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Manager, Uco Bank v. Samar Sarkar & Ors.
Factual and Procedural Background
The plaintiff filed a suit seeking a declaration of tenancy rights over a flat held from defendant No. 1, and a declaration that he cannot be evicted without due process of law. The plaintiff claimed that he had been a tenant since July 2003, paying rent regularly, and alleged that defendants No. 2 and 3 attempted to forcibly evict him by pasting a notice on the building and taking possession of the premises. The plaintiff was unaware of any transaction between defendant No. 1 and defendants No. 2 and 3. The plaintiff sought relief restraining defendants No. 2 and 3 from forcibly evicting him.
Defendants No. 2 and 3 filed an application under Order 7, Rule 11(d) of the Code of Civil Procedure to reject the plaint, contending the suit was barred under Sections 13, 17, and 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the SARFAESI Act). The learned Trial Judge rejected this application, holding that neither the suit nor the reliefs claimed were barred under the said Act.
The present application under Article 227 of the Constitution challenges the Trial Judge’s order rejecting the defendants’ application to reject the plaint.
Legal Issues Presented
- Whether the suit filed by the plaintiff claiming tenancy rights and protection from eviction is barred under Sections 13, 17, and 34 of the SARFAESI Act, 2002.
- Whether the Civil Court has jurisdiction to entertain a suit challenging eviction by a bank enforcing security interest under the SARFAESI Act.
- Whether the plaint is liable to be rejected under Order 7, Rule 11(d) of the Code of Civil Procedure on the grounds alleged by the defendants.
Arguments of the Parties
Petitioner’s Arguments
- Section 13 of the SARFAESI Act empowers the bank to enforce security interest by taking possession of secured assets, including the right to lease, assign, or sell the property.
- Any person aggrieved by measures taken under Section 13(4) of the Act, including a tenant, must challenge such measures by appeal to the Debt Recovery Tribunal within forty-five days.
- The expression “any person” in Section 17 includes tenants, who are thus barred from approaching Civil Courts and must resort to the Debt Recovery Tribunal.
- Therefore, the Civil Court lacks jurisdiction, and the plaint should be rejected as barred by the SARFAESI Act.
Opposite Party’s Arguments
The opinion does not contain a detailed account of the opposite party’s legal arguments.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The Court examined the relevant provisions of Sections 13, 17, and 34 of the SARFAESI Act. It observed that the Act does not authorize a bank to evict a tenant from a mortgaged property in the process of enforcing security interest. The plaintiff’s suit was not a challenge to any action taken by the bank under the SARFAESI Act but was aimed at protecting tenancy rights against eviction by defendants No. 2 and 3.
The Court found that the relief sought by the plaintiff was distinct from the bank’s enforcement actions and that none of the cited provisions barred the suit. Since the bank does not have power under the Act to evict tenants, a tenant’s suit to protect tenancy rights is maintainable in Civil Court. Consequently, the Trial Judge correctly held that the plaint could not be rejected on the grounds of bar under the SARFAESI Act.
Holding and Implications
The revisional application challenging the rejection of the plaint is dismissed.
The direct effect of this decision is the affirmation of the Trial Judge’s order allowing the tenancy suit to proceed in Civil Court. The Court clarified that the SARFAESI Act does not oust Civil Court jurisdiction in suits filed by tenants seeking protection from eviction by banks enforcing security interests. No new legal precedent beyond this specific interpretation was established.
1. This application under Art. 227 of the Constitution of India is directed against an order being No. 19 dated 19th September, 2006 passed by the learned Civil Judge (Senior Division), 1st Court at Sealdah in Title Suit No. 205 of 2004 by which the application of the defendant No. 3.petitioner for rejection of the plaint under O. 7, R. 11 of the Code of Civil Procedure was rejected by the learned Trial Judge.
2. The plaintiff/opposite party No. 1 filed a suit for declaration of his tenancy right under the defendant/opposite party No. 2 herein. A further declaration was also sought for against the said defendant for declaring that he cannot be evicted without due process of law. So far as the petitioner, as well as the opposite party No. 3 herein are concerned, the following relief was claimed by the plaintiff in the plaint:
“The respondent No. 2 or 3 or their agents and officers be restrained from forcibly evicting the plaintiff from the scheduled flat.”
3. The said reliefs were claimed by the plaintiff on the basis of the following averments made out by the plaintiffs in the plaint of the said case.
1. The plaintiff took tenancy of the disputed flat from the defendant No. 1 in the month of July, 2003 at a monthly rental of Rs. 2500/- to be paid within 10th of the month. The plaintiff occupied the said premises in the month of July, 2003 and has been living their with his family.
2. The plaintiff never defaulted in payment of rent to his landlord.
3. The defendants No. 2 and 3 called the plaintiff along with his landlord, namely, the defendant No. 1 at his residence and asked him to vacate the flat. A notice was pasted on the wall of the said building. The defendants No. 2 and 3, after pasting the said notice on the wall of the said building left. The defendant No. 1 assured the plaintiff that it was a mere formality and he need not be worried. The rent for the month of August, 2004 was also received by the defendant No. 1 from the plaintiff.
4. On 9th September, 2004 the defendant No. 1 suddenly served the plaintiff a notice dated 1st September, 2004 stating inter alia that the defendant No. 2 has taken possession of the entire premises, being holding No. 20/7, Northern Avenue, P.S Chitpur, Kolkata — 700037 and asked the plaintiff to vacate the ground floor and occupied by the plaintiff immediately. The defendant No. 1 thereafter refused to accept the rent for the month of September, 2004.
5. The plaintiff is totally in the dark about the transaction between the defendant No. 1 and the defendants No. 2 and 3.
4. Under such circumstances, apprehending that the plaintiff may be evicted from his tenancy forcibly, the plaintiff filed the said suit claiming the aforesaid reliefs.
5. In such a suit, the defendants No. 2 and 3 filed an application for rejection of the plaint under O. 7, R. 11(d) of the Code of Civil Procedure on the ground that the suit is barred under Section 13, Section 17 and Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
6. Such an application of the defendants No. 2 and 3 was rejected by the learned Trial Judge by holding, inter alia, that neither the suit as framed by the plaintiff/opposite party nor the reliefs, claimed by him in the said suit, is barred under any of the provisions under Sections 13, 17 and 34 of the said Act.
7. Mr. Roy, learned Advocate, appearing for the petitioner submits that Section 13 of the said Act has given his client the right of enforcement of security interest by way of taking possession of the secured asset of the borrower, including the right to transfer by way of lease, assignment or sale for realising the secured asset. Mr. Roy, further, submits that, if any person, including the borrower, is aggrieved against the step and/or measure which is taken and/or adopted by the bank in the process of enforcement of security interest by the bank, any person who is aggrieved by any of the measures referred to in sub-section (4) of Section 13 of the said Act, may prefer an appeal to the Debt Recovery Tribunal having jurisdiction in the matter within forty-five days from the date of which such measure had been taken. By giving much stress on the expression “any person” appearing in Section 17 of the said Act, Mr. Roy, further, submits that the tenant of the said premises, being a person whose right of appeal is recognised under Section 17 of the Act, is required to take steps for challenging the action of the bank before the Debt Recovery Tribunal having jurisdiction in the matter as per the provision contained in Section 17 of the said Act. Thus, Mr. Roy submits that the jurisdiction of the Civil Court is barred to entertain such a suit.
8. I have considered the relevant provisions, being Sections 13, 17 and 34 of the said Act. On perusal of those provisions, this Court does not find that the bank is authorised to evict a tenant from any mortgaged property in the process of realisation of the dues of the landlord/borrower.
9. On perusal of the plaint case, this Court also does not find that the plaintiff has challenged any action of the bank taken in the process of recovery of its dues from its borrower under the provision of the said Act. The reliefs which were claimed by the plaintiff in the said suit, make it clear that the plaintiff simply wants to protect his tenancy right in respect of his tenancy under the defendant No. 1 who is a borrower from the bank.
10. None of the provisions of the said Act authorises the bank to recover possession from a tenant under the borrower in a mortgaged property in the process of recovery of its dues from its borrower. If that be so, the bank cannot evict the tenant of a borrower from a mortgaged property by virtue of any of the provisions of the said Act and if any action of the bank which is not protected under the said Act, is challenged by such a tenant in a suit, such challenge cannot be held to be barred under the provision of Section 17 of the said Act.
11. Accordingly, this Court holds that the suit as framed by the plaintiff/opposite party is not barred under the provision of the said Act. The learned Trial Judge rightly held that the suit is maintainable and the plaint cannot be rejected.
12. I fully agree with the findings arrived at by the learned trial Judge in support of his conclusion in the order impugned.
13. The revisional application, thus, stands rejected.
Application dismissed.
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