MANU/SC/0638/2018

Equivalent Citation: II(2018)BC 510(SC ), 2018 (2) KHC 883, 2018(3)RC R(C ivil)790, 2018 (10) SC J 514

IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 7214-7216 and 7213 of 2012
Decided On: 03.05.2018
Appellants: Sree Anandhakumar Mills Ltd.
Vs.
Respondent: Indian Overseas Bank and Ors.
Hon'ble Judges/Coram:
Ranjan Gogoi and R. Banumathi, JJ.
Case Category:
MERCANTILE LAWS, COMMERCIAL TRANSACTIONS INCLUDING BANKING - MATTERS
RELATING TO SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND
REINFORCEMENT OF SECURITY INTEREST ACT, 2002
ORDER
C.A. Nos. 7214-7216 of 2012
1. The Appellant herein seeks to challenge the order of the High Court of Madras by
which the suit filed by the second Respondent-Nandini has been held to be
maintainable in law, notwithstanding the provisions of Section 34 of the
Securitisation and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 (hereinafter referred to as "SARFAESI Act"). Accordingly, the
injunction granted by the learned trial Court was held to be justified and the sale
transaction that had taken place in favour of the Appellant (during the period when
the injunction order was stayed by the High Court) has been invalidated. Though the
case has a chequered history and the facts are long the matter lies within a short
compass. The core question is one relating to the maintainability of the suit, viz.,
O.S. No. 106 of 2009 filed by the second Respondent-Nandini seeking partition
wherein the order of injunction was passed.
2 . The High Court by the order under challenge took the view that as the said suit
(O.S. No. 106 of 2009) was for partition, Section 34 of the SARFAESI Act will not bar
the same. Hence the order.
3. The matter need not engage the Court in any great detail as in view of the law laid
down by this Court in Jagdish Singh v. Heeralal and Ors. MANU/SC/1126/2013 : IX
(2013) SLT 253 : IV (2013) BC 744 (SC) : (2014) 1 SCC 479, it would clear and
evident that the suit filed by the second Respondent (i.e. O.S. No. 106 of 2009) is
not maintainable, In Jagdish Singh (supra) this Court after an elaborate consideration
of the provisions of the SARFAESI Act, particularly, Sections 2(zf), 2(zc), 13(1), 17,
18 and 34, took the view, on almost similar facts, that a suit for partition would not
be maintainable in a situation where proceedings under the SARFAESI Act had been
initiated. It was also held mat the remedy of any person aggrieved by the initiation of
proceedings under the SARFAESI Act lies Under Section 17 which provides for an
efficacious and adequate remedy to a party aggrieved. Paragraph 24 of the report in
Jagdish Singh (supra) which make the above position clear may be usefully extracted
below:

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 24. Statutory interest is being created in favour of the secured creditor on
the secured assets and when the secured creditor proposes to proceed
against the secured assets, Sub-section (4) of Section 13 envisages various
measures to secure the borrower's debt. One of the measures provided by
the statute is to take possession of secured assets of the borrowers,
including the right to transfer by way of lease, assignment or realising the
secured assets. Any person aggrieved by any of the "measures" referred to in
Sub-section (4) of Section 13 has got a statutory right of appeal to the DRT
Under Section 17. The opening portion of Section 34 clearly states that no
civil Court shall have the jurisdiction to entertain any suit or proceeding "in
respect of any matter" which a DRT or an Appellate Tribunal is empowered
by or under the Securitisation Act to determine. The expression "in respect of
any matter" referred to in Section 34 would take in the "measures" provided
Under Sub-section (4) of Section 13 of the Securitisation Act. Consequently,
if any aggrieved person has got any grievance against any "measures" taken
by the borrower Under Sub-section (4) of Section 13, the remedy open to
him is to approach the DRT or the Appellate Tribunal and not the Civil Court.
The Civil Court in such circumstances has no jurisdiction to entertain any suit
or proceedings in respect of those matters which fall Under Sub-section (4)
of Section 13 of the Securitisation Act because those matters fell within the
jurisdiction of the DRT and the Appellate Tribunal. Further, Section 35 says,
the Securitisation Act overrides other laws, if they are inconsistent with the
provisions of that Act, which takes in Section 9, Code of Civil Procedure as
well.
4 . Beyond the above, we do not consider it expedient and prudent to record any
findings in view of the final direction that we propose to pass. But for the purpose of
the present controversy it would suffice to say that our view as recorded above with
regard to the issue of maintainability of the suit would be an adequate reason to set
aside the order of the High Court and maintain the sale and possession of the
Appellant-auction purchaser.
5. As we have held that under the provisions of Section 17 of the SARFAESI Act and
thereafter Under Section 18 of the SARFAESI Act the Respondent No. 2 has an
adequate and efficacious remedy we are inclined to permit the Respondent No. 2 to
have recourse to the said remedies and agitate before the learned Debts Recovery
Tribunal all issues that may be open in law. All objections as may be available to the
Appellant may also be raised before the learned Debts Recovery Tribunal. The learned
Debts Recovery Tribunal and thereafter the learned Debts Recovery Appellate
Tribunal, if required to be approached by the Respondent No. 2, will decide the
matter with utmost expedition. Untill the aforesaid proceedings are complete while
confirming the auction sale in favour of the Appellant we direct the Appellant not to
encumber the property in question or to transfer it to any third party.
6. We also make it clear that if the second Respondent approaches the jurisdictional
Debts Recovery Tribunal within a period of 45 days from today the said application
will be entertained and adjudicated on merits. We make it clear that we have
expressed no opinion on the merits of the rival contentions of the parties which we
leave open for adjudication by the learned Debts Recovery Tribunal.
7. Consequently O.S. No. 1243 of 2009 and O.S. No. 106 of 2009 filed by the second
Respondent shall stand closed with liberty to the second Respondent as above. The
order of the High Court is set aside subject to above conditions and the appeals are
allowed. The deposit of Rs. 5 crores (Rupees Five crores) made in the Registry of this
Court in terms of the order of this Court dated 28th September, 2012, along with

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 interest, if any, shall be returned to the second Respondent forthwith on proper
identification. The appeals as also all pending applications are disposed of in terms
of the above.
C.A. No. 7213 of 2012
In view of the order of this Court passed today i.e. 3rd May, 2018 in Civil Appeal
Nos. 7214-7216 of 2012, this appeal as also all pending applications therein are
disposed of in terms of the said order of this Court dated 3rd May, 2018 passed in
Civil Appeal Nos. 7214-7216 of 2012.
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