Case Note & Summary
The respondent, original plaintiff, filed Regular Civil Suit No.1756 of 2014 seeking a permanent injunction restraining the applicant bank from re-auctioning a property. The property, CTS No.1194/27A admeasuring 552 sq.mtrs. at Shivajinagar, Pune, was mortgaged to the bank as security for loans advanced to M/s. Pratham Motors. The bank sanctioned loans of Rs.2,50,00,000 at 18% p.a. repayable in 48 installments and Rs.1,00,00,000 at 36% p.a. repayable in 12 installments. The property was mortgaged by Rajiv Yeshwant Bhale, Managing Partner of M/s. Pratham Motors, and two others under a registered Deed of Mortgage. On default, the account was classified as a Non-Performing Asset, and the bank issued a notice under Section 13(2) of the SARFAESI Act calling for payment of Rs.3,92,35,022.38. The bank then took possession under Section 13(4) and issued a sale notice. The plaintiff claimed to have purchased the property from the mortgagors and sought to restrain the bank from re-auctioning. The trial court framed a preliminary issue on jurisdiction and held that it had jurisdiction. The bank challenged this order in revision. The High Court considered the bar under Section 34 of the SARFAESI Act and held that the civil court's jurisdiction is not ousted where the action is challenged as not in accordance with law or on grounds of fraud. The court found that the plaintiff's suit was for a permanent injunction and not for matters covered under the SARFAESI Act. The revision was dismissed, upholding the trial court's order.
Headnote
A) Civil Procedure - Jurisdiction - Bar under Section 34 of SARFAESI Act - Civil Court has jurisdiction to entertain suit for permanent injunction against re-auction of mortgaged property where the action of the bank is challenged as not in accordance with law - The bar under Section 34 of SARFAESI Act does not oust the jurisdiction of the Civil Court if the remedy under the Act is not efficacious or the action is challenged on grounds of fraud or lack of jurisdiction - Held that the trial court correctly ruled that it has jurisdiction to try the suit (Paras 2-10).
Issue of Consideration
Whether the Civil Court has jurisdiction to entertain a suit for permanent injunction restraining the bank from re-auctioning the property, in view of the bar under Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).
Final Decision
The High Court dismissed the Civil Revision Application, upholding the trial court's order that it has jurisdiction to try the suit.
Law Points
- Civil court jurisdiction
- SARFAESI Act
- Section 34 bar
- permanent injunction
- mortgage
- non-performing asset
Case Details
2015 LawText (BOM) (04) 68
Civil Revision Application No.34 of 2015
Dr. Birendra Saraf with Shri Nikhil Rajani I/by M/s. V Deshpande & Co. for Applicant; Mrs. Chandana Salgaoncar for the Respondent.
Authorised Officer, Kotak Mahindra Bank Ltd.
M/s. Brahmo Construction Pvt. Ltd.
Subscribe to unlock Case Details (Citation, Judge, Date & more)
Subscribe Now
Nature of Litigation
Civil revision against order of trial court deciding preliminary issue of jurisdiction in a suit for permanent injunction.
Remedy Sought
The applicant bank sought to set aside the trial court's order holding that it has jurisdiction to try the suit.
Filing Reason
The bank challenged the trial court's ruling on jurisdiction, arguing that the suit is barred under Section 34 of the SARFAESI Act.
Previous Decisions
The trial court (5th Joint Civil Judge, Junior Division, Pune) by order dated 27/11/2014 decided the preliminary issue in favor of the plaintiff, holding that the court has jurisdiction.
Issues
Whether the Civil Court has jurisdiction to entertain a suit for permanent injunction restraining the bank from re-auctioning the property, in view of the bar under Section 34 of the SARFAESI Act.
Submissions/Arguments
The applicant bank argued that the suit is barred under Section 34 of the SARFAESI Act, which ousts the jurisdiction of civil courts in matters relating to actions taken under the Act.
The respondent plaintiff argued that the suit is for a permanent injunction and not for matters covered under the SARFAESI Act, and the civil court has jurisdiction.
Ratio Decidendi
The bar under Section 34 of the SARFAESI Act does not oust the jurisdiction of the Civil Court if the remedy under the Act is not efficacious or the action is challenged on grounds of fraud or lack of jurisdiction. The suit for permanent injunction against re-auction of property is maintainable.
Judgment Excerpts
The revisionary jurisdiction of this Court is invoked against the order dated 27/11/2014 passed by the learned 5th Joint Civil Judge, Junior Division Pune by which order the learned Judge has decided the preliminary issue and has ruled that his Court is having the jurisdiction to try and entertain the suit in question.
Procedural History
The respondent filed Regular Civil Suit No.1756 of 2014 for permanent injunction. The trial court framed a preliminary issue on jurisdiction and decided it in favor of the plaintiff on 27/11/2014. The applicant bank filed Civil Revision Application No.34 of 2015 in the High Court challenging that order. The High Court heard the revision and dismissed it on 16/04/2015.
Acts & Sections
- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002: 13(2), 13(4), 34
