Mr. Shahrukh Inam, Advocate v. ROSHINI DEVI

Judgment

1. The petitioner is arrayed as defendant No. 5 in CS SCJ/851/2022, pending before the JSCC/ASCJ/GJ, Patiala House Court, Delhi [“Trial Court”]. By way of the present revision petition under Section 115 of the Code of Civil Procedure, 1908 [“CPC”], it assails an order dated

01.04.2024 passed by the Trial Court in CS SCJ/851/2022, dismissing its application under Order VII Rule 11 CPC, for rejection of the plaint. The said application was preferred on the ground that the suit is barred under Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 [“SARFAESI Act”]. Signature Not Verified Signed By:DAMINI YADAV Signing Date:24.12.2025 17:33:23 C.R.P. 158/2024 Page 1 of 22 A. FACTS

2. The transactions between the parties arise out of a loan agreement dated 24.12.2020 executed between the petitioner and late Mr. Mahavir Singh, as the primary borrower, alongwith his son, Mr. Gaurav Tanwar, and his wife, Ms. Roshni Devi, as co-borrowers [“the borrowers”]. The respondent herein, who is the plaintiff in the suit, is the wife of late Mr. Mahavir Singh and the mother of Mr. Gaurav Tanwar. 3. Under the said loan agreement, a sum of Rs.64,33,968/- was sanctioned, repayable in 144 monthly instalments of Rs.92,464/- each. The loan was secured by a mortgage created over an immovable property bearing No. WZ-144, measuring 83⅓ sq. yds. (37½ ft. × 20 ft.), with all roof rights, out of Khasra No. 1791, situated within the limits of Old Lal Dora, Village Naraina, New Delhi-110028 [“the suit property”]. 4. Owing to persistent defaults in repayment, the petitioner classified the loan account as a Non-Performing Asset [“NPA”] on 08.05.2022 to the borrowers, and thereafter issued a demand notice dated 20.05.2022 under Section 13(2) of the SARFAESI Act. 5. In response thereto, the borrowers submitted a representation in June 2022, inter alia contending that the loan was intended to be insured with Kotak Mahindra Life Insurance Company Ltd. [“the Insurance Company”], and that the insurance premium had been handed over to the petitioner’s representatives. It was further alleged that, despite the same, no insurance policy was ever issued or received by them. 6. the borrowers’ The petitioner rejected representation vide communication dated 07.07.2022 and thereafter issued a possession notice dated 01.08.2022 under Section 13(4) of the SARFAESI Act. Signature Not Verified Signed By:DAMINI YADAV Signing Date:24.12.2025 17:33:23 C.R.P. 158/2024 Page 2 of 22

In the meantime, the respondent/plaintiff instituted the civil suit, wherein the petitioner was arrayed as defendant No. 5, and four individuals were impleaded as defendants No. 1 to 4, described as “representatives/officers” of the petitioner. 8. The reliefs sought in the suit are as follows: “(a) passing a decree/order of declaration that the acts of the defendants, i.e. i) presenting of ECS mandate of EMI amounting to Rs.92,464/- which was cleared on 07.01.2022 in the bank account of deceased husband of plaintiff; ii) issuing the letter dated 15.03.2022 thereby demanding the two outstanding EMI which were returned unpaid; iii) issuing of PRE SARFESAI Notice dated 18.04.2022; iv) declaring the loan account of borrower/plaintiff/husband of plaintiff as Non Performing Assets (NPA) on 08.05.2022 and v) issuing of Notice dated 20.05.2022 u/s 13(2) of SARFAESI Act, 2002, are illegal and having no effects against the plaintiff, her son regarding mortgaged property bearing no. WZ-144, Khasra No.1791, Lal Dora of Naraina, near Pillar No.09, New Delhi- 110028; (b) passing a decree/order of declaration that the there is no loan loan account outstanding against No.SLPHDLHI0001093 as the borrower/deceased husband of the plaintiff was insured against the loan liability; in respect of the plaintiff (c) passing a decree/order of mandatory injuction thereby directing defendants not to recover any dues arising out of loan account No.SLPHDLHI0001093 from plaintiff or her son and recover the loan outstanding from Insurance Company to whom Defendants paid the premium of insurance against the life of borrower/Sh. Mahavir Singh Tanwar; (d) passing an order thereby directing Defendant No.5 to refund the amount of one EMI amounting to Rs.92,464/- which was cleared on 07.01.2022 from the bank account of deceased husband as a consequential relief for which the appropriate court fees, if required or is directed shall be paid by the plaintiff subsequently; (e) passing an order awarding the cost of the suit proceedings in favour of the Plaintiff and against the Defendants. Signature Not Verified Signed By:DAMINI YADAV Signing Date:24.12.2025 17:33:23 C.R.P. 158/2024 Page 3 of 22 (f) Any other order or relief as this Hon’ble Court may deem fit and necessary may also be passed in favour of the plaintiff and against the defendants.”1

9. Summons in the suit were issued on 27.07.2022, and by order dated 06.08.2022, the Trial Court directed maintenance of status quo with respect to possession of the suit property. 10. Thereafter, the petitioner filed an application under Order VII Rule 11 CPC, which came to be dismissed by the impugned order dated

01.04.2024. Aggrieved thereby, the petitioner has preferred the present revision petition. 11. By the impugned order dated 01.04.2024, the Trial Court also directed the impleadment of the Insurance Company as a party to the suit. Pursuant thereto, Kotak Mahindra Life Insurance Company Ltd. was arrayed as defendant No. 6 on 01.07.2024, and summons were issued accordingly. B. SUBMISSIONS:

12. I have heard Mr. Shahrukh Inam, learned counsel for the petitioner, and Mr. Satish Kumar Paanchal, learned counsel for the respondent. 13. The principal contention advanced on behalf of the petitioner is that the suit is barred by law, as it is, in substance, directed against the measures initiated by the petitioner under the SARFAESI Act in respect of a secured asset. Reliance is placed on Section 34 of the SARFAESI Act, which reads as under: “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 1 Emphasis supplied. Signature Not Verified Signed By:DAMINI YADAV Signing Date:24.12.2025 17:33:23 C.R.P. 158/2024 Page 4 of 22 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).”

14. Mr. Inam contended that the suit falls within the scope of Section 17 of the SARFAESI Act and, therefore, falls within the jurisdiction of the Debts Recovery Tribunal [“DRT”], rendering it barred under Section 34 of the SARFAESI Act. The relevant part of Section 17 of the Act reads as under: “17. [Application against measures to recover secured debts].—(1) Any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorised officer under this Chapter, [may make an application along with such fee, as may be prescribed,] to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measure had been taken: [Provided that different fees may be prescribed for making the application by the borrower and the person other than the borrower.] [Explanation.—For the removal of doubts, it is hereby declared that the communication of the reasons to the borrower by the secured creditor for not having accepted his representation or objection or the likely action of the secured creditor at the stage of communication of reasons to the borrower shall not entitle the person (including borrower) to make an application to the Debts Recovery Tribunal under this sub-section.] [(2) The Debts Recovery Tribunal shall consider whether any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor for enforcement of security are in accordance with the provisions of this Act and the rules made thereunder. [(3) If, the Debts Recovery Tribunal, after examining the facts and circumstances of the case and evidence produced by the parties, comes to the conclusion that any of the measures referred to in sub- section (4) of section 13, taken by the secured creditor are not in Signature Not Verified Signed By:DAMINI YADAV Signing Date:24.12.2025 17:33:23 C.R.P. 158/2024 Page 5 of 22 accordance with the provisions of this Act and the rules made thereunder, and require restoration of the management or restoration of possession, of the secured assets to the borrower or other aggrieved person, it may, by order,— (a) declare the recourse to any one or more measures referred to in sub-section (4) of section 13 taken by the secured creditor as invalid; and (b) restore the possession of secured assets or management of secured assets to the borrower or such other aggrieved person, who has made an application under sub-section (1), as the case may be; and (c) pass such other direction as it may consider appropriate and necessary in relation to any of the recourse taken by the secured creditor under sub-section (4) of section 13.] (4) If, the Debts Recovery Tribunal declares the recourse taken by a secured creditor under sub-section (4) of section 13, is in accordance with the provisions of this Act and the rules made thereunder, then, notwithstanding anything contained in any other law for the time being in force, the secured creditor shall be entitled to take recourse to one or more of the measures specified under sub-section (4) of section 13 to recover his secured debt. xxx”2

15. Per contra, Mr. Paanchal submitted that the suit is not directed against SARFAESI measures, but arises out of the petitioner’s failure to procure and provide the insurance policy, despite having allegedly received the premium. It is contended that, had the policy been issued, the petitioner could have recovered its dues from the Insurance Company, instead of proceeding against the borrowers. It was further submitted by Mr. Paanchal that the respondent’s allegations relate to fraud and misrepresentation on the part of the petitioner and its officers, which, according to him, constitutes a recognized exception to the bar under Section 34 of the SARFAESI Act, as held in various judicial decisions. 2 Emphasis supplied. Signature Not Verified Signed By:DAMINI YADAV Signing Date:24.12.2025 17:33:23 C.R.P. 158/2024 Page 6 of 22

16. Learned counsel for both parties have relied upon various judicial precedents, which shall be adverted to at the appropriate stage. C. ANALYSIS

17. The petitioner has sought rejection of the plaint under Order VII Rule 11 CPC. Clause (d) thereof empowers the Court to reject a plaint where the suit appears, from the statements contained therein, to be barred by any law. 18. The scope of enquiry under Order VII Rule 11 CPC is narrow and well defined, inasmuch as the Court is required to assess the maintainability of the plaint solely on the basis of the averments contained in the plaint and the documents filed therewith, without adverting to the defences raised in the written statement or any material produced by the defendants. This settled position of law has been consistently reiterated by the Courts, including in the recent decision of the Supreme Court in Karam Singh v. Amarjit Singh3. 19. The ambit of Order VII Rule 11 CPC also extends to cases where the suit is manifestly vexatious, frivolous, or otherwise amounts to an abuse of the process of the Court. The provision is attracted where the plaint discloses an illusory cause of action, or where such cause of action is sought to be created or sustained through contrived, misleading, or artfully drafted averments. The power under the said provision may also be exercised where suppression of material facts or a clear misuse of the Court’s jurisdiction is apparent on the face of the plaint4.