CANARA BANK Vs. P. SELATHAL
LAWS(SC)-2020-2-85
SUPREME COURT OF INDIA
Decided on February 28,2020

CANARA BANK Appellant
VERSUS
P. Selathal Respondents





Cited Judgements :-

SHRI SAURAV JAIN VS. M/S. A. B. P. DESIGN [LAWS(SC)-2021-8-13] [REFERRED TO]
NANJAMMA VS. N. NARASIMHAMURTHY [LAWS(KAR)-2021-7-152] [REFERRED TO]
BARDOLI SHREERANG EXHIBITORS PRIVATE LIMITED VS. MAHESHBHAI BABUBHAI HIRPARA [LAWS(GJH)-2021-9-36] [REFERRED TO]
ELECTROSTEEL CASTINGS LIMITED VS. UV ASSET RECONSTRUCTION COMPANY LIMITED [LAWS(SC)-2021-11-66] [REFERRED TO]
M/S. SREE SURYA DEVELOPERS AND PROMOTERS / M/S. RAJA PUSHPA PROPERTIES PVT. LTD. VS. N. SAILESH PRASAD [LAWS(SC)-2022-2-33] [REFERRED TO]
ICICI BANK LTD VS. SASWATI DAS [LAWS(GAU)-2021-12-18] [REFERRED TO]
SREE SURYA DEVELOPERS VS. N. SAILESH PRASAD [LAWS(SC)-2021-2-103] [REFERRED TO]


JUDGEMENT

M.R.SHAH,J. - (1.)Leave granted.
(2.)Feeling aggrieved and dissatisfied with the impugned common judgment and order dated 09.11.2017 passed by the High Court of Judicature at Madras in C.R.P.(PD) No. 2586/2013 and C.R.P.(PD) No. 2587/2013, by which the High Court has dismissed the said revision applications preferred by the appellant herein ­ Canara Bank and has confirmed the orders passed by the learned trial Court dismissing the applications preferred by the appellant herein to reject the respective plaints in exercise of powers under Order 7 Rule 11 of the CPC, original defendant no.5 ­ Canara Bank in O.S. No. 1269/2010, who is original defendant no.6 in O.S. No.233/2011, has preferred the present appeals.
(3.)The facts leading to the present appeals in nutshell are as under:
That the appellant ­ bank sanctioned and granted a term loan of Rs.49,50,000/ to M/s Coimbatore Hatcheries, a partnership firm in which one Shri Ravichandran and G. Suresh Babu were the partners, in the year 1995. That the said loan was secured by mortgage of immovable property belonging to the said firm and the land situated at Survey Nos. 472 and 488 of Sanganur Village of one Shri M.C. Kallikutty ­ Guarantor. That the land bearing Survey Nos. 472 and 488 of Sanganur Village of one Shri M.C. Kallikutty ­ Guarantor is the subject matter of dispute. At this stage, it is required to be noted that the said Shri M.C. Kallikutty stood as a Guarantor. That the said Shri M.C. Kallikutty (hereinafter referred to as the 'Guarantor') signed Guarantee Deed dated 28.09.1995 and created equitable mortgage by deposit of Title Deeds of the disputed lands in question.

3.1 That as the original borrower failed to repay the loan amount due to the appellantbank, the appellantbank filed O.A. No. 489 of 2001 before the Debt Recovery Tribunal, Chennai in the month of October, 1997 against the principal borrower, its partners as well as against the Guarantor. That on 31.10.2001, DRT, Chennai passed an order in O.A. No. 489/2001 to proceed exparte against the Guarantor. That O.A. No. 489/2001 was transferred to DRT, Coimbatore and was renumbered as T.A. No. 822/2002. That T.A. No. 822/2002 (previously O.A. No. 489/2001) filed by the appellantbank came to be decreed by the DRT for Rs.57,35,770/ with 18% interest per annum in favour of the appellantbank and against the principal borrower as well as Guarantor. That a Recovery Certificate dated 16.09.2003 was issued in favour of the appellantbank for a sum of Rs.57,35,770/ with 18% interest per annum.

3.2 That Recovery Officer, DRT, Coimbatore issued a Demand Notice dated 11.11.2003 in R.P. No. 141/2003 to the principal borrower, its partners and the Guarantor directing them to pay the sum of Rs.1,55,75,443/ as decreed in T.A. No. 822/2002. That the Guarantor filed a writ petition before the High Court of Madras denying his guarantee and creation of EMT and sought direction to the Crime BranchCID to register an FIR and investigate into the matter. That on directions of the High Court of Madras, FIR No. 152/2010 came to be registered on 2.11.2005. The CBCID, Coimbatore filed a final report under Section 173(2) of Cr.P.C. for the offences under Sections 120B read with 465, 466, 467, 468, 471, 420 and 419 of the IPC against the partners of the principal borrower and also against one K.V. Roshan Babu, Agricultural Extension Officer of the appellant ­ bank. It appears that thereafter the criminal proceedings against the officer of the bank ­ Roshan Babu came to be quashed by the High Court vide judgment and order dated 28.06.2011.

3.3 That in the year 2007 and in pursuance of the Recovery Certificate in favour of the appellantbank, the bank auctioned and sold the properties of the partnership firm and recovered Rs.38 lacs. That thereafter after a period of five years from the date of the order passed by the DRT dated 27.08.2003, the Guarantor filed I.A. No. 1821 of 2008 in the year 2008 for setting aside the exparte decree dated 27.08.2003 before the DRT, Coimbatore. That vide order dated 12.06.2009, DRT, Coimbatore dismissed the said I.A filed by the Guarantor and refused to condone the delay of 1337 days in challenging the exparte decree dated 27.08.2003 and for condonation of delay of 2392 days in filing the petition to set aside the exparte order dated 31.10.2001.

3.4 That thereafter after a period of 15 years from the date of mortgage and after seven years from the date of the decree dated 27.08.2003 passed by the DRT, the respondents herein filed O.S. No. 1269/2010 and O.S. No. 233/2011 respectively in the Court of learned Second Additional Subordinate Court, Coimbatore against the Guarantor, principal borrower and its partners and the appellantbank for a declaration to declare the order dated 27.08.2003 passed by the DRT in T.A. No. 822/2002 as nonest, ultra vires, null and void and not binding on the suit property and also for a consequential permanent injunction restraining the Recovery Officer from interfering with their peaceful possession and enjoyment of the suit property by taking any action as against the suit property by way of attachment, sale or otherwise. That in the aforesaid two suits, the appellantbank was joined as defendant no.5 in O.S. No. 1269/2010 and defendant no.6 in O.S. No. 233/2011 and was served with the summons/notices of the suits. That the appellantbank filed I.A. No.431/2011 in O.S. No. 1269/2010 and I.A. No. 122/2012 in O.S. No. 233/2011 to reject the respective plaints in exercise of powers under Order 7 Rule 11(d) of the CPC. It was the case on behalf of the appellantbank that in view of the specific bar of jurisdiction under Sections 18 and 20(1) of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (for short 'RDDBFI Act'), the suits are not maintainable and the civil court has no jurisdiction. It was the case on behalf of the appellant bank that as per Section 20(1) of the RDDBFI Act, the appeal is provided to Debt Recovery Appellate Tribunal against the order of DRT and therefore the civil court has no jurisdiction to entertain the suits challenging the decree passed by the DRT.

3.5 That the said applications were opposed by the original plaintiffs submitting inter alia that they have purchased the suit property from the original owner and that they are in possession and enjoyment of the suit property. It was the case on behalf of the original plaintiffs that the vendor did not create any equitable mortgage in favour of the bank and the officials of the bank in collusion with the promoters of the principal borrower created and fabricated equitable mortgage, as though the original owner, their vendor created a mortgage. It was submitted that on a complaint given by the Guarantor ­ Shri M.C. Kallikutty, the original owner of the suit property, an FIR was registered on 02.11.2005 and a charge sheet dated 18.08.,2007 has been filed which is pending. It was alleged that the bank and promoters of the principal borrower played fraud and obtained decree in the DRT. It was submitted that the fraud played by the bank and others can be proved only by the civil forum and the same cannot be decided by the DRT. It was also submitted that the plaintiffs are third parties and therefore they cannot approach the DRT and the DRAT. Therefore, it was prayed to dismiss the said applications.

3.6 That the learned trial Court dismissed the said applications and refused to reject the respective plaints in exercise of powers under Order 7 Rule 11(d) of the CPC.

3.7 Feeling aggrieved and dissatisfied with the orders passed by the learned trial Court dismissing the aforesaid applications and refusing to reject the respective plaints under Order 7 Rule 11(d) of the CPC, the appellantbank preferred two separate revision applications before the High Court. By the impugned common judgment and order, the High Court has dismissed the said revision applications and has confirmed the orders passed by the learned trial Court rejecting the applications to reject the respective plaints in exercise of powers under Order 7 Rule 11 CPC by observing that the issue of either fraud or impersonation or whether mortgage created by the Guarantor, vendor of the original plaintiffs, in favour of the bank is legal or not is a matter to be adjudicated in the civil suits and in criminal case.

3.8 Feeling aggrieved and dissatisfied with the impugned common judgment and order passed by the High Court in refusing to reject the respective plaints in exercise of powers under Order 7 Rule 11 CPC, the appellantbank ­ original defendant no. 5 in O.S. No. 1269/2010 and original defendant no.6 in O.S. No. 233/2011 has preferred the present appeals.

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