Civil Revision Application No.58 of 2012

28th January, 2014

Petitioner Counsel: Mr. A.P. WACHASUNDER
Respondent Counsel: Mr. N.H. SHAMS, Mr. S.N. KUMAR

Cases Cited:
United Bank of India Vs. Satyawati Tondon, 2010(5) ALL MR 902 (S.C.)=(2010) 8 SCC 110 [Para 6,8]

JUDGMENT

JUDGMENT :- ADMIT. Heard finally with consent.

2. Both the civil revision applications are heard and decided together as they arise out of the same civil suit.

3. One Biswanath Ramkaran Agrawal who is respondent No.1 in Civil Revision Application No.58/2012 filed suit against the applicants in the same civil revision application on the ground that they had purchased certain goods worth Rs.29,47,065/- and did not pay the sale price, therefore, along with interest the suit was filed for recovery of Rs.11,47,734/- after taking accounts. Defendant No.3 Asset Reconstruction Company-secured creditor of the applicants has, in the meantime, taken out proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "the Act" for short) and therefore, the same is also arrayed as a defendant. For the sake of convenience the parties will be termed as 'plaintiff' and 'defendant' as arrayed in the suit before the trial Court.

4. Defendant No.3 i.e. secured creditor has filed an application under Section 9-A of the Act read with Order 7 Rule 11 of the Code of Civil Procedure challenging maintainability of the suit as against the secured creditor who has already took possession of the secured property and thereafter under the provisions of the Act the property was sold before filing of the suit. In the circumstances, it was submitted that the secured creditor cannot be joined as a defendant in the suit in view of the provisions of Section 35 read with Section 17 of the Act. The learned trial Court, however, dismissed the application. Therefore, the Civil Revision Application No.92 of 2012 is filed by the said defendant No.3 / secured creditor.

5. The application under Order 7 Rule 11 of the Code of Civil Procedure by the applicant in Civil Revision Application No. 58 of 2012, who was defendant No.2 in the suit, was also dismissed by the learned trial Court. It was a case of this applicant that since the plaintiff has certain remedies under Section 17 of the Act the suit would not be tenable. The learned trial Court has also rejected the said application and therefore, the present two civil revision applications.

6. In Civil Revision Application No. 58 of 2012 Mr. Wachasunder, the learned counsel for the applicant, submits that in view of the provisions of Sections 17 and 34 of the Act and Section 47 of the Sale of Goods Act the suit was not maintainable as the plaintiff has a remedy to appear in the proceedings under the Act to put his claim. He relies on the ratio in the case of United Bank of India Vs. Satyawati Tondon, reported in (2010) 8 SCC 110 : [2010(5) ALL MR 902 (S.C.)].

7. It is to be noted that the plaintiff is unsecured creditor claiming the price of the goods sold by him. In the circumstances, though he can invoke his right under Section 17 of the Act to appear in the proceedings under the Act to lay claim he has also independent right to sue the borrower. The provisions of Section 34 of the Act would show that Civil Court would have no jurisdiction in respect of any matter which Debts Recovery Tribunal or Appellate Tribunal is empowered by or under the Act to determine the issue. However, Civil Court's jurisdiction for grant of decree for recovery of money is nowhere barred by the provisions of the Act.

8. In the case of United Bank vs Satyawati, [2010(5) ALL MR 902 (S.C.)] (cited supra) a guarantor of the secured borrower has filed writ petition challenging proceeding against him initiated by the Bank under the Act and in those circumstances, in paragraph 42, as relied by the learned counsel Mr. Wachasunder, following observations were made :

"42. There is another reason why the impugned order should be set aside. If Respondent No.1 had any tangible grievance against the notice issued under Section 13(4) or action taken under Section 14, then she could have availed remedy by filing an application under Section 17(1). The expression "any person" used in Section 17(1) is of wide import. It takes within its fold, not only the borrower but also the guarantor or any other person who may be affected by the action taken under Section 13(4) or Section 14. Both, the Tribunal and the Appellate Tribunal are empowered to pass interim orders under Sections 17 and 18 and are required to decide the matters within a fixed time schedule. It is thus evident that the remedies available to an aggrieved person under the SARFAESI Act are both expeditious and effective."

Those observations are not applicable in the present case for the reasons already forwarded. Therefore, the application of the applicants in Civil Revision Application No. 58 of 2012 is rightly dismissed by the learned trial court.

9. As regards Civil Revision Application No.92 of 2012, as admittedly defendant No.3 is a secured creditor who has taken action under the Act and even the property is sold before filing of the suit. The defendant No.3 i.e. present applicant, therefore, was not a necessary party or even a proper party in the claim of unpaid purchase price of the goods between the plaintiff and defendant Nos.1 and 2. In those circumstances, the learned trial Court ought to have allowed the application. In the result the following order.

ORDER

i. Civil Revision Application No. 58 of 2012 is hereby dismissed without any order as to costs.

ii. Civil Revision Application No. 92 of 2-12 is hereby allowed.

iii. The order passed by the learned trial Court in Application at Exh.23 is hereby set aside and instead the plaint is rejected as regards defendant No.3 only.

Both the civil revision applications are thus disposed of without any order as to costs.

Ordered accordingly.