BY AD v. N.RATHEESH

T.M.CHANDRAN T.M.MATHAI - R1 SRI.REJI GEORGE SHRI.NASEER MOIDU - R2 SRI.BINOY DAVIS SRI.DEEPAK JOY.K. - R3 THIS REGULAR SECOND APPEAL HAVING COME UP FOR FINAL HEARING ON 12/06/2024, THE COURT ON 19.06.2024 DELIVERED THE FOLLOWING: R.S.A.No.1018 of 2019 3 C.S.SUDHA, J. ---------------------------------- R.S.A.No.1018 of 2019 --------------------------------------------- Dated this the 19th day of June 2024 J U D G M E N T This second appeal under Section 100 read with Order XLII Rule 1 CPC filed by the additional second plaintiff/appellant is against the judgment and decree dated 22/07/2019 in A.S.No.17/2015 on the file of the Subordinate Judge's Court, Cherthala, which appeal in turn is against the judgment and decree dated 29/11/2014 in O.S.No.275/2010 on the file of the Munsiff Court, Cherthala. The parties and the documents will be referred to as described in O.S.No.275/2010.

2. The plaint schedule property belonged to Dumminku Mathaikutty, who died in the year 1974. Annakkutty, his wife predeceased Mathaikutty. The plaintiff Mariyamma and her brother R.S.A.No.1018 of 2019 4 Kunjukunju are the only legal heirs of Mathaikutty. On the death of Mathaikutty the plaint schedule property no.1 devolved on the sole plaintiff and late Kunjukunju, who were in joint possession and enjoyment of the property. Defendants 4 to 9 are the legal heirs of Kunjukunju. Kunjukunju during his life time was looking after the plaint schedule properties and thereafter the properties was in the possession and enjoyment of the sole plaintiff. On 17/05/2010, a notice was seen affixed on plaint schedule item no.1 property stating that the third defendant had bid in the auction proceedings conducted pursuant to proceedings initiated by the Debt Recovery Tribunal (DRT), Ernakulam and that the second defendant bank is going to take possession of the property. On enquiry it was found that two settlement deeds had been executed by Kunjukunju in favour of his son, the 9th defendant, in respect of the plaint schedule properties. The 9th defendant had availed loans from both the first and the second defendant banks relating to plaint schedule item no.1 and item no.2. He failed in repaying the amounts pursuant to which both the banks initiated proceedings against the secured R.S.A.No.1018 of 2019 5 asset and obtained orders in their favour. Pursuant to the second defendant obtaining orders relating to plaint schedule item no.1, the property was auctioned to the third defendant and thereafter Ext.B9 sale certificate issued in his favour. Plaint schedule item no.1 was sold by the first defendant bank to one Prasanth Simpson. When the first plaintiff came to know about the DRT proceedings, she filed an objection before the DRT. According to the plaintiff the documents executed by her brother Kunjukunju are void and not binding on her and so she is entitled to ½ share in the property. The plaint schedule properties have so far not been mutated in the name of the 9th defendant and the same continues in the thandapper of late Mathaikkutty. The plaintiff is still in possession and enjoyment of the plaint schedule properties. Hence the suit seeking partition of the plaint schedule property and allotment of ½ share to the plaintiff.

3. During the course of the proceedings the sole plaintiff died. The 6th defendant claimed that the plaintiff had executed a will in his favour and hence on his request was transposed as the R.S.A.No.1018 of 2019 additional second plaintiff. 6

4. The first defendant filed written statement contending that the suit was not maintainable in the light of Section 34 of the Securitisation and Re-construction of Financial Assets and Enforcement of Security Interest Act, 2002 ('the SARFAESI Act'). In fact, the plaintiff had approached the DRT, Ernakulam and filed S.A.No.60/2009 raising similar allegations. The first defendant also disputed the allegation of the sole plaintiff that she is the sister of Kunjukunju. The plaint schedule property no.2 was mortgaged by the 9th defendant with the first defendant bank when he availed a loan. However, the 9th defendant failed in repaying the loan and hence proceedings was initiated against the secured asset and the first defendant took possession of the property on 19/12/2008. In the auction conducted on 16/02/2009, one Prasanth Simpson purchased the property. The first defendant was unable to issue a sale certificate to the auction purchaser and had to return the amount deposited by the auction purchaser along with interest and costs as per a direction of this court. The plaint schedule item no.1 R.S.A.No.1018 of 2019 7 was in exclusive possession and enjoyment of the 9th defendant who obtained the property as per a settlement deed executed by his father late Kunjukunju. Defendants 4 to 9 have no right in the property in the light of the settlement deed executed by late Kunjukunju in favour of the 9th defendant.

5. After the plaint was amended by which the second additional plaintiff was brought on record, an additional written statement was filed by the first defendant denying the execution of the will by the sole plaintiff.

6. The second defendant bank also filed separate written statement contending that plaint schedule item no.1 had been mortgaged by the 9th defendant when a loan was availed. The property belongs to the 9th defendant as per settlement deed no.1802/87, SRO, Cherthala executed by his father Kunjukunju in his favour. The 9th defendant defaulted repayment of the loan and hence the bank filed O.S.No.296/1999 before the Subordinate Judge's Court, Ernakulam. The suit was decreed. Recovery certificate was issued in O.A.No.276/01. When the second R.S.A.No.1018 of 2019 8 defendant moved the Recovery Officer, DRT for sale of plaint schedule item no.1, the plaintiff filed IA 1280/2007, which was dismissed as per order dated 31/01/2001. Subsequently, another application was filed by the plaintiff, which was also dismissed. Auction was thereafter held on 16/03/2010 and the third defendant purchased the property. The sale has been confirmed. The third defendant is in possession and enjoyment of the property with effect from 28/05/2010. The second defendant also contended that the suit was barred by res judicata. The second defendant also disputed the will alleged to have been executed by the first plaintiff in favour of the additional second plaintiff.

7. The third defendant, the auction purchaser of plaint schedule item no.1, also contended that the suit was barred under Section 34 of the SARFAESI Act.

8. The fifth defendant filed written statement contending that defendants 5 to 9 are the legal heirs of the first plaintiff and Kunjukunju. There was no necessity for Kunjukunju to execute settlement deeds in favour of the 9th defendant. The settlement R.S.A.No.1018 of 2019 9 deeds relied on by the 9th defendant are void documents. The 9th defendant had no right to pledge the plaint schedule property, which is still standing in the name of late Mathaikkutty. The fifth defendant is having 1/10 share in the property and therefore he sought for a decree of partition for allotment of his 1/10 share in the property by remitting court fees.

9. Necessary issues were framed by the trial court. The parties went to trial on the basis of the aforesaid pleadings. PW1 to PW3 were examined and Ext.sA1 to A7 were marked on the side of the plaintiffs. DW1 and DW2 were examined and Exts. B1 to B10 were marked on the side of the defendants.

10. The trial court on an appreciation of the oral and documentary evidence and after hearing both sides found no bar under section 34 of the SARFAESI Act and held the suit to be maintainable. The suit was decreed and the plaint schedule properties was directed to be partitioned into two equal shares and the additional second plaintiff allotted one share in both the items. The first defendant bank was given the liberty to proceed against ½ R.S.A.No.1018 of 2019 10 share over plaint schedule item no.2. The third defendant, auction purchaser, was held entitled to get ½ share of plaint schedule item no.1. The second additional plaintiff was given the liberty to move for passing a final decree. Aggrieved by the judgment and decree, the third defendant/auction purchaser, filed A.S.No.17 of 2015. The first appellate court reversed the judgment and decree of the trial court holding the suit to be not maintainable and thus allowed the appeal. Aggrieved, the second plaintiff has come up in second appeal.

11. This court as per order dated 29/10/2019 admitted the appeal on the following substantial questions of law: (i) Whether the Recovery of Debts due to Banks and Financial Institutions Act oust the jurisdiction of civil court in a suit for declaration and partition filed by a co-owner? (ii) Whether jurisdiction of Debts Recovery Tribunal is exclusive or exhaustive in matters involving adjudication of issues like fabrication of document, fraud and the right of co-owner? R.S.A.No.1018 of 2019 11

12. Heard both sides.

13. The learned counsel for the plaintiff/appellant quite persuasively argued that a well reasoned judgment of the trial court has been reversed by the first appellate court on a perverse understanding of the facts and law on the point, which requires to be interfered with. In support of the argument reference was made to the dictum in Elsamma v. Kaduthuruthy Urban Co-operative Bank Ltd. 2018 (5) KHC 701. Per contra it was submitted by the learned counsel appearing for defendants 1 and 2 banks and the third defendant/auction purchaser relying on the dictums in Jagdish Singh v. Heeralal, 2013 KHC 4865: 2014 (1) SCC 479 and Sree Anandhakumar Mills Ltd. v. Indian Overseas Bank, 2018(2) KHC 883: 2019(14)SCC 788, that in view of the specific bar contained under Section 34 of the Act, the suit in respect of the secured asset was not maintainable and hence the first appellate court was right in arriving at such a finding and therefore the judgment and decree calls for no interference. R.S.A.No.1018 of 2019 12

14. In Elsamma (Supra) relied on by the plaintiff/appellant a Division Bench of this court held that the bar of jurisdiction under 34 of the SARFAESI Act does not apply if the property is not a secured asset in relation to which only measures can be taken under Section 13(4) thereof. In other words, the jurisdiction of the civil court is not barred if the plea is that the plaint schedule property is not the secured asset in respect of which a security interest is created. The civil court shall decline jurisdiction if it is found in the midst of adjudication that the disputed property is in fact the secured asset over which security interest is created. It has also been held that any person aggrieved can move the DRT under Section 17 seeking clarification about the measures taken under Section 13(4) of the SARFAESI Act.

15. In the case on hand the plaintiff does not have a case that the plaint schedule property is not the secured asset relating to which proceedings have been initiated by defendants 1 and 2. Therefore, the decision relied on does not in any way advance the case of the plaintiff. R.S.A.No.1018 of 2019 13

16. In Jagdish Singh and Sree Anandakumar Mills Ltd. (Supra), the Apex Court has clearly held that the expression 'any person’ used in Section 17 of the SARFAESI Act 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 any action taken under Section 13(4) of the SARFAESI Act. Section 17 confers a right of appeal to any person, including the borrower, if that person is aggrieved by any of the ‘measures’ referred to in subsection (4) of Section 13 taken by the secured creditor. In Sree Anandhakumar Mills Ltd (Supra), it has been held that a suit for partition is not maintainable in a situation where proceedings under the SARFAESI Act has been initiated. In such cases the remedy of any person aggrieved by the initiation of proceedings under the SARFAESI Act lies under Section 17. In the light of the above precedents of the Apex Court, the argument of the learned counsel for the plaintiff/appellant, that she had no remedy available to be pursued under the SARFAESI Act is apparently incorrect. R.S.A.No.1018 of 2019 14 It would also be apposite to refer to Ext.B7, the order of the Recovery Officer, DRT, Ernakulam, in IA No.231/10 in DRC No.1500 in OA No.276/2001, a claim filed by the original 1st plaintiff. The very same case set up in the plaint was raised in the said IA also. However, as per Ext.B7 order dated 10/02/2010, the claim petition was dismissed. On going through Ext.B7 order, I find that a similar claim petition, that is, O.A.1820/2007 had been filed by the plaintiff raising the same claims. However, the said application was dismissed in the year 2007. Despite the dismissal of both the petitions filed by the first plaintiff before the Recovery Officer, DRT, they were never challenged. As the plaint schedule property is the secured asset in the transaction between the 9th defendant and the banks, namely, defendants 1 and 2, the suit has been rightly held to be not maintainable in the light of Section 34 of the SARFAESI Act. I do not find any infirmity in the findings of the first appellate court. As the suit has been held to be not maintainable, the question whether Section 11 CPC is attracted does not arise for consideration. Substantial questions of law (i) R.S.A.No.1018 of 2019 15 and (ii) are answered against the additional second plaintiff/appellant. Hence the second appeal is dismissed. Interlocutory applications, if any pending, shall stand closed. Sd/- C.S.SUDHA JUDGE