1. This petition challenges the judgment dated 27.8.2018 passed by the learned District Judge, Cuttack in FAO No. 28 of 2018. By the said judgment, learned District Judge dismissed the appeal and confirmed the order dated 29.11.2017 passed by the learned Senior Civil Judge, 1st Court, Cuttack in I.A No. 1 of 2017 whereby and whereunder learned trial Judge rejected the application of the plaintiff-petitioner under Order 39 Rules 1 and 2, CPC.
2. Plaintiff-petitioner instituted the suit for partition of Schedule-A land and permanent injunction. She filed an application under Order 39 Rules 1 and 2, CPC stating that she is the owner in possession of Schedule-A land. She had purchased Schedule-A land admeasuring Ac.0.106 dec. by means of a registered sale deed No. 1542 dated 17.4.1996. After obtaining approval from C.D.A., she has constructed a two storeyed building. Schedule-B land measuring Ac.0.053 dec. was mutated in her name. Accordingly, Mutation Khata No. 650/996, plot No. 1/1553 was carved out. After Schedule-B land was carved out from Schedule-A land, remaining land corresponds to Schedule-C land. To establish a company, defendant No. 3 approached the Bank for a loan of Rs.1,20,00,000/-. Schedule-B land had been given as collateral security. Title deeds were deposited with the Bank. Due to default in payment of the loan amount, the Bank initiated a proceeding under Section 13 of the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act (‘SARFAESI Act’) against defendant No. 3. On 10.5.2015, she came to know that Schedule-B land would be auctioned. Challenging the auction sale notice, she approached the Debt Recovery Tribunal, Cuttack (‘DRT’) in S.A. No. 17 of 2015. There was no demarcation between Schedule-B and Schedule-C land, which is within the compact area of Schedule-A land within a common boundary wall. The Bank approached the Collector under Section 14 of the SARFAESI Act for taking over physical possession of Schedule-B land. The Collector allowed the application of the Bank. On 6.3.2017, the officials of the Bank along with police personnel visited Schedule-C land and intimated her that they would take possession of Schedule-A land. No demarcation had been made by the Bank officials separating Schedule-C land from Schedule-B land. The Bank officials had not tried to ascertain which portion of Schedule-A land has been mortgaged. She has inducted one Hina Begum as a tenant over Schedule-A land on monthly rent. Hina Begum has filed C.S No. 76 of 2017. The Bank is not entitled to take over possession of the entire Schedule-A land. She has a prima facie case, balance of convenience tilts in her favour and she would suffer irreparable loss in the event injunction is not granted. Therefore, the Bank be restrained from dispossessing her from the suit land till disposal of the suit.
3. Defendants 1 and 2 filed objection to the interim application stating that the suit is barred by Section 34 of the SARFAESI Act. The Bank had sanctioned loan to defendant No. 3, daughter-in-law of the plaintiff. Schedule-A land was mortgaged in favour of the Bank as collateral security. Defendant No. 3 did not pay the loan amount. The Bank filed O.A. Case No. 604 of 2015 before the DRT, Cuttack for recovery of Rs. 6,51,52,898/-. The plaintiff filed S.A. No. 17 of 2015 to stay e-auction notice dated 9.5.2015. Defendant No. 3 is the daughter-in-law of the plaintiff. She approached this Court in WPC No. 25624 of 2014 seeking a direction against the Bank from taking any coercive action. DRT, Cuttack directed for e-auction sale of the mortgaged property. The Bank initiated a proceeding under Section 14 of the SARFAESI Act before the Collector to render police assistance. Pursuant to the order of the Collector, the Bank had deposited Rs. 1,11,774/- before the DCP., Cuttack. If the Bank would not be allowed to take possession of the mortgaged property, it would suffer irreparable loss.
4. Learned trial Court dismissed the interim application mainly on the ground that the suit is barred by Section 34 of the SARFAESI Act. In the event temporary injunction is granted, the Bank will suffer irreparable loss. Felt aggrieved, the petitioner filed FAO No. 28 of 2018 before the learned District Judge, Cuttack. The District Judge has assigned the following reasons and the dismissed the appeal:
“7. The case of the appellant is that, she had not mortgaged the entire Schedule-A property which consists of Schedule-B and Schedule-C properties; only the Schedule-B property had been mortgaged, but the Bank is trying to take over the possession of Schedule-C property also. In this regard the attention of the Court is drawn to one letter for supplementary mortgage dated 22.2.2014 to show that plot No. 1/1553 (1339) of Khata No. 650/1996 situated at Mahanadi Vihar was only given as collateral security and not the entire Schedule-A property. This contention of the appellant as noted above is strongly refuted by the Bank.
8. In the Schedule of the plaint the appellant describes Schedule-A, B, C properties as Schedule-A District-Cuttack, Tahasil-Cuttack Sadar, Mouza-Cuttack Sahar unit No. 28 Peisa, Khata No. 177/85, Plot No. 1339, Area A).103 dec. approximately 4,500 sq.ft. Schedule-B-District-Cuttack Tahasil-Cuttack Sadar, Mouza-Cuttack Sahar unit No. 28 Peisa, Khata No. 650/966, Plot No. 1/1553 area A0.053 dec. approximately 2,300 sq.ft. Schedule-C District-Cuttack, Tahasil-Cuttack Sadar, Mouza-Cuttack Sahar Unit No. 28 Peisa, Khata No. 177/85, Plot No. 1339, area approximately 2,200 sq.ft. So, Schedule-A property is the whole land consisting of Schedule-B and Schedule-C property. However, it is to be observed that the appellant before coming to the Civil Court had approached DRT, Cuttack with S.A. No. 17 of 2015 with the similar prayer however the DRT did not accept the contention of the appellant.
9. For the limited purpose of deciding the appeal it is to be observed that the claim of the appellant is hit by Section 34 of the SARFAESI Act. It is further to be observed that the loanee who is the daughter-in-law of the appellant had approached the Hon’ble Court in WPC No. 25624 of 2014 challenging the possession notice issued by the respondent-Bank. However, Hon’ble High Court by order dated 26.2.2005 directed her to deposit the amount due upon her within four weeks giving liberty to the Bank to proceed according to law if she failed to make the deposit. It seems the daughter-in-law of the appellant did not make any such deposit. Section 34 of the SARFAESI Act stipulated that: No Civil Court shall have jurisdiction 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 to determine and no injunction shall be granted by any Court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993). Under the afore-stated facts and circumstances, I am of the considered view that no temporary injunction can be granted at the behest of the Appellant against the Bank. However, prudence requires that the respondent Bank to proceed fairly.”
5. Heard Mr. R.K. Mohanty, learned Senior Advocate along with Mr. R.K. Rout and Ms. S. Mohanty, learned Counsel for the petitioner and Mr. G.D. Kar along with Mr. A.K. Mohanty and Mr. B.C. Swain, learned Counsel for the Bank.
6. Mr. R.K. Mohanty, learned Senior Advocate for the petitioner argued with vehemence that equitable mortgage was created in favour of the Bank in respect of an area of Ac.0.53 dec. out of Ac.0.103 dec. The Bank can proceed against the mortgaged property, but not the entire properties. Elaborating the submission, he submitted that the petitioner is the owner of Schedule-A land. Pursuant to the permission accorded by the C.D.A, the petitioner has constructed a building over a plinth area of 2300 sq.ft. She filed Mutation Case No. 513 of 2005. The mutation authority had mutated Ac.0.53 dec. of land and allotted separate Mutation Khata No. 650/966, Plot No. 1/1553. Accordingly, ROR was issued, vide Annexure-8. Defendant No. 3 took a loan from the Bank. The petitioner stood as a guarantor and deposited title deeds to create equitable mortgage in respect of Schedule-B land having an area of Ac.0.53 dec. Schedule-A property was not mortgaged in favour of the Bank. When the application for temporary injunction was pending, the petitioner filed a petition under Order 39 Rule 7, CPC to demarcate Ac.0.53 dec. of land. Learned Trial Court rejected the same. He further submitted that the petitioner had challenged the action of the Bank in taking over possession of Schedule-B land under the SARFAESI Act in S.A No. 17 of 2015 before the DRT, Cuttack. The appeal was dismissed on 13.2.2019. The petitioner is ready and willing to part with the mortgaged Schedule-B property on proper identification through the Court. He further submitted that since the entire property has not been mortgaged, notice under the SARFAESI Act is bad in law.
7. Per Contra, Mr. Kar, learned Counsel for the opposite party No. 1 submitted that defendant No. 3, daughter-in-law of the petitioner, availed a loan to establish an industry. The petitioner stood as a guarantor. She mortgaged Schedule-A property in favour of the Bank. She deposited the title deeds for creation of equitable mortgage. The Bank issued notice under SARFAESI Act. Assailing the same, petitioner filed S.A No. 17 of 2015 before the DRT., Cuttack, which was dismissed on 28.2.2017. The order has attained finality. The Bank could not proceed against the mortgaged property due to interim order passed by this Court. The petitioner has suppressed the said fact in the objection case. The petition is liable to be dismissed. Under Section 34 of the SARFAESI Act, the suit is barred. The Bank cannot be restrained from proceeding against the mortgaged property. The petitioner has approached this Court with a pair of unclean hands. She played fraud on Bank. Thus she is not entitled to any relief. He further submitted that she has deposited the title deeds for creation of equitable mortgage in respect of the mortgaged property. In the register of title deeds below the area of Ac.0.53 dec., 4,500 sq. ft. has been mentioned, which pre-supposes that the entire property has been mortgaged in favour of the Bank. The petitioner having lost in the DRT, has filed the suit. Order passed by the DRT has attained finality. The suit is barred by res judicata. To buttress the submission, he placed reliance on the decisions of the Apex Court in the case of Amar Nath v. Kewla Devi and Another, V (2014) SLT 763=(2014) 11 SCC 273; Uddar Gagan Properties Ltd. v. Sant Singh and Others, IV (2016) SLT 212=(2016) 11 SCC 378; Authorized Officer, State Bank of Travancore and Another v. Mathew K.C, II (2018) SLT 405=AIR 2018 SC 676; Authorised Officer, State Bank of India v. M/s. Allwyn Alloys Pvt. Ltd. and Others, II (2018) BC 547 (SC)=IV (2018) SLT 433=AIR 2018 SC 2721; ICICI Bank Ltd. etc. etc. v. Umakanta Mohapatra etc. etc., (Civil Appeal Nos.10243-10250 of 2018 disposed of on 5.10.2018) and the decision of this Court in the case of Kamalakanta Das v. A.O., Indian Overseas Bank, 2019 (I) OLR 202.
8. In course of hearing, Senior Manager, Indian Overseas Bank filed an affidavit on 5.3.2019 annexing the photostat copies of the extract of confirmation letter for supplemental mortgage dated 22.2.2014, vide Annexure-I, and the mortgaged register, vide Annexure-J. In column No. 2 meant for “particulars of title deeds” of the extract of mortgage register, vide Annexure-J, sale deed No. 3715 dated 25.9.1993, sale deed No. 1542 dated 17.4.1996 and sale deed No. 3109 dated 29.6.2002 have been mentioned along with other documents. In the third column, the property has been described as follows:
“Dist. & D.S.R.O., Cuttack, Tahasil-Cuttack Sadar No. 235, Thana-Chauliaganj No. 05, Mouza-Cuttack Sahar, Unit-28, Mutated Khata 650/1966, Plot 1/1553 (1339), Sikharpur Housing Accommodation Scheme, Mouza-Sikharpur, Cuttack, Dist-Cuttack.”
On the left hand column of the register, an area of Ac.0.53 dec. has been mentioned and below the same, 4,500 sq. ft. has been mentioned. In the confirmation letter for supplemental mortgage,vide Annexure-I, three sale deeds along with other documents have been mentioned.
9. Description of the property mentioned in the register of title deeds indicates that the equitable mortgage has been created in respect of Mutation Khata No. 650/1966, plot No. 1/1553, Ac.0.53 dec., Mouza-Cuttack Sahar, Dist. Cuttack. The petitioner has mortgaged the same in favour of the Bank. Thus the Bank cannot proceed against the entire property under the SARFAESI Act. Neither the Tribunal, nor the Courts below delved into the matter. The Courts below proceeded on the premises that the entire property has been mortgaged in favour of the Bank, which is apparently an error of record. The decision of the Tribunal shall not operate as res judicata.
10. Now the time is set to deal with Section 34 of the SARFAESI Act. Section 34 of the SARFAESI Act provides:
“34. Civil Court not to have jurisdiction—No Civil Court shall have jurisdiction 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 to determine and no injunction shall be granted by any Court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993).”
11. The relevant words are “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 to determine and no injunction shall be granted by any Court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act”.
12. Section 13(1) of the SARFAESI Act postulates that notwithstanding anything contained in Section 69 or Section 69-A of the Transfer of Property Act, 1882 (4 of 1882), any security interest created in favour of any secured creditor may be enforced, without the intervention of the Court or Tribunal, by such creditor in accordance with the provisions of this Act. Security interest has been defined in Section 2(zf) which means right, title or interest of any kind, other than those specified in Section 31, upon property created in favour of any secured creditor.
13. Thus the necessary corollary is the Bank can enforce the security interest created in favour of it under the provisions of the SARFAESI Act. If a property is not mortgaged in favour of the Bank, the Bank cannot proceed with the properties under the SARFAESI Act.
14. The decisions cited by the learned Counsel for the opposite parties are distinguishable on facts.
15. In Mathew K.C, the Apex Court held that discretionary jurisdiction under Article 226 is not absolute but has to be exercised judiciously in the given facts of a case and in accordance with law. The normal rule is that a writ petition under Article 226 of the Constitution ought not to be entertained if alternate statutory remedies are available, except in cases falling within the well defined exceptions. There is no quarrel over the proposition of law. As held in the preceding paragraphs, only Ac.0.53 dec. of land has been mortgaged in favour of the Bank. Thus the Bank cannot proceed against the entire property and in
Please Login To View The Full Judgment!
such a contingency the suit is maintainable. 16. In M/s. Allwyn Alloys Ptv. Ltd., the Apex Court held that no Civil Court can exercise jurisdiction to entertain any suit or proceeding in respect of any matter which a DRAT is empowered to determine. The said decision was rendered, since equitable mortgage was created in respect of the property. 17. In K.D. Sharma v. Steel Authority of India Ltd. and Others, IV (2008) BC 557 (SC)=VIII (2008) SLT 2=(2008) 12 SCC 481, the Apex Court held that “fraud avoids all judicial acts, ecclesiastical or temporal" proclaimed Chief Justice Edward Coke of England before about three centuries. There is no material on record that the petitioner has played fraud. 18. In Umakanta Mohapatra, the decision of the Apex Court in the case of Mathew K.C. has been reiterated. The same view was reiterated by this Court in the case of Kamalakanta Das. 19. Niranjan Mekap pertains to the Orissa Estate Abolition Act and the Orissa Hindu Religions Endowments Act. 20. If the orders passed by the Courts below are allowed to stand, the same would cause miscarriage of justice. The Courts below have exercised the jurisdiction in a manner not permitted by law and failure of justice has occasioned thereby. Accordingly, the impugned orders are quashed. 21. In order to give quietus to the issue, this Court directs that the officers of the Bank shall measure the land in presence of the petitioner on 29.4.2019 to carve out Ac.0.53 dec. of land. In the event the petitioner does not cooperate, then the Bank shall measure the land and proceed with the matter under the SARFAESI Act. The petition is disposed of with this aforesaid observation. Petition disposed of.