IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION CIVIL REVISION APPLICATION NO.377 OF 2008

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1 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION CIVIL REVISION APPLICATION NO.377 OF 2008 The Saraswat Co-operative Bank Limited (Formerly Maratha Mandir Co-operative Bank Limited) A Co-operative Bank Limited, registered under the provisions of Multi-State Co-operative Societies Act, 2002 through their having their Recovery Department at 74-C, Samadhan Building, 2 nd floor, Senapati Bapat Marg (Tulsi-Pipe Road), Dadar (W), Mumbai V/s. 1. Madan S. Jha & anr. Age : about 31 years Occupation : Not known R/o.Flat No.401, E Wing, Shanti Niketan Complex, Mira Bhayandar Road, Mira Road (East) District Thane Ravindran Selvaraj Age : about 38 years Occupation : Service R/o.Flat No.E-1(Knagaranjini) Periwinkle Building No.1 Kanakiya Bharati Park, Mira Bhayandar Road, Mira Road (East) District Thane

2 2 Mr.Bhupesh Samant, Advocate, for the Applicant Mr.D.N.Kamara, Advocate, for Respondent No.1 Mr.A.A.Khan a/w.mr.rahul R. Sharma i/b.mr.akhilesh Dubey, Advocate, for Respondent No.2 CORAM : R.C.CHAVAN, J. JUDGMENT RESERVED ON : 11TH JUNE, 2010 JUDGMENT PRONOUNCED ON : 1ST JULY, 2010 JUDGMENT. This Civil Revision Application by Applicant-Bank is directed against Order passed by the learned Civil Judge, Senior Division, Thane, rejecting the Applicant s Application at Exhibit 17 in Special Civil Suit No.512 of 2007 before him. 2. By an Order dated 25 th June, 2008 this Civil Revision Application was directed to be heard finally at the stage of admission. Accordingly, it was heard on 11 th June, 2010 and is being disposed of by this Judgment. 3. Facts which are material for deciding this Civil Revision Application are as

3 3 under :- In the year October, 1999, Ravindran Selvaraj Respondent No.2 herein had taken a loan from the Maratha Mandir Sahakari Bank Limited and mortgaged property bearing Flat No.401, 4 th floor, E Wing, Shanti Niketan Complex, Mira Bhayandar Road, Mira Road(E), District Thane by depositing the title deeds of the same for securing repayment of the said loan. The mortgage was duly registered with the Sub-Registrar. The Applicant acquired the said Maratha Mandir Sahakari Bank Limited from 20 th March, 2006 pursuant to the Order of amalgamation and therefore, the Applicant-Bank stepped into the shoes of the Maratha Mandir Sahakari Bank Limited. Since the loan was not repaid by Respondent No.2, Applicant-Bank initiated proceedings for recovery of the same and issued notice to Respondent No.1, to whom the property had been allegedly sold by the Respondent No.2 by registered Agreement of

4 4 Sale dated 27 th August, 2004, calling upon Respondent No.1 to repay a sum of Rs. 3,92,486/- due as on 31 st May, 2006 to the Bank. Since Respondents failed to comply with the notice, the authorized Officer of the Applicant-Bank took symbolic possession of the property and duly published notice to that effect. 4. Respondent No.1, the purchaser, filed Special Civil Suit No.512 of 2007 against his vendor as well as the Applicant-Bank. In this Special Civil Suit Respondent No.1 had claimed the following reliefs. (a) It be declared that the agreement for sale dated 18 th August, 2004 duly registered with the Registrar of Assurances vide No.TNN/5527 is valid and binding between the Plaintiff and Defendant No.1. (b) It be declared that the deed of cancellation of Registration dt under No.TNN/8962 is null and/not binding as the same is without consideration and executed under coercion; (c) It be declared that then notices issued by the Defendant No.2 under Section 13(2) (4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security

5 5 Act 2002 to the Defendant No.1 to recover possession of the flat No.E-401 in Shanti Niketan Complex, Mira Bhayander Road, Mira Road (East), Dist. Thane from the Plaintiff, are illegal and not binding upon the Plaintiff and/or def.no.1, (d) Pending hearing and final disposal of the suit, Defendant No.2 be restrained from taking possession of the flat No.E-401 in Shanti Niketan Complex, Mira Bhayander Road, Mira Road (E), Dist.Thane from the Plaintiff and/or Defendant No.1, by an order of injunction of this Hon.Court; (e) The Defendant No.2 be directed to recover the balance amount of loan amount from the Defendant No.1 and handover the original title deed to the Plaintiff. (f) Pending the hearing and final disposal of the suit, the interim and ad-interim injunction in terms of prayer (d) above be granted; (g) Any other reliefs which the Honourable Court deems fit and proper in the circumstances of the case be granted; (h) Costs of the suit be granted. Respondent No.1 had taken stand that the provisions of the Securitisation And Reconstruction Of Financial Assets And Enforcement Of Security Interest Act, 2002 (hereinafter referred to as Securitisation Act ) were not attracted since the definition

6 6 of 'debt' in the Securitisation Act, 2002 was the same as in the Recovery of Debts Due to Banks and Financial Institutions Act, 1993(hereinafter referred to as DRT Act ) which applied only to loans above Rs. 10,00,000/-. Therefore, according to the Plaintiff, the Applicant-Bank was not entitled to invoke Section 13 of the Securitisation Act, 2002 or to take possession of the property. 5. This Suit was contested by the Applicant by filing a Written Statement. In addition,the Applicant-Bank filed an Application, on which the impugned Order has been passed, for rejection of the plaint under Order VII of Rule 11 of the Code of Civil Procedure, The Bank contended that the Applicant-Bank is the Multi-State Co-operative Bank which carries on business of Banking under the Banking Companies Act, The Bank had initiated proceedings for recovery of

7 7 the dues from the borrower. The actions of the Bank, first, were under the provisions of the Multi-State Co-operative Societies Act, 2002 and therefore, without first issuing notice as contemplated under Section 115 of the said Act, a Suit could not have been filed. Secondly, as per Section 34 of the Securitisation Act, 2002, the Civil Court had no jurisdiction to try such suit. 6. Respondent No.1, the Plaintiff in the Suit, filed a reply raising several objections including that the Applicant-Bank could not have invoked provisions of Securitisation Act since the amount of loan was less than Rs. 10,00,000/-. 7. After hearing the parties the learned Judge held that the Respondent No.1-Plaintiff was not seeking any relief against the Bank but that the Plaintiff was seeking relief against his vendor. He further held that

8 8 there can be no inherent lack of jurisdiction of the Civil Court and since it was a mixed question of facts and law, the Application was not tenable and therefore, rejected the same by his impugned Order. Aggrieved thereby, the Applicant is before this Court. 8. I have heard Mr.Bhupesh Samant, Advocate, for the Applicant, Mr.D.N.Kamara, Advocate, for Respondent No.1 and Mr.A.A.Khan a/w.mr.rahul R. Sharma i/b.mr.akhilesh Dubey, Advocate, for Respondent No The learned Counsel for the Applicant first submitted that in view of provisions under Section 115 of the Multi-State Cooperative Societies Act, 2002, a suit could not have been filed without issuing notice to the Central Registrar and without the plaint containing a recital that such notice has been delivered. The provisions of this Section may be reproduced for ready reference as under :-

9 9 SECTION 115 Notice Necessary in Suits No suit shall be instituted against a multi-state co-operative society or any of its officers in respect of any act touching the constitution, management or the business of the society until the expiration of ninety days next after notice in writing has been delivered to the Central Registrar or left at his office, stating the cause of action, the name, description and place of residence of the plaintiff and the relief which he claims, and the plaint shall contain a statement that such notice has been so delivered or left. 10. It is, thus, clear from this Section that a suit could not have been instituted against a multi-state Co-operative Society in respect of any Act touching the business of the Society without giving any notice as may be prescribed under the said Section. The contention of the learned Counsel for the Respondent-Plaintiff that the dispute is in fact between the Respondent Nos.1 & 2 has to be rejected since the Plaintiff had specifically sought a declaration that the notice issued by the Applicant-Bank under

10 10 Section 13(4) of the Securitisation Act, 2002 was illegal and not binding upon the Plaintiff, which is an Act touching the business of the Bank. Therefore, the learned Judge should have seen that the objection of the Bank to tenability of suit for want of notice as prescribed under Section 115 of the Multi-State Co-operative Societies Act, 2002 could not have been lightly brushed aside. 11. There is another aspect to the matter. The learned Judge should have also seen that what was sought to be done was to prevent the Bank from enforcing the security tendered by the Plaintiff's-Vendor to the Bank. The contention of the learned Counsel for the Respondent-Plaintiff that the provisions of the Securitisation Act, 2002 are not at all attracted is superficial. It is true that the definition of the debt under the Securitisation Act, 2002 is the same as the definition of debt in the Recovery of Debts

11 11 Due to Banks and Financial Institutions Act, The relevant provision may be reproduced below for the purpose of ready reference. 2(ha) debt shall have the meaning assigned to it in clause (g) of section 2 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993(51 of 1993);) 2(g) debt means any liability (inclusive of interest) which is claimed as due from any person by a bank or a financial institution or by a consortium of banks or financial institutions during the course of any business activity undertaken by the bank or the financial institution or the consortium under any law for the time being in force, in cash or otherwise, whether secured or unsecured, or assigned, or whether payable under a decree or order of any civil Court or any arbitration award or otherwise or under a mortgage and subsisting on, and legally recoverable on, the date of the application;) The learned Counsel for the Respondent- Plaintiff submitted that since the term debt has the same meaning in the Securitisation Act, 2002 as in the Recovery of Debts Due to Banks and Financial Institutions Act, 1993

12 12 unless the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 applies to the debt in question, the Securitisation Act, 2002 would not be applicable. First, it is to be seen that the definitions of debt under the Securitisation Act, 2002 as also DRT Act do not refer to any monetary ceiling of Rs. 10,00,000/-. Secondly, what has to be imported from the Recovery of Debts due to Banks and Financial Institutions Act, 1993 to the Securitisation Act, 2002 is only the definition of debt and not all the provisions of the Recovery of Debts due to Banks and Financial Institutions Act, Therefore, the provision of Section 1(4) of the DRT Act that the Act would apply only to loans above Rs.10,00,000/- would not be attracted to the Securitisation Act,2002 if the debt in question satisfies all the requirements of the definition of the debt under the Recovery of Debts due to Banks and Financial Institutions Act, 1993.

13 In the face of clear provisions of Section 34 of the Securitisation Act, 2002, jurisdiction of the Civil Court is ousted and therefore, Civil Court could not have entertained the suit, which questions a notice issued under Section 13(4) of the Securitisation Act, 2002 on the specious plea that the Act itself is not applicable. If the Respondent-Plaintiff did have any grievance, Section 17 of the Act sufficiently provides for the remedy and any person aggrieved by action under Section 13 of the Securitisation Act, 2002 could approach the Debts Recovery Tribunal. In view of this, it cannot be said that the Civil Court could assume jurisdiction to decide a question which squarely fell for the decision of the Debts Recovery Tribunal and in respect of which the jurisdiction of Civil Court was expressly barred under Section 34 of the Securitisation Act, In view of this, insofar as the suit pertained to

14 14 grant of reliefs against the present Applicant, and joinder of the Applicant as the Defendant, plaint had to be rejected under O.VII, Rule 11 of the Code of Civil Procedure, 1908 though there would not be any bar to the continuation of the suit inter-se the two Respondents. 13. In view of this, Civil Revision Application is allowed. The Applicant's prayer that, the plaint as against it be rejected, is accepted. The impugned Order is quashed and set aside and substituted by directing that the plaint as against the Applicant is rejected, leaving to the Plaintiff such remedies, as may be open to him under, the Securitisation Act, (R.C.CHAVAN, J.)