Civil Court cannot usurp jurisdiction of DRT u/S 13 of the SARFAESI Act until civil rights are affected: Bombay High Court

 on 23 04 2021 on 23 04 1 ) cra43.20IN THE HIGH COURT OF JUDICATURE AT BOMBAYBENCH AT AURANGABADCIVIL REVISION APPLICATION NO. 43 OF 2020Maharashtra Gramin Bank..ApplicantThrough its Regional ManagerAdvocate for the applicant.Mr.G.R. Syed Advocate for the respondent.CORAM : N.J.JAMADAR J.RESERVED ON:19.03.2021PRONOUNCED ON:23.04.2021JUDGMENT : 01.The legality propriety and correctness of anorder passed by the learned 6th Joint Civil Judge JuniorDivision Latur on an applicationfor rejectionof plaint under Order VII Rule 11(d) of the Code ofCivil Procedure 1908whereby the learned on 23 04 2021 on 23 04 2 ) cra43.20Civil Judge was persuaded to reject the applicationpreferred by the petitioner defendant bank is assailedin this revision application. 02.The background facts leading to this revisionapplication can be stated in brief as under : a]The respondent plaintiff deals in the businessof rice. In the year 2013 the plaintiff had availedcash credit facility of Rs.25 lakhs from the defendant.The limit came to be enhanced by Rs.20 lakhs in the year2014. Against the said facility the plaintiff hadmortgaged immovable property being plot No.2 in landSurvey No.334 B 2cra43.20publication in the newspaper dated 30th August 2018. b]The plaintiff instituted a suit being RCS No.476of 2018 with the assertions that the defendant bankproceeded to invoke the provisions under theSecuritisation and Reconstruction of Financial Assets andEnforcement of Security Interest Act 2002ina highhanded manner and utter disregard to the offer madeby the plaintiff to clear the due amount under one timesettlement plan. The plaintiff averred that the defendanthad not issued notice under section 13(2) of the Act 2002 which is a peremptory requirement before initiatingmeasures under section 13(4) of the Act 2002. Thedefendant bank prepared a false record to show that ithas obtained possession of the suit plot which was to besold by way of auction in terms of notice of sale dated30th August 2018.c]The defendant bank preferred an application[Exh.16] for rejection of the plaint as jurisdiction of on 23 04 2021 on 23 04 4 ) cra43.20the Civil Court to entertain and try the subject matterof the dispute is expressly barred by the provisions ofSection 34 of the Act 2002. Since special forums havebeen constituted to entertain the dispute arising out ofmeasures taken under section 13(4) of the Act 2002 theCivil Court has no jurisdiction to entertain try anddecide the suit. Thus the plaint be rejected.d]The plaintiff resisted the application. It wascontended that the Trial Court had considered thechallenge to the jurisdiction of the Court while decidingthe application for interim injunction and restrainedthe defendant from conducting auction sale of the suitproperty till decision of the suit. The appeal thereagainst also came to be dismissed. Thus the defendantcannot again agitate the issue of jurisdiction of theCivil Court to entertain the suit.e]The learned Civil Judge after appraisal of therival contentions and submissions across the Bar was on 23 04 2021 on 23 04 5 ) cra43.20persuaded to reject the application for rejection of theplaint. The learned Civil Judge was of the view that theprovisions of the statute in question Act 2002 havenot been complied as the plaintiff claimed that thedefendant had not issued notice under section 13(2) ofthe Act 2002 and thus the jurisdiction of the CivilCourt was not ousted. It was further observed that thequestion as to whether such notice was infact issued bythe defendant was a matter for trial and thus theapplication came to be rejected. Being aggrieved by anddissatisfied with the aforesaid order the defendant bankhas invoked the revisional jurisdiction of this Court.03.I have heard Mr.Patil learned Counsel for theapplicant defendant and Mr. Syed learned Counsel for therespondent plaintiff. 04.Mr.Patil learned Counsel for the applicantwould urge that the learned Civil Judge committed a graveerror in assuming the jurisdiction over the subject on 23 04 2021 on 23 04 6 ) cra43.20matter of the suit which is clearly within the provinceof the forum constituted under the Act 2002. It wasurged that the learned Civil Judge completely misdirectedherself in taking a view that since it was averred in theplaint that notice under section 13(2) of the Act 2002was not issued before initiating the measures undersection 13(4) of the Act 2002 section 34 of the Act 2002 would not oust the jurisdiction of the Civil Court.A bald assertion in the plaint that notice under section13(2) of the Act 2002 was not issued would not conferjurisdiction on the Civil Court canvassed Mr. Patil. Inview of the provisions contained in section 17 of theAct 2002 the question as to whether the measuresreferred to in sub sectionof Section 13 of the Act 2002 taken by the secured creditor are in accordance withthe provisions of the Act 2002 and the Rules madethereunder squarely falls within the province of theauthority of the Debt Recovery Tribunal and thus thelearned Civil Judge could not have assumed thejurisdiction on the said count submitted Mr. Patil. on 23 04 2021 on 23 04 7 ) cra43.2005.In order to lend support to the aforesaidsubmissions Mr.Patil placed reliance on the judgments ofthe Supreme Court in the cases of Jagdish Singh Vs.Hiralal and Ors 1 SCC 479 Authorized Officer State Bank of India Vs. Allwyn Alloys Private Limited andOrs. 8 SCC 120 and of this Court in the case ofBank of Baroda Vs. Paramount Conductors Ltd. 2020(2) BCR76.06.In opposition to this Mr. Syed learned Counselfor the respondent plaintiff supported the impugnedorder. It was stoutly submitted that the learned CivilJudge committed no error in rejecting the application asit is a clear case of non compliance of the mandatorynotice under section 13(2) of the Act 2002. From thepleadings of the parties according to Mr.Syed itbecomes evident that there is no clear contention on thepart of the defendant that such notice under section13(2) of the Act 2002 was issued and served on the on 23 04 2021 on 23 04 8 ) cra43.20plaintiff. Despite notice to produce the defendant hasnot produced documents which evidence the issue andservice of notice. Taking the Court through provisionsof the Act 2002 and The Security InterestMr.Syed urged with tenacitythat recourse to the provisions of section 13(4) of theAct 2002 without complying with the mandatoryrequirement of issue of notice to the borrower is whollyimpermissible. Thus the Civil Court would be within itsright in entertaining the suit where a clear case of non compliance is made out urged Mr.Syed.07.To bolster up his submissions Mr.Syed placed astrong reliance on the judgment of the Supreme Court inthe case of M s. Hindon Forge Pvt. Ltd. & Anr. Vs. Stateof Uttar Pradesh through District Magistrate Ghaziabad &Anr 2 SCC 198.08.In the case of Hindon Forgethe SupremeCourt considered the question as to whether an on 23 04 2021 on 23 04 9 ) cra43.20application under section 17(1) of the Act 2002 at theinstance of a borrower is maintainable even beforephysical or actual possession of secured assets is takenby banks financial institutions in exercise of theirpowers under section 13(4) of the Act read with Rule 8 ofRules 2002. The question arose as a Full Bench of theAllahabad High Court had ruled that SecuritizationApplication under section 17 of the Act 2002 ismaintainable only when actual or physical possession istaken by secured creditor or the borrower loses actualpossession of the secured assets.09.The Supreme Court reversed the judgment of theFull Bench of the Allahabad High Court and held that theborrower debtor can approach the Debt Recovery Tribunalunder section 17 of the Act at the stage of possessionnotice referred to in Rule 8(1) and 8(2) of the Rules 2002. The Supreme Court thus held that applicationunder section 17 of the Act 2002 at the instance ofborrower is maintainable even before physical or actual on 23 04 2021 on 23 04 10 ) cra43.20possession of the secured assets is taken by the securedcreditor. 10.The aforesaid pronouncement as is evident maynot govern the controversy at hand save to the extentthe learned Counsel for the respondent plaintiffendeavoured to import its analogy to canvass thesubmission that in the event there is non compliance withthe provisions of the Act 2002 and Rules 2002 theCivil Court can entertain the suit even before the actualphysical possession of the secured assets is taken overby the secured creditor. 11.It may be advantageous to have recourse to therelevant provisions of Act 2002..The “security interest” is defined under clause(zf) of Section 2 of the Act 2002 as under : “(zf)“security interest” means right title orinterest of any kind other than those specified insection 31 upon property created in favour of anysecured creditor and includescra43.20assignment or any right title or interest of any kind on tangible asset retained by the secured creditor asan owner of the property given on hire or financiallease or conditional sale or under any other contractwhich secures the obligation to pay any unpaid portionof the purchase price of the asset or an obligationincurred or credit provided to enable the borrower toacquire the tangible asset or(ii)such right title or interest in anyintangible asset or assignment or licence of suchintangible asset which secures the obligation to pay anyunpaid portion of the purchase price of the intangibleasset or the obligation incurred or any credit providedto enable the borrower to acquire the intangible assetor licence of intangible asset ”.Relevant part of section 13 which subsumes theprovisions for enforcement of security interest reads asunder : “13.Enforcement of security interest Notwithstandinganything contained in section 69 or section 69A of theTransfer of Property Act 1882any securityinterest created in favour of any secured creditor may beenforced without the intrvention of the court or tribunal bysuch creditor in accordance with the provisions of this Act.(2)Where any borrower who is under a liability to asecured creditor under a security agreement makes any defaultin repayment of secured debt or any instalment thereof andhis account in respect of such debt is classified by thesecured creditor as non performing asset then the securedcreditor may require the borrower by notice in writing todischarge in full his liabilities to the secured creditorwithin sixty days from the date of notice failing which thesecured creditor shall be entitled to exercise all or any ofthe rights under sub sectionthe requirement of classification of secured debt asnon performing asset under this sub section shall not apply toa borrower who has raised funds through issue of debtsecurities and on 23 04 2021 on 23 04 12 ) cra43.20(ii)in the event of default the debenture trustee shallbe entitled to enforce security interest in the same manner asprovided under this section with such modifications as may benecessary and in accordance with the terms and conditions ofsecurity documents executed in favourt of the debenturetrustee.(3) The notice referred to in sub sectionshall givedetails of the amount payable by the borrower and the securedassets intended to be enforced by the secured creditor in theevent of non payment of secured debts by the borrower.(3 A)If on receipt of the notice under sub sectiontheborrower makes any representation or raises any objection thesecured creditor shall consider such representation orobjection and if the secured creditor comes to the conclusionthat such representation or objection is not acceptable ortenable he shall communicate within fifteen days of receiptof such representation or objection the reasons for non acceptance of the representation or objection to theborrower:Provided that the reasons so communicated or the likelyaction of the secured creditor at the stage of communicationof reasons shall not confer any right upon the borrower toprefer an application to the Debts Recovery Tribunal undersection 17 or the Court of District Judge under section 17 A.(4) In case the borrower fails to discharge his liability infull within the period specified in sub sectionthesecured creditor may take recourse to one or more of thefollowing measures to recover his secured debt namely:take possession of the secured assets of the borrowerincluding the right to transfer by way of lease assignment orsale for realising the secured assettake over the management of the secured assets of theborrower including the right to transfer by way of lease assignment or sale and realise the secured asset Provided that the right to transfer by way of lease assignment or sale shall be exercised only where thesubstantial part of the business of the borrower is held assecurity or the debt owner.Provided further that where the management of whole ofthe business or part of the business is severable the securedcreditor shall take over the management of such business ofthe borrower which is relatable to the security for the debt on 23 04 2021 on 23 04 13 ) cra43.20(c) appoint any personto manage the secured assets the possession of whichhas been taken over by the secured creditorrequire at any time by notice in writing any personwho has acquired any of the secured assets from the borrowerand from whom any money is due or may become due to theborrower to pay the secured creditor so much of the money asis sufficient to pay the secured debt.Xxxxxxxxxxxxxx “.Section 17 of the Act 2002 which provides forremedies against measures initiated under section 13(4)of the Act 2002 reads as under : “17.Application against measures to recover secured debts Any personaggrieved by any of themeasures referred to in sub sectionof section 13 taken bythe secured creditor or his authorised officer under thisChapter may make an application along with such fee as maybe prescribed to the Debts Recovery Tribunal havingjurisdiction in the matter within forty five days from thedate on which such measures had been taken:—Provided that different fees may be prescribed formaking the application by the borrower and the person otherthan the borrower.Explanation For the removal of doubts it is herebydeclared that the communication of the reasons to the borrowerby the secured creditor for not having accepted hisrepresentation or objection or the likely action of thesecured creditor at the stage of communication of reasons tothe borrower shall not entitle the personshallbe filed before the Debts Recovery Tribunal within the locallimits of whose jurisdiction the cause of action wholly or in part ariseswhere the secured asset is located orthe branch or any other office of a bank or financial on 23 04 2021 on 23 04 14 ) cra43.20institution is maintaining account in which debt claimed isoutstanding for the time being.(2) The Debts Recovery Tribunal shall consider whether any ofthe measures referred to in sub sectionof section 13taken by the secured creditor for enforcement of security arein accordance with the provisions of this Act and the rulesmade thereunder.(3)If the Debts Recovery Tribunal after examiningthe facts and circumstances of the case and evidence producedby the parties comes to the conclusion that any of themeasures referred to in sub sectionof section 13 takenby the secured creditor are not in accordance with theprovisions of this Act and the rules made thereunder andrequire restoration of the management of the secured assets tothe borrower or restoration of possession of the securedassets to the borrower or other aggrieved person it may byorderdeclare the recourse to any one or moremeasures referred to in sub sectionof section 13 taken bythe secured creditor as invalid andrestore the possession of the secured assetsor management of secured assets to the borrower or such otheraggrieved person who has made an application under sub sectionas the case may be and(c) pass such other order as it may considerappropriate and necessary in relation to any of the recoursetaken by the secured creditor under sub sectionof section13.(4)If the Debts Recovery Tribunal declares therecourse taken by a secured creditor under sub sectionofsection 13 is in accordance with the provisions of this Actand the rules made thereunder then notwithstanding anythingcontained in any other law for the time being in force thesecured creditor shall be entitled to take recourse to one ormore of the measures specified under sub sectionofsection l3 to recover his secured debt.4 A.Where any person in an application under sub sectionclaimsany tenancy or leasehold rights upon secured assets the DebtsRecovery Tribunal after examining the facts of the case andevidence produced by the parties in relation to such claimsshall for the purpose of enforcement of security interest have the jurisdiction to examine whether lease or tenancy on 23 04 2021 on 23 04 15 ) cra43.20(a)has expired or stood determined or(b)is contrary to section 65 A of the Transfer ofProperty Act 1882or(c)is contrary to terms of mortgage or(d)is created after the issuance of notice of defaultand demand by the bank under sub sectionof section 13 ofthe Act and(ii)the Debts Recovery Tribunal is satisfiedthat tenancy right or leasehold rights claimed in securedasset falls under the sub clauseor sub clauseor sub clauseor sub clauseof clausethennotwithstanding anything to the contrary contained in anyother law for the time being in force the Debts RecoveryTribunal may pass such orders as it deems fit in accordancewith the provisions of this Act.(5)Any application made under sub sectionshallbe dealt with by the Debts Recovery Tribunal as expeditiouslyas possible and disposed of within sixty days from the date ofsuch application:Provided that the Debts Recovery Tribunal may from time to time extend the said period for reasons to berecorded in writing so however that the total period ofpendency of the application with the Debts Recovery Tribunal shall not exceed four months from the date of making of suchapplication made under sub sectionany party to the application maymake an application in such form as may be prescribed to theAppellate Tribunal for directing the Debts Recovery Tribunalfor expeditious disposal of the application pending before theDebts Recovery Tribunal and the Appellate Tribunal may onsuch application make an order for expeditious disposal ofthe pending application by the Debts Recovery Tribunal.(7)Save as otherwise provided in this Act the DebtsRecovery Tribunal shall as far as may be dispose ofapplication in accordance with the provisions of the Recoveryof Debts Due to Banks and Financial Institutions Act 1993and the rules made thereunder.” on 23 04 2021 on 23 04 16 ) cra43.20.Section 34 of the Act 2002 which barsjurisdiction of the Civil Court reads as under : “34. Civil Court not to have jurisdiction No Civil Courtshall have jurisdiction to entertain any suit or proceeding inrespect of any matter which a Debts Recovery Tribunal or theAppellate Tribunal is empowered by or under this Act todetermine and no injunction shall be granted by any Court orother authority in respect of any action taken or to be takenin pursuance of any power conferred by or under this Act orunder the Recovery of Debts Due to Banks and FinancialInstitutions Act 1993ofthe Act 2002 the security interest created in favour ofunsecured creditor may be enforced without interventionof the Court or Tribunal by such creditor in accordancewith the provisions of the Act. In the event borrowerfails to discharge the contractual liability the securedcreditor can initiate measures enlisted in section 13(4) on 23 04 2021 on 23 04 17 ) cra43.20of the Act 2002 so as to recover the loan amount. Theborrower against whom the measures are initiated is notrendered remediless. Section 17 of the Act 2002envisages that a person aggrieved by any of the measuresreferred to in sub sectionof section 13 of the Actinitiated by the secured creditor may approach the DebtsRecovery Tribunal assailing the legality propriety andcorrectness thereof. The Legislature has designately usedthe expression ‘any person’ and taken care to furtherclarify that it includes a borrower. Thus not only theborrower but guarantor or any other person aggrieved bythe action of the secured creditor may invoke theprovisions under section 17 of the Act 2002. 13.The exclusion of the jurisdiction of the CivilCourt is to be construed in the context of the statutoryremedy by way of application under section 17 of the Act 2002. Section 34 thus provides that no Civil Court shallhave jurisdiction to entertain any suit or proceeding inrespect of any matter which a Debts Recovery Tribunal or on 23 04 2021 on 23 04 18 ) cra43.20Appellate Tribunal is empowered by or under the said Actto determine.14.The ambit of bar envisaged by section 34 of theAct is no longer res integra. It may be apposite torefer to the Constitution Bench judgment in the case ofMardia Chemicals Vs. Union of India 2004Mh.L.J.1090 wherein the nature and import of bar under section34 was expounded in the following words : “50. It has also been submitted that an appeal isentertainable before the Debts Recovery Tribunal only aftersuch measures as provided in sub sectionof Section 13 aretaken and Section 34 bars to entertain any proceeding inrespect of a matter which the Debts Recovery Tribunal or theAppellate Tribunal is empowered to determine. Thus before anyaction or measure is taken under sub sectionof Section13 it is submitted by Mr.Salve one of the counsel for therespondents that there would be no bar to approach the civilcourt. Therefore it cannot be said that no remedy isavailable to the borrowers. We however find that thiscontention as advanced by Shri Salve is not correct. A fullreading of Section 34 shows that the jurisdiction of the civilcourt is barred in respect of matters which a Debts RecoveryTribunal or an Appellate Tribunal is empowered to determine inrespect of any action taken "or to be taken in pursuance ofany power conferred under this Act". That is to say theprohibition covers even matters which can be taken cognizanceof by the Debts Recovery Tribunal though no measure in thatdirection has so far been taken under sub sectionofSection 13. It is further to be noted that the bar ofjurisdiction is in respect of a proceeding which matter may betaken to the Tribunal. Therefore any matter in respect ofwhich an action may be taken even later on the civil courtshall have no jurisdiction to entertain any proceedingthereof. The bar of civil court thus applies to all suchmatters which may be taken cognizance of by the Debts RecoveryTribunal apart from those matters in which measures have on 23 04 2021 on 23 04 19 ) cra43.20already been taken under sub sectionof Section 13.51. However to a very limited extent jurisdiction of thecivil court can also be invoked where for example the actionof the secured creditor is alleged to be fraudulent or hisclaim may be so absurd and untenable which may not require anyprobe whatsoever or to say precisely to the extent the scopeis permissible to bring an action in the civil court in thecases of English mortgages.” afteradverting to the aforesaid pronouncement in the case ofMardia Chemicalsthe Supreme Court reiteratedthe legal position in the following words : “22. Statutory interest is being created in favour of thesecured creditor on the secured assets and when the securedcreditor proposes to proceed against the secured assets sub sectionof Section 13 envisages various measures to securethe borrower’s debt. One of the measures provided by thestatute is to take possession of secured assets of theborrowers including the right to transfer by way of lease assignment or realizing the secured assets. Any personaggrieved 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 Section34 clearly states that no civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matterwhich a DRT or an Appellate Tribunal is empowered by or underthe Securitisation Act to determine. The expression ‘inrespect of any matter’ referred to in Section 34 would take in the “measures” provided under sub sectionof Section 13 ofthe Securitisation Act. Consequently if any aggrieved personhas got any grievance against any “measures” taken by theborrower under sub sectionof Section 13 the remedy opento him is to approach the DRT or the Appellate Tribunal andnot the civil court. Civil Court in such circumstances has nojurisdiction to entertain any suit or proceedings in respectof those matters which fall under sub sectionof Section13 of the Securitisation Act because those matters fell withinthe jurisdiction of the DRT and the Appellate Tribunal.Further Section 35 says the Securitisation Act overrides on 23 04 2021 on 23 04 20 ) cra43.20other laws if they are inconsistent with the provisions ofthat Act which takes in Section 9 CPC as well.23. We are of the view that the civil court jurisdiction iscompletely barred so far as the “measure” taken by a securedcreditor under sub sectionof Section 13 of theSecuritisation Act against which an aggrieved person has aright of appeal before the DRT or the Appellate Tribunal. todetermine as to whether there has been any illegality in the“measures” taken. xxxxxxxxxx “ cra43.2017.The aforesaid observations evidently drawsupport from the pronouncement of the Supreme Court inthe case of Dhulabhai Vs. State of Madhya Pradesh & Anr. AIR 1969 SC 78 wherein the principles for exclusion ofthe jurisdiction of the Civil Court were illuminatinglypostulated. The relevant propositions read as under : “(1) Where the statute gives a finality to the orders of thespecial tribunals the civil courts jurisdiction must be heldto be excluded if there is adequate remedy to do what thecivil court would normally do in a suit. Such provision however does not exclude those cases where the provisions ofthe particular Act have not been complied with or thestatutory tribunal has not acted in conformity with thefundamental principles of judicial procedure.(2) Where there is an express bar of the jurisdiction of thecourt an examination of the scheme of the particular Act tofind the adequacy or the sufficiency of the remedies providedmay be relevant but is not decisive to sustain thejurisdiction of the civil court. Where there is no expressexclusion the examination of the remedies and the scheme ofthe particular Act to find out the intendment becomesnecessary and the result of the inquiry may be decisive. Inthe latter case it is necessary to see if the statute createsa special right or a liability and provides for thedetermination of the right or liability and further lays downthat all questions about the said right and liability shall bedetermined by the tribunals so constituted and whetherremedies normally associated with actions in civil courts areprescribed by the said statute or not.xxxxxxxxxx(7) An exclusion of the jurisdiction of the Civil Court is notreadily to be inferred unless the conditions above set downapply." on 23 04 2021 on 23 04 22 ) cra43.2018.It has to be seen whether in the facts of theinstant case even on the touchstone of the principlesenunciated above the Civil Court could have assumed thejurisdiction. It is trite that a plea for rejection ofplaint is a plea of demurer. It has to be decided on thebasis of averments in the plaint and nothing more. Therelevant averments in the plaint in the case at hand areto be found in paragraph Nos.8 and 11 of the plaint.“8)That on the very first time dtd. 30 08 2018 plaintiffissued a publication in the news paper i.e. Lokmatand showed due amount of Rs.55 32 452 on the name ofplaintiff and showed the suit property has been taken intopossession of the defendant and said suit property will besale out in auction to the approximate amount ofRs.25 61 400 and the auction purchaser who is ready topurchase the suit property can file tender till 03 10 2018.11)That the defendant Bank has not issued any noticeU s.13(2) of securitization & reconstruction of financialassets and enforcement of security interest Act 2002 prior topublish the auction notice in news paper Lokmat. Therefore the record prepared by the defendant by seating the office forshowing the public auction without possession of the suitproperty is false one. It is learned to the plaintiff that the defendant is about to attach the suit property withoutfollowing the due procedure of law and also about the saleout in auction the suit property. On the contrary theplaintiff is ready to settled the matter to the extent of oneplot its valued come of Rs.60 00 000 . But the defendantsare inhaste to sale out the suit property in auction and turndeaf ear to the oral request of the plaintiff. Therefore having regard to the act of the agent of the defendant theplaintiff has filed the present suit against the defendant.”19.From the aforesaid averments it becomes evident on 23 04 2021 on 23 04 23 ) cra43.20that the respondent plaintiff has challenged the actionof the defendant bank on two principal counts one notice under section 13(2) of the Act 2002 has not beenissued before initiating action under section 13(4) ofthe Act 2002 and two the value of the suit property isfar in excess of the amount sought to be recovered andthe defendant has shown reserve price of Rs.25 61 400 only.20.This Court is not expected to delve into thequestion as to whether notice under section 13(2) of theAct 2002 was infact given by the defendant bank. Fromthe perusal of the material on record it becomes evidentthat the said question is put in contest and requiresdetermination on facts. However the crucial questionwhich warrants consideration is whether an assertion inthe plaint that the mandatory notice under section 13(2)of the Act 2002 is not given by the secured creditorwould in itself be sufficient to remove the embargocreated by section 34 of the Act 2002. For an answer on 23 04 2021 on 23 04 24 ) cra43.20it has to be seen as to what the special forum i.e. DebtRecovery Tribunal is to examine in an application undersection 17 of the Act and what reliefs it is empowered togrant.21.From the text of section 17(3) of the Act itbecomes evident that the Debt Recovery Tribunal isstatutorily enjoined to examine as to whether any ofthe measures referred to in sub sectionof Section13 taken by the secured creditor are not in accordancewith the provisions of the Act 2002 and Rules 2002[Rules 8 and 9 in particular] and if it comes to theconclusion that the measures so taken are not inconformity with the Act 2002 and Rules 2002 it isempowered to require restoration of the management orrestoration of possession of the secured assets to theborrower or other aggrieved person and also pass an orderdeclaring that recourse to any one or more measuresreferred in sub sectionof section 13 taken by thesecured creditor is invalid and pass any such other on 23 04 2021 on 23 04 25 ) cra43.20directions as may be necessary. 22.The aforesaid provisions thus make itabundantly clear that the Act 2002 has created a forum which is obligated to examine the legality andcorrectness of measures initiated under section 13(4) ofthe Act 2002 on the touchstone of their conformity withthe provisions of the Act 2002 and Rules 2002 and isfurther empowered to pass appropriate declaratory andconsequential orders which could be passed by the CivilCourt. Non compliance with the provisions of the Act 2002is thus a ground for grant ofremedy by the Tribunal constituted under the Act. Inthis view of the matter in my considered opinion theCivil Court could not have assumed jurisdiction on thepremise that the provisions of section 13(2) of the Acthave not been complied with even if such assertion ofthe plaintiff is taken at par.23.If it is held that bar under section 34 of the on 23 04 2021 on 23 04 26 ) cra43.20Act would not operate once there is an averment in theplaint to the effect that there is non complinance withthe provisions under section 13(2) of the Act there is adanger of the provisions of the Act 2002 being renderedotiose. The question as to whether action of the securedcreditor is in conformity with the provisions of the Actis essentially a matter which the Debt Recovery Tribunalis empowered to determine under the provisions of theAct 2002. 24.A useful reference can be made to a recentDivision Bench judgment in the case of Bank of Baroda andOthers Vs. Gopal Shriram Panda and Ors. decided on 25 th March 2021 in CRA No.29 30 2011wherein the following question was referred for thedecision of the Larger Bench."Whether the jurisdiction of a Civil Court to decide allthe matters of civil nature excluding those to be triedby the Debts Recovery Tribunal under Section 17 of theSecuritisation Act in relation to enforcement ofsecurity interest of a secured creditor is barred bySection 34 of the Securitisation Act ”.After an elaborate analysis of the relevant on 23 04 2021 on 23 04 27 ) cra43.20provisions and governing precedents the Division Benchanswered the question in the following words: The answer looking to the nature of the question in ourview is in parts :Jurisdiction of the Debts Recovery Tribunal to decide allmatters relating to Sections 13 and 17 of the SARFAESI Act is exclusive.(B) In all cases where the title to the property in respectof which a security interest has been created in favour ofthe Bank or Financial Institution stands in the name of theborrower and or guarantor and the borrower has availed thefinancial assistance it would be only the DRT which wouldhave exclusive jurisdiction to try such matters to the totalexclusion of the Civil Court. Any pleas as raised by theborrowers or guarantors vis a vis the security interest willhave to be determined by the DRT.(C) The jurisdiction of the Civil Court to decide all thematters of civil nature excluding those to be tried by theDebts Recovery Tribunal under Section 13 and 17 the SARFAESIAct in relation to enforcement of security interest of asecured creditor is not barred by Section 34 of the SARFAESIAct.(D) Where civil rights of persons other than the borrower(s)or guarantorare involved the Civil Court would havejurisdiction that too when it is prima facie apparent fromthe face of record that the relief claimed is incapable ofbeing decided by the DRT under Section 17 of the DRT Act 1993 read with Sections 13 and 17 of the SARFAESI Act.(E) Even in cases where the enforcement of a security interestinvolves issues as indicated in Mardia Chemicalsoffraud as established within the parameters laid down in A.Ayyasamya claim of discharge by a guarantor underSections 133 and 135 of the Contract Acta claim of discharge by a guarantor under Sections139 142 and 143 of the Contract Act Marshaling under Section56 of the Transfer of property Actthe Civil Court shall have jurisdiction.(F) Examples as indicated in para 22.3 are illustrative ofthe Civil Court s jurisdiction. on 23 04 2021 on 23 04 28 ) cra43.20(G) The principles laid down in para 33toof SagarPramod Deshmukhare in accordance with what we havediscussed and held above.30. The law is therefore well settled that where any person isaggrieved by any notice or action pursuant thereto under theprovisions of SARFAESI Act the only remedy available to suchperson would be to approach the DRT by filing an appropriateapplication under the provisions of the Act.” cra43.202018. However the grant of the interim protection wouldnot preclude the Civil Court from entertaining anapplication for rejection of plaint as it can beentertained at any stage of the suit. This Court in theexigency of the situation however deems it in thefitness of things to direct that the applicant shall nottake action in terms of the notice of sale for a certainperiod so as to facilitate the plaintiff respondent toinstitute appropriate proceedings before the appropriateforum if so advised. Hence the following order : O R D E R The Civil Revision Application stands allowed.The impugned order passed by the Civil Judge dated 20th Feburary 2019 stands quashed and setaside.The application for rejection of plaintofthe Code. on 23 04 2021 on 23 04 30 ) cra43.20The applicant defendant bank shall not take anyaction on the basis of the notice of sale dated20th August 2018 till 31st May 2021.No costs.[N.J.JAMADAR J.]snk 2021 APR21 cra43.20 

Summary: Preliminary jurisdiction to try cases involving debt shall always be aligned with the Debts Recovery was opined by the bench constituting of N.J. Jamadar J. of the Bombay High Court bench. In the matter of Maharashtra Gramin Bank v Anwar [CRA NO. 43 OF 2020] it was held that only when civil rights are involved in the issue of credit then the matter hall be presented before the civil court otherwise the preliminary jurisdiction lies with the Debts Recovery Tribunal. The respondent/plaintiff deals in the business of rice. In the year 2013, the plaintiff had availed cash credit facility of Rs.25 lakhs from the defendant. The limit came to be enhanced by Rs.20 lakhs in the year 2014. The plaintiff committed default in payment of the installments and the interest accrued on the amount advanced by the bank. The defendant/bank issued a notice of sale of the suit plot, in which security interest has been created, by issuing a The plaintiff instituted a suit being RCS No.476 of 2018 with the assertions that the defendant/bank proceeded to invoke the provisions under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 [Act, 2002] in a highhanded manner and utter disregard to the offer made by the plaintiff to clear the due amount under one-time settlement plan. The plaintiff averred that the defendant had not issued notice under section 13(2) of the Act, 2002, which is a peremptory requirement before initiating measures under section 13(4) of the Act, 2002.  The crucial question before the bench which warranted consideration was whether an assertion in the plaint that the mandatory notice under section 13(2) of the Act, 2002 if not given by the secured creditor would, in itself, be sufficient to remove the embargo created by section 34 of the Act, 2002. For the answer, it was to be seen as to what the special forum i.e. Debt Recovery Tribunal is to examine in an application under section 17 of the Act and what reliefs it is empowered to grant. The Court relied upon the case of Bank of Baroda and Others Vs. Gopal Shriram Panda and Ors., CRA No.29,30/2011 wherein it was concluded that where civil rights of persons other than the borrower(s) or guarantor (s) are involved, the Civil Court would have jurisdiction, that too, when it is prima facie apparent from the face of the record that the relief claimed, is incapable of being decided by the DRT, under Section 17 of the DRT Act, 1993 read with Sections 13 and 17 of the SARFAESI Act stands in the name of the borrower and/or guarantor, and the borrower has availed the financial assistance, it would be only the DRT which would have exclusive jurisdiction to try such matters, to the total exclusion of the Civil Court. Any pleas as raised by the borrowers or guarantors, vis-a-vis the security interest, will have to be determined by the DRT.