Vimala Dharmalingam vs Sasidhara Prabhu

R. Mahadevan, J.

These Appeals are filed against the common judgment and Decree dated 30/04/2014 in A.Nos. 1557 and 1558 of 2012 in C.S No. 368 of 2011.

The Applications in A.Nos. 1557 and 1558 were filed by the Appellants seeking to vacate the ex-parte order of interim injunction and ex-parte direction issued by this court to furnish security in O.A.No. 467/2011 and A.No. 2494/2011, respectively.

The appellants herein are the defendants and the respondents are the plaintiffs in the suit. The parties for the sake of convenience would be referred hereinafter as per their rank in the suit.

Brief facts of the case.

The plaintiffs have filed the suit for damages, permanent and mandatory injunction contending that they have purchased the suit property in an auction conducted by the Vijaya Bank under the SARFAESI Act and the defendants without any right are in illegal possession. The further case of the plaintiffs is that subsequent to the purchase, the steps were taken by the Bank under Section 14 of the SARFAESI Act and one Mr.Arjunan, a tenant in the suit flat was evicted with his articles still inside. Later, the plaintiff allowed him to remove his articles and it is then the defendants have encroached into the property. Along with the suit, the plaintiffs also filed an application for Interim injunction, an application to direct the defendants to deposit all the original documents/title deeds pertaining to the suit flat and an application for an interim direction to direct the defendants to furnish a bank guarantee towards the suit claim.

Initially notice was ordered and duly served upon the defendants. Subsequently, recording the service and their non-appearance, the defendants were set exparte, ad-interim injunction was granted and direction was also issued to the defendants to furnish guarantee on 26.05.2011. Aggrieved, the applications to set-aside the exparte orders were filed in December 2011.

The case of the defendants is that they are the owners of the entire land comprising the disputed flat and one Joseph Isaac has manipulated the power of attorney executed by the defendants and illegally sold away the suit flat to one Kanmani Srinivasan, who seems to have furnished the property as collateral security to a loan obtained by Deepthi Construction. The Bank for enforcement of its dues has sold the suit flat to the plaintiffs. The further case of the defendants are that a civil suit filed by them in O.S 3282/2008 for declarations that sale deed and construction agreement executed by the Joseph Isaac in favour of kanmani Srinivasan as null and void and not binding on them, to declare the sale certificate issued in favour of the plaintiffs as null and void and for permanent injunction restraining the plaintiffs from interfering with their peaceful possession and enjoyment. The said civil suit is still pending. The further case of the defendants are that having failed to secure the possession through other methods, the plaintiffs have come up with the instant suit and since the suit is pending, the plaintiffs are not entitled to any relief. Though the defendants received the papers relating to the case in May 2011 which was handed over by them to their counsel, they were not put on notice of the hearing date and no summons were received by them from the court and hence sought for vacating the ex-parte interim orders.

Subsequently, the Plaintiffs have filed contempt petition in Cont. Petition No. 1719 of 2012 fro non-compliance of the earlier orders. The Learned Single judge prima facie found that the order has been dis-obeyed. However, further orders were not passed as the counsel sought time to issue appropriate instructions to the defendants. The contempt petition is still pending.

After perusing the pleadings and documents and after hearing the parities at length, the Learned Judge has dismissed the applications holding that since the defendants have not claimed title to the property based on documents. Further, the Learned judge has satisfied himself with the prima facie title of the plaintiffs and since the order passed in Contempt Petition on 01.02.2013 has not been challenged or stayed, the applications were dismissed as unsustainable as the defendants were not entitled to continue without paying any rent.

Mr. Muthukumarasamy, the Learned Senior Counsel appearing for the defendants would contend that the learned judge has failed to consider that the title documents of the plaintiffs are subject matter of the suit in O.S No 3286 of 2006 and that since the relief sought in the interim application and the main suit are one and the same, the Learned Judge ought to have allowed the applications. The learned senior counsel would further contend that being the owner, the defendants need not pay any amount to the plaintiffs nor should they be directed to furnish security and hence sought the setting aside of the impugned judgments and decrees.

Per contra, Mr.Shanmugam, learned counsel appearing for the plaintiffs would contend that the defendants are trespassers and despite purchasing the suit property in public auction, the plaintiffs are unable to enjoy the property for seven long years. The counsel further contended that when possession was taken with police aid as per the directions of the Metropolitan Magistrate, one Arjunan was in possession. The counsel further contended that the orders of the Learned Single judge are sound after considering the entire facts of the case.

Heard both the counsel and perused the documents.

Upon perusal of the documents, it is clear that even though the defendants have claimed to have paid the full sale consideration based on a sale agreement and power of attorney, they have not sought for any declaration to affirm their title. Rather, they have challenged the parent document and the auction sale by the Bank in a Civil Suit. It is settled law that in view of the statutory bar under section 34 of the SARFAESI Act, a civil suit questioning the action of the bank under the SARFAESI Act is not maintainable, unless, allegations of fraud are made. It is relevant to point out certain decisions in this regard.

(i) In the case reported in Jagdish Singh Vs. Heeralal and Others, the Hon''ble Supreme Court in Para 22 held as follows:-

 22. ......... The opening portion of section 34 clearly states that no civil court shall have jurisdiction to entertain any suit or proceeding  in respect of any matter which a DRT or an Appellate Tribunal is empowered by or under the Securitisation Act to determine. The expression  in respect of any matter referred to section 34 would take in the measures provided in sub-section (4) of section 13 of the Securitisation Act. Consequently if any aggrieved person has got any grievance against any measures taken by the borrower under sub-section (4) of Section 13, the remedy open to him is to approach the DRT or the Appellate Tribunal and not the civil Court . Civil Court in such circumstances has no jurisdiction to entertain any suit or proceedings in respect of those matters which fall under sub-section (4) of section 13 of the securitisation Act because those matters fell within the jurisdiction of DRT and the Appellate Tribunal. Further, section 35 says, the Securitisation Act overrides other laws, if they are inconsistent with the provisions of that Act, which takes in Section 9 of Civil Procedure as well.

(ii) In the case reported in United Bank of India Vs. Satyawati Tondon and Others, the Hon''ble Supreme Court in Para 27 held as follows:

 It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the rights of the banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with great caution.

(iii) In the case reported in V. Thulasi Vs. Indian Overseas Bank, , the Division Bench of this Court while dealing with a plea of the plaintiff therein claiming misuse of trust and the documents, confirming the rejection of the plaint, in para-35 held as follows:-

There is no force in the contention of the Appellant that the Tribunal is not vested with the power to inquire into the issues concerning the creation of security. It is not as if remedy available under section 17 is illusory. The right to move an Application under section 17 of the SARFAESI Act accrues to any person aggrieved by any of the measures taken under section 13 (4). The expression  evidence produced by the parties occurring in the section 17(3) would include evidence produced by the Appellant, though he is a person other than the borrower. Under section 17, it is open to the Appellant to raise the points raised.

Be that as it may, from the pleadings in O.S no 3286 of 2008, it is seen that the defendants have claimed that one Viji Joseph was in possession and that they vacated in 2005. The sale in favour of the plaintiffs in the present suit took place on 21.03.2007. The defendants have not stated anything about Arjunan either in the suit filed by them or in the applications filed to vacate the interim orders. They have also not raised any defence against the contentions regarding the measures under section 14 of the SARFAESI Act. The suit was filed only on 05.05.2008 and on the strength of the suit, the defendants have been ably resisting eviction. The letter dated 09.05.2008 produced by the defendants itself would clearly show that they were aware that the bank had already sold the flat to the plaintiffs as early as in April 2008 and were taking steps to secure possession. While so, nothing prevented them from filing an appeal under section 17 of the SARFAESI Act, raising all the available grounds. Further, the reasons furnished by the defendants for their non-appearance also cannot be accepted. Having received the suit papers, they cannot say that they were not aware of the particulars regarding the hearing date. If they had really entrusted the matter to an advocate, he would have found out the status from the Registry. This court, in the light of facts and circumstances, has rightly directed them to furnish security. Further, it is settled law that seeking interim relief akin to the main relief would not amount to allowing the suit. The purpose of granting interim relief is to preserve the property and avert third party rights. Hence, this court finds no infirmity in the orders impugned. Therefore, the appeals fail and are accordingly dismissed. Consequently, connected Miscellaneous Petitions are closed. No costs.