TMI Blog2009 (7) TMI 1332X X X X Extracts X X X X X X X X Extracts X X X X ..... of the action taken by the bank (secured creditor) under Section 13(4) of the said Act, as according to the petitioner, part of the cause of action has arisen within the territorial jurisdiction of the said Tribunal. The part of the cause of action which according to the petitioner arose within the jurisdiction of the said Tribunal, are as follows :- 1. Pursuant to the request made by the petitioner, UCO Bank, Ashram Road Branch, Ahamedabad sent its proposal dated 23rd August, 2003 to the UCO Bank Head Office, Credit Department at 10 BTM Sarani, Kolkata -700001 (hereinafter referred to as the Head Office of the Bank) inter alia for sanction of the said credit proposal favouring the petitioner. 2. Pursuant to the said request made by the Ahamedabad Branch of the said bank, the head office of the bank by its letter dated 13th November, 2003 advised the Ahamedabad Branch that competent authority had sanctioned the credit proposal on 7th November, 2003 subject to the terms and conditions enclosed in Annexure 2 with its memorandum dated 29th October, 2003. The said letter dated 13th November, 2003 was issued from the head office of the bank which is situated within the jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. Though the bank accepted the said order without filing any appeal, but subsequently the bank challenged the territorial jurisdiction of the said Tribunal to entertain the said application under Section 17 of the said Act, as according to the bank, the said Tribunal has no territorial jurisdiction to entertain the said application as no part of the integral part of the cause of action for the said application had arisen within the territorial jurisdiction of the said Tribunal. The sum and substance of the contention of the bank regarding the lack of territorial jurisdiction of this Tribunal to entertain the said application is as follows :- 1. Though notice under Section 13(2) of the SARFAESI Act is a condition precedent before measures under 13(4) of the said Act can be taken but it does not form an integral part of the cause of action and the receipt of the notice itself does not give any cause of action to the borrower since it is not the issuance of the notice under Section 13(2) of the SARFAESI Act that give rise to the cause of action but non-payment of demand raised in the said notice which gives right to the bank to take over the mortgage assets of the defaulting b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g lack of territorial jurisdiction of the Tribunal to entertain the petitioner's application under Section 17 of the said Act which was raised by the opposite party bank, was not accepted by the said Tribunal. The bank was aggrieved against the said order. As such, the bank preferred an appeal before the Debt Recovery Appellate Tribunal, Kolkata. The learned Appellate Tribunal reversed the judgment and/or order of the learned Debt Recovery Tribunal, Kolkata by holding inter alia that no part of integral part of the cause of action has arisen within the territorial jurisdiction of the said Tribunal and as such, the said Tribunal has no territorial jurisdiction to entertain the said application under Section 17 of the said Act. The learned Appellate Tribunal was of the view that grant of formal sanction of the loan by head office of the creditor bank at Kolkata and/or service of some of the notices at the registered office of the borrower at Kolkata did not constitute an integral part of the cause of action. According to the learned Appellate Tribunal, since the borrower was granted loan on credit facilities on certain terms and conditions by Ashram Road Branch of the credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of action? It has been held by the Hon'ble Supreme Court in the case of Swami Atmananda -Vs- Ramakrishna Tapavanam Ors. reported in AIR 2005 SC 2392, that cause of action means every fact which, it traversed it would be necessary for the plaintiff to prove in order to support his right to a judgment of the Court or in other words it is a bundle of facts which taken with the law applicable to them gives the plaintiff a right to relief against the defendant. It must include some act done by the defendant since in the absence of such an act no cause of action can possibly accrue. It is not limited to the actual infringement of the right sued on, but includes all the material facts on which it is founded. If this principle is applied to the facts of the instant case then, of course, broadly speaking all the facts starting from sanction of the loan proposal of the petitioner from the bank having its Branch Office at Ashram Road at Ahamedabad upto the issuance of notice for taking possession of the petitioner's securities at Ahamedabad will constitute cause of action for filing application under Section 17 of the said Act. But can it be said that all this acts and/or actio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sought to be sold in execution, are lying. According to Mr. Chowdhury, the expression action used in the case of Transcore to describe a notice under Section 13(2) of the said Act would not convert the same into a cause of action to approach the Debt Recovery Tribunal under Section 17 particularly, in view of the expressed proviso contained in Section 13(3A) read with the provision of Section 17(1) of the SARFAESI Act. Mr. Chowdhury further pointed out by referring to the decision of the Division Bench of this Hon'ble Court in the case of Oriental Bank of Commerce - Vs- Santosh Kumar Agarwal reported in AIR 2007 Calcutta 148 that mere fact that the regional office is situated within does not give jurisdiction to this Tribunal as each Branch of a bank is a separate entity. Thus, Mr. Chowdhury supported the judgment passed by the learned Appellate Tribunal. In my view, sanction of the loan proposal either from the bank in its Head office at Calcutta or from its branch office at Ahamedabad does not form part of the integral part of cause of action. As such, this part of the controversy has no relevance on the issue in hand. Mr. Chatterjee, on the contrary, submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts decision to the borrower as per Section 13(3A) of the said Act. The proviso to Section 13(3A) of the said Act provides that such communication of the secured creditor's decision to the borrower will not confer any right upon the borrower to approach the Tribunal/Court for challenging the correctness of such decision. Thus, the decision of the secured creditor becomes final and conclusive so far as the legality and/or conclusiveness of such demand as assessed by the secured creditor. This is the end of the first phase of this chapter. The scheme of the said Act thus makes it clear that the integral part of the cause of action for the first phase of this chapter are as follows :- 1. Borrower makes a default in repayment of secured debt or any installment under a security agreement and his account in respect of such debt is classified by the secured creditor as non-performing assets. 2. Secured creditor, may by notice invite the borrower to discharge his liability in full to the secured creditor within sixty days from the date of notice, with a rider that failing compliance of such notice, the creditor will exercise all or any of the rights under sub-section (4) thereo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the nature of execution of the ultimate decision of the secured creditor taken under Section 13(3A) of the said Act coupled with the fact of non-payment of the dues so determined under Section 13(2) and/or Section 13(3A) of the said Act. Since the action under Section 13(4) of the said Act is in the nature of execution proceeding, the Tribunal within whose territorial jurisdiction the secured assets situate, is the only competent Tribunal whose jurisdiction can be invoked for filing an application under Section 17 of the said Act as the cause of action for the second phase of this chapter wholly arises within the jurisdiction of the said Tribunal. Mere service of notice under Section 13(2) of the said Act, and/or communication of the decision of the secured creditor to the borrower at its registered office at Kolkata, though may form part of the cause of action, however, insignificant it may be, but these parts of the cause of action do not form part of the integral part of the cause of action under Section 13(4) of the said Act, as these part of the cause of action has no co-relation with the measures to be taken by the secured creditor under Section 13(4) of the said A ..... 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