IN THE HIGH COURT OF KERALA AT ERNAKULAM
CRP No. 633 of 2006()
1. BRANCH MANAGER INDIAN BANK, BHARANIKAVU
... Petitioner
2. THE CHIEF MANAGER, CIRCLE OFFICE,
Vs
1. KRISHNAMOORTHY, S/O.RAMAMOORTHY,
... Respondent
For Petitioner :SRI.T.K.AJITH KUMAR
For Respondent :SRI.K.SUBASH CHANDRA BOSE
The Hon'ble MR. Justice M.SASIDHARAN NAMBIAR
Dated :29/11/2006
O R D E R
M.Sasidharan Nambiar,J.
C.R.P No.633 of 2006
Dated this the 29th day of November,2006
O R D E R
Petitioners are the defendants in O.S.195/05 on
the file of Munsiff Court, Sasthamcottah.
Respondent is the plaintiff. Respondent filed the
suit seeking a decree for permanent prohibitory
injunction restraining petitioner bank from
trespassing into the plaint schedule property or
transferring the property to third parties,
admitting that respondent is a borrower from the
petitioner bank. Petitioner filed written
statement contending that suit is not maintainable
by virtue of Section 34 of Securitisation and
Reconstruction of Financial Assets and Enforcement
of Security Interest Act,2002, (hereinafter
referred to as the Act). As per order dated
12.4.06, Munsiff dismissed I.A.883/05 filed by
petitioners challenging the maintainability of the
suit and held that suit is maintainable. It is
CRP No.633/06 2
challenged in this revision petition filed under
section 115 of the Code of Civil Procedure.
2.Learned counsel appearing for petitioners and
respondent were heard.
3. Learned counsel appearing for petitioners
pointed out that respondent had borrowed the amount
from petitioner bank and when respondent
committed default, the Bank issued notice as
provided under sub section (2) of Section 13 of the
Act and instead of filing objection, respondent
rushed to the court and filed the suit which is
barred under section 34 of the Act. It was also
argued that learned Munsiff without properly
appreciating the provisions of Section 34 or
following the decision of the Apex Court, relying
on a decision of the Apex Court in Dhulabhai v.
State of Madhya Pradesh (AIR 1969 SC 78) rendered
much earlier to the enactment of the Act held that
the suit is maintainable and that order is illegal
and unsustainable.
CRP No.633/06 3
4. Learned counsel appearing for respondent
argued that all suits are not barred under section
34 and Apex Court has held that there are
exceptions to the bar provided under section 34 and
when fraud is alleged the suit is maintainable.
It was argued that notice contemplated under
section 13(2) of the Act is a notice providing the
details of the amount due and the notice served on
the respondent does not disclose the details and
instead the total amount without the details is
claimed and it is not a notice as provided under
section 13(2) and hence the suit is maintainable.
5.Section 13(2) and (3) of the Act reads:-
(2)”Where any borrower, who is
under a liability to a secured
creditor under a security
agreement, makes any default in
repayment of secured debt or any
instalment thereof, and his account
in respect of such debt is
classified by the secured creditor
CRP No.633/06 4
as non-performing asset, then, the
secured creditor may require the
borrower by notice in writing to
discharge in full his liabilities
to the secured creditor within
sixty days from the date of notice
failing which the secured creditor
shall be entitled to exercise all
or any of the rights under sub-
section (4).
(3) The notice referred to in sub-
section (2) shall give details of
the amount payable by the borrower
and the secured assets intended to
be enforced by the secured creditor
in the event of non-payment of
secured debts by the borrower.”
The bar of suits provided under section 34 reads:-
“No civil court shall have
jurisdiction to entertain any suit
or proceeding in respect of any
CRP No.633/06 5
matter which a Debts 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
(51 of 1993).”
The Constitutional validity of the Act was
considered by the Apex Court in Mardia Chemicals v.
Union of India (2004(2) KLT 273). Upholding the
constitutional validity and repelling the
contention against Section 34, their Lordship held:
“50. It has also been submitted
that an appeal is entertainable
before the Debt Recovery Tribunal
CRP No.633/06 6
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 Debt Recovery Tribunal
or the appellate Tribunal is
empowered to determine. Thus
before action or measure is taken
under sub-section (4) of Section
13, it is submitted by Mr.Salve
one of the counsel for
respondents that there would be
no bar to approach the civil
court. Therefore, it cannot be
said 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
CRP No.633/06 7
civil court is barred in respect
of matters which a Debt Recovery
Tribunal or 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 Debt
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
CRP No.633/06 8
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
Debt Recovery Tribunal, apart
from those matters in which
measures have already been taken
under sub-section(4) of Section
13.”
Their Lordships also considered the exception of
the bar and held:-
“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
of their claim may be so absurd and
untenable which may not require any
probe, whatsoever or to say precisely
to the extent the scope is
CRP No.633/06 9
permissible to bring an action in the
civil court in the cases of English
mortgages”
6. The facts of the case establish that
petitioner bank had already initiated steps under
the Act. A notice as provided under section 13(2)
was sent to the respondent. According to learned
counsel appearing for petitioners inspite of the
service of notice, respondent did not file any
objection. When a notice as provided under
section 13(2) of the Act is sent to a borrower
and borrower files an objection as provided under
section 13(3A) the borrower has a right to raise
any objection to the said notice. Sub section
(3A) provides that on receipt of the notice under
sub section 2, if the borrower makes objection,the
secured creditor shall consider such
representation or objection and if on such
consideration comes to the conclusion that such
representation or objection is not acceptable or
tenable, he shall communicate within one week of
CRP No.633/06 10
receipt of such representation or objection the
reasons for non-acceptance of the representation
or objection. But the proviso to the sub section
makes it clear that the reasons so communicated
or the likely action of the secured creditor at
the stage of communication of reasons shall not
confer any right upon the borrower to prefer an
application to the Debts Recovery Tribunal under
section 17 or the Court of District Judge under
section 17A of the Act. The right of the borrower
to approach the Debt Recovery Tribunal will
accrue only after measures are taken under section
13(1) of the Act.
7. The question is whether in the light of
these provisions a borrower, without filing an
objection to the notice under section 13(2), who
is not entitled to prefer a petition under section
17, even if he has filed objection and it was
found untenable and the reasons was communicated
can institute a civil suit in a civil court
seeking a decree for injunction restraining the
CRP No.633/06 11
bank from entering the mortgaged property or
putting the property for sale. The argument of
the learned counsel appearing for respondent was
that as the notice does not contain the details of
the amount as provided under sub section 3 of
Section 13 respondent is entitled to approach the
civil court for the remedy. I cannot agree with
the submission. When the respondent did not
dispute the amount due and did not claim that the
notice sent under section (2) is bad for non-
mentioning the details as provided under sub
section (3), he is not entitled to circumvent the
provisions of the Act or avoid the bar under
section 34 contending that notice did not disclose
the details. If the notice does not contain the
details as contemplated under sub section 3, he
should have filed representation or objection as
provided under sub section 3A. It is definitely
not a ground to file a suit inspite of the bar
provided under section 34. Unfortunately court
below did not appreciate the provisions of
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Section 34 in the proper perspective. It appears
that the decision of the Apex Court was not
brought to the notice of the court. It is
absolutely clear that the suit is barred under the
provisions of Section 34 of the Act. The impugned
order is set aside and it is held that suit is
barred under section 34 of the Act. It is made
clear that respondent is entitled to approach the
Bank for one time settlement. If such a
representation for one time settlement is made to
the Bank, Bank has to consider the same and pass
appropriate orders. Respondent is also entitled
to approach the Bank for the details of the amount
due and if such a representation is made, the Bank
shall furnish the details.
Civil Revision is disposed as above.
M.Sasidharan Nambiar
Judge
tpl/-
M.SASIDHARAN NAMBIAR, J.
———————
C.R.P.NO.633 /06
———————
ORDER
29TH NOVEMBER,2006