CANARA BANK versus P. SELATHAL AND ORS. ETC.ETC.

Citation: [2020] 2 S.C.R. 944 · Decided: 28-02-2020 · Supreme Court of India · Bench: UDAY UMESH LALIT · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · cites 4 · see the full citation network in Lexace

Judgment (excerpt)

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SUPREME COURT REPORTS
[2020] 2 S.C.R.
CANARA BANK
v.
P. SELATHAL AND ORS. ETC.ETC.
(Civil Appeal Nos. 1863-1864 of 2020)
FEBRUARY 28, 2020
[UDAY UMESH LALIT, INDIRA BANERJEE AND
M. R. SHAH, JJ.]
Code of Civil Procedure, 1908 – Or.7, r.11 – Rejection of
Plaint – The appellant-bank sanctioned and granted a term loan to
a partnership firm – The said loan was secured by mortgage of
immovable property belonging to the said firm and land of a
Guarantor – The land of the guarantor are subject matter of dispute
– A Guarantor had signed Guarantee Deed and created a equitable
mortgage by deposit of title deeds – The original borrower failed to
repay the loan amount – The DRT proceeded ex- parte against the
Guarnator and directed the principal borrower, its partners and
the Guarantor pay the sum of the term loan with interest – The
Guarantor filed an I.A. in 2008 against the order of the DRT, for
setting aside the ex-parte decree dated 27.8.2003, however, the same
was dismissed – After seven years from the date of the decree dated
27.8.2003 passed by the DRT, the respondents-plaintiffs filed two
suits to declare the order dated 27.8.2003 as non- est, ultra-vires,
null and void and not binding on the suit property – In the said
suits, the bank filed application u/Or. 7, r.11 to reject the respective
plaints – The bank contended that as per s.20(1) of Recovery of
Debts due to Banks and Financial Institutions Act, 1993 the appeal
is provided to DRAT against the order of DRT and therefore, the
Civil Court had no jurisdiction to entertain the suits – The
respondents-plaintiffs opposed the applications stating that they
have purchased the suit property from the original owner and that
they are in possession and enjoyment of the suit property – The
applications u/Or.7,r.11(d) were dismissed by the Trial Court – The
High Court confirmed the orders passed by the Trial Court – On
appeal, held: The decree passed by the DRT and even the order
passed by the Recovery Officer are appealable u/s. 20 of the
RDDBFI Act – The averments in suits, allege fraud with respect to
the partnership deed and there are no allegations at all with respect
 [2020] 2 S.C.R. 944
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to mortgage created by the guarantor – The suits are vexatious and
are filed with malafide intention to get out of the judgment and
decree passed by the DRT – The plaintiffs are claiming right, title
on the basis of the sale deeds executed by the guarantor as power
of attorney holder of the original vendor/original owner – According
to the averments in the plaints that they have purchased the suit
property from their vendor/original owner is factually incorrect –
Before, the execution of sale deeds, the lands were already put as a
security by way of mortgage – Further, the guarantor had filed I.A.
in 2008 against the judgment and decree by the DRT, he did not
disclose that he had already sold the property in favour of plaintiffs
– Thus, considering the overall facts and circumstances of the case
the suits filed by the plaintiffs are vexatious, frivolous and an abuse
of process of law and Court – Therefore, considering the law laid
down by the Supreme Court, the plaints are rejected u/Or. 7, r. 11 –
Both the Courts below, materially erred in not rejecting the plaints
in exercise of powers u/or. 7, r. 11(d) of the CPC.
Allowing the appeals, the Court
HELD:1. The short question which is posed for
consideration of this Court is, whether the suits filed by the
plaintiffs were liable to be rejected in exercise of powers under
Order 7 Rule 11(d) of the CPC or not? [Para 7.1][957 D-E]
2. Applying the law laid down by this Court on exercise of
powers under Order 7 Rule 11 of the CPC to the facts of the case
on hand and the averments in the plaints, this Court is of the
opinion that both the courts below have materially erred in not
rejecting the plaints in exercise of powers under Order 7 Rule
11 of the CPC. As observed, the main prayer in the suits is
challenging the decree passed by the DRT. The decree passed
by the DRT and even the order passed by the Recovery Officer
are appealable under Section 20 of the Recovery of Debts due to
Banks and Financial Institutions Act, 1993. In the case of O.C.
Krishnan and others, this Court has observed and held that in
view of the alternate remedy of preferring the appeal before the
DRAT, the petition under Article 227 challenging the order passed
by the DRT shall not be maintainable, without exhaustion of such
rem

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