Case Note & Summary
The case involves a civil revision application filed by Punjab National Bank (original defendant) against an order of the District Judge, Chandrapur, which set aside the trial court's dismissal of the suit. The respondent, Shaikh Jumman Shaikh Guljar (original plaintiff), had filed Regular Civil Suit No. 142/2005 seeking a permanent injunction restraining the Bank from taking possession of M/s. Janata Plastic Industries, Ballarpur, alleging that the Bank's notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) was fraudulent. The plaintiff claimed he was the proprietor of the industry and had obtained financial assistance from the Bank, but disputed the Bank's claim that a property belonging to his father was kept as security. The Bank filed an application under Order IX Rule 11 of the Code of Civil Procedure, 1908 (CPC) for dismissal of the suit for want of jurisdiction, arguing that the Civil Court had no jurisdiction to entertain any suit in respect of matters under the SARFAESI Act, as the plaintiff's remedy lay before the Debt Recovery Tribunal (DRT) under Section 17 of the Act. The trial court dismissed the suit, holding that there was no case of fraud made out in the pleadings or by any material on record, and that the averments of fraud were vague and unspecific. The appellate court reversed this order and directed restoration of the suit. The High Court, in revision, examined the bar under Section 34 of the SARFAESI Act, which ousts the jurisdiction of Civil Courts in matters that the DRT or Appellate Tribunal is empowered to determine. The Court noted that the only exception to this bar is when the action of the secured creditor is alleged to be fraudulent, but such allegations must be specific and supported by material. The plaintiff's plaint merely stated that the Bank's claim regarding the security property was fraudulent without giving particulars. The High Court held that the trial court was correct in dismissing the suit for want of jurisdiction, as the plaintiff had not made out a case of fraud. The revision application was allowed, the appellate order was set aside, and the trial court's order dismissing the suit was restored.
Headnote
A) Civil Procedure - Jurisdiction - Bar under SARFAESI Act - Section 34 of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Civil Court has no jurisdiction to entertain any suit or proceeding in respect of any matter which the Debt Recovery Tribunal or Appellate Tribunal is empowered to determine under the Act - The suit for injunction against notice under Section 13(2) is barred unless fraud is specifically pleaded and supported by material (Paras 1-4). B) Fraud - Pleading - Specificity - Order VI Rule 4 CPC - Allegations of fraud must be pleaded with full particulars and supported by material on record - Vague and unspecific averments of fraud do not oust the bar of jurisdiction under Section 34 of SARFAESI Act (Paras 4-5).
Issue of Consideration
Whether the Civil Court has jurisdiction to entertain a suit for injunction against a notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, in the absence of specific allegations of fraud.
Final Decision
The revision application is allowed. The order dated 31.10.2006 passed by the learned District Judge, Chandrapur is set aside. The order dated 15.10.2005 passed by the learned 2nd Jt. Civil Judge Senior Division, Chandrapur below Exh.13 dismissing the suit is restored. No order as to costs.
Law Points
- Civil Court jurisdiction barred under Section 34 of SARFAESI Act
- 2002
- Fraud exception requires specific pleadings and material
- Order IX Rule 11 CPC for dismissal for want of jurisdiction
