* HIGH COURT OF DELHI : NEW DELHI
+ IA No.8629/2004, R.A. No. 8/2005, RA No.9/2005, IA
No.1259/2007, I.A. No. 3372/2005 and I.A. No. 1260/2007
in CS (OS) No. 1472/2004
Smt. Shruti Aggarwal & Anr. ...Plaintiffs
Through : Mr. Harish Malhotra, Sr. Adv. with Mr.
Tanuj Khurana and Mr. Rajinder
Kumar
Versus
Sh. Subhash Kumar & Ors. ...Defendants
Through : Mr. Mike Desai, Adv. for D 1 and 2
Mr. Jaswinder Singh, Adv. for D 3
Mr. Sanjay Jain, Sr. Adv. with Mr. C.
Mohan Rao and Ms. Ruchi Jain, Advs.
for D 4 to D 7
Reserved on: September 10, 2009
Decided on: December 23, 2009
Coram:
HON'BLE MR. JUSTICE MANMOHAN SINGH
1. Whether the Reporters of local papers may
be allowed to see the judgment? No
2. To be referred to Reporter or not? Yes
3. Whether the judgment should be reported
in the Digest? Yes
MANMOHAN SINGH, J.
1. By this order, I shall dispose of the following applications,
details of which are given as under :
(i) IA No.8629/2004 (u/Order XXXIX Rule 1-2 of the
Code of Civil Procedure, 1908) filed by Plaintiff.
(ii) RA No.8/2005 (u/Section 114 Code of Civil
Procedure, 1908) filed by Plaintiff.
CS (OS) No. 1472/2004 Page 1 of 24
(iii) RA No.9/2005 (u/Section 114 Code of Civil Procedure,
1908) filed by Defendant No.3.
(iv) IA No.3372/2005 (u/Order VII Rule 7 Code of Civil
Procedure, 1908) filed by Defendant No.3.
(v) IA No.1259/2007 (u/Order X Rule 2 Code of Civil
Procedure, 1908) filed by Defendant Nos. 4 to 7.
(vi) IA No.1260/2007 (u/Order XXXIX Rule 4 Code of
Civil Procedure, 1908) filed by Defendants No.4-7.
2. The present suit has been filed by the plaintiffs for a decree of
permanent injunction restraining the defendant nos. 1 to 3 from taking
any steps to dispossess them from the ground and first floor of BN-34,
West Shalimar Bagh, Delhi (hereinafter referred to as the „suit
premises‟) in pursuance of notice dated 9th September, 2004 sent by the
defendant no. 3 bank to defendant nos. 1 and 2 under Section 13 (2) of
the Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 (hereinafter referred to as
„the Securitization Act‟) and also from disturbing or interfering with
their peaceful possession of the same.
3. The brief facts of the case are as follows. Defendant nos. 1
and 2 are the owners of the suit premises. It is the plaintiffs‟ claim that
the said premises were leased out to them, i.e. the ground floor to
plaintiff no. 1 and the first floor to plaintiff no. 2. It is the plaintiffs‟ case
that since the defendant nos. 1 and 2 were in dire need of money, they
rented out the suit premises to the plaintiffs for a „substantial amount‟ in
addition to the rent of Rs. 2800/- p.m. and Rs. 2500/- p.m. in respect of
CS (OS) No. 1472/2004 Page 2 of 24
the ground and first floors respectively, the factum of rent being
recorded in lease deed dated 1st September, 1998.
4. After the first year of tenancy, as per the plaintiffs, the
defendants started misbehaving with the plaintiffs and threatened to
throw them out of the suit premises. On 6th July, 2004 defendant no. 2
along with two thugs came to the suit premises when plaintiff no. 1 was
alone at home and started throwing out the furniture etc. and used
abusive language as well, and also threatened to kill her entire family if
the suit premises were not vacated by 26th July, 2004.
5. Plaintiff no. 1 has averred that she went to a nearby police
chowki to complain of defendant no. 2‟s behavior, however, there she
was to comply with defendant no. 2‟s order of vacating the suit
premises. The plaintiff no. 1 then filed a suit being no. 417/2002 for
permanent injunction before the Sr. Civil Judge, Delhi where on the very
first day of the hearing, defendant nos. 1 and 2‟s counsel gave a
statement to the court that they would not dispossess the plaintiffs. In
lieu of this, the plaintiffs withdrew their case.
6. Subsequently, the plaintiffs found out that defendant nos. 1
and 2 had taken a loan from defendant no. 3 bank by mortgaging the suit
premises and recovery proceedings against the said loan had been
initiated by defendant no. 3 in pursuance of which a notice under Section
13 (2) of the Securitisation Act had also been issued on 9th September,
2004. It is the plaintiffs‟ claim that defendant nos. 1 and 2 are
CS (OS) No. 1472/2004 Page 3 of 24
deliberately not repaying the loan taken from the defendant no. 3 bank so
as to create a situation whereby the plaintiffs would be forcibly
dispossessed by defendant no. 3.
7. The plaintiffs have stated in the plaint that since they are
governed by the Delhi Rent Control Act and are statutory tenants, they
cannot be thrown out by the connivance of the defendants as there is
judicial precedent stating that the rights and obligations of a third party
in respect of a property cannot be affected as such rights would be
regulated by the incidence of tenancy following from the statute
determining inter-se rights of the landlord and tenant. Since the plaintiffs
are protected by the Delhi Rent Control Act, they claim that as per law
they cannot be evicted by defendant no. 3. In these circumstances, the
plaintiffs filed the present suit.
8. On 6th February, 2006 I.A. No. 1529/2006 was filed on behalf
of Sh. Chandra Kant Misra, Smt. Deepika Misra and Sh. Vipin Kumar
Misra, all three being partners in M/s. Pragati Builders and Promoters.
The said application had been filed for the impleadment of all four
entities as proposed defendant nos. 4 to 7. Vide order dated 18th
December, 2006 this court allowed the application and defendant nos. 4
to 7 were consequently impleaded.
9. In their defense, defendant nos. 1 and 2 have submitted that
though due to financial trouble they rented out the ground and first floor
of the suit premises to the plaintiffs, it was the plaintiffs and not the
CS (OS) No. 1472/2004 Page 4 of 24
defendants who started being uncooperative, troublesome and stopped
paying rent. The said defendants have contended that the present suit has
come as a shock to them as they have never caused any hindrance to the
plaintiffs and in fact, the plaintiffs are harassing them by filing frivolous
suits against them. Further, the plaintiffs have no privity in the dealings
of defendant nos. 1 and 2 with defendant no. 3 bank and cannot
comment upon the same. The action of the defendant no. 3 against the
defendant nos. 1 and 2 i.e. the sending of the notice dated 9th September,
2004 and initiation of proceedings under the Securitisation Act has been
challenged by defendant nos. 1 and 2 by way of a Securitization
Application (S.A.) No. 50/2005 filed before the Debt Recovery
Tribunal-II, Delhi.
10. Defendant no. 3 has filed a written statement stating that the
plaintiffs‟ suit is barred under Section 34 of the Securitisation Act as the
said section bars Civil Courts from having any jurisdiction to entertain
any proceeding or matter with regard to which the Debt Recovery
Tribunal is empowered to act. The contention of defendant No.3 bank
is that it has, under Section 13 (4) of the Securitization Act, already
taken action as is evident in the Chief Metropolitan Magistrate‟s order
dated 11th February, 2005 whereby a Receiver has been appointed to
take over possession of the suit property for the purpose of handing over
the same to the defendant No.3. In pursuance of this order, the Receiver
issued a 10 days‟ notice to the parties for compliance and for taking over
possession as per the order. Therefore, the only remedy available to the
CS (OS) No. 1472/2004 Page 5 of 24
plaintiffs is to file an appeal under Section 17 of the Securitization Act.
The correct action for the plaintiffs would be to file an appeal under
Section 17 of the Securitisation Act, as action has already been taken by
the bank under Section 13 (4) of the said Act.
11. Defendant nos. 4 to 7, i.e. the defendants impleaded later by
virtue of their act of purchasing the suit premises after the serving of
notice dated 9th September, 2004 have submitted a completely different
version of the entire facts of the matter.
12. Defendant nos. 4 to 7 have submitted that the Securitisation
Act, 2002 was enacted by the Legislature with the view to improve
recovery of loans advanced by banks to individuals as well as
corporations etc. The Securitization Act authorized banks to take
possession of the „Security Interest‟ as defined therein. Defendant nos. 1
and 2 had mortgaged the suit premises with the defendant no. 3 bank.
After various notices for repayment and after satisfying itself that the
asset was in fact a non-performing asset, defendant no. 3 lawfully and
under the Securitization Act took possession of the suit premises and
auctioned the same.
13. The submission of defendant nos. 4 to 7 is that the present
suit is a fraud on the defendant no. 3 bank as well as on this court. It is
their submission that the present suit has been filed by the plaintiffs on
behalf of and in collusion with defendant nos. 1 and 2 in order to prevent
CS (OS) No. 1472/2004 Page 6 of 24
defendant no. 3 from taking physical possession of the suit premises, in
turn preventing it from handing over the same to defendant nos. 4 to 7.
14. Further, the rent which is stated to be paid by the plaintiffs to
defendant nos. 1 and 2 in lieu of the suit premises are averred by
defendant nos. 4 to 7 to be fifteen times less (which is around Rs.
40,000/-) than the going rent for properties in the same area, which is a
ludicrous assertion to have been made by the plaintiffs and the same was
made only in order to bring the suit premises within the purview of the
Delhi Rent Control Act.
15. It has also been submitted that it is defendant nos. 1 and 2
who are in actual and physical possession of the suit premises and not
the plaintiffs. No valid lease deed has been executed and the lease deed
asserted to have been executed is a fabrication. The defendant nos. 4 to 7
have stated that before equitable mortgage was created in respect of the
suit premises, a valuation report was obtained from a third party. As per
this report dated 10th July, 2002 the suit premises are stated to be under
the „self occupation‟ of the defendant nos. 1 and 2. Therefore, the
present suit is nothing but a web of lies created by the plaintiffs and
defendant nos. 1 and 2 so that this court affords protection to them from
lawful eviction under the Securitization Act.
16. I have heard learned counsel for all the parties. Since there
are common facts in all the pending applications, the learned counsel for
the parties have addressed their submissions accordingly. The defendant
CS (OS) No. 1472/2004 Page 7 of 24
No.3 in its application being IA No.3372/2005 has made a prayer for
rejection of the plaint as the suit according to it is barred under Section
34 of the Securitization Act, 2002.
17. I.A. No. 3372/2005 has been filed by defendant no. 3 praying
for rejection of the plaint. Defendant no. 3 has submitted that the
plaintiff‟s suit is barred by Section 34 of the Securitisation Act. The said
section provides the following :
“Section 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 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.”
18. Defendant no. 3 has referred to this court‟s order dated 17th
December, 2004 wherein this court held as follows :
“…the plaintiff shall not be dispossessed from the suit
premises except by following the due process of law. It is
made clear that if in the reckoning of defendant no. 3 they
are entitled to take possession of the suit property under the
provisions of “The Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act,
2002 and the Security Interest (Enforcement) Rules, 2002″,
they will be free to do so.”
19. However, by the next order dated 25th January, 2005 this
court directed that the plaintiffs‟ possession would not disturbed for a
period of two weeks to enable the plaintiffs to file an appeal under
Section 17 of the Act in the Debt Recovery Tribunal. The said two
CS (OS) No. 1472/2004 Page 8 of 24
weeks ended on 9th February, 2005. On 11th February, 2006 defendant
no. 3 took action under Section 13 (4) of the Act.
20. The following are the main contentions of the plaintiffs:
i) That the tenant cannot be dispossessed from the premises
without due process of law. According to the plaintiffs the sale was
conducted by the defendant No.3 to the defendants No.4 to 7 „as is
where is basis‟ and the purchasers were aware that the plaintiffs are in
possession of the said property as tenant thereof.
ii) The defendants No.2 to 7 cannot claim possession from the
plaintiffs in the present proceedings without taking recourse of the
provisions of Delhi Rent Control Act and the plaintiffs cannot be
straightaway dispossessed.
iii) The plaintiffs in their individual capacity being tenant has
filed the suit for securing their possession which can only be secured by
the civil court and Section 31(e) of the Securitisation & Reconstruction
of Financial Assets and Enforcement of Security Interest Act, 2002 lays
down that the provisions of this Act do not apply to any conditional sale,
hire purchase or lease or any other contract in which no security interest
has been created.
iv) That the right of the statutory tenant cannot be affected and
the tenant cannot be thrown out summarily by secured creditors as per
settled law and this Court in such cases has no jurisdiction to pass orders
or direction affecting the rights of the tenant protected, controlled and
regulated by the Rent Act.
CS (OS) No. 1472/2004 Page 9 of 24
v) That the notice under Section 13(2) of the Act taking
possession of the property is bad as the remedy of appeal under Section
17(i) of the Act is not available to the plaintiffs who are bonafide
tenants. The right of the appeal accrues only after the possession has
been taken in terms of Section 13(4) of the Act. In case the possession is
taken in the present case by the defendant No.3, it would affect the rights
of the plaintiffs who are statutory tenant. The right of the plaintiffs
cannot be affected by the act of third party as held in the various judicial
proceedings by the Supreme Court and other courts reported in AIR
1981 SC 981, AIR 2001 Delhi 175, AIR 1997 Patna 160, AIR 2008
Calcutta 9.
21. In order to consider the submission of the plaintiffs, certain
factual aspects of the matter are necessary to be mentioned here. The
plaintiffs have filed the present suit for permanent injunction with the
following prayer:
(a) pass a decree for permanent injunction
whereby restraining the defendant no.1, 2
& 3 from taking any steps with regard to
the Ground Floor & First Floor of the
property bearing No.BN-34 West
Shalimar Bagh, Delhi, which is in
possession of the plaintiffs herein;
(b) pass the decree of permanent injunction
against the defendants whereby restraining
them from taking any steps with regard to
the property in possession of the plaintiffs
in pursuance to the alleged notice dt.
9.9.2004 under Section 13(2) of the
Securitisation & Reconstruction of
Financial Assets & Enforcement of
Security Interest Act, 2002;
(c) pass a decree for permanent injunction
against the defendant no.1, 2 & 3 for
CS (OS) No. 1472/2004 Page 10 of 24
dispossession of the plaintiffs herein as
well as restraining them to interfering into
peaceful and lawful possession of the
ground floor & first floor of the property
bearing No.BN-34, West Shalimar Bagh,
Delhi.”
22. The suit as well as the interim application being IA
No.8629/2004 was listed before Court on 17.12.2004 when the summons
were issued to the defendants in the main suit and the ex-parte ad-
interim injunction was granted against the defendants to the following
effect:
“In the meanwhile, the plaintiff shall
not be dispossessed from the suit premises
except by following the due process of law. It is
made clear that if in the reckoning of defendant
No.3 they are entitled to take possession of the
suit property under the provisions of “The
Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act,
2002 & The Security Interest (Enforcement)
Rules, 2002″, they will be free to do so.”
23. On 25.1.2005 the liberty was granted to the plaintiff to take
recourse to Section 17 of the Securitization Act and to file an appeal to
protect his right. However, it was ordered that the plaintiffs‟ possession
will not be disturbed for a period of two weeks from that date.
Thereafter, the plaintiffs filed the review application No.8/2005 and the
interim order was continued. The main contention in the review
application was that Section 17 of the Act would only apply in the
circumstances where the secured creditors have taken the specific
possession of the property in question. Since the possession in the above
subject matter is not taken by the defendant No.-3, therefore, the review
CS (OS) No. 1472/2004 Page 11 of 24
was filed for recalling the order dated 25.1.2005.
24. The defendant No.3 thereafter filed the application under
Order 7 Rule 11 CPC being IA No.3372/2005 for rejection of the plaint
mainly on the ground that the suit filed by the plaintiffs is barred by law
and is not maintainable. The defendant No.3 also filed R.A.9/2005 for
review of order dated 18.2.2005 wherein the relief of interim order
granted on 25.1.2005 was continued in R.A.8/2005 filed by the
plaintiffs.
25. In another application being IA No.1259/2007 was filed by
the defendants No.4 to 7 for examination of the plaintiff under Order 10
Rule 2 CPC mainly on the ground that the present suit is a fraud
committed by the plaintiffs with the collusion of defendants No.1 & 2 as
the plaintiffs and defendants No.1 & 2 CPC are relatives and the said
fact has not been disclosed by the plaintiffs in the plaint. The defendants
No.4 to 7 also filed the application under Order 39 Rule 4 CPC being IA
No.1260/2007 for vacation of the interim order dated 17.12.2004 and
7.3.2005. All the applications were heard together.
26. It appears from the facts that defendant no. 1 applied for a
loan from defendant no. 3 while offering the suit premises as security.
The suit premises were valued by a third party valuer who in his report
dated 10th July, 2002 stated that the suit premises were self occupied by
defendant nos. 1 and 2.
27. It is also not in dispute that when the defendant No.1 applied
for loan from the defendant No.3 offering house No.BN-34, Shalimar
CS (OS) No. 1472/2004 Page 12 of 24
Bagh, as security the said property was valued by the approved valuer
who gave a report on 10th of July, 2002 wherein it was mentioned that
the suit property was under self-occupation of the defendants No.1 & 2.
The defendant No.1 in his application for credit facilities dated
14.8.2003 specified that the suit property is being provided as collateral
security and is under his self-occupation. He also filed the application
dated 25.8.2003 stating that the suit property is under his self-occupation
and shall not be given on rent. Even in Income Tax return submitted by
the owner of the property defendant No.1 does not show any income
from the house property. After satisfaction of the above, the bank
granted the credit facility to the defendant No.1. However, the
defendant no. 3 bank declared the suit premises to be a non-performing
asset on 31st August, 2004 as the defendant nos. 1 and 2 were unable to
pay back the loan amount. As a consequence, defendant no. 3 issued a
notice under Section 13 (2) of the Securitization Act to the defaulting
defendants, who conveyed that they were suffering financial stress and
shortage of funds by their letter dated 20th October, 2004. The bank
granted the defendant nos. 1and 2 one month time vide their letter dated
6th November, 2004. Since no payment was made despite the said
correspondence, the defendant no. 3 bank issued a notice to defendant
nos. 1 and 2 under Section 13 (4) of the Securitization Act on 27 th
December, 2004. The suit premises were auctioned and bought by
defendant nos. 4 to 7 on 11th June, 2005 and sale certificate was issued in
their favour on 28th June, 2005.
CS (OS) No. 1472/2004 Page 13 of 24
28. It appears from the entire pleadings and submissions of the
defendants No.3 to 7, that defendant Nos.1 and 2 in order to avoid
making payment to defendant No.3 bank have firstly filed the FIR
against the alleged goons of plaintiff No.1 alleging serious threat to life
and then filed the suit in the court of Senior Civil Judge wherein consent
order dated 9th September, 2004 was obtained wherein it was stated that
the plaintiffs will not be dispossessed without the due process of law.
It is pertinent to mention that the notice under Section 13(2) of the
Securitization Act, 2002 was issued on 9th September, 2004. Thus, it is
clear that the present suit is a collusive suit between the plaintiffs and
defendant Nos.1 and 2. As far as the FIR is concerned, no action as of
today has been taken by the plaintiff No.1 about the serious allegation
made therein.
29. Admittedly, the plaintiff No.1 who is in possession of ground
floor as alleged by her is the sister-in-law of defendant No.2. Similarly,
the plaintiff No.2 is the father-in-law of defendant No.2 and they are
close relatives and the plaintiff did not disclose the same in the plaint as
well as at the time of obtaining the interim order. The plaintiffs are
relatives of defendant Nos.1 and 2, still, the said important fact has been
concealed from this Court, which is a serious matter and the present
suit ought to be dismissed on this ground itself.
30. It appears that defendants No.1 and 2 were aware on the date
of filing of the present suit that the same was not maintainable under
Section 34 of the Securitization Act, 2002 so the plaintiffs have
CS (OS) No. 1472/2004 Page 14 of 24
apparently been fighting a proxy war on behalf of defendants No.1 and
2. The defendants No.4 to 7 have already purchased the suit property
from defendant No.3 and the sale certificate in this regard has already
been issued. Receiver has been appointed for the purpose of possession.
In view of these facts, I find that there is no force in the submission of
the plaintiffs that no appeal under Section 17 of the Act is maintainable.
Even the suit filed by the plaintiffs in the court of Chief Metropolitan
Magistrate, wherein the interim order was passed, has been withdrawn
by the plaintiffs. From the entire gamut of the matter, it appears that the
plaintiffs have come before this Court with unclean hands.
31. There is no dispute as far as the proposition of law is
concerned and this court is fully agreeable with the finding of the
Supreme Court in the case of Dev Raj Dogra and Ors. Vs. Gyan
Chand Jain and Ors.; AIR 1981 SC 981 wherein it has been held that
in execution proceedings after decree has been passed, if there is
failure to pay the decreetal amount in terms of the decree and the
premises were sold in public action then only the symbolic possession
can be given. Similar view has been taken in other decisions referred by
the learned counsel for the plaintiffs. However, the situation in the
present matter is entirely different as elucidated in paras 27 to 29 of this
order.
32. I do not agree with the submission of the plaintiffs that the
review application being R.A. No.8/2005 is maintainable as vide order
dated 25.1.2005, this Court was pleased to pass the following order:
CS (OS) No. 1472/2004 Page 15 of 24
“…..The plaintiff is at liberty to take
recourse to Section 17 of the Securitization Act
and file an appeal to protect his rights. However,
with a view to enable the plaintiff to file an
appeal under Section 17 of the Act, his
possession will not be disturbed for a period of
two weeks from today.”
33. The plaintiffs did not choose to file the appeal under Section
17 of the Act rather the plaintiffs filed the review application for
recalling the order dated 25.1.2005. The defendant No.3 in exercise of
powers conferred under sub-section 4 of Section 13 for taking the
possession applied to the Court of Chief Metropolitan Magistrate thereby
inter alia for appointment of receiver for taking over the possession of
the suit property. Court of Chief Metropolitan Magistrate after going
through the same and having heard, appointed a court receiver for taking
over the possession of secured asset i.e. suit property. The receiver
thereafter sent a notice on 17.2.2005 to the borrowers as per order dated
11.2.2005 wherein the receiver is required to give ten days‟ notice to the
parties in advance prior to taking over the possession. I agree with the
contention of the learned counsel for the defendants No.3 to 7 that the
protection sought by the plaintiffs under Section 31(e) of the Act does
not help the case of the plaintiffs as a plain reading of Section 31 of the
Act lays down that it shall not apply if security interest has been created.
The said provision reads as under :
“(e) any conditional sale, hire purchase or
lease or any other contract in which no
Security Interest has been created.”
As per order of the Chief Metropolitan Magistrate, the
CS (OS) No. 1472/2004 Page 16 of 24
defendant No.3 has already taken action under Section 13(4) of the Act
wherein the Court has appointed the receiver to take over the possession
of the suit property. Therefore, this Court vide order dated 25.1.2005
has rightly asked the plaintiff to file the appeal under Section 17 of the
Act.
34. Vide order dated 7.3.2005 while considering the review
application No.8/2005 filed by the plaintiffs wherein the parties agreed
that the plaintiffs may be given liberty to move the concerned DRT for
appropriate relief against their dispossession from the premises in
question by the defendant No.3. The Court also observed that the
interim order shall continue till the time DRT returns a finding as to
whether it has jurisdiction or not to entertain the plaintiffs‟ application.
The DRT, as informed by the defendant No.3, after hearing was of the
opinion that only DRT has the jurisdiction in the matter.
35. This Court vide order dated 10.4.2008, on raising the
objection by the defendants No.4 to 7 that the plaintiffs are not in actual
physical possession appointed the Local Commissioner directing that he
should proceed to visit the ground and first floor of the premises for a
study of the occupation and physical possession of the aforesaid portion
of the suit premises.
36. The report of the Local Commissioner was filed on 30.4.2008
which indicates that in fact the defendant No.2 is in possession of the
property. The plaintiffs at the time of executing the commission
proceeding even failed to identify the portrait of the elderly couple
CS (OS) No. 1472/2004 Page 17 of 24
which was hanging on the wall of the living room of the ground floor.
37. Plaintiff No.1‟s mother also failed to disclose whether the
cable connection is available or not. It also appears from the report that
the first floor was not in use or occupation of any person for the last
several months. As per the report where it is mentioned that despite the
plaintiffs being tenant for more than about five to six years as per their
statement, the explanation of these locked rooms/cupboards were still in
the custody and possession of the owner/landlord even though the entire
premises was under the tenancy of the plaintiffs was unclear.
38. The above said circumstances demolish the case of the
plaintiffs and rather confirm the statement of defendant No.1 which was
made by owner before defendant No.3 that the property in question is in
exclusive possession of defendants No.1 and 2.
39. I do not agree with the learned counsel for the plaintiffs that
the plaintiffs are in fact statutory tenant of the defendants No.1 & 2.
The reliance of the two separate leased agreements executed on 1.9.1998
cannot be accepted as no explanation has come forward why two
separate agreements were executed in respect of the ground and first
floor, these are admittedly unregistered documents. Further, the ground
and first floor are joint and first floor is integrated into the ground floor,
hence there could not have been a separate tenancy agreement in respect
of first floor. The said deeds seem to have been created out of thin air in
order to avoid payment of the loan taken by defendant nos. 1 and 2 from
defendant no. 3.
CS (OS) No. 1472/2004 Page 18 of 24
40. Learned counsel for the plaintiffs has relied upon the case of
M/s. Mardia Chemicals Ltd. v. UOI & Ors., JT 2004 (4) SC 308 by
the plaintiffs in RA 8/2005, particularly para 48 of the decision wherein
while seeking review of this court‟s order dated 25 th January, 2005 to the
extent of its direction to the plaintiffs to take recourse under Section 17
of the Securitization Act.
41. The said para does not help the case of the plaintiffs in view
of the finding in the earlier para. Rather, the subsequent para 50 of the
same judgment goes against the plaintiffs which reads as under :
“50. It has also been submitted that an appeal is
entertainable before the Debts Recovery Tribunal 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 Debts Recovery Tribunal or
the Appellate Tribunal is empowered to determine. Thus
before any action or measure is taken under sub-section (4)
of Section 13, it is submitted by Mr Salve, one of the
counsel for the respondents that there would be no bar to
approach the civil court. Therefore, it cannot be said that 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 civil court is barred in respect of matters which a Debts
Recovery Tribunal or an 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 Debts 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 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
Debts Recovery Tribunal, apart from those matters in whichCS (OS) No. 1472/2004 Page 19 of 24
measures have already been taken under sub-section (4) of
Section 13.”
42. Clearly, the above-quoted judgment indicates that Section 34
of the Act will operate as bar against action taken as well as to be taken.
The plaintiffs were given two weeks time to file an appeal in the Debts
Recovery Tribunal, during which their possession was not to be
disturbed and no action taken by the defendants. It was only on the
expiry of those two weeks that defendant no. 3 took action under Section
13 (4) vide its notice dated 27th December, 2004, which it had been
permitted to do vide this court‟s order dated 17th December, 2004. The
plaintiffs were not to be dispossessed “except by following the due
process of law”. It seems to me that such due process, after the restricted
period of two weeks expired, was duly taken up by defendant no. 3.
43. It has been submitted by defendant no. 3 that on 7 th March,
2005 this court passed an order directing the interim order of 25th
January, 2005 to continue till the time the Debts Recovery Tribunal
returned a finding as to whether it has jurisdiction to entertain the
plaintiff‟s application (filed belatedly, i.e. much after the order of 17
December, 2004). On 7th April, 2005 arguments were partly heard and
the matter was listed on 13th April, 2005 when it was again heard in part
and listed for 26th April, 2005. Notices in the matter were directed to be
served at this hearing. It is the contention of defendant no. 3 that vide
this order, the Debts Recovery Tribunal took cognizance of the matter
and assumed jurisdiction.
CS (OS) No. 1472/2004 Page 20 of 24
44. Reference has been made in para 16 of the plaint to the notice
dated 9th September, 2004 sent by defendant no. 3 to defendant no. 1 and
2 for payment of Rs. 98,64,986.99/- under Section 13 (2) of the
Securitization Act. As per the plaintiffs, it is because the existence of
this notice came to their knowledge that they have filed the present suit,
as they apprehend that defendant nos. 1 and 2 are intentionally not
paying defendant no. 3 in order to evict the plaintiffs under the Act. The
plaintiffs have then submitted that they are statutory tenants protected
under the Delhi Rent Control Act. It is the submission of defendant no. 3
that the plaintiffs are relatives of defendant no. 1 and 2 and have filed the
instant suit in collusion with the same to prevent defendant no. 3 from
taking over the suit premises in accordance with the Act as defendant
nos. 1 and 2 have defaulted in repayment of the borrowed amount.
45. The relevant principles regarding ouster of jurisdiction of
Civil Court were laid down by the Apex Court in Dhulabhai v. State of
MP, AIR 1969 Supreme Court 78. The relevant portion of the said
judgment reads as under :-
“54. …
(1) Where the statute gives a finality to the orders
of the special tribunals the Civil Court’s
jurisdiction must be held to be excluded if there is
adequate remedy to do what the Civil Courts
would normally do in a suit. Such provision,
however, does not exclude those cases where the
provisions of the particular Act have not been
complied with or the statutory tribunal has not
acted in conformity with the fundamental
principles of judicial procedure.
CS (OS) No. 1472/2004 Page 21 of 24
(2) Where there is an express bar of the
jurisdiction of the court, an examination of the
scheme of the particular Act to find the adequacy
or the sufficiency of the remedies provided may be
relevant but is not decisive to sustain the
jurisdiction of the civil court.
Where there is no express exclusion the
examination of the remedies and the scheme of the
particular Act to find out the intendment becomes
necessary and the result of the inquiry may be
decisive. In the latter case it is necessary to see if
the statute creates a special right or a liability and
provides for the determination of the right or
liability and further lays down that all questions
about the said right and liability shall be
determined by the tribunals so constituted, and
whether remedies normally associated with
actions in Civil Courts are prescribed by the said
statue or not.
(3) Challenge to the provisions of the particular
Act as ultra vires cannot be brought before
Tribunals constituted under that Act. Even the
High Court cannot go into that question on a
revision or reference from the decision of the
Tribunals.
(4) When a provision is already declared
unconstitutional or the constitutionality of any
provision is to be challenged, a suit is open. A writ
of certiorari may include a direction for refund if
the claim is clearly within the time prescribed by
the Limitation Act but it is not a compulsory
remedy to replace a suit.
(5) Where the particular Act contains no
machinery for refund of tax collected in excess of
constitutional limits or illegally collected a suit
lies.
(6) Questions of the correctness of the assessment
apart from its constitutionality are for the decision
of the authorities and a civil suit does not lie if the
orders of the authorities are declared to be final or
there is an express prohibition in the particular
Act. In either case the scheme of the particular Act
must be examined because it is a relevant enquiry.
CS (OS) No. 1472/2004 Page 22 of 24
(7) An exclusion of the jurisdiction of the Civil
Court is not readily to be inferred unless the
conditions above set down apply.”
46. Examining the facts of the present case in this light now, it
appears that Section 34 of the Securitization Act bars the civil court from
adjudicating upon any matter which is pending before the Debts
Recovery Tribunal. A notice under Section 13 (2) of the Securitization
Act with regard to default in the repayment of the loan taken by
defendant nos. 1 and 2 was sent to the said defendants by the defendant
no. 3 bank as well as due to the finding given in para 27 to 29 of my
judgment. Correspondence was exchanged between the parties, and due
to further default notice under Section 13 (4) was issued on 27 th
December, 2004 after the same had been impliedly allowed by this
court‟s order dated 17th December, 2004.
47. In view of all these facts, it seems to be that the Debts
Recovery Tribunal is taking cognizance of the matter. More
importantly, in light of the plaintiffs awareness of the notice under
Section 13 (2) of the Act as well as the fact that it is the plaintiffs who
referred the decision of Mardia Chemicals case (supra), it seems to me
that the plaintiffs‟ suit barred under Section 34 of the Securitization Act
and is not maintainable.
48. In view of the afore-stated observation, I hereby allow the
application under Order VII Rule 11 of the CPC. Consequently, I reject
the plaint being barred by law. All pending applications also stand
disposed of in view of the common order passed in the matter.
CS (OS) No. 1472/2004 Page 23 of 24
No costs.
MANMOHAN SINGH, J.
DECEMBER 23, 2009
nn
CS (OS) No. 1472/2004 Page 24 of 24