Judge Baratha chakravarthy# In view thereof, the Civil Revision Petition is allowed on the following terms:-(i)The order dated 08.05.2024 made in M.A.No.128 of 2024 in C.C.No.383 of 2022 passed by the District Consumer Disputes Redressal Commission, Tirunelveli, shall stand set aside;
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
Dated: 25.07.2024
CORAM
THE HONOURABLE MR JUSTICE D.BHARATHA CHAKRAVARTHY
C.R.P(MD)No.1361 of 2024
and
C.M.P(MD).No.7935 of 2024
1.The Branch Manager,
M/s.Cholamandalam
Investment and Finance Company Limited,
Tiruchendur Road, Palayamkottai,
Tirunelveli District.
2.M/s.Cholamandalam Investment and
Finance Company Limited, Dare House,
1st Floor, No.2, NSC Bose Road, Parrys,
Chennai 600 001. … Petitioners
Vs.
Uma Maheswari …Respondent
Civil Revision Petition is filed under Article 227 of the Constitution of India, to set aside the impugned docket order dated 08.05.2024 in M.A.No.128 of 2024 in C.C.No.383 of 2022 on the file of the District Consumer Disputes Redressal Commission, Tirunelveli, which stands extended from time to time and all further proceedings arising thereunder.
For Petitioners : Mr.Kishore Balasubramanian
For Respondent : Mr.S.ManiORDER
A. The Petition:
The Civil Revision petition is filed challenging the order dated 08.05.2024 made in M.A.No.128 of 2024 in C.C.No.383 of 2022 on the file of the District Consumer Disputes Redressal Commission, Tirunelveli.
1.1 The Miscellaneous Application No.128 of 2024 is filed for grant of an ad-interim injunction restraining the respondents therein from taking possession of the properties pursuant to the notice dated 08.03.2023 or to take any other steps till the disposal of the main complaint. The complaint was being adjourned for enquiry. It was actually posted for respondents’ side arguments on 08.05.2024 and it seems that on the said day, since representation is made on behalf of the petitioners that the Financial Institution was trying to take physical possession, an ad-interim order is passed, even while adjourning the matter further. Aggrieved by the same, the petitioner/ Financial Institution is before this Court.
B. The Factual Background:
- The factual background in which this petition arises is that the petitioners/Financial Institution would submit that this is a case, where a sum of Rs.1,70,00,000/- was advanced to the husband of the respondent on 22.12.2021 vide loan Account No.HE01MAM00000018943. Thereafter, the respondent’s husband died on 01.05.2022 and even thereafter, there was no payment towards the discharge of principal or interest in respect of the loan amount due and therefore, the petitioners/ Financial Institution resorted to initiation of proceedings under the SARFAESI Act (Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act,2002).
2.1 A demand notice under Section 13(2) of the SARFAESI Act was issued on 15.12.2022. Since no payment was made even within the period of 60 days, a possession notice under Section 13(4) of the SARFAESI Act was issued taking symbolic possession on 08.03.2023 in respect of the properties mortgaged with the Financial Institution.
2.2 While so, the respondent filed a complaint before the District Consumer Disputes Redressal Commission, Tirunelveli, on 01.11.2023 claiming that even at the time of disbursal, a sum of Rs.3,35,825/- was deducted from the account towards payment of premium of Life Insurance. Such Life Insurance premium having been paid, there must have been a policy and upon the death of the respondent’s husband, the entire sum outstanding should be covered by the said policy and therefore, the complaint was filed to direct the Financial Institution to pay a sum of Rs.1,80,00,000/- as the loss for the negligent act in not issuing the policy till the lifetime of the respondent’s husband and also to pay another sum of Rs.20,00,000/- as damages to the complainant.
2.3 Simultaneously, the respondent also challenged the demand notice and the consequential possession notice by way of W.P.(MD)No.7858 of 2023 on the self same ground stating that the amount is not due to the petitioner/ Financial Institution in view of the deduction of the premium towards Insurance Policy. The said writ petition was disposed of by an order dated 08.04.2024 and it is essential to extract paragraphs 16 to 18 of the said judgment, which read as follows:
“………..
16.It is the specific case of the Insurance Company that after waiting for a few months, they have refunded the premium amount vide RTGS in HDFC bank account bearing No.00040310005866 on 04.04.2022 and the amount was credited on 06.04.2022 to the account of the Housing Finance Company namely respondents 1 and 2. Therefore, it is clear that the respondents 1 and 2 have refunded the premium amount even while the borrower was alive. Since the Insurance Company had not issued any policy document covering the life of the deceased borrower and they have refunded the premium amount to the Housing Finance Company even before the death of the borrower, they cannot be found fault with.
17.As far as the case of the Housing Finance Company namely respondents 1 and 2 are concerned, there is no record to show on what date the premium amount was credited to the borrower's account or whether the borrower was put on notice about the fact that the proposal has been declined by the Insurance Company. These issues have to be adjudicated before the consumer complaint pending before the State Consumer Redressal Forum in C.C.No.383 of 2022. Unless it is decided by the competent forum relating to deficiency of service, the rights of the Housing Finance Company to proceed under SARFAESI Act cannot be curtailed. When the non payment of loan amount is an admitted fact, the alleged deficiency of service in processing the insurance policy cannot be a legal impediment for proceeding under SARFAESI Act. In case, if the petitioner ultimately succeeds before the Consumer Redressal Forum, they will be entitled to get refund of the amount paid by them along with reasonable interest.
18.We place on record our appreciation for the assistance rendered by Mr.S.Srinivasa Raghavan, Advocate as Amicus Curiae by placing the factual and legal aspects before this Court including the judgments of the Hon'ble Supreme Court. Those judgments arise out of the Consumer Protection Act and hence, we are not considering those judgments for the purpose of deciding the validity of proceedings under SARFAESI Act.…….. “
2.4 Thereafter, the petitioners/ Financial Institution had also approached the learned Chief Judicial Magistrate, Kanyakumari, under Section 14 of the SARFAESI Act to secure physical possession of the mortgage properties and an order has also been passed in their favour on 28.04.2024. In view of the same, when an attempt was made by the petitioners/ Financial Institution to take the physical possession of the property, the impugned order was passed in the interim application pending before the Consumer Forum. Aggrieved by which, the present civil revision petition is filed. It is also brought to the notice of this Court that the stage of the complaint before the Consumer Forum is for the arguments of both sides.
C. The Arguments:
- Heard Mr.Kishore Balasubramanian, the learned counsel for the petitioners and Mr.S.Mani, the learned counsel for the respondent.
3.1 Mr.Kishore Balasubramanian, the leanred counsel appearing on behalf of the petitioners/Financial Institution relying upon Section 34 of the Act would submit that Section 34 of the SARFAESI Act not only bars the jurisdiction of the Consumer Forum in respect of the matters, to which the Debt Recovery Tribunal has jurisdiction to decide, but its second limb specifically bars to grant of any interim injunction. The said bar is absolute and there is no scope for the Consumer Forum to grant interim injunction pending the complaint. Even though the Consumer Forum had jurisdiction to decide the question with reference to the issue of Insurance Policy and whether there is deficiency in service or not, still it ought not to have granted an injunction as against the petitioners/ Financial Institution from proceeding under the SARFAESI Act. It is only the Debt Recovery Tribunal alone, which has got the jurisdiction. The learned counsel would rely upon the judgment of the Hon’ble Supreme Court of India in Jagdish Singh versus Heeralal and others reported in (2014) 1 SCC 479, more specifically to paragraphs 22 to 24. He would also rely upon the judgment of the Hon’ble Supreme Court of India in Authorized Officer State Financial Institution of Travancore and another versus Mathew K.C reported in (2018) 3 SCC 85, more specifically placing reliance on paragraph 15.
3.2 He would further submit that the Kerala High Court had specifically decided the very issue with reference to the Consumer Forum itself in the judgment in Punjab National Financial Institution versus the Consumer Disputes Redressal Forum reported in AIR 2012 Ker 8. A similar decision is also made by the Kerala High Court in Iduki District Co-operative Financial Institution versus the Consumer Disputes Redressal Forum reported in 2015 SCC Online Ker 30863. The learned Counsel would thereupon rely on the judgment of the Honourable Supreme Court of India in Celir LLP versus Bafna Motors(Mumbai) Pirvate Limited and others reported in (2024) 2 SCC 1 to contend that as against the express provisions of law contained in the Act, the Courts cannot even grant reliefs based on equity and equitable considerations. The learned counsel would rely upon paragraph 110.5 of the said judgment.
3.3 The learned counsel would further place reliance on the judgments in Achuthanandan Baidya versus Prafullya Kumar Gayan and others reported in (1997) 5 SCC 76 and Virudhunagar Hindu Nadargal Dharma Paribalana Sabai and others versus Tuticorin Educational Society and others reported in (2019) 9 SCC 538 with reference to the powers of this Court under Article 227 of the Constitution of India to determine the issues, wherever the Courts or Tribunal, Subordinate to it assume jurisdiction which is not there with them and pass orders in excess of their jurisdiction.
3.4 Per Contra, Mr.S.Mani, learned counsel appearing on behalf of the respondent would submit that in this case, it is the Financial Institution, which had the tie up with the Insurance Company. The respondent’s husband had nothing to do with the choice of the Insurance Company. The premium sum, as mentioned above, was deducted even at the time of releasing the loan amount and the same was never repaid to the respondent’s husband, until his death and never credited to the respondent’s account till date. In view thereof, had the Insurance Policy being issued in time in the lifetime of the respondent’s husband, the entire loan account would have been covered by the Insurance Policy and therefore, there was no question of any liability on the part of the respondent herein.
3.5 He would submit that the respondent/ widow having lost her husband, is now about to come to the streets as the residential house is now sought to be taken possession by the petitioners/ Financial Institution. It is his contention that the District Consumer Diputes Redressal Forum is not going to decide as to any matter, to which, the Debt Recovery Tribunal has jurisdiction. It has to decide whether the action of the Petitioners/ Financial Institution in not issuing the Insurance Policy in time would amount to deficiency in service or not and the quantum of compensation is most likely to be the balance loan amount due, in which case, the respondent will not be mulcted with the any liability and the entire proceedings under the Act would not be necessary. In view of the same, there is nothing erroneous in passing an interim order.
3.6 He would further submit that when Courts have jurisdiction to entertain the main dispute, then in connection thereof, the District Forum must have powers to pass such interim orders to protect the interests of the parties pending disposal of the main complaint. He would submit that even the earlier writ petition judgment relegates the parties only to the Consumer Forum and now, the petitioners/ Financial Institution is contending that the respondent should approach the Debt Recovery Tribunal.
D. The Discussion & Findings:
- I have considered the rival submissions made on either side and perused the material records of the case.
4.1 It is essential to extract Section 34 of the SARFAESI Act, which reads as follows:
“No Civil Court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any Court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Financial Institutions and Financial Institutions Act, 1993 (51 of 1993)”
4.2 In Jagdish Singh (cited supra), the Hon’ble Supreme Court had an occasion to consider the effect of Section 34 with reference to the jurisdiction of Civil Court to entertain proceedings in respect of the measures taken under SARFAESI Act and it was held as follows:
“22. ….. The opening portion of Section 34 clearly states that no civil court shall have jurisdiction to entertain any suit or proceeding “in respect of any matter” which a DRT or an Appellate Tribunal is empowered by or under the Securitization Act to determine. The expression ‘in respect of any matter’ referred to in Section 34 would take in the “measures” provided under sub-section (4) of Section 13 of the Securitisation Act. Consequently if any aggrieved person has got any grievance against any “measures” taken by the borrower under sub-section (4) of Section 13, the remedy open to him is to approach the DRT or the Appellate Tribunal and not the civil court. Civil Court in such circumstances has no jurisdiction to entertain any suit or proceedings in respect of those matters which fall under sub-section (4) of Section 13 of the Securitisation Act because those matters fell within the jurisdiction of the DRT and the Appellate Tribunal. Further, Section 35 says, the Securitisation Act overrides other laws, if they are inconsistent with the provisions of that Act, which takes in Section 9 CPC as well.”
4.3 In view thereof with reference to the matters relating to the Act, Debts Recovery Tribunal has the exclusion of jurisdiction when it comes to determination of legality or otherwise of the measures taken under the Act. In this case, as far as the main issue in the complaint is concerned, the same does not fall within the jurisdiction of the Debts Recovery Tribunal and the question as to the deficiency in service in not issuing the Insurance Policy in time is well within the jurisdiction of the District Consumer Forum and the same can be decided on merits with the District Consumer Forum.
4.4 The judgment inter-parties in the earlier writ petition is extracted above. It can be seen that the Hon’ble Division Bench did not grant any interim order restraining the Financial Institution from proceeding further under the Act and it has held that ultimately if the respondent succeeds in the consumer forum, the amount can be refunded. Going a step further, it can even be adjusted, if at all any compensation is awarded to the petitioner in the district fora.
4.5 Now, the question is only with reference to the interim order of injunction. Section 34 of the Act, apart from the first limb, has the specific second limb where it mandates that no injunction can be granted by the civil Court or any other authority from taking such measures under the Act. If at all, interim injunction or any stay of the proceedings, which have to be granted, it should have been granted only by the Debts Recovery Tribunal. There is no quarrel over the proposition that whenever any forum has got jurisdiction to deal with the main issue, it can pass interim orders protecting the rights of the parties by way of interim order. But that power can be exercised so long as there is no express bar of jurisdiction. When there is an express bar under Section 34, the District Forum ought not to have passed the interim order and ought to have relegated the complainant to the Debts Recovery Tribunal with reference to the interim order. In view thereof, the respondent has to approach the jurisdictional Debts Recovery Tribunal only.
4.6 However, it can also be seen that earlier the Division Bench had made observations that the parties shall take recourse through the proceedings on the file of the District Forum, though it can be distinctly understood that it is with reference to the compensation alone. This Court also cannot look away from the glaring fact that after deducting the premium, neither the policy was issued nor the amount was credited. The next factor, which this Court takes into consideration, is that the miscellaneous petition was filed before the Consumer Forum and it was being periodically adjourned and a counter affidavit was also filed and the matter was being proceeded with. The fourth factor is that when the Interlocutory Application was pending before the consumer forum, the further proceedings were taken. Finally, the respondent had lost her husband and the property in question is the dwelling house. Therefore, considering all the above factors, this Court is of the opinion that the respondent should be given an opportunity to agitate the matter before the appropriate Debts Recovery Tribunal with reference to the measures, which are taken under the Act.
4.7 In view thereof, this Court holds that the respondent will be entitled to file an application before the Debts Recovery Tribunal within a period of 45 days from the date of receipt of the copy of this order and if such right is exercised, the Debts Recovery Tribunal should consider the start of limitation only from the date of receipt of the copy of the order and if the application is filed within a period of 45 days, the same shall be treated as within time. It is also further stated that since this Court is now directing the respondent to approach the Debts Recovery Tribunal, until the time which is granted by this Court expires and also further considering the fact that the property is also a dwelling house, until a period of 45 days from the date of receipt of the copy of the order or until such interim order is passed by the Debts Recovery Tribunal, let not the Financial Institution further proceed with the matter in the issue. Considering the fact that the complaint is pending before the District forum for arguments, the petitioners/ Financial Institution shall also co-operate for the arguments and the District forum is requested to take up the complaint for expeditious disposal and dispose of the same within a period of 30 days from the date of receipt of the copy of the order.
E. The Result:
- In view thereof, the Civil Revision Petition is allowed on the following terms:-
(i)The order dated 08.05.2024 made in M.A.No.128 of 2024 in C.C.No.383 of 2022 passed by the District Consumer Disputes Redressal Commission, Tirunelveli, shall stand set aside;
(ii)M.A.No.128 of 2024 in C.C.No.383 of 2024 shall stand dismissed;
(iii)The learned Consumer Disputes Redressal Commission shall dispose of the C.C.No.383 of 2022 on merits and in accordance with law as expeditiously as possible, in any event, not later than 30 days from the date of receipt of a copy of the order.
(iv)The respondent is at liberty to approach the Jurisdictional Debts Recovery Tribunal with reference to the measures taken by the petitioners/ Financial Institution under the Act by filing an application under section 17 of the Act. 45 days time from the date of receipt of a copy of the order is given to the respondent to file such application and if such application is filed within the said time of 45 days, then the same shall be treated as within the period of limitation and any interim order has to be sought before the Debts Recovery Tribunal only. The rights of the parties from thereupon will be determined by the further orders that will be passed by the Debts Recovery Tribunal alone.
(vi)Since this Court is now referring the respondent to file the above appeal before the Debts Recovery Tribunal, the petitioners/ Financial Institution shall not precipitate the matter further, until the time granted by this Court expires and can proceed further depending upon the further orders that will be passed by the Debts Recovery Tribunal, whichever is earlier.
No costs. Consequently, connected Miscellaneous Petition is closed.
25.07.2024
NCC:Yes/No
Index:Yes/No
Rmk
To
1.The District Consumer Disputes
Redressal Commission, Tirunelveli.
D.BHARATHA CHAKRAVARTHY, J.
Rmk
C.R.P(MD)No.1361 of 2024
25.07.2024
