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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
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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.)
pnd/lpa333.10
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