Central Bank of India & Anr. vs Smt. Prabha Jain & Ors.

Held: First and second reliefs not in relation to any measures taken by the secured creditor u/s.13(4) – They are reliefs in relation to the actions taken prior to the secured creditor stepping into the picture and well prior to the secured creditor invoking the provisions of the SARFAESI Act – Tribunal would have no jurisdiction u/s.17 to grant the declarations sought in the first and second reliefs – SARFAESI Act has not been enacted for providing a mechanism for adjudicating upon the validity of documents or to determine questions of title finally – Jurisdiction to declare sale deed or mortgage deed being illegal, vested with the civil court u/s. 9 CPC – Civil Court has jurisdiction to finally adjudicate upon the first two reliefs – As regards the relief of possession, plaintiff could not have sought the relief from DRT – Plaintiff neither a borrower nor a person claiming under/through the borrower – Plaintiff has a claim independent of and adverse to the borrower – Plaintiff was not in possession, thus, the question of DRT “restoring” possession to plaintiff did not arise – DRT would have no jurisdiction to grant such relief to her, thus, the plaintiff’s third relief in the suit also not barred by s.34 – Even under the expression appearing at the end of s.13(3), the plaintiff cannot seek the relief of being handed over possession – Even the amended s.13(3) confers no power to hand over the property to someone who was never in possession – Plaint must survive because there cannot be a partial rejection of the plaint u/Ord. VII r. 11 – Hence, even if one relief survives, the plaint cannot be rejected u/Ord. VII r. 11 – First and second reliefs regarding illegality of the execution of sale deed and mortgage deed clearly not barred by s. 34 and within the civil court’s jurisdiction, thus, plaint cannot be rejected u/Ord. VII r. 11 – Furthermore, if civil court cannot reject a plaint partially, then by the same logic, it ought not to make any adverse observations against the other relief – Thus, no error of law committed by the High Court in passing the impugned order – Code of Civil Procedure, 1908 – Ord.VII r.11. [Paras 16-18, 23-25, 45]

Code of Civil Procedure, 1908 – Ord.VII r.11 – Partial rejection of plaint under O.VII, r.11 – Effect:

Held: Even if one relief survives, the plaint cannot be rejected u/Ord.VII, r.11 – Plaint must survive because there cannot be a partial rejection of the plaint u/Ord. VII, r.11 – Thus, the plaint cannot be rejected u/Ord.VII, r.11 – If the civil court is of the view that one relief is not barred by law but is of the view that the other relief is barred by law, the civil court must not make any observations to the effect that the other relief is barred by law and must leave that issue undecided in an Ord. VII, r. 11 application – This is because if the civil court cannot reject a plaint partially, then by the same logic, it ought not to make any adverse observations against the other relief. [Paras 24, 25]

SARFAESI Act, 2002 – s.17 – Application against measures to recover secured debts – Relief of possession – Power of DRT – “Restore” possession and “Handover” possession – Difference between – Stated. [Para 23]

Debts Recovery Tribunal – Scope and power of:

Held: Debts Recovery Tribunal is a creature of the Recovery of Debts and Bankruptcy Act, 1993 and is empowered to exercise powers under that Act and the SARFAESI Act, 2002 – Tribunal cannot go beyond the four corners of the SARFAESI Act – Tribunal is bound by the powers conferred to it by the Parliament – Sub-sections (3) and (4) of s.17 respectively instructive to the level of examination that DRT can undertake, and the same is limited to the validity of the measures u/s.13(4) – Thus, DRT not permitted to examine the validity of the earlier sale deed, whereafter the mortgage was executed in favour of Bank. [Para 38] Banking/Banks – Sanctioning of loans – Inadequate title clearance reports – Approach to be adopted by the Banks: Held: Banks should remain very careful with inadequate title clearance reports, more particularly, when such reports are obtained cheaply and at times for external reasons – Concern is with the protection of public money and is in the larger public interest – Thus, essential for the Reserve Bank of India and other stakeholders to collaborate in developing a standardized and practical approach for preparing title search report before sanctioning loans and also for the purpose of determining liability (including potential criminal action) of the Officer who approves loan – Also, there should be standard guidelines for fees and costs associated with title search reports so as to ensure that they maintain high quality. [Para 44]