UCO Bank, Branch Office-Amethi vs Ram Pal Soni And Anr.

This appeal has been preferred under section 18 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short "the SARFAESI Act") against the order dated 06.08.2019 passed by the Presiding Officer, DRT, Lucknow, whereby the preliminary objection about jurisdiction raised by the appellant-Bank was rejected.

The appellant-Bank granted loan facility to the respondents from its Amethi Branch. The loan was secured by mortgage of the property situated at Amethi. The borrowers committed default in repayment of the loan, hence the demand notice was issued by the authorized Officer from Zonal Office, Lucknow. The possession notice and the sale notice were also issued from the Zonal Office, Lucknow. The territorial jurisdiction of Lucknow vests with the DRT, Lucknow, whereas the territorial jurisdiction of Amethi lies with the DRT, Allahabad. The borrowers filed the S.A. before the DRT, Lucknow, to which a preliminary objection was taken by the Bank that the DRT, Lucknow has no jurisdiction. The Tribunal below vide impugned order observed that the notices were issued from Lucknow, therefore, a part of cause of action arose from Lucknow, as such the Tribunal below had jurisdiction. Being aggrieved by this observation, the Bank has filed the present appeal.

Learned counsel for the appellant submitted that the loan was sanctioned from Amethi. All the documents were executed at Amethi and the secured property is also situated at Amethi. Thus, all cause of actions arose from Amethi only. Since the authorized officer sitting at Lucknow has been authorized to issue the notice, hence the notices were issued from Lucknow, but only by issuing the notices, no part of cause of action arises. Any Chief Manager may be authorized to issue such notices. Thus, the DRT, Lucknow has no jurisdiction. In support of the contention, the learned counsel has referred the following judgments:-

A. Ramsay Exim and Technology Private Limited and others Vs. ICICI Bank Limited and another, 2019 LawSuit (Cal) 1238 (Calcutta High Court)

B. Amish Jain & Ors. Vs. ICICI Bank Ltd., 2018 LawSuit (Del) 2370 (Delhi High Court (D.B.))

On the contrary, the learned counsel for the S.A.-applicants submitted that the notices were issued from Lucknow and e-auction was also conducted by the officer sitting at Lucknow, therefore, a part of cause of action has arisen at Lucknow. Thus, the DRT has rightly exercised its jurisdiction.

Considered the arguments and perused record.

The above narrated facts are undisputed. As per section 17(1A) of the SARFAESI Act, an application can be filed within the limits of DRT, where the cause of action whole or in part arises or the secured asset is located or the Branch of secured creditor is maintaining the account of debt. In the instant case, the property is situated at Amethi, the branch having the loan account is also at Amethi, the documents were also executed at Amethi, but the notices were issued by the authorized officer, Zonal Office, Lucknow. Thus, the question for consideration is, as to whether any part of cause of action has arisen at Lucknow by issuing the notices?

The secured creditor may authorize any Chief Manager to initiate the recovery proceedings. It is not the necessary that the officer belonging to same branch or the same Zonal Office is required to be authorized for the purpose. The issuance of notice cannot be treated as cause of action and rather it is an effect, which comes into force for initiation of recovery proceedings. Thus, the issue of notice is result of non payment of the dues. Since any of the officers of the Bank may be authorized for this purpose, hence the same may be issued from any office of the secured creditors. Thus, it cannot be said that a part of cause of action has arisen from such place. A part of cause of action implies, when the branch is under jurisdiction of DRT 'A' and the secured asset is situated under the jurisdiction of DRT 'B', then it can be treated that a part of cause of action has arisen under the jurisdiction of both such DRTs and the S.A.-applicant is free to opt the jurisdiction of any of these DRTs. But even in that case, the jurisdiction of only one DRT may be opted for challenging all types of notices and not at different DRTs, as laid down by the Hon'ble Calcutta High Court in Ramsay Exim and Technology Private Limited and others Vs. ICICI Bank Limited (Supra).

The Hon'ble Delhi High Court in Amish Jain & Ors. Vs. ICICI Bank Ltd.(Supra) has held that by issuing the notice under section 13(2) from the branch under jurisdiction of DRT, Delhi does not give rise jurisdiction to the DRT, Delhi, as no part of cause of action has arisen in Delhi. In that case, the property was situated at Meerut and the loan was also granted from Meerut having jurisdiction of DRT situated in Uttar Pradesh. The facts of that matter are similar to the facts of the present case, hence the principle laid down is squarely applicable in this case. Thus, it is held that the S.A. filed by the S.A.-applicants is not maintainable before the DRT, Lucknow for lack of jurisdiction and the order impugned is set aside.

Since both the parties were present before this Tribunal and the S.A.-applicants have already paid the requisite court fee, therefore, the S.A. stands transferred under the provisions of section 17(1A) of the SARFAESI Act to the DRT, Allahabad having jurisdiction to entertain the same. The Tribunal below is directed to send the file on the next date after intimating the parties about the date for appearance before the DRT, Allahabad.

A copy of this judgment be sent to the parties as well as the DRT concerned and be also uploaded on the e-DRT portal.