Authorised Officer, State Bank Of India vs M/S Allwyn Alloys Pvt. Lt.

REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 5248 OF 2018 (Arising out of SLP (C) No.32031/2016)

THE AUTHORISED OFFICER, STATE BANK OF INDIA ....Appellant(s)

:Versus:

M/S. ALLWYN ALLOYS PVT. LTD. AND ORS. ....Respondent(s)

JUDGMENT

A.M. Khanwilkar, J.

1. The judgment and order dated 30th August, 2016 of the

Division Bench of the High Court of Judicature at Bombay in

Writ Petition No.7480 of 2014, is assailed in this appeal,

whereby the High Court without formally setting aside the Signature Not Verified Digitally signed by DEEPAK GUGLANI order passed by the Debts Recovery Appellate Tribunal, Date: 2018.05.17 15:43:58 IST Reason:

Mumbai dated 20th November, 2013 in Appeal No.273 of 2013 2

connected with M.A. No.886 of 2013, disposed of the writ

petition with liberty to respondent Nos.5 & 6 (writ petitioners)

to approach the competent forum for adjudication of their

right, title and interest in respect of a flat/apartment, i.e. Flat

No.C-203 on the Second Floor of Blue Heaven Apartment, C-

Wing, Rebellow Road, Bandra (West), Mumbai, which was

mortgaged to the appellant Bank by the directors of

respondent No.1 Company by way of an equitable mortgage.

2. The Debts Recovery Tribunal (“DRT”) as well as the Debts

Recovery Appellate Tribunal (“DRAT”) after examining the plea

taken by respondent Nos.5 and 6 came to hold that the

document styled as Memorandum of Understanding dated 13th

March, 2011, relied upon by respondent Nos.5 and 6, was

subsequently created after the equitable mortgage and moreso

it was an unregistered document which would not confer any

right, title and interest in their favour in the said flat. Further,

the share certificate of the said flat has already been

transferred by the Society in the name of the directors of

respondent No.1 Company i.e. Mrs. Zahoor K. Dhanani, Mr. 3

Karim K. Dhanani and Mrs. Habika K. Dhanani (respondent

Nos.2, 3 and 4 herein). It is also held that the Society has

contemporaneously recorded the factum of mortgage created

by the said respondents in respect of the subject flat in favour

of the Bank; and that the said respondents were not coming

forward to deny the stated mortgage. On the basis of the

documentary evidence, DRT as well as the DRAT concurrently

held that it is well established that the said respondents had

legitimately created an equitable mortgage in respect of the

said flat in favour of the Bank, which has had security interest

upon the said flat. On the other hand, respondent Nos.5 and 6

(writ petitioners) have failed to file any documentary evidence

to establish their subsisting title over the subject flat. On that

basis, the relief claimed by respondent Nos.5 and 6 (writ

petitioners) to restrain the Bank from proceeding with the

auction of the subject flat stood rejected.

3. This decision of the DRAT dated 20th November, 2013

was assailed by respondent Nos.5 and 6 (writ petitioners) by

way of Writ Petition No.7480 of 2014. The Division Bench of 4

the High Court noted the plea of the writ petitioners and

opined that the question regarding the right, title and interest

or marketable title of the writ petitioners or any interest that

could have been parted by respondent Nos.2 to 4 under the so

called mortgage, involved disputed facts and would require

evidence and a full-fledged trial. After so noting, the High

Court went on to observe that with a view to give full

opportunity to the parties to bring on record the relevant facts

in terms of the pleadings and for full and complete

adjudication of the matters in issue, it is apposite to give

liberty to the writ petitioners to contest the matter before a

proper forum where all the issues could be agitated. For,

indisputably, respondent No.5 (writ petitioner No.1) is in

physical possession of the stated flat. The High Court

proceeded to pass the following operative order in the said writ

petition:

“6] Accordingly, we dispose of the writ petition with the following directions:

a] Period of 8 weeks is granted for the writ petitioners to approach proper forum to get adjudication of the rights of the writ petitioners as contended in the writ petition and within the said period of 8 weeks, they shall file and seek 5

proper interim relief in their favour. Till expiry of 8 weeks, the 1st respondent bank shall not proceed with the matter in terms of the order obtained by them before Debts Recovery Tribunal so far as the property in question;

b] Amount of Rs.25 Lacs shall be deposited in an interest earning deposit, by the respondent No.1 bank and profits of the said deposit shall enure to the benefits of the parties, who become successful in the litigation; and c] No order as to costs.”

4. The Bank has assailed the aforesaid decision of the High

Court primarily on the ground that all issues concerning the

mortgaged/secured property are required to be decided only

by the DRT; and not in any civil proceedings as has been

observed by the High Court in the impugned judgment. For,

filing of a civil suit in respect of secured assets is barred by

law. Secondly, the DRT as well as DRAT have examined the

merits of the controversy and justly answered the same

against the writ petitioners. The concurrent finding of fact

recorded by the said Tribunals is that the writ petitioners have

failed to establish any right, title or interest in the subject flat.

That finding has neither been disturbed nor is it assailable.

According to the Bank, the High Court judgment under appeal

is untenable and deserves to be set aside.

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5. The contesting respondent Nos.5 and 6 (writ petitioners),

however, supported the view taken by the High Court and

would contend that it is indisputable that respondent No.5

(writ petitioner No.1) is in physical possession of the subject

flat and was entitled to pursue his claim about the right, title

and interest in the subject flat in view of the Memorandum of

Understanding dated 13th March, 2011, executed between the

writ petitioners and respondent Nos.2 to 4 regarding re-sale of

the subject flat in their (writ petitioners) favour. The

respondent Nos.5 and 6 would also contend that the original

share certificate and few receipts of payments made to the

Society were still in their possession and that the entries

effected in the Society’s record to transfer the share certificate

in favour of respondent Nos. 2 to 4 are fabricated.

6. After having considered the rival submissions of the

parities, we have no hesitation in acceding to the argument

urged on behalf of the Bank that the mandate of Section 13

and, in particular, Section 34 of the Securitisation and

Reconstruction of Financial Assets and Enforcement of 7 Security Interest Act, 2002 (for short, “the 2002 Act”), clearly

bars filing of a civil suit. For, no civil court can exercise

jurisdiction to entertain any suit or proceeding in respect of

any matter which a DRT or DRAT is empowered by or under

this Act to determine and no injunction can be granted by any

Court or authority in respect of any action taken or to be

taken in pursuance of any power conferred by or under the

Act. The fact that the stated flat is the subject matter of a

registered sale deed executed by the respondent Nos. 5 and 6

(writ petitioners) in favour of respondent Nos. 2 to 4 and which

sale deed has been deposited with the Bank along with the

share certificate and other documents for creating an

equitable mortgage and the Bank has initiated action in that

behalf under the 2002 Act, is indisputable. If so, the question

of permitting the respondent Nos.5 and 6 (writ petitioners) to

approach any other forum for adjudication of issues raised by

them concerning the right, title and interest in relation to the

said property, cannot be countenanced. The High Court has

not analysed the efficacy of the concurrent finding of fact

recorded by the DRT and DRAT but opined that the same 8

involved factual issues warranting production of evidence and

a full-fledged trial. The approach of the High Court as already

noted hitherto is completely fallacious and untenable in law.

7. The learned counsel appearing on behalf of the Bank

persuaded us to decide the merits of the controversy between

the parties but as noted earlier, the High Court has not

analysed the same at all but chose to dispose of the writ

petition by giving liberty to the writ petitioners to pursue their

remedy before a proper forum. The respondent Nos.5 and 6

(writ petitioners) would, however, contend that crucial aspects

have been glossed over by the DRT and DRAT including the

effect of admitted position that respondent No.5 (writ

petitioner No.1) is in possession of the subject property and

also having custody of the original share certificate and few

receipts issued by the Society. In these circumstances, we

deem it appropriate to relegate the parties before the High

Court by setting aside the impugned judgment and leaving all

questions open, to be decided by the High Court on its own

merits and in accordance with law.

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8. We find force in the submission made on behalf of the

Bank that the High Court could not have directed the Bank to

deposit Rs.25 Lacs in an interest earning deposit and the

profits of the said deposit to enure to the benefit of the

successful party. Such a direction, in our view, was wholly

uncalled for.

9. Be that as it may, since we are setting aside the

impugned judgment of the High Court, we direct that Writ

Petition No.7480 of 2014 shall stand restored to the file of the

High Court to its original number for being decided on its own

merits and in accordance with law. As the proceeding for

recovery is pending since 2010, concerning the equitable

mortgage created by respondent Nos. 2 to 4 in respect of the

subject flat and having failed to repay the loan amount, which

is quite substantial, we request the High Court to dispose of

the writ petition expeditiously, preferably by the end of July,

2018.

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10. The appeal is allowed on the above terms, with no order

as to costs.

.………………………….CJI.

(Dipak Misra)

…………………………..….J. (A.M. Khanwilkar)

…………………………..….J. (Dr. D.Y. Chandrachud) New Delhi;

May 17, 2018.