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TMI Blog2023 (3) TMI 420X X X X Extracts X X X X X X X X Extracts X X X X ..... oan after mortgaging House No. H-208, Ashok Vihar, Phase-I, Delhi-110052 hereinafter referred as "property" with the appellant-bank. As the said original borrower defaulted in repaying the loan, appellant-bank initiated proceedings under Section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 hereinafter referred as "SARFAESI ACT" and after taking possession, issued notice for public auction. Respondents, vide e-auction dated 15.07.2016 bought the property for Rs.6,10,05,000/- and deposited 25% of the bid amount alongwith the TDS of 1% from 15.07.2016 to 17.08.2016. Sale thereof was confirmed on 25.07.2016 and the balance sale consideration of Rs.4,50,00,000/- was to be paid within 15 days of the date of confirmation of sale i.e., by 10.08.2016. 3. Appellant-bank, Mayur Vihar Branch, after sanctioning loan of Rs.4,50,00,000/- credited it to respondents on 09.08.2016. Thereafter, a Sale Certificate was issued in favour of respondents and the possession of the property was also handed over to them on 11.08.2016 itself. Meanwhile, the original borrower filed S.A. No. 265/2016 titled as Ajay Gupta vs. PNB before the Debt R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nancial Institutions Act, 1993 hereinafter referred as "RDDBFI Act" to protect the interest of the appellant-bank would be initiated. 7. Learned Trial Court vide the Impugned Judgment, rejecting the application under Order VII rule 11, CPC of appellant-bank, pronounced a judgment under Order XII rule 6, CPC against the appellant-bank, in favour of respondents on various grounds, primarily on the ground of nonmaintainability of the suit before a Civil Court under Section 34 of the SARFAESI Act. As the appellant-bank has not raised any challenge to any of the other findings, thus, the moot issue for consideration in the present appeal is only with respect to non-maintainability of the suit before a Civil Court. Accordingly, this Court is restricting itself to the necessary pleadings qua Section 34 of the SARFAESI Act only. 8. Learned Trial Court, after hearing learned counsels for both parties and while referring to the provisions of Section(s) 13(1), (2), (4), 17 and 34 of SARFAESI Act, noted that since the appellant-bank had not initiated any proceedings under Section 13 of SARFAESI Act against the respondents and that in such a case of non-initiation, the provisions of Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uit is barred even in respect of an action to be taken in pursuance of any power conferred by or under the SARFAESI Act or the RDDBFI Act. 11. On the other hand, learned counsel for respondents, supporting the Impugned Judgment and the reasoning therein, has submitted that the learned Trial Court is at no fault in entertaining and decreeing the suit under Order XII rule 6, CPC in view of the fact that the respondents had no other alternative remedy available but to approach a Civil Court by instituting a suit for declaration for seeking the reliefs sought therein. Learned counsel for respondents, during the course of his arguments has taken this Court through the provisions of Section 13(1), 13(2) and 34 of SARFAESI Act to submit that as the appellant-bank had never initiated any proceedings against respondents, they could not have approached the DRT for initiating any proceedings against the appellant-bank under the SARFAESI Act or the RDDBFI Act and in any way, there was no occasion for them to do so. 12. This Court has patiently heard the learned counsel for both parties at considerable length and has expended sufficient time to go through all the documents on record. After gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansfer by way of lease, assignment, or sale for realising the secured asset: Provided that the right to transfer by way of lease, assignment or sale shall be exercised only where the substantial part of the business of the borrower 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 acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the secured creditor, so much of the money as is sufficient to pay the secured debt. 17. [Application against measures to recover secured debts].-(1) Any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorised officer under this C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or under Section 13(4) of SARFAESI Act may take appropriate steps under Section 17 of SARFAESI Act, meaning thereby, that, recourse to Section 17 of SARFAESI Act can only be taken once the appropriate steps have already been taken under Section 13(4) of SARFAESI Act. In case the aforesaid steps are not followed, the borrower is left remediless and the whole purpose of SARFAESI Act will be nugatory and redundant, which could never have been the intention of the legislature. 15. Lastly the words "... ...in respect of any action taken or to be taken... ..." forming a part of Section 34 of SARFAESI Act are in itself granting a two-fold protection to a party, essentially a bank, one when the action has already been "taken" signifying that the proceedings have well been initiated and the ball has been set rolling and another when the action is yet "to be taken" signifying that the proceedings are yet to be initiated and can be initiated in future. The word "taken" forming a part of Section 34 of SARFAESI Act is clear and unambiguous and nothing calls for this Court to dissect or determine the meaning thereof, however, the words "to be taken" forming a part of Section 34 of SARFAESI Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision and as stipulated in Section 36 therein, it must be read along with the provisions contained in the Limitation Act, 1963. 18. In Mardia Chemicals (supra) wherein though the aforesaid words "... ...in respect of any action taken or to be taken... ..." forming a part of Section 34 of SARFAESI Act were explained, but, in our view, rightly so, no extension of time for initiating such action to be taken was granted and it was held as under:- "50. ...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-section (4) of Section 13. It is further to be noted that the bar of jurisdiction is in respect of a proceeding which matter may be taken to the Tribunal. Therefore, 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 bar of civil court thus applies to all such matters which may be taken cognizance of by the Debts Recovery Tribunal, apart from those matters in which measures have already been taken under sub-section (4) of Section 13. 51. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are governed by and thus are within the purview of the SARFAESI Act or the RDDBFI Act. A perusal of the whole SARFAESI Act reveals that there is no bar of any kind for a Civil Court to proceed with such actions which are beyond the domain of the SARFAESI Act of the RDDBFI Act. The jurisdiction of a Civil Court has not been ousted and has only been restricted by introduction of the SARFAESI Act. The Hon‟ble Supreme Court in a recent judgment in Bank of Rajasthan Ltd. vs VCK Shares & Stock Broking Services Ltd. 2022 SCC OnLine SC 1557, though pertaining to RDDBFI Act, which contains the para materia provisions as the SARFAESI Act, while dealing with the transfer of civil proceedings, has held as under:- "45 We are thus of the view that there is no provision in the RDB Act by which the remedy of a civil suit by a defendant in a claim by the bank is ousted, but it is the matter of choice of that defendant. Such defendant may file a counterclaim, or may be desirous of availing of the more strenuous procedure established under the Code, and that is a choice which he takes with the consequences thereof." "46 ...The Legislature did not, at any stage, make any further amendment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ims till now. Not only that, the appellant-bank itself issued the Sale Certificate and executed the Sale Deed in favour of respondents. 25. Had appellant-bank any dispute or concern with respondents, it is highly implausible to believe that the appellant-bank, with all the arsenal and force at their disposal, would have chosen not to proceed against the respondents and instead to proceed with the aforesaid documentation in favour of respondents and rely upon their statement of initiating proceedings against them in future. This is besides any logical reasoning. Appellant-bank cannot be allowed to approbate and reprobate. As the lid is closed and there is nothing surviving against the respondents, in such a scenario, any party like the respondents herein, who have neither been declared as defaulters nor against whom appellant-bank has initiated any action or against whom there is no scope of initiation of any action left, cannot be made to suffer the ignominy of eternal wait for no wrong attributable to it. Respondents cannot be left at the mercy of the appellant-bank, without any clarity and for no plausible reason. This, surely could never have been the intention of the legislatu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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