RFA. No. 38/ Versus- PRESENT HON BLE MR. JUSTICE N. CHAUDHURY. : Mr. GN SAhewalla, Sr.Adv.Ms. J Barua Adv. Adv. RFA No.18 of 2008 Page 1 of 13

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1 Smti Tanuja Baruah Prof.of M/S Borsons Asia Borbheta Bongali Gaon PO Monkholi PS Bordubi Dist-Tinsukia, IN THE GAUHATI HIGH COURT (THE HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH) RFA. No. 38/ 2009 Assam. Appellant -Versus- 1.State Bank of India Hijuguri Branch Dist-Tinsukia Assam. Respondents PRESENT HON BLE MR. JUSTICE N. CHAUDHURY For the Appellant For the Respondents : Mr. GN SAhewalla, Sr.Adv.Ms. J Barua Adv. : Mr. SS Sharma, Sr.Adv., Ms. L Sharma Adv. Date of hearing Date of Judgment : RFA No.18 of 2008 Page 1 of 13

2 JUDGMENT AND ORDER(ORAL) This regular first appeal has been preferred by the plaintiff of Title Suit No. 54 of 2006 challenging the judgment and decree dated whereby the suit of the plaintiff was dismissed holding the same not maintainable. 2. The brief facts involved in the appeal be stated first. One Smti Tanuja Baruah as plaintiff instituted Title Suit No. 54 of 2006 in the court of learned Civil Judge at Tinsukia. On she stated that pursuant to her application dated , the defendant bank sanctioned agricultural term loan limit of Rs.6,00,000/- as embodied in the sanction letter dated for pig farming and livestock and other asset of the firm was pledged/hypothecated as primary security. The firm was situated at Borbheta Bongali Gaon, Mouza Tipling, PS Bordubi in the district of Tinsukia. The collateral security was executed by plaintiff by mortgaging land measuring 6 Bigha belonging to one Madhab Barua of the same village. But the bank wrote the name of owner as Bhuban Barua wrongly. After the firm was commissioned, the pigs were attacked by disease and consequently they died in large number and plaintiff could hardly earn Rs. 23,780/- by sale of few healthy pigs. The bank did not view it leniently and rather by taking a cruel view issued a threatening letter dated on demanding entire loan amount with interest within 10 days failing which legal action was threatened. The bank also showed deposit of Rs.35,000/- RFA No.18 of 2008 Page 2 of 13

3 in the plaintiff s account without knowledge of the plaintiff which however was not indicated in the plaintiff s Pass Book. According to the plaintiff, aforesaid demand notice dated is prima facie void, illegal and unenforceable in law and hence it is liable to be set aside and quashed. The plaintiff, therefore, prayed that a decree be passed declaring that notice dated sent by defendant No.1 to the plaintiff demanding payment of Rs.5,52, along with interest thereon on as against terms loan account No is void, illegal and unenforceable and also for prohibitory injunction restraining the defendant bank from taking recourse to legal action under Section 13 (2) of The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002(herein after referred to as SARFAESI Act ). 3. On being notified, defendant No. 1 appeared and submitted written statement challenging, inter-alia, the maintainability of the suit itself in view of bar under the SARFAESI Act, The defendant pleaded that no injunction can be granted in view of specific bar and the suit of the plaintiff is liable to be dismissed as not maintainable on that ground alone. On merit it is stated that plaintiff miserably failed to disclose her legal right in regard to the demand notice dated and so no declaration as prayed for can be given in favour of the plaintiff and no injunction can be granted invoking Section-13(2) of the SARFAESI Act. In para-6 of the written statement it is specifically pleaded that under Section 34 of the SARFAESI Act, 2002, no suit / injunction proceeding lies in any civil court and as such, the jurisdiction of the civil court is specifically and RFA No.18 of 2008 Page 3 of 13

4 expressly ousted. The allegation levelled in the plaint that the defendant bank acted in a cruel manner or that it did not act in accordance with the banking norms or that it acted in dilatory manner. have been specifically denied by the defendant. In para-13 of the written statement, it was further stated that although the borrower could not produce any documentary evidence of livestock purchase and or failure of the project, yet the defendant bank disbursed a sum of Rs.35,000/- on on the basis of application dated submitted by the plaintiff which the answering defendant recredited in loan account on so as to absolve the plaintiff from the burden of paying unnecessary interest. The plaintiff never visited the branch of the bank nor did she enquire about disbursement after submitting the application dated and under such circumstances, the bank did not have any other alternative then to take recourse to notice dated According to the bank, the plaintiff did never start the business of piggery for which loan was sanctioned and disbursed by the bank. With these averments, contesting bank prayed for dismissal of the suit with compensatory cost. 4. Upon such averments made by the parties, the learned trial court framed the following four issues in the suit and asked the parties to lead their respective evidence: (i) Is the suit maintainable? RFA No.18 of 2008 Page 4 of 13

5 (ii) Whether the defendant bank disbursed the whole sanctioned amount to the plaintiff? (iii) Whether the Demand Notice dated issued in compliance of the provision of Sec.13 of The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002? (iv) To what relief/or reliefs, the plaintiff is entitled to? 5. Plaintiff examined two witnesses including herself and adduced some documents. Defendant s side examined only one witness, the Senior Manager of the bank as sole witness and exhibited documents in their favour. The learned trial court thereafter, hearing the arguments of both the sides passed the impugned judgment and decree dated and decided issue No. 1 in favour of the defendants holding that the suit is not maintainable and is barred under the provision of SARFAESI Act, However, on merit, it was held that the defendant did not disburse the total loan amount while deciding issue No.2. Coming to Issue No. 3, it was held that an order of prohibitory injunction restraining the authority to exercise power under Section 13(2) and 13(4) of the SARFAESI Act, 2002 for taking possession of the mortgaged and hypothecated assets would be ultra vires to all the provision of SARFAESI Act, 2002 and accordingly Issue No. 3 was decided in negative and in favour of the defendant. In view of all these findings, ultimately Issue No. 4 was also decided against the RFA No.18 of 2008 Page 5 of 13

6 plaintiff and the suit was dismissed with cost. This judgment and decree dated basically dismissing the suit on the ground of bar under Section 34 of the SARFAESI Act, 2002 lack of jurisdiction of the civil court, has been challenged in the present appeal by the plaintiff. 6. I have heard Mr. GN Sahewalla, learned senior counsel assisted by Ms. J Barua for the appellant and Mr. SS Sharma, learned senior counsel assisted by Ms. L Sharma for the respondents. I have perused the LCR including the pleadings of the parties and the evidence adduced by them. Upon hearing the learned counsel for the parties and on perusal of the materials available on record, it appears that this appeal involves the following point for determination: Whether the suit of the plaintiff is barred under Section 34 of the SARFAESI Act, 2002? 7. On perusal of the plaint, it is noticeable that the facts as to sanction and disbursement of loan by the defendant have been admitted by the plaintiff. Plaintiff claimed that upon finance advanced by the defendant bank, she started a piggery firm at Borbheta Bongali Gaon, Mouza Tipling, PS Bordubi in Tinsukia district. In so doing, she not only made use of the loan money disbursed by the bank but also spent some money from her pocket so as to help and develope the land for piggery firm. Proper boundary fencing was re-constructed and buildings were raised along with fixtures, structures and drain etc. so as to make the piggery firm workable. Only after the firm was ready, the defendant bank RFA No.18 of 2008 Page 6 of 13

7 inspected the same and on being satisfied about the project disbursed the loan. But the loan amount was not issued in time to enable timely purchase of feed for pigs. In the meantime, pigs were attacked with disease and they died. The plaintiff thereafter sold few healthy pigs and derived Rs.23,780/- by way of sale proceed. At that crucial hour of the business, the bank did not come forward to help the plaintiff but rather started pressing for re-payment of the entire loan amount. The bank acted in a very cruel manner by not releasing remaining installment in time. Had the bank released the remaining installment in time in response to the appeal made by the plaintiff, in that event the firm would not have failed. The bank thereafter issued notice dated threatening the plaintiff again under Section 13 of the SARFAESI Act. On perusal of the aforesaid averments made in the plaint, it does not appear that there is any allegation of fraud from the side of the defendant bank. Admittedly bank sanctioned loan and disbursed a part of it facilitating the plaintiff to run business. The business failed due to the fact that pigs were attacked by disease and they started dying. Death of the livestock has not been attributed to any default of the bank. The plaintiff does not appear to have made any allegation that a specific bank guideline or banking law has not been followed by the bank but for which the plaintiff had to face closure of the business. There is neither any allegation that the defendants have played fraud with the plaintiff nor was there any allegation that fundamental principle of judicial procedure were not followed by the bank or that the provision of SARFAESI Act were not complied with. Rather from a perusal of RFA No.18 of 2008 Page 7 of 13

8 the plaint it appears that the bank is yet to take any action under the SARFAESI Act and gave notice to the plaintiff on asking it to make payment of the whole amount with interest failing which action would be taken under the provision of SARFAESI Act. It is at that stage, without going to the Debts Recovery Tribunal (DRT), plaintiff instituted the suit for declaration that notice dated itself is void, illegal and without jurisdiction. 8. The learned trial court while deciding Issue No. 3 considered the case of the plaintiff as pleaded in the plaint and also perused the provision of Section - 34 of the SARFAESI Act.The learned trial court also noticed that under Section 17 of the SARFAESI Act any person aggrieved by any of the measures referred to in Sub-Section (4) to Section -13 taken by secured creditor may approach DRT within 45 days from the date of the impugned action. Under Section 13(4) of the SARFAESI Act, in case a 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 measures prescribed under Clause (a), (b) (c) or (d) of the said section. By this provision, the secured creditor can take possession of the secured asset of the borrower, management of the business and or may appoint a the receiver to manage the business and also to take money from any person who had acquired secured asset from borrower. Here the bank threatened of taking action but before the action was taken, the plaintiff instituted Title suit for declaration that the impugned notice is without jurisdiction. The learned trial court, therefore, held that in view of the provisions of Section-34 of the SARFAESI Act RFA No.18 of 2008 Page 8 of 13

9 that no suit or injunction proceeding is maintainable and accordingly Issue Nos. 1 and 3 were decided against the plaintiff dismissing the suit. 9. Section-34 of the SARFAESI Act provides in no uncertain terms that Civil Court does not have jurisdiction to entertain any suit or proceeding in respect of the matter which a DRT or appellate tribunal is empowered to deal with. Section- 17 of the Act on the other hand provides that aggrieved at any of the action referred to in the Section 13(4) of the SARFAESI Act any person aggrieved can approach the DRT for appropriate relief. The impugned notice dated has been exhibited in the case as Exhibit-A. Exhibit-A is quoted below: Dear Sir, YOUR AGRICULTURAL TERM LOAN A/C/ NO You were sanctioned a Term Loan Limit of Rs.6,00,000/- on under certain terms and conditions among them construction of pig shed purchase of machineries/equipments livestock s repayment of installments were the prime requirements. On inspection by our bank official it has been found that you have not yet started the activity in respect of the proposed piggery farm out of bank finance. Despite our repeated verbal requests and reminders you have not cared to abide by the terms and conditions. Thus, your account has become irregular your action has endangered the Bank s security & safety of the advance and we cannot continue the advance anymore. Therefore, we call upon you to repay the Bank s outstanding in the RFA No.18 of 2008 Page 9 of 13

10 A/C No of Rs.5,52, Rupees Five lac fifty two thousand eight hundred ninety seven to paise thirty nine only) Interest till the final liquidation of the loan within 10 days from date of receipt of this letter failing which we shall resort to legal action including invocation of Section 13(2) of the The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and realize the Bank s dues by asking possession of the mortgaged & hypothecated property of by selling in public auction without any further reference to you. Yours faithfully Sd/- Branch Manager Copy to Sri Madhav Borauh(Guarantor) Borbheta Bongali Gaon PO Monkhuli, Dist-Tinsukia For information. 10. A perusal of the impugned notice dated which has been exhibited as Exhibit-A by the defendant clearly shows that by that notice the defendant bank asked for Rs.5,52, from the plaintiff along with interest till final liquidation of the loan within 10 days from the date of receipt of the letter failing which legal action under Section 13(2) of the Act was threatened. Section- 13(2) of SARFAESI Act provides that where any borrower who is under a liability RFA No.18 of 2008 Page 10 of 13

11 to a secured creditor under a security agreement makes any default in repayment or any installment thereof and his Account is classified as nonperforming asset by secured creditor in that event, secured creditor may require the borrower by notice in writing to discharge the liability in full within 60 days from the date of notice. However, the plaintiff has nowhere pleaded that the impugned notice dated is not in conformity with the provision of Section-13 (2) of the Act. Section-13(3-A) of the Act provides further that borrower may make representation or raise objection to the secured creditor and if such objection is raised the secured creditor shall consider the same and intimate the borrower within one week of receipt of representation by objection for non-acceptance of the representation. It is further provided that the reasons so communicated or likely action of the secured creditor at the stage of communication of reasons shall not confer any right upon the borrower to prefer application under Section-17 of the SARFAESI Act. Section 13(4) provides that in case borrower fails to discharge his liability within the period specified Sub- Section-(2) in that event secured creditor will be entitled to take any action under Section 13(4) of the SARFAESI Act. Here it appears that notice was issued on and the suit was instituted on i.e. after expiry of one month. Be that as it may, Section 34 of the SARFAESI Act imposes clear and specific bar ousting jurisdiction of the civil court. The nature and character of such borrower has been considered by this court in an earlier judgment in the case of Bhopal Thapa vs- Bina Boro & Ors. reported in (2015) 1 GLR 340 on the basis of RFA No.18 of 2008 Page 11 of 13

12 earlier judgment of the Hon ble Supreme Court. This court took into consideration the law laid down by the Hon ble Supreme Court in the case of Mardia Chemicals Ltd.-vs- Union of India reported in (2004) 4 SCC 311 as well as in the case of Bhau Ram vs- Janak Singh reported in (2012) 8 SCC 701 and thereupon held that even despite express ouster of civil court, a suit may still lie if it is made out by appropriate pleadings that the fundamental principles of judicial procedure has been violated or that the provision of the Act which bars jurisdiction of the civil court have not been strictly followed or that fraud has been perpetrated on plaintiff. Even in case of allegation of fraud, the jurisdiction of the civil court may remain notwithstanding the specific bar under Section 34 of the Act. As has been pointed out, there is no pleading in the plaint to show that impugned notice is not in accordance with the provision of the Act or that fraud has been perpetrated on the plaintiff by the defendant. Under such circumstances, the express bars under Section 34 of the SARFAESI Act cannot be avoided in the present case. 11. In view of what has been stated above, the suit instituted by the plaintiff does not appear to be maintainable on the face of the pleadings made in the plaint and so even without requiring the parties to lead evidence, the learned trial court could have rejected the plaint under Order VII Rule 11 of the Code of Civil Procedure. The learned trial court, allowed the defendant to submit written statement and thereafter permitted the parties to provide their respective evidence. It is settled law that no amount of evidence can be led beyond RFA No.18 of 2008 Page 12 of 13

13 pleadings and if on prima facie appraisal of the plaint, it appears that the suit is barred by a statute in that event the plaint can be rejected at the threshold. As pointed out above, the suit of the plaintiff is specifically barred under Section 34 of the Act and no endevour has been made by way of appropriate pleadings to show that despite clear and express bar ousting jurisdiction of the civil court a suit may still lie. In the absence of the pleadings of such nature as indicated in the case of Bhopal Thapa (supra), the learned trial court has not committed any error in holding that the suit of the plaintiff is not maintainable in view of bar under Section 34 of the Act. The appellant has not argued anything to show that such finding of the trial court is erroneous and in that view of the matter, the appeal stands dismissed. 12. No order as to cost. Send down the records. Interim order if any will stand automatically stands vacated. JUDGE Nivedita RFA No.18 of 2008 Page 13 of 13