstances, the trial Court was of the view that as the DRT Act had no jurisdiction to entertain an appeal against the order passed under the provisions of the Act, a civil suit was maintainable and therefore, the application made under Order VII Rule 11 of the CPC had been rejected by the trial Court. The High Court confirmed the said view of the trial Court.

Reasoning: 22. In the instant case, we are concerned with the challenge to the proceedings initiated under Section 13 of the Act. There is a specific provision in the Act to the effect that the proceedings initiated under the Act cannot be challenged before a Civil Court because the Civil Court has no jurisdiction to entertain any matter arising under the Act and in that event, the concerned debtor has to approach the Tribunal under the provisions of Section 17 of the Act.23. Thus, the Tribunal would be exercising its appellate jurisdiction when the action initiated under the provisions of Section 13 of the Act is challenged before the Tribunal. There is a difference between theoriginal jurisdiction under the provisions of the DRT Act and the appellate jurisdiction under the Act.24. The issue with regard to availability of a forum for challenging the action under the provisions of the Act had been dealt with by this Court in the case of Mardia Chemicals Ltd. (supra). This Court, in the said case, unequivocally held that the aggrieved debtor can never be without any remedy and we firmly believe that the legislature would normally not leave a person without any remedy when a harsh action against him is initiated under the provisions of the Act.25. So as to know the appellate jurisdiction of the Tribunal, one has to look at the provisions of the Act as Section 17 of the Act specifically provides a right to the aggrieved debtor to challenge the validity of an action initiated under Section 13(4) of the Act before the Tribunal. Moreover, the Act was enacted in 2002 and the legislature is presumed to have knowledge about the provisions of Section 1(4) of the DRT Act. So harmonious reading of both the aforestated Sections would not be contrary to any of the legalare of the view that the application submitted by the appellant bank under Order VII Rule 11 of the CPC should have been granted by the trial Court as, according to Section 34 of the Act, a Civil Court has no jurisdiction to entertain any appeal arising under the Act.