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TMI Blog2024 (7) TMI 1389X X X X Extracts X X X X X X X X Extracts X X X X ..... ly be summarized as under: 2(a). The defendants (Punjab National Bank and Punjab Batiohal Bank, defendants No. 1 and 2, respectively) maintained an application before the learned Trial Court under Order VII, Rule 11 read with Section 151 of the CPC for rejection of plaint filed by the plaintiff. As per the applicants/defendants the non-applicant/plaintiff filed a suit for declaration and permanent prohibitory injunction against the action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short "SARFAESI Act") taken by the applicants/defendants. It was further averred that the plaint filed by the non-applicant/plaintiff is liable to be rejected under the provisions of Order VII, Rule 11(d) CPC, as the suit appears from the statement in the plaint to be barred by law. It was also averred that in the application that the question of rejection of the plaint has to be ascertained in accordance with the provisions of Order VII, Rule 11(d) of CPC, which provides the plaint shall be rejected, if the suit appears from the statement in the plaint to be barred by any law as Section 34 of SARFAESI Act bars the jurisdiction of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the law and natural principles of justice. 2(d). As per the non-applicant/plaintiff, the proceedings were started under the SARFAESI Act wrongly, illegally and fraudulently against him by issuing notice under Section 13(2) of the SARFASI Act, on 05.04.2022, and in the said notice the NPA and recall amount are different from the earlier notice, dated 21.03.2022, i.e., 09.03.2022 is NPA date and recall amounts are Rs.41,34,2161/- and Rs.6,27,848.00/-. Thereafter, the non-applicant/plaintiff filed reply on 06.06.2022 for notice under Section 13(2) of SARFASI Act on email ID of the PNB Branch Sundernagar, and also to Circle Sastra Center at their email ID and on receiving the reply/objection under Section 13(3A) of SARFASI Act, by the applicants/defendants, it was obligatory for the applicants/defendants to communicate with the respondent within fifteen days from the receipt of the reply/objections by making rejoinder regarding tenability of the reply of the non-applicant/plaintiff, but despite resorting to this procedure, the applicants/defendants directly opted to proceed under Section 13(4) of the SARFASI Act. Lastly, dismissal of the application was prayed. 3. After hearing the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substantial question of law. To be "substantial" a question of law must be debatable, not previously settled by law of the land or a binding precedent, and must have a material bearing on the decision of the case, if answered either way, insofar as the rights of the parties before it are concerned. To be a question of law "involving in the case" there must be first a foundation for it laid in the pleadings and the question should emerge from the sustainable findings of fact arrived at by court of facts and it must be necessary to decide that question of law for a just and proper decision of the case. An entirely new point raised for the first time before the High Court is not a question involved in the case unless it goes to the root of the matter. It will, therefore, depend on the facts and circumstances of each case whether a question of law is a substantial one and involved in the case, or not; the paramount overall consideration being the need for striking a judicious balance between the indispensable obligation to do justice at all stages and impelling necessity of avoiding prolongation in the life of any lis." 8. In Govindaraju vs. Martamman, AIR 2005 SC 1008, the Hon'ble S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot take away or abridge the power of the court to frame any other substantial question of law which was not formulated earlier, if the court is satisfied that the case involved such additional questions after recording reasons for doing so. It is abundantly clear from the analysis of Section 100 that if the appeal is entertained without framing the substantial questions of law, then it would be illegal and would amount to failure or abdication of the duty cast on the court. The existence of substantial questions of law is the sine qua non for the exercise of jurisdiction under Section 100 of the Code. (Refer to Kshitish Chandra Purkait v. Santosh Kumar Purkait & others (1997) 5 SCC 438); Panchugopal Barua v. Umesh Chandra Goswami (1997) 4 SCC 413); Kondiba Dagadu Kadam v. Savitribai Sopan Gujar (1999) 3 SCC 722). " 9. In Vijay Kumar Talwar v. Commissioner of Income Tax, New Delhi, (2011) 1 SCC 673, the Hon'ble Apex Court has held as under: "21. Similarly, in Satosh Hazari v. Purushottam Tiwari, a three-Judge Bench of this Court observed that: "14. A point of law which admits of no two opinions may be a proposition of law but cannot be a substantial question of law. To be 'su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in abnegation or abdication of the duty cast on Court. The existence of substantial question of law in the sine qua non for the exercise of the jurisdiction under the amended Section 100 of the Code." 12. The present suit has been filed by the plaintiff for declaration that the proceedings initiated by the defendants against him under the SARFAESI Act regarding the hypothecation of stocks and mortgage of the land and building comprised in Khata Khatauni No. 131 min/180 Khasra No. 705/595, measuring 00-18-18 bighas situated at Mohal Bahot/25, Tehsil Sundernagar, District Mandi, H.P., are based upon fraud with the consequential decree of a permanent prohibitory injunction for restraining the defendants from selling the stocks and the suit land or taking over the physical possession of the suit land. However, Section 34 of the SARFAESI Act bars the jurisdiction of the Civil Court to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act. At this stage, it would be apt to reproduce Section 34 of the SARFAESI Act, which reads as under: "34. Civil court not to have jurisdiction.- No c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an be granted by any court or authority in respect of any action taken or to be taken in pursuance of any power conferred by or under the Act." 16. Thus, it is clear that no civil court can exercise jurisdiction to entertain any suit or proceeding in respect of any matter which Debt Recovery Tribunal or Appellate Tribunal is empowered to determine and no injunction can be granted by any court taken in pursuance of any power conferred by or under the SARFESI Act or under the Recovery of Debts Due to Banks and Financial Institutions Act. 17. The plaintiff had also sought the relief to restrain the defendants from selling the hypothecated stock or the mortgaged land. However, Section 13(4) of the SARFAESI Act empowers the secured creditor to take possession of the assets of the borrowers, including the right of transfer by way of lease, assignment or sale and to take over the management of the business of the borrowers and to appoint any person to manage the secured assets. At this stage, it would be relevant to reproduce Section 13(4) of the SARFAESI Act, which reads as under: "13. Enforcement of security interest.- ... ... ... ... ... ... (4) In case the borrower fails to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e which may not require any probe whatsoever. However, it has been further laid down by the Hon'ble Supreme Court in Charu Kishor Mehta vs. Prakash Patel and others, 2022 SCC online SC 1967, that mere allegation of fraud is not sufficient and the particulars of the fraud have to be given. The relevant portion of the judgment reads as under: "15. A mere recital of fraud, however, is not enough. Once fraud is alleged by a party, like the one that has been done by the Petitioner in reply to the objection under Order VII, Rule 11 of the Civil Procedure Code, then the allegation of fraud has to be tested in terms of Order VI, Rule 4 of the Civil Procedure Code, which reads as under: '4. Particulars to be given where necessary. In all cases in which the party pleading relies on any misrepresentation, fraud, breach of trust, willful default, or undue influence, and in all other cases in which particulars may be necessary beyond such as are exemplified in the forms aforesaid, particulars (with dates and items if necessary) shall be stated in the pleading.' 16. Apart from making a bald statement of collusion between Defendant Nos. 1, 2 & 4 and the secured creditor, i.e., M/s. Pho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant herein intends to get out of the bar under Section 34 of the SARFAESI Act and wants the suit to be maintainable. As per the settled proposition of law mere mentioning and using the word "fraud"/"fraudulent" is not sufficient to satisfy the test of "fraud". As per the settled proposition of law such a pleading/using the word "fraud"/"fraudulent" without any material particulars would not tantamount to pleading of "fraud"." 22. In the instant case, except for the use of the word "fraud", no particulars of the allegations of fraud have been specifically pleaded as mandated by the provisions of Order 6 Rule 4 of the Civil Procedure Code,1908. Thus, the plea of jurisdiction of the Civil Court based on the allegations of fraud cannot be countenanced. Hence in view of provisions of Section 34 of the SARFESI Act, both the learned Courts below have rightly rejected the plaint. 23. Therefore, no question of law, what to say of a substantial question of law is involved in the instant case. Accordingly, I find no illegality or perversity in the judgments passed by both the Courts below in rejecting the plaint under Order 7 Rule 11 CPC. 24. In view of what has been discussed herei ..... X X X X Extracts X X X X X X X X Extracts X X X X
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