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State Bank of India Versus Ramkrishna Builders

2015 (9) TMI 811 - CALCUTTA HIGH COURT

Review petition - Jurisdiction - Validity of action under SARFAESI Act, 2002 - in respect of the secured asset being the immovable property mortgaged by the opposite party no. 1/plaintiff to secure the repayment of loan obtained from the defendant no. 1 bank. - By the impugned order the learned Court below held that since the claim of the defendant no. 1 bank against the opposite party no. 1/plaintiff is ₹ 6,10,111/- which is less than the ₹ 10 lakhs, the suit is not barred under the .....

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by any measure adopted by the secured creditor under sub-section (4) of Section 13 of the Act of 2002.

Sub-section (4) of Section 1 the RDB Act relates to the original jurisdiction of the Debts Recovery Tribunal to entertain an application of the banks or financial institutions for recovery of their dues from the borrowers under the said Act and by no means the said provisions can be construed to have any bearing on the jurisdiction conferred by the Act of 2002 to entertain an appea .....

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of the Code cannot be sustained. - Decided in favor of appellant. - C.O. NO. 1590 OF 2015 - Dated:- 3-7-2015 - ASHIS KUMAR CHAKRABORTY, J. For The Appellant : Mr. Swarup Banerjee, Mr. H.C. Yadav, Mr. S.N. Mishra and Mr. Chandan Kumar Lal JUDGMENT This revisional application has been filed by State Bank of India and its officers, the defendants in Title Suit No. 411 of 2012 filed by the opposite party no. 1/plaintiff the constituent of the bank. In spite of service of the application the opposite .....

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eing the defendant no. 1 in the said suit, filed the application for rejection of the plaint is that from the plaint filed in the said suit it is evident that the opposite party no. 1/plaintiff has filed the said suit challenging the notices issued by the petitioner no. 1 bank under sub-sections (2) and 4(a), Section 13 of the Securitisation and Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (hereinafter referred to as "the Act of 2002") in respect .....

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the well settled principle of law that for the purpose of deciding an application under Order 7 Rule 11 of the Code the averments contained in the plaint filed in the suit should be treated as true and correct. In the instant case from the averments made in the plaint filed in the suit it is evident that the cause of action of the opposite party no. 1/plaintiff in the suit is receipt of the notices under sub- sections (2) and Section (4)(a) of the Act of 2002 issued by the defendant-bank. In the .....

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In support of his contention that the said suit filed by the opposite party no. 1/plaintiff is barred by law, Mr. Swarup Banerjee appearing for the petitioner bank submitted that in view of the provisions contained in Sections 17 and 34 of the Act of 2002, the actions taken by the petitioner bank in this case under the provisions of sub-section (2) and 4(a) of Section 13 of the Act of 2002 cannot be challenged in a suit before any Civil Court. Mr. Banerjee strenuously urged that in view of the .....

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e Act of 2002. He further submitted that the trial court rejected the application of the defendant/petitioner under Order 7 Rule 11(d) of the Code by holding that since the claim of the petitioner-defendant bank is less than ten lakh rupees, in view of the sub-section (4) of Section 1 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as "RDB Act"), the Debts Recovery Tribunal does not have the jurisdiction to decide the validity of acti .....

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ned court below is not maintainable in view of the provisions contained in sections 17 and 34 of the Act of 2002, Mr. Banerjee relied upon the decisions of the Supreme Court in the cases United Bank of India vs. Satyabati Tandon reported in (2010)8 SCC110 and Jagdish Singh v. Heeralal & Ors., reported in 2013 AIR SCW 6378 = (2014) 1 SCC 479. Since the in the said suit the opposite party no. 1 has challenged the notice under sub-section (2) and 4(a) Section 13 of the Act of 2002 the said prov .....

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the date of notice failing which the secured creditor shall be entitled to exercise all or any of the rights under sub-section (4). (3) ............................................................................ (3A)........................................................................... (4) In case the borrower fails to discharge his liability in full within the period specified in sub-section (2), the secured creditor may take recourse to one or more of the following measures to recover hi .....

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is held as security for the debt: Provided Further that where the management of whole of the business or part of the business is severable, the secured creditor shall take over the management of such business of the borrower which is relatable to the security for the debt; (c) appoint any person (hereafter referred to as the manager), to manage the secured assets the possession of which has been taken over by the secured creditor; (d) require at any time by notice in writing, any person who has .....

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ed that the expression "any person" used in Section 17 of the Act is of wide import and the said expression includes not only the borrower but also the guarantor or any other person who may be affected by the action taken by the secured creditor under sub-section (4) of Section 13 of the Act of 2002. In this regard reference may be made to the decision of the Supreme Court, in the case of Satyawati Tandon (supra), cited by Mr. Banerjee. Therefore, the expression "any person" .....

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or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993). 35. The provisions of this Act to override other laws The provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force o .....

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erred under the Act of 2002. The Supreme Court held that the jurisdiction under Section 34 of the Act of 2002 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 Section (4) of Section 13 of the said Act. The Act of 2002 has created statutory interest 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 .....

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t of appeal to the Debts Recovery Tribunal under Section 17 of the Act. In the case of Jagdish Singh (supra) cited by Mr. Banerjee the Supreme Court held that the expression "in respect of any matter" referred to in Section 34 of the Act of 2002 would take in the "measures" provided under sub-section (4) of Section 13 of the Act and if any person has got any grievance against any "measures" taken by the borrower under the said provision, the remedy open to him is to .....

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Reconstruction Co. Ltd. reported in (2014) 6 SCC 1. In the said case one of the questions of law raised before the Supreme Court was whether the tenants of a secured asset can have remedies under the tenancy law of the State of Maharashtra, under Maharashtra Rent Control Act, 1999 to move the appropriate Court having jurisdiction and obtain the relief of injunction against the secured creditor from taking possession of the secured asset under sub-section 4 of section 13 of the Act of 2002 The Su .....

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the said Act, cannot entertain an appeal under Section 17 of the 2002 Act against the steps taken by the petitioner bank against the opposite party no. 1/plaintiff under sub-section (4) of Section 13 and as the claim of the petitioner bank, against the opposite party no. 1 is less than rupees ten lakhs, City Civil Court has the jurisdiction to entertain the suit. Section 31(h) of the Act of 2002 provides that the provisions of the Act of 2002 shall apply to any security interest for securing rep .....

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