Supreme Court

The Authorised Officer, State Bank of India Vs. Allwyn Alloys Pvt. Ltd. and Ors.

MANU/SC/0581/2018

17.05.2018

Banking

No Civil Court can exercise jurisdiction to entertain any suit or proceeding in respect of any matter which a DRT or DRAT is empowered

The judgment of the High Court is assailed in instant appeal, whereby the High Court without formally setting aside the order passed by the Debts Recovery Appellate Tribunal, disposed of the writ petition with liberty to Respondent Nos. 5 & 6 (writ Petitioners) to approach the competent forum for adjudication of their right, title and interest in respect of a flat/apartment, on the Second Floor of Blue Heaven Apartment, which was mortgaged to the Appellant Bank by the directors of Respondent No. 1 Company by way of an equitable mortgage.

Bank has assailed the aforesaid decision of the High Court primarily on the ground that, all issues concerning the mortgaged/secured property are required to be decided only by the DRT; and not in any civil proceedings as has been observed by the High Court in the impugned judgment. For, filing of a civil suit in respect of secured assets is barred by law. Secondly, the DRT as well as DRAT have examined the merits of the controversy and justly answered the same against the writ Petitioners. The concurrent finding of fact recorded by the said Tribunals is that, the writ Petitioners have failed to establish any right, title or interest in the subject flat. That finding has neither been disturbed nor is it assailable. According to the Bank, the High Court judgment under appeal is untenable and deserves to be set aside.

The mandate of Section 13 and, in particular, Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, clearly bars filing of a civil suit. For, no civil Court can exercise jurisdiction to entertain any suit or proceeding in respect of any matter which a DRT or DRAT is empowered by or under this Act to determine and no injunction can 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.

The fact that the stated flat is the subject matter of a registered sale deed executed by the Respondent Nos. 5 and 6 (Writ Petitioners) in favour of Respondent Nos. 2 to 4 and which sale deed has been deposited with the Bank along with the share certificate and other documents for creating an equitable mortgage and the Bank has initiated action in that behalf under the 2002 Act, is indisputable. If so, the question of permitting the Respondent Nos. 5 and 6 (writ Petitioners) to approach any other forum for adjudication of issues raised by them concerning the right, title and interest in relation to the said property, cannot be countenanced. The High Court has not analysed the efficacy of the concurrent finding of fact recorded by the DRT and DRAT but opined that the same involved factual issues warranting production of evidence and a full-fledged trial. The approach of the High Court is completely fallacious and untenable in law. Present Court deemed it appropriate to relegate the parties before the High Court by setting aside the impugned judgment and leaving all questions open, to be decided by the High Court on its own merits and in accordance with law. Appeal allowed.

Tags : Civil court Jurisdiction Bar

Share :