cpc

stay of drt proceedings by civil court


I wish to know the Supreme Court/High Court case(s) where the Civil Courts have been debarred from entertaining any petition and passing any orders which has the effect of staying the proceedings under DRT.

Thanks in advance

Surendra Gupta

 
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Advocate

Section 34 of SARFAESI Act,2002 and Section 18 of the DRT Act (RDDB&FI Act) clearly bar jurisdiction of any other courts on issues to be dealt with by DRT.

 
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Inspite of the legal provisions in two acts refffered to in the abovereply of Shri Raju, the matter has been dealt with in detail by the Supreme Court/High Courts. I wish to know them urgently. Thanks

 
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Advocate

If the issues involved in the matter are not capable to be dealt with DRT, then Civil Court can decide that issue.

Eg, vacating tenant/leaseholder, partition suit after mortgage to bank, etc. 

 
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Mr. Surendra Gupta,

Please remember that neither High Courts nor Supreme Court make any law. The courts only interpret law.  It is only Parliament which has power to make law. As a banker you should read the land mark judgment delivered by Supreme Court in Mardia Chemicals case(AIR 2004 SC.2371) to avoid such confusion.  The Hon'ble Supreme Court exhaustively dealt with each and every provision of the Act.

Civil Court's jurisdiction is ousted u/s 34 of the SARFAESI Act by Parliament in respect of certain matters which are conferred to DRTs with exclusive jurisdiction to deal with them and decide. This is to avoid delay in recovery.  SARFAESI Act is enacted base on the recommendations of Andhyarujina Committee Report 2000.  Mr. Andhyarujina ( former Solicitor General of India) who examined the entire legal system relating to recovery of banks debts, opined that adjudication process is main casuse for the delay in recovery of banks debts through DRTs or Civil Courts on account of lengthy process of adjudication. SARFAESI Act is framed in converse way to adjudication system. Instead of adjudication the word scrutiny is put in place. Thus "execution first and adjudication next" is the present system under this special enactment. Hence the jurisdiction of Civil Court's is ousted u/s 34 of SARFAESI Act to ensure that they do not interfere with the action initiated by the bank as per the statutory power conferred to it.. However the Supreme Court in the above cited case held that for cetain matters (Eg. Fraud,  Misrepresentation, etc) which require application of CPC & Evidence Act are not under the purview of DRTs,  Civil Court alone has Jurisdiction to decide the matters tainted with fraud, misrepresentation etc..  Supreme Court  in Nahar Industrial  Enterprises Vs. H.S.B.C. [2009 (8)S.C.C. 646]  held that the DRT is not bound by CPC or Evidence Act and it has to frame its own regulations based on Principles of Natural Justice and decide the matters filed before it.  DRT can not grant declaratory or specific reliefs to borrowers like civil courts. Hence if any such claims are made the party has to approach civil court as DRT has no jurisdiction to deal with such matters and such matters have to be decided by civil court only. If borrower approaches Civil Court for any such reliefs, you as a banker have to examine the case and contest it if it is  false and frivolous suit. 


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Lawyer

Very nice clarification Sir.

 
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Consultant & Legal Analyst

While I endorse the views of Shri CPS Ramachary, I would like to add that the bankers should not forget that in a State the High Court is the supreme constitutional judicial body, and the Supreme Court for the whole of India. No other court or Tribunal can be treated as a parallel set up to go beyond the constitutional powers of the HC or SC. In the interest of justice, the competent courts can intervene in the process of the other bodies/tribunals functioing within their jurisdictional areas. A recovery tribunal cannot be equated with the judicial bodies like HC & SC to encroach upon their powers. The bankers usually try to misuse the provisions of .SARFAESI Act under the shelter of DRT and try to keep aside the elements of natural justice, where the accused become helpless and is compelled to take recourse to seek justice only through appropriate competent courts.


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Thanks Mr. C.P.S. Ramachary & Shri P S Dhingra

Surendra Gupta

 

 
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