286.civil Appeal No.2924 of 2023 - ENG
286.civil Appeal No.2924 of 2023 - ENG
A from M/s Bharat Chamber of Commerce, vide sale deed dated 17th
February 2005. Thereafter, the respondent availed various credit facilities
from the appellant to the tune of Rs.42.74 crore by mortgaging, inter
alia, the suit property as collateral.
3.3 Subsequently, in furtherance of the terms of a purported
B settlement agreement, dated 29 th November 2010, filed in the
aforementioned ejectment suit before the City Civil Court, Calcutta, a
lease deed dated 11th February 2011 was executed between the parties,
thereby demising the suit property in favour of the appellant for a period
of 21 years. It is pertinent to note that no consent decree was actually
passed by the City Civil Court, Calcutta.
C
3.4 Owing to the financial defaults committed by the respondent,
the appellant was constrained to classify the credit facilities availed by
the respondent as Non-Performing Assets (for short, “NPA”) on 31st
March 2012. Soon afterwards, a demand notice dated 13th June 2012
was also issued by the appellant under sub-section (2) of Section 13 of
D the Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 (hereinafter referred as
‘SARFAESI Act’) for recovery of outstanding dues of approximately
Rs.44.89 crore, with interest, from the respondent. The demand remained
unmet, and so the appellant issued a possession notice under sub-section
E (4) of Section 13 of the SARFAESI Act, declaring therein that it had
taken possession of the suit property.
3.5 Aggrieved thereby, the respondent preferred a securitization
application, being S.A. No. 19 of 2013, before the learned Debt Recovery
Tribunal-I, Calcutta (for short, “DRT”). Simultaneously, a civil suit, being
F C.S. No. 217 of 2013, was also instituted before the High Court, inter
alia, for specific performance of the purported settlement agreement
entered into between the parties, as well as the consequent lease deed.
The respondent claimed therein that, as per the terms of the purported
settlement agreement, the fulfilment of the obligations on part of the
appellant, which involved the temporary vacation of the appellant from
G the suit property so as to enable the respondent to reconstruct the suit
property and, thereafter, to hand over possession of the ground floor of
the suit property back to the appellant, would enable the outstanding
dues to be set off and adjusted from the amounts receivable from the
creation of third party interests in the newly constructed building. An
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PUNJAB AND SIND BANK v. FRONTLINE CORPORATION 863
LTD. [B. R. GAVAI, J.]
injunction application, being G.A. No. 1884 of 2013, was also moved by A
the respondent in the suit to restrain the appellant from dealing with,
disposing of or encumbering any part or portion of the suit property.
3.6 The learned Single Judge, vide interim order dated 15 th July
2013, allowed the aforesaid application and directed that no final orders
of sale be passed for a period of 6 weeks. This interim order was B
extended from time to time, and lastly vide order dated 2nd December
2013.
3.7 Contending that the ejectment suit had been dismissed and
that the purported settlement agreement had not fructified into a consent
decree, the appellant filed an application being G.A. No. 2352 of 2014 C
for vacating the aforesaid interim order. The Single Judge, vide order
dated 2nd November 2016, set aside the interim order dated 15th July
2013, noting therein that the appellant, being a secured creditor, could
not be restrained from taking appropriate steps qua the secured suit
property, especially in light of the express bar on the jurisdiction of the
civil court, as provided under Section 34 of the SARFAESI Act. Cost of D
Rs.5,00,000/- was also imposed on the respondent.
3.8 Being aggrieved thereby, the respondent challenged the
aforesaid order before the learned Division Bench of the High Court, in
A.P.O.T. No. 411 of 2016, along with an application for stay being G.A.
No. 3535 of 2016. E
A parties. As such, the interim order initially passed in the suit, dated 15th
July 2013, stood revived and was directed to continue till the disposal of
the civil suit. Being aggrieved thereby, the present appeal.
4. We have heard Shri Ashim Banerjee, learned Senior Counsel
appearing on behalf of the appellant and Shri Karan Batura, learned
B counsel appearing on behalf of the respondent.
5. Shri Banerjee submitted that the Division Bench has grossly
erred in reversing the well-reasoned order passed by the Single Judge.
It is submitted that the Single Judge had found the suit to be mischievous
and, as such, had refused to grant the discretionary relief under Order
C XXXIX Rules 1 and 2 of the Civil Procedure Code, 1908 (for short,
“CPC”). He, therefore, submitted that the impugned judgment and order
dated 30th January 2017 deserves to be set aside and the order of the
Single Judge dated 2nd November 2016 needs to be restored.
6. Shri Batura, on the contrary, submitted that the Single Judge,
D having held that the suit, being for specific performance of the terms of
the settlement filed in the eviction suit, was maintainable, could not have
vacated the interim relief granted earlier.
7. Undisputedly, the property in question in respect of which the
suit is filed, has been mortgaged with the appellant-Bank. As observed
E by the Single Judge, the suit as well as the application for interim relief
has been cleverly drafted. Though various interim reliefs have been
sought, it will be relevant to refer to Clause (d) of the prayer, which
reads thus:
“(d) injunction restraining the respondent from in any manner
F dealing with and/or disposing of and/or encumbering any part or
portion of the said premises No. 8, Old Court House Street, Kolkata
– 700001.”
8. It could thus be seen that a blanket injunction restraining the
respondent, i.e. the appellant herein in any manner dealing with and/or
disposing of and/or encumbering any part or portion of the suit property
G
has been sought.
9. By an ad-interim order dated 15th July 2013, the Single Judge,
though permitted the steps to be taken for selling the premises in question,
directed that the final orders of sale could not be passed for a period of
6 weeks. The said ad-interim order came to be continued from time to
H
PUNJAB AND SIND BANK v. FRONTLINE CORPORATION 865
LTD. [B. R. GAVAI, J.]
time. As such, the appellant was constrained to file G.A. No. 2352 of A
2014 for vacating the said interim order. The same was ultimately vacated
by the Single Judge vide order dated 2nd November 2016.
10. It would be relevant to note that the Single Judge has
specifically referred to Section 34 of the SARFAESI Act while vacating
the interim relief granted to the respondent. B
11. The Division Bench, vide the impugned judgment observed
that, since the Bank has taken steps in terms of the purported settlement,
it could not repudiate its obligations under the settlement. The Division
Bench relied on the Doctrine of Promissory Estoppel for finding it
necessary to restrain the Bank from selling the suit property until C
determination of the rights of the parties.
12. The issue as to the exclusion of the jurisdiction of a civil court
is no more res integra. The provisions of Section 34 of the SARFAESI
Act have been considered by a Bench of three Judges of this Court in
the case of Mardia Chemicals Limited and Others v. Union of India D
and Others1. It will be relevant to refer to the following observations of
this Court in the said case:
“50. It has also been submitted that an appeal is entertainable
before the Debts Recovery Tribunal only after such measures as
provided in sub-section (4) of Section 13 are taken and Section 34 E
bars to entertain any proceeding in respect of a matter which the
Debts Recovery Tribunal or the Appellate Tribunal is empowered
to determine. Thus before any action or measure is taken under
sub-section (4) of Section 13, it is submitted by Mr Salve, one of
the counsel for the respondents that there would be no bar to
approach the civil court. Therefore, it cannot be said that no remedy F
is available to the borrowers. We, however, find that this contention
as advanced by Shri Salve is not correct. A full reading of Section
34 shows that the jurisdiction of the civil court is barred in respect
of matters which a Debts Recovery Tribunal or an Appellate
Tribunal is empowered to determine in respect of any action taken G
“or to be taken in pursuance of any power conferred under this
Act”. That is to say, the prohibition covers even matters which
can be taken cognizance of by the Debts Recovery Tribunal though
no measure in that direction has so far been taken under sub-
1
(2004) 4 SCC 311 H
866 SUPREME COURT REPORTS [2023] 4 S.C.R.
13. It could thus be seen that this Court has held that the jurisdiction A
of the civil court is barred in respect of matters which a DRT or an
Appellate Tribunal is empowered to determine in respect of any action
taken “or to be taken in pursuance of any power conferred under this
Act”. The Court has held that the prohibition covers even matters which
may be taken cognizance of by the DRT though no measure in that
B
direction has so far been taken under sub-section (4) of Section 13 of
the SARFAESI Act. It has been held that the bar of jurisdiction is in
respect of a proceeding which matter may be taken to the Tribunal. It
has categorically been held that any matter in respect of which an action
may be taken even later on, the civil court shall have no jurisdiction to
entertain any proceeding thereof. The Court held that the bar of civil C
court thus applies to all such matters which may be taken cognizance of
by the DRT, apart from those matters in which measures have already
been taken under sub-section (4) of Section 13 of the SARFAESI Act.
14. This Court has further held that, to a very limited extent
jurisdiction of the civil court can also be invoked, where for example, the D
action of the secured creditor is alleged to be fraudulent or his claim
may be so absurd and untenable which may not require any probe
whatsoever or to say precisely to the extent the scope is permissible to
bring an action in the civil court in the cases of English mortgages.
15. In the present case, it cannot be said that the action of the E
secured creditor, i.e. the appellant is either fraudulent or that its claim is
so absurd or untenable which may not require any probe whatsoever. It
is further to be noted that the SARFAESI Act itself provides remedies
to an aggrieved party in view of the provisions of Sections 17 and 18.
16. We find that the present appeal deserves to be allowed on F
another ground also. Undisputedly, the jurisdiction which was exercised
by the Division Bench was analogous to the one exercised under Order
XLIII Rule 1 of the CPC. It will be relevant to refer to the following
observations of this Court in the case of Wander Ltd. and Another v.
Antox India P. Ltd.2:
G
“14. The appeals before the Division Bench were against the
exercise of discretion by the Single Judge. In such appeals, the
appellate court will not interfere with the exercise of discretion of
the court of first instance and substitute its own discretion except
2
1990 (Supp) SCC 727
H
868 SUPREME COURT REPORTS [2023] 4 S.C.R.