PUNJAB AND SIND BANK versus FRONTLINE CORPORATION LTD

Citation: [2023] 4 S.C.R. 858 · Decided: 18-04-2023 · Supreme Court of India · Bench: BHUSHAN RAMKRISHNA GAVAI · Disposal: Appeal(s) allowed

cites 1 · see the full citation network in Lexace

Judgment (excerpt)

A
B
C
D
E
F
G
H
858
SUPREME COURT REPORTS
[2023] 4 S.C.R.
   [2023] 4 S.C.R. 858
858
PUNJAB AND SIND BANK
v.
FRONTLINE CORPORATION LTD.
(Civil Appeal No.2924 of 2023)
APRIL 18, 2023
[B. R. GAVAI AND ARAVIND KUMAR, JJ.]
Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 – s. 34 – Respondent
purchased the suit property wherein the appellant-bank was inducted
as a tenant by the previous owner in the ground floor of the suit
premises – Respondent availed various credit facilities from the
appellant-bank to the tune of Rs.42.74 crore by mortgaging, inter
alia, the suit property as collateral – Thereafter, a purported
settlement agreement, dated 29.11.2010, filed in the ejectment suit
which was filed earlier by the previous owner, before the City Civil
Court and a lease deed dated 11.02.2011 was executed between
the parties – Financial defaults were committed by the respondent –
Demand notice u/s. 13 of the SARFAESI Act was issued by appellant-
bank – Demand remained unmet – Appellant declared that it had
taken possession of the suit property – Respondent filed
securitisation application before the DRT and instituted a suit before
the High Court for specific performance of the settlement deed and
lease deed – An injunction application was also filed restraining
appellant from disposing any part of suit property – Interim order
was passed by the Single Judge of the High Court that no final
orders of sale be passed and this was extended from time to time –
Thereafter, the Single Judge set aside the interim order noting therein
that the appellant, being a secured creditor, could not be restrained
from taking appropriate steps qua the secured suit property,
especially in light of the express bar on the jurisdiction of the civil
court, as provided u/s. 34 of the SARFAESI Act – Division Bench set
aside the order of the Single Judge and observed that the bar u/s.
34 of the SARFAESI Act was not absolute and restrained the appellant
from selling the suit property until the final determination of the
rights of the parties – On appeal, held: It is settled that the jurisdiction
of the civil court is barred in respect of matters which a DRT or an
Appellate Tribunal is empowered to determine in respect of any action
A
B
C
D
E
F
G
H
859
taken “or to be taken in pursuance of any power conferred under
this Act” – Bar of civil court thus applies to all such matters which
may be taken cognizance of by the DRT, apart from those matters in
which measures have already been taken under sub-section (4) of
s.13 of the SARFAESI Act – Though 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 his claim may
be so absurd and untenable which may not require any probe
whatsoever – In the instant case, it cannot be said that the action of
the secured creditor, i.e. the appellant is either fraudulent or that its
claim is so absurd or untenable which may not require any probe
whatsoever – Single Judge had passed the said order on the basis
of a statutory bar – Division Bench has grossly erred in interfering
with the discretion exercised by the Single Judge – Thus, the
judgment and order passed by the Single Judge upheld.
Allowing the appeal, the Court
Held : 1. The Supreme Court has held in Mardia Chemicals
Limited and Others v. Union of India and Others that the
jurisdiction of the civil court is barred in respect of matters which
a DRT or an Appellate Tribunal is empowered to 11 determine in
respect of any action taken “or to be taken in pursuance of any
power conferred under this Act”. The Court has held that the
prohibition covers even matters which may be taken cognizance
of by the DRT though no measure in that direction has so far
been taken under subsection (4) of Section 13 of the SARFAESI
Act. It has been held that the bar of jurisdiction is in respect of a
proceeding which matter may be taken to the Tribunal. It has
categorically been held that any matter in respect of which an
action may be taken even later on, the civil court shall have no
jurisdiction to entertain any proceeding thereof. The Court held
that the bar of civil court thus applies to all such matters which
may be taken cognizance of by the DRT, apart from those matters
in which measures have already been taken under sub-section
(4) of Section 13 of the SARFAESI Act. [Para 13][867-A-C]
2. This Court has further held that, to a 

Excerpt shown. Read the full judgment & AI analysis in Lexace.