rejecting the plaint on the ground that in the obtaining factual matrix, the civil court has no jurisdiction to entertain the suit in view of the provisioncontained in Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, “SARFAESI Act”).

IN THE HIGH COURT OF ANDHRA PRADESH: AMARAVATI

 HON’BLE Mr. JUSTICE PRASHANT KUMAR MISHRA, CHIEF JUSTICE

&

HON’BLE Mr. JUSTICE D.V.S.S. SOMAYAJULU

APPEAL SUIT No.212 of 2022

Amara Venkata Siva Kumar, S/o. late Amara Sathyanarayana

Murthy, Hindu, aged about 33, Business, R/o.D.No.3-29-

104/A/2, Krishna Nagar, 1st lane, Opp: Pattabhipuram

Mosque, Guntur

 … Appellant

Versus

Amara Venkateswarlu, S/o. late Amara Sathyanarayana

Murthy, Hindu, aged about 43 years, Business, R/o.D.No.3-

29-104/A/2, Krishna Nagar, 1st lane, Opp: Pattabhipuram

Mosque, Guntur, and another

 … Respondents

Counsel for appellant : Mr. K.V. Vijaya Kumar

Counsel for respondents : ---

 JUDGMENT

Dt.09.02.2023

(Prashant Kumar Mishra, CJ)

This appeal under Section 96 of the Code of Civil

Procedure, 1908, filed by the plaintiff, assails the legality and

validity of the docket order dated 12.04.2022 passed by the

learned Principal Senior Civil Judge, Guntur in an unnumbered

plaint in C.F.R.No.5448 of 2021, rejecting the plaint on the

ground that in the obtaining factual matrix, the civil court has

no jurisdiction to entertain the suit in view of the provision

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contained in Section 34 of the Securitisation and

Reconstruction of Financial Assets and Enforcement of

Security Interest Act, 2002 (for short, “SARFAESI Act”).

2. The plaintiff has preferred the suit seeking partition of

the plaint schedule property by dividing it into two equal

shares between the plaintiff and the 1st defendant; allot half

share to the plaintiff and deliver possession to him by metes

and bounds.

3. When the plaint was presented before the trial court, an

objection was raised by the office calling upon the plaintiff to

explain as to how the civil court has got jurisdiction to

entertain the plaint as the bank has already initiated

proceedings under the SARFAESI Act with regard to the plaint

schedule property. Further objection was raised that when

the plaint schedule property stands in the name of the 1st

defendant, how can the plaintiff seek relief of partition. It

was observed in the docket order dated 07.01.2022 that

certified copy of the sale deed dated 26.12.2022 stands in the

name of the 1st defendant, it is not showing the names of the

family members and there is no recital in it that the family

consists of parties to the suit. It was also noticed that the 1st

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defendant stood as guarantor for a third party and placed the

property as surety with a bank, which had already initiated

proceedings for taking possession of the property under the

SARFAESI Act; in that view of the matter, the plaintiff is liable

to explain as to how the civil court has got jurisdiction to

entertain the plaint.

4. By the impugned order, the learned Principal Senior

Civil Judge, Guntur, has held that in view of the provision

under Section 34 of the SARFAESI Act, civil court does not

have jurisdiction either to entertain the suit or to grant orders

restraining the bank from taking action in pursuance of the

power conferred under the said Act for recovery of debts; if

the plaintiff is aggrieved of the steps taken under Section 13

of the SARFAESI Act, there is remedy of appeal under Section

17 of the said Act, to the Debts Recovery Tribunal having

jurisdiction in the matter and without availing the remedy of

appeal and bypassing the same, plaintiff has no right to

approach the civil court.

5. It is submitted by the learned counsel for the

appellant/plaintiff that the suit is essentially for partition of

the plaint schedule property and the bank is not a party to the

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suit; therefore, in between the plaintiff and the defendants,

provisions of the SARFAESI Act would not operate or apply in

the matter relating to partition of family property. He would

further submit that the trial court has wrongly interpreted the

provision contained in Section 34 of the SARFAESI Act.

6. To consider the submissions made by the learned

counsel for the appellant/plaintiff at Bar, it is necessary to

refer to the plaint averments. Paragraph III (b) of the plaint

clearly states that the property was purchased in the name of

the 1st defendant under registered sale deed dated

26.12.2002 and all the bills like electricity service connection,

house property tax etc., were obtained in the name of the 1st

defendant.

7. At paragraph III (d), plaintiff has specifically pleaded

that a notice dated 29.10.2021 was issued by Pridivi Asset

Reconstruction and Securitization Company Limited on behalf

of Karur Vysya Bank to the 1st defendant to the address of the

property, which was received by the plaintiff, who was

shocked to know that the said property was given as security

by the 1st defendant as guarantor for the loan taken by

M/s. Sri Lakshmi Chillies Trading Company.

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8. According to the plaintiff, the plaint schedule property

being joint family property, 1st defendant should have

informed or intimated him about his standing as guarantor for

the loan obtained by M/s. Sri Lakshmi Chillies Trading

Company. The plaintiff, therefore, questions the right and

entitlement of the 1st defendant about his unilateral action in

giving the plaint schedule property as security in the bank

though it is a joint family property. It is stated that,

thereafter, the plaintiff demanded the 1st defendant to come

forward to partition the property equally between the plaintiff

and the 1st defendant. Cause of action for filing the suit is

stated to have arisen on 29.10.2021 when notice issued to

the 1st defendant by Pridivi Asset Reconstruction and

Securitization Company Limited on behalf of Karur Vysya

Bank came to the notice of the plaintiff.

9. A plain reading of the plaint averments would reveal

that the plaintiff himself has disclosed initiation of proceedings

by Pridivi Asset Reconstruction and Securitization Company

Limited on behalf of Karur Vysya Bank under the provisions of

the SARFAESI Act. Thus, it is the admitted position of the

plaintiff that proceedings under the said Act have already

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been initiated and that the plaint schedule property is

mortgaged by the 1st defendant as guarantor to the loan

transaction of M/s. Sri Lakshmi Chillies Trading Company.

10. The argument that the suit would not be barred under

Section 34 of the SARFAESI Act, has been raised on the

ground that the plaintiff is not a party to the loan transaction

and that the plaint schedule property is a joint family

property; therefore, 1st defendant cannot subject the plaint

schedule property as guarantor to the loan transaction of M/s.

Sri Lakshmi Chillies Trading Company.

11. In Jagdish Singh v. Heeralal and others – (2014) 1

SCC 479, a similar situation had arisen when the property

was auctioned in course of recovery proceedings under the

SARFAESI Act and a civil suit for declaration of title, partition

and permanent injunction was filed by one of the family

members, who originally owned the property. An objection

was raised before the civil court stating that in view of Section

13 read with Section 34 of the SARFAESI Act, civil court has

no jurisdiction to entertain the suit. The said objection was

upheld by the civil court holding that the suit is not

maintainable and the appropriate remedy for the plaintiff is to

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file appeal under Section 17 of the SARFAESI Act. The High

Court allowed the appeal of the plaintiff, holding that the suit

is maintainable.

12. Referring to the definition of “security interest” as

defined under Section 2(zf), “secured asset” as defined under

Section 2(zc) and the provisions contained in Sections 13, 17

and 34 of the SARFAESI Act, the Hon’ble Supreme Court held

that the expression ‘any person’ used in Section 17 is of wide

import and takes within its fold not only the borrower but also

the guarantor or any other person who may be affected by

action taken under Section 13(4) of the SARFAESI Act. The

Supreme Court relied on its earlier decisions in United Bank

of India v. Satyawati Tondon and others – (2010) 8 SCC

110 and Mardia Chemicals Ltd. and others v. Union of

India and others – (2004) 4 SCC 311, to hold that any

matter in respect of which an action may be taken even later

on, the civil court shall have no jurisdiction to entertain any

proceeding thereof and the bar of civil court applies to all such

matters which may be taken cognizance of by the Debts

Recovery Tribunal; apart from those matters in which

measures have already been taken under sub-section (4) of

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Section 13. The Supreme Court concluded by holding thus in

paragraphs 24 and 25:

“24. Statutory interest is being created in favour of

the secured creditor on the secured assets and when

the secured creditor proposes to proceed against the

secured assets, sub-section (4) of Section 13

envisages various measures to secure the borrower's

debt. One of the measures provided by the statute is

to take possession of secured assets of the

borrowers, including the right to transfer by way of

lease, assignment or realising the secured assets.

Any person aggrieved by any of the “measures”

referred to in sub-section (4) of Section 13 has got a

statutory right of appeal to the DRT under Section

17. The opening portion of Section 34 clearly states

that no civil court shall have the 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 in Section 34 would take in the

“measures” provided under 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 subsection (4) of Section 13, the remedy open to him is

to approach the DRT or the Appellate Tribunal and

not the civil court. The civil court in such

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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 the 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 CPC as well.”

“25. We are of the view that the civil court

jurisdiction is completely barred, so far as the

“measures” taken by a secured creditor under subsection (4) of Section 13 of the Securitisation Act,

against which an aggrieved person has a right of

appeal before the DRT or the Appellate Tribunal, to

determine as to whether there has been any

illegality in the “measures” taken. The Bank, in the

instant case, has proceeded only against secured

assets of the borrowers on which no rights of

Respondents 6 to 8 (sic Respondents 1 to 5) have

been crystallised, before creating security interest in

respect of the secured assets.”

13. In the case at hand also, the plaintiff claims interest in

the property in respect of which proceedings under the

SARFAESI Act have already been initiated. Even if the plaintiff

is not the borrower or the guarantor, he being interested in

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the property which is the subject matter of the proceedings

under the SARFAESI Act, bar under Section 34 of the

SARFAESI Act would equally apply to him and the remedy for

him is to prefer an appeal under Section 17 of the SARFAESI

Act. The trial court has rightly dismissed the suit at the stage

of registration.

14. The appeal has no substance and is, accordingly,

dismissed. No order as to costs. Pending miscellaneous

applications, if any, shall stand closed.

 Sd/- Sd/-

PRASHANT KUMAR MISHRA, CJ D.V.S.S. SOMAYAJULU, J

MRR

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