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Bombay High Court
Smt. Laxmibai vs The Jalgaon Merchant … on 20 December, 2010
Bench: Naresh H. Patil, Shrihari P. Davare
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                   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.
     ------------------------------------------------------------




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                                                   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

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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,

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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

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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.

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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

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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

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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

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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.”

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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

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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.)

                                           





                                           





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