Case Note & Summary
The case involves two appeals arising from a suit filed by Pooja Ravikumar Nidasoshi and Vandana (plaintiffs) against the Gadhinglaj Urban Co-operative Bank (appellant in AO-1005/2022) and Yashoda Shreepatrao Magdum (appellant in AO-1108/2022), along with other defendants. The plaintiffs are wives of defendants No.2 and 3, who are partners of defendant No.1-Firm. The bank had extended credit facilities to defendants No.1 to 3, secured by mortgages over flats owned by defendants No.1 and 2. The plaintiffs had consented to the mortgage. Upon default, the bank initiated proceedings under the SARFAESI Act, 2002, took symbolic possession, and proceeded to auction the properties. The plaintiffs and borrowers agreed to sell the properties to defendant No.5 (purchaser) and jointly filed a securitisation application before the DRT for redemption, offering to pay Rs.70,19,675/-. The DRT disposed of the application on 25 July 2018, directing the bank to accept the amount and return the documents. However, the bank did not comply, leading to the plaintiffs filing a civil suit seeking a declaration that the mortgage was not binding on them, an injunction against auction, and other reliefs. The Trial Court rejected the plaint under Order 7 Rule 11 CPC on the ground that the suit was barred by Section 34 of the SARFAESI Act. The lower Appellate Court set aside that order and restored the suit, directing the Trial Court to frame an issue on jurisdiction. The bank and Yashoda Magdum appealed. The High Court allowed the appeals, holding that the suit was not maintainable as the dispute fell within the exclusive jurisdiction of the DRT under the SARFAESI Act. The court emphasized that Section 34 bars civil court jurisdiction for matters relating to actions under the Act, and the plaintiffs had an alternative remedy under Section 17. The plaint rejection was upheld, and the suit was dismissed.
Headnote
A) Civil Procedure Code - Order 7 Rule 11 - Rejection of Plaint - Jurisdiction - The court examined whether the plaint was liable to be rejected for lack of jurisdiction under Order 7 Rule 11 CPC, as the suit sought to challenge actions under the SARFAESI Act, 2002, which are exclusively triable by the DRT. (Paras 1-42) B) SARFAESI Act, 2002 - Section 34 - Bar on Civil Court Jurisdiction - The court held that Section 34 of the SARFAESI Act bars the jurisdiction of civil courts in matters relating to actions taken under the Act, and the suit challenging the mortgage and auction was not maintainable. (Paras 15-30) C) SARFAESI Act, 2002 - Section 17 - Alternative Remedy - The court noted that the plaintiffs had an alternative remedy under Section 17 of the SARFAESI Act before the DRT, and the civil suit was not maintainable. (Paras 20-25) D) Civil Procedure Code - Order 7 Rule 11 - Plaint Rejection - The court held that the Trial Court's rejection of the plaint under Order 7 Rule 11 was correct, and the lower Appellate Court erred in setting it aside. (Paras 35-42)
Issue of Consideration
Whether the Civil Court has jurisdiction to entertain a suit challenging the mortgage and auction of secured assets under the SARFAESI Act, 2002, and whether the plaint is liable to be rejected under Order 7 Rule 11 CPC for want of jurisdiction.
Final Decision
The High Court allowed both appeals, set aside the order of the lower Appellate Court, and upheld the Trial Court's rejection of the plaint under Order 7 Rule 11 CPC. The suit was dismissed as not maintainable.
Law Points
- Order 7 Rule 11 CPC
- Section 34 SARFAESI Act
- 2002
- jurisdiction of civil court
- bar on civil suit
- plaint rejection
- maintainability of suit
