IN THE HIGH COURT OF JHARKHAND AT RANCHI.
W.P. (C) No. 5150 of 2008
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1. Tara Devi Kelanka
2. Shree Bhagwan Kelanka … Petitioners
-V e r s u s-
The State Bank of India & Others … Respondents
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CORAM: – HON’BLE MR. JUSTICE D.G.R. PATNAIK.
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For the Petitioners : – Mr. Amit Kumar Das, Advocate.
For the Respondents : – M/s. Rajesh Kumar &
Amit Kumar, Advocates
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C.A.V. on 27.01.2009 Pronounced on 19.02.2009
Petitioners in this writ application have challenged the order
dated 09.09.2008 passed by the Sub-Judge-II, Dhanbad in Title (M)
Suit No. 87 of 1993 whereby the petitioners’ prayer for an order of
injunction restraining the Respondent No. 1 from putting the
petitioners’ properties on auction sale and from encashing the
cheques obtained from the petitioners, was rejected.
2. Facts of the case lie in narrow compass and stated briefly are
as follows :-
The Respondent No. 1 namely the State Bank of India had
filed a suit against the present petitioners/defendants on 22.05.1993
before the Court below for a decree for recovery of a sum of Rs.
1,14,384.92 from the defendants. The claim related to the loan
borrowed by the defendants from the plaintiff Bank and the same
was sought to be recovered as the outstanding dues assessed by the
plaintiff from the defendants.
The petitioners/defendants had appeared in the suit and had
filed their written statements denying and disputing the claim of the
plaintiff. Defendant Nos. 3 and 4 filed a counter claim against the
plaintiff Bank in the aforesaid suit for a sum of Rs. 4,93,045.19.
The proceedings in the suit had almost reached the stage of
final argument, but before that, the respondent Bank had initiated
measures under the provisions of Securitisation and Reconstruction
of Financial Assets and Enforcement of Security Interest Act, 2002
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(Securitisation Act), firstly, by issuing a demand notice to the
defendants to pay the outstanding dues and 60 days thereafter, by
issuing a notice dated 26.06.2008 to the defendants informing them
that the Bank had taken over possession of the properties secured
against the debts, with an intent to sell the same for realization of its
dues, under the provisions of Section 13(4) of the Securitisation Act.
During the pendency of the suit, considering the
apprehensions expressed by the parties, the learned Court below
had passed an order of injunction on 25.05.1999 restraining the
Defendant No. 4 from selling away or transferring in any manner
the part of the suit property which was in his possession and
custody.
On receipt of the notice dated 26.06.2008 under Section 13(4)
of the Securitisation Act the petitioners/defendants, filed a petition
praying for an order of injunction restraining the plaintiff Bank from
interfering with the order of injunction as passed by the Trial Court
on 25.05.1999. Such prayer was made on the ground that by
proceeding to take possession of the suit property and with the
intention of selling away the property for realization of its purported
dues, the plaintiff Bank was in fact proposing to change the status of
the suit property and such act on the part of the plaintiff Bank
would amount to violation of the order of injunction passed by the
Court.
The defendants prayer was contested by the plaintiff Bank on
the ground that the plaintiff’s act of taking possession of the suit
property was in lawful exercise of its authority under Section 13(4)
of the Securitisation Act and further, that the suit property was
never transferred to the custody of the Court and had, for all
practical purposes, remained in the custody of the Defendant No. 4
and in terms of the conditions of loan availed by the defendants, the
plaintiff Bank had every right to take possession of the suit property
and sell the same for realization of its outstanding dues from the
defendants and if the prayer of the defendants for an order of
injunction against the plaintiff Bank is allowed, it would amount to
interfering with the powers of the Bank under the Securitisation Act.
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3. The learned Court below vide its impugned order, had
rejected the defendants’ prayer for injunction on the ground that it
has no jurisdiction to entertain any petition filed against the action
taken by the plaintiff Bank under the Securitisation Act as per the
prohibition under the provisions of Section 34 of the Act.
4. The petitioners/defendants have challenged the aforesaid
order of the learned Court below. Assailing the impugned order,
Shri Amit Kumar Das, learned counsel for the petitioners would
argue that since admittedly the plaintiff Bank had not initiated any
action whatsoever before the Debt Recovery Tribunal or the
appellate tribunal, the learned Court below could not have relied
upon the provisions of Section 34 of the Securitisation Act to reject
the petitioners prayer for injunction. Learned counsel argues further
that during the pendency of the suit, an order of injunction was
passed by the learned Court below restraining the Respondent No. 4
from disposing of the suit property in his possession. Such order,
according to learned counsel, amounts the property being custodia-
legis becoming the custody legacy and therefore, the attempt on the
part of the plaintiff/Respondent No. 1 to take possession and to
dispose of the property, would amount not only to violation of the
order of injunction passed by the Court, but would also amount to
frustrating the counter claim of the petitioners/defendants raised by
them in the suit against the plaintiff Bank. Learned counsel would
thereafter want to refer to the various issues raised in the suit on the
basis of the rival pleadings of the parties and would attempt to
emphasize that the plaintiff Bank’s suit against the
petitioners/defendants is totally misconceived and not maintainable
and the plaintiff bank has no authority to realise any sum of money
from the defendants as claimed in the suit.
5. The questions as raised by the petitioners in this writ
application are :-
(i) Whether in the facts and circumstances of the case, the
learned Court below could have relied upon the
provisions of Section 34 of the Securitisation Act to
-4-reject the prayer of the petitioners/defendants for an
order of injunction against the plaintiff Bank ?
(ii) Whether the act of the Respondent No. 1 Bank in
proceeding to take possession of the suit properties for
the purpose of recovering its outstanding dues from the
defendants, under the provisions of Section 13(4) of the
Securitisation Act, would amount to violation of the
order of injunction passed by the Trial Court in the suit?
6. From the facts of the case, admittedly, the
petitioners/defendants had borrowed money from the respondent
Bank by way of loan. Against the loan advanced, certain specific
properties of the defendants/petitioners were secured creating a
charge over the properties in favour of the Bank. Under the terms of
agreement of loan, the Bank did have the authority to realize its
dues from the borrower by taking possession of the secured assets of
the borrower and selling the same.
On the ground that the defendants/borrowers had not
discharged their liability inspite of repeated demand notices, the
Bank had filed a suit before the Court below on 22.05.1993 for
realization of the outstanding dues from the defendants under the
provisions of the Civil Procedure Code.
During the pendency of the suit, an order of injunction was
passed by the Trial Court restraining the Defendant No. 4 from
disposing of the suit property under his possession and custody,
during the pendency of the suit.
The Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act (Securitisation Act) came into
force in the year 2002. Under the Act, special provisions were
created relating to recovery of debts by the secured creditors
subjecting the contract between the parties to be governed by the
statutory provisions under the Act. It would, therefore, appear that
there is an element of election which would enable the secured
creditor to choose between the different modes and forums for
recovering its dues.
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Section 13 of the Securitisation Act gives a right to the secured
creditor to enforce the security interest without the intervention of
the Court or Tribunal. The provisions of Sub Section 2 and Sub
Section 4 of Section 13 of the Act lay down procedure according to
which the secured creditor may proceed to enforce the security
interest. Sub Section 4 of Section 13 of the Act enables the secured
creditor to take possession of the secured assets of the borrowers
including the right of transfer by way of lease, assignment or sale for
realizing the secured assets.
Section 34 of the Act lays down that no Civil Court shall have
the jurisdiction to entertain any suit or proceeding in respect of any
matter which a Debt Recovery Tribunal or an Appellate Tribunal is
empowered by or under the 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 Bank and
Financial Institutions Act, 1993.
The facts which are undisputed, do categorically declare that
the plaintiff Bank has proceeded to exercise its powers under the
provisions of Section 13 of the Securitisation Act by resorting to the
preliminary steps of issuance of notice to the defendants/borrowers
under Section 13(2) of the Act followed by a notice under Section
13(4) of the Act for taking possession of the secured assets of the
borrowers. Under such circumstances, as rightly held by the learned
Court below, the provisions of Section 34 of the Act would prohibit
the Court below from passing any order which would amount to
restrain or injunct the Bank from taking any action for realization of
its outstanding dues from the borrower, in pursuance of the powers
conferred to the Bank under the Securitisation Act. This answers the
first question.
7. Coming to the second question, the contention of the
petitioner is that the order of injunction restraining the Defendant
No. 4 from disposing the suit property in his possession during the
pendency of the suit, amounts to the property coming under the
custody of the Court. On a plain reading of the order of injunction, it
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would be manifest that the Trial Court had merely restrained the
Defendant No. 4 from alienating the suit property in his possession
and custody. The order does no more indicate or suggest that the
Court had indicated thereby to take possession of the suit property
under its custody. The possession and custody of the property has
been left with the Defendant No. 4 though right to alienate the
property has been restricted only till the pendency of the suit. Under
such circumstances, since the property continues to remain in the
possession and custody of the Defendant No. 4, the plaintiff Bank
had the authority to take possession of the property in exercise of its
right under the provisions of Section 13(4) of the Securitisation Act.
Considering the fact of pendency of the suit before the Court below,
the Bank would be obliged to intimate the Trial Court regarding its
act of taking over possession and to obtain due permission from the
Trial Court before proceeding to sell the secured assets of the
defendants for realization of its outstanding dues.
The mere act of taking possession of the secured assets by the
plaintiff Bank, does not thereby amount to violation of the order of
injunction of the Trial Court. The second question is answered
accordingly.
8. In the light of the above discussion, I do not find any merit in
this writ application. Accordingly, this writ application is dismissed.
(D.G.R.Patnaik, J.)
Birendra/A.F.R.