Case Note & Summary
The petitioners, Jalgaon Peoples Co-operative Bank Ltd. and its authorized officer, challenged an order dated 27.09.2016 passed by the 6th Joint Civil Judge, Senior Division, Jalgaon, rejecting their application under Order VII Rule 11(d) of the Code of Civil Procedure, 1908 (CPC) in Special Civil Suit No. 01 of 2012. The respondent, M/s. Om Sai Extrusions Pvt. Ltd., had filed the suit seeking a declaration that the proceedings initiated by the bank under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, were illegal and for a permanent injunction restraining the bank from taking possession of the secured assets. The bank contended that the suit was barred under Section 34 of the SARFAESI Act, which ousts the jurisdiction of civil courts in matters relating to the Act. The trial court rejected the application, holding that the plaint disclosed a cause of action and that the bar under Section 34 was not absolute. The High Court, in its judgment, upheld the trial court's order, observing that the plaint averments must be taken as true for the purpose of deciding an application under Order VII Rule 11(d). The court noted that the plaint sought to challenge the legality of the SARFAESI proceedings, which is not expressly barred by Section 34, as the civil court retains jurisdiction to examine whether the proceedings were in accordance with law. The court further held that the bar under Section 34 is limited to matters that the Debt Recovery Tribunal or Appellate Tribunal is empowered to determine, and does not oust the jurisdiction of the civil court to entertain a suit for declaration and injunction if the plaint discloses a cause of action. Consequently, the writ petition was dismissed, and the trial court was directed to proceed with the suit in accordance with law.
Headnote
A) Civil Procedure Code - Order VII Rule 11(d) - Rejection of Plaint - Bar of Suit - The court must examine the plaint averments to determine if the suit is barred by any law. The bar must be apparent from the plaint itself. In this case, the plaint sought declaration that the SARFAESI proceedings were illegal and for injunction, which is not expressly barred by Section 34 of the SARFAESI Act as the civil court retains jurisdiction to examine the legality of the proceedings. (Paras 5-7) B) SARFAESI Act - Section 34 - Bar of Civil Court Jurisdiction - The bar under Section 34 is not absolute and does not oust the jurisdiction of the civil court to entertain a suit challenging the legality of the proceedings under the Act. The plaint disclosed a cause of action, and the trial court rightly rejected the application under Order VII Rule 11(d). (Paras 5-7)
Issue of Consideration
Whether the suit filed by the respondent for declaration and injunction is barred under Section 34 of the SARFAESI Act, 2002, and therefore liable to be rejected under Order VII Rule 11(d) of the CPC.
Final Decision
The High Court dismissed the writ petition, upholding the trial court's order rejecting the application under Order VII Rule 11(d) CPC. The court directed the trial court to proceed with the suit in accordance with law.
Law Points
- Order VII Rule 11(d) CPC
- SARFAESI Act 2002 Section 34
- Cause of action
- Plaint rejection
- Bar of suit
