Case Note & Summary
The State Bank of India (SBI) filed a Civil Revision Application under Section 115 of the Code of Civil Procedure, 1908 (CPC) challenging an order dated 20.02.2024 passed by the learned Principal Senior Civil Judge, Rajpipla, in Special Civil Suit No.26 of 2015. The trial court had rejected SBI's application under Order 7 Rule 11 CPC seeking rejection of the plaint. The suit was filed by Narmada Valley Chemical Industries Pvt. Ltd. (the borrower) seeking to protect its possession over immovable properties mortgaged to SBI for a credit facility of Rs.25 Crores. The borrower defaulted, and the account was classified as a Non-Performing Asset (NPA). SBI invoked the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) and took symbolic possession under Section 13(4). The borrower filed two parallel proceedings: Special Civil Suit No.26 of 2015 before the civil court and SA No.31 of 2013 before the Debts Recovery Tribunal (DRT). SBI contended that the civil suit was barred by Section 34 of the SARFAESI Act, which ousts the jurisdiction of civil courts in matters where the DRT has jurisdiction. The trial court rejected SBI's application, leading to the revision. The High Court, after hearing SBI's counsel (respondents were served but absent), held that the suit was not maintainable as the borrower had already availed the remedy under Section 17 of the SARFAESI Act before the DRT. The court allowed the revision, set aside the trial court's order, and rejected the plaint under Order 7 Rule 11 CPC.
Headnote
A) Civil Procedure - Rejection of Plaint - Order 7 Rule 11 CPC - Bar of Suit - The court examined whether the plaint disclosed a cause of action barred by law, specifically under Section 34 of the SARFAESI Act, which provides an exclusive remedy before the Debts Recovery Tribunal. Held that the suit was not maintainable as the borrower had already availed the remedy under Section 17 of the SARFAESI Act before the DRT, and the civil court lacked jurisdiction. (Paras 1-6) B) Banking Law - SARFAESI Act - Bar of Jurisdiction - Section 34 SARFAESI Act - The court held that Section 34 of the SARFAESI Act bars the jurisdiction of civil courts in matters where the DRT has jurisdiction. Since the borrower had already filed SA No.31 of 2013 before the DRT, the civil suit was not maintainable. (Paras 3-6) C) Civil Procedure - Order 7 Rule 11 - Application for Rejection of Plaint - The court allowed the revision application, setting aside the trial court's order rejecting the application under Order 7 Rule 11 CPC. The plaint was ordered to be rejected as barred by law. (Paras 5-6)
Issue of Consideration
Whether the civil suit filed by the borrower challenging the possession notice under SARFAESI Act is barred by Section 34 of the SARFAESI Act and liable to be rejected under Order 7 Rule 11 CPC.
Final Decision
The High Court allowed the Civil Revision Application, set aside the order dated 20.02.2024 passed by the learned Principal Senior Civil Judge, Rajpipla, below Exh.121 in Special Civil Suit No.26 of 2015, and rejected the plaint under Order 7 Rule 11 CPC.
Law Points
- Order 7 Rule 11 CPC
- Section 34 SARFAESI Act
- Bar of jurisdiction of civil court
- Maintainability of suit
