DRT Can Not Decide Tenancy And Ownership Issues

QUERY:

"Kindly give opinion whether the jurisdiction of civil court is not excluded and the DRT does not have power to decide tenancy and ownership issues?" (This has become necessary to convince the Civil Court, before whom a suit is to be filed by the Owner of a Property, whose assets have been attached and auctioned, treating that tenant (borrower) is holding ownership/transferable tenancy rights)

REFERENCES:

(a)The Recovery Of Debts Due To Banks And Financial Institutions Act, 1993 (‘the 1993 Act’) Section 17. Jurisdiction, powers and authority of Tribunals-(1) A Tribunal shall exercise, on and from the appointed day, the jurisdiction, powers and authority to entertain and decide applications from the banks and financial institutions for recovery of debts due to such banks and financial institutions.

(b)Section 18. Bar of jurisdiction - On and from the appointed day, no court or other authority shall have, or be entitled to exercise, any jurisdiction, powers or authority (except the Supreme Court, and a High Court exercising jurisdiction under articles 226 and 227 of the Constitution) in relation to the matters specified in section 17.

 (c)The Code of Civil Procedure, 1908 (‘the Code’) Section 9. Courts to try all civil suits unless barred-The Courts shall (subject to the provisions herein contained) have jurisdiction to try all suits of a civil nature excepting suits of which their cognizance is either expressly or impliedly barred.      

  [Explanation I].- A suit in which the right to property or to an office is contested is a suit of a civil nature, notwithstanding that such right may depend entirely on the decision of questions as to religious rites or ceremonies.

  (d) As per P Ramanatha Aiyar’s the Law Lexicon, 2nd Edition 1997 at page 1687 the term “Right” means an interest which is recognised and protected by law. As it is recognised by law a man is entitled to have it. As it can be protected by law the possessor can enforce it by an appropriate action in a court. (Raj Rajendra Sardar Maloji Narsig Rao Vs. Shankar Saran, AIR 1958 All 775, 787).

OPINION

  Bar of Jurisdiction of Civil Courts

1.   Section 18 of the DRT Act, 1993 (short for “Recovery of Debts Due To Banks and Financial Institutions Act, 1993”) provides for the bar of jurisdiction of civil courts in relation to the matters specified in section 17. Similarly, Section 34 of the Securitisation Act, 2002 (short for “The Securitisation and Reconstruction Of Financial Assets and Enforcement Of Security Interest Act, 2002”) provides, inter alia, for the bar of jurisdiction of civil courts in respect of any matter which a Debt Recovery Tribunal (‘DRT’) or the Debt Recovery Appellate Tribunal (‘DRAT’)  is empowered by or under the Securitisation Act. However, since long the Courts have held that “the jurisdiction of civil court is not excluded unless the cognizance of entire suit as brought is barred” (Mayadevi vs. Indernarian, 1967 A.A. 118, 120; Mewa vs. Baldeo, 1967 A. A. 358). In this regard hon’ble Supreme Court in Bhatia Co-Operative Housing Society Ltd Vs. D. C. Patel (1953 AIR 16; 1953 SCR 185 date of judgment: 05/11/1952) held as follows:

“Learned counsel  for  the respondent took  a  preliminary objection,  founded  on the provisions of section 28  of the  Bombay Act, that the City Civil Court had no jurisdiction to entertain the suit, for that section clearly states that  in Greater Bombay the Court of Small Causes alone shall have jurisdiction  to  entertain  and  try  any  suit  between  a landlord  and a tenant relating to the recovery of  rent  or possession of any premises to which any of the provisions of that  Part of the Act applied and to decide any application made  under the Act and to deal with any claim or  question arising out  of  the Act and no other Court should have jurisdiction to entertain any suit or proceeding or to deal with  such claim or question. ………………………….The question at once arises as to who is  to decide this point in controversy. It is well settled that a Civil Court has inherent power to decide the question of its own jurisdiction, although, as a result of its enquiry, it may turn out that it has no jurisdiction  over  the  suit. Accordingly we think, in agreement with the High Court, that this preliminary objection is not well founded in principle or authority and should be rejected.”

  1.1    Further, Hon’ble Supreme Court in Dhulabhai and others vs. State of M. P. and another [1969 AIR 78; 1968 SCR  (3) 662 decided on  05/04/1968] held as follows:

  “Where the statute gives a finality to the orders of the special tribunals  the civil court's jurisdiction  must  be held  to be excluded if there is adequate remedy to do what the  civil  courts  would  normally  do in  a suit. Such provision, however, does not exclude those cases where the provisions of the particular Act have not been complied with or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure. [682 A-C; 683 C]” (emphasis supplied)

  1.2    Hon’ble Bombay High Court in a recent judgment in Centurion Bank Ltd vs. Indian Lead Ltd [(2000) 100 Comp. Cas. 537: (1999-3) 101 Bom. L.R. 556] held as follows:

  “Under the 1993 Act (i.e. ‘the DRT Act, 1993’), there is no total ouster of jurisdiction of civil Court. The ouster is by virtue of Section 18, which sets out that no Court or other authority can try matters for recovery of debts. Insofar as the reliefs which do not pertain to debts, on a plain reading of Section 17 of the 1993 Act are concerned, there can be no doubt that the civil Court will still retain jurisdiction.”

  1.3    Recently, Hon’ble Supreme Court in Indian Bank vs. ABS Marine Products (P) Ltd [JT 2006 (5) SC 281: SCC 2006 (5) 72] held as follows:

  “From Section 17 and 18 the Civil Court’s jurisdiction is barred only in regard to application by bank / financial institution for recovery of its debt and not barred to file a suit by a borrower against a bank.”

1.4  Further, in a latest judgment Hon’ble Supreme Court in  Rajender Singh Vs. Vijay Pal @ Jaipal & Ors.[(2008) 4 SCC 36 Appeal (civil) No. 3867 of 2001 date of judgment: 19/02/2008] held as follows (in para 2 and 3):

   “2.        The plaintiff/respondent no. 1 had instituted the suit before the Civil Judge, Delhi for declaration and injunction in respect of the suit property and for other incidental reliefs. In the said suit, a preliminary issue was framed to the extent that in view of Section 185 of the Delhi Land Reforms Act, 1954 (in short ‘the Act’), the jurisdiction of the Civil Court to entertain the suit was barred.

  3…………………..The (Delhi)High Court in the impugned judgment held that Section 185 of the Act could not be applied in view of the nature of the reliefs claimed in the suit and therefore, the suit shall be heard on merits on the other issues. In view of the stand taken by us, as noted hereinafter, and considering the facts and circumstances of the case and the allegations made in the plaint, we are, prima facie, satisfied that this appeal can be disposed of by directing the trial court to decide the suit not only on the other issues on merits but also on the issue regarding the jurisdiction of the civil court to entertain the suit in view of section 185 of the Act.

  1.5  Further, Hon’ble Supreme Court in  Mardia Chemicals Ltd. U.O.I. & Ors. [A.I.R 2004 SC 2371; (2004) 4 SCC 311 Decided on 08/04/2004] held as follows: (in para 51)

  “51. However, to a very limited extent jurisdiction of the civil court can also be invoked, where for example, the action of the secured creditor is alleged to be fraudulent or their claim may be so absurd and untenable which may not require any probe, whatsoever or to say precisely to the extent the scope is permissible to bring an action in the civil court in the cases of English mortgages………….”  (emphasis supplied)

  The Dictionary meaning of the word “fraudulent” is “to Defraud”. As per P Ramanatha Aiyar’s “The Law Lexicon” 2nd edition 2007 at page no. 511 the word “Defraud” means to deprive of some right, interest, or property by deceitful devices.

  CONCLUSION

         Mr. S.A.Ahmed, Advocate, Mumbai has opined, with which I respectfully agree, that:

2.1   The DRT is a Tribunal of special jurisdiction. The Civil Court under Section 9 of the CPC can try all civil suits unless they are expressly or impliedly barred. In DRT matters the question of implied bar and the tests required therefor are not relevant because there is an express bar to try matters that fall under the purview of the DRT Act. The governing section here is Section 17 of the DRT Act and only matters that fall within its ambit are taken out of the jurisdiction of the Civil Court and tried by the DRT. Section 17 is very technical and various terms like bank, debt etc are defined therein. Section 17 is to be given a strict construction and only those matters that fall within its ambit are to be tried by the Tribunal and none others. Even the matter which falls within its ambit, the Civil Court will continue to have jurisdiction in certain cases, as given in Mardia Chemical's case (supra) or under the General Law if the Tribunal is not acting within the scope of its powers or in disregard of the same.

  2.2  In the final analysis, after sharply defining the ambit of matters that fall within Section 17 of the DRT Act, it becomes clear as to which matters can be decided by the DRT and which cannot. That is to say, all matters that are out of the scope of the powers of the DRT are to be / continue to be governed by the General Law and be tried by the Civil Court.

  2.3  Therefore, using the above principles, in answer to the query, if a matter relates to something that falls out of the ambit of Section 17, whether it is a suit for declaration of tenancy or any other declaration, it will be tried by the General Law and the ordinary civil law will come into play, as if, there was no DRT matter. In other words, the special tribunal i.e. DRT designated for the purpose will have jurisdiction if it otherwise falls within its jurisdiction. In view of aforesaid discussion, it stands concluded that the jurisdiction of civil court is not excluded and the DRT does not have power to decide tenancy and ownership issues.

2.4   However, readers may please note carefully that recently hon’ble Supreme Court in Jagdish Singh vs Heeralal & Ors. {(2014) 1 SCC 479; Decided on 30 October, 2013} has held as follows.

“23. We are of the view that the civil court jurisdiction is completely barred, so far as the “measure” taken by a secured creditor under sub-section (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 Respondent Nos.6 to 8 have been crystalised, before creating security interest in respect of the secured assets. In such circumstances, we are of the view that the High Court was in error in holding that only civil court has jurisdiction to examine as to whether the “measures” taken by the secured creditor under sub-section (4) of Section 13 of the Securitisation Act were legal or not.” (END)

 

Note: The views expressed are my personal and a view point only.

 

Author:

Narendra Sharma,

Consultant (Corporate Legal)

E-mail: nkdewas@yahoo.co.in

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