STATE BANK OF INDIA AND ORS.versusBHAT MAHABALESHWARA EDAKKANAN SHAM THR. C.A. MR. MANOJ V. SHETTY AND ORS.

Harish
                     IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                             CIVIL APPELLATE JURISDICTION

                        CIVIL REVISION APPLICATION NO. 530 OF 2022

         1.    State Bank of India,
               State Bank of India Bldg,
               Near Mantralaya, Mumbai.
               Through Authorized Officer &
               Chief Mangar, SBI,
               Mr. Ramchandra Akulwal.

         2.    State Bank of India Shop No. 9 & 10,
               Sun Magnatica, LIC Service Road,
               Luiswadi, Thane-400 604.
               New (present) Address:
               Stress Assets Recovery Branch
               Situate at 1st Floor, Kerom Building,
               Plot No. A-112, Near Road No. 22 Circle,
               Wagle Industrial Estage,
               Thane (W), Dist. Thane-400 604.

         3.    Nishikant Prabhakar Ambodkar,
               Age- 51 years, Authorized Officer &
               Chief Manager, State Bank of India,
               Stressed Assets Recovery Branch,
               Shop No. 9 & 10, Sun Magnatica,
               LIC Service Road, Louiswadi,
               Thane-400 604.
               New (present) Address:
               Stress Assets Recovery Branch
               situate at 1st Floor, Kerom Building,
               Plot No. A-112, Near Road No. 22 Circle,
               Wagle Industrial Estate,
               Thane (W), Dist. Thane-400 604.          … Applicants


         Vs.

         1.    Bhat Mahabaleshwara Edakkanan Sham,
               Age- 48 years, Occu- Business,



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      R/at- 10/42, Edakkana House,
      Post- Permude, Kumbala,
      Dist. Kasaragod, Pin-671324.
      Through his Constituted Attorney,
      Mr. Manoj V. Shetty, Age- 39 years,
      Occu- Business, Residing at Mira-
      Bhayandar, Dist. Thane.

2.    Palm Beach Hospital,
      Plot No. 240, Sector 28,
      Palm Beach Road, Bashi,
      Navi Mumbai-400 703.

3.    Dr. Amit Subhash Pathak,
      Age- 53 yrs, Occu: Service,
      Gurukul Hospital bldg., 4th Floor,
      Plot No. 7, Sector - 12A, Koparkhaine,
      Navi Mumbai-400 709.

4.    Dr. Abhilasha Amit Pathak,
      Alias Abhilasha Kantilal Jadhav,
      Age: 51 yrs, Occu: Service,
      O/at: Gurukul Hospital bldg.,
      4th Floor, J Plot No.7,
      Sector - 12A, Koprkhairne,
      Navi Mumbai-400 709.                             … Respondents
                                      __________
Mr. Drupad Patil a/w Mr. Suyash Sule, for the applicants.

Dr. Brinda Gurbuxani a/w Mr. Amrendra Sinha & Mr. Pankaj Ghai, for the
respondents.

                                      __________


                     CORAM                      : PRAFULLA S. KHUBALKAR, J.


                     RESERVED ON                : 22nd JUNE, 2026


                     PRONOUNCED ON              : 17th SEPTEMBER, 2026



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JUDGMENT:

1.     Heard learned counsel for applicants as well as learned counsel for respondents.

2.     Rule. Rule made returnable forthwith. Heard finally with consent of parties.

3.     This Civil Revision Application raises a challenge to the order dated 3 rd August

2022 passed by the Trial Court rejecting the application (Exh.26) under Order VII Rule 11

of the Code of Civil Procedure, 1908, (in short "CPC").

4.     The revision applicants are the original defendant nos. 1 to 3 - Bank in Civil Suit

No. 295 of 2017, which was filed by the respondent no. 1 herein seeking declaration and

cancellation of the sale certificate dated 7 th April 2016 and other consequential reliefs. In

the said suit, the defendants had appeared and filed written statement and had raised a

preliminary objection to the maintainability of suit on account of provisions of the

Securitisation and Reconstruction of Financial Assets and Enforcement of Security

Interest, Act 2002 (hereinafter referred as "SARFAESI Act"). The defendants also filed a

separate application, at Exh. 26 under Order VII Rule 11 (d) of CPC on the ground that

the suit is barred by Section 34 of the SARFAESI Act. The said application was initially

rejected by the order dated 3rd October 2021 and the rejection order was challenged before

this Court vide Civil Revision Application No. 37 of 2022. By order dated 27th April 2022,

this Court had remanded the matter to the Trial Court with a direction to decide the

application in the light of the embargo under Sections 17 & 34 of the SARFAESI Act.

After the remand of the matter, both the parties advanced their arguments and by order

dated 3rd August 2022, the said application came to be rejected. Feeling aggrieved by this

order, the instant Civil Revision Application is filed.




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5.     The suit was filed for cancellation of the sale certificate under the Specific Relief

Act, 1963 and for recovery of an amount of Rs. 8,00,00,000/- and interest thereon. The

plaintiff has alleged in the suit that, after participating in the e-auction process initiated by

the defendant nos. 1 to 3 - bank, he has purchased the suit property for valuable

consideration of Rs. 7,00,00,000/-. It is stated that the e-auction sale was conducted under

the SARFAESI Act for recovery of outstanding dues from the secured assets mortgaged

by the defendant nos. 4 to 6, who were the borrowers. The plaintiff has alleged that,

before participating in the e-auction sale, he was informed that the building under auction

was constructed for commercial use and at that time, 27 documents were provided to the

plaintiff for inspection purpose. The plaintiff has further alleged in the plaint that, after

obtaining sale certificate, when he approached to the authorities of NMMC for obtaining

the necessary permission regarding renovation of the building, it was revealed that the

purpose of construction of the building was residential and not commercial. In this

background, the plaintiff has alleged that the defendant nos. 1 to 3 - bank had

misrepresented and induced the plaintiff to participate in the auction by showing

fabricated documents. On the basis of these pleadings, the plaintiff has prayed for the

relief of cancellation of the sale certificate along with ancillary reliefs.


6.     The defendant nos. 1 to 3 - bank have filed the application at Exh. 26 under Order

7 Rule 11(d), seeking rejection of plaint on the ground that the jurisdiction of Civil Court

is barred since the Debt Recovery Tribunal only is empowered to take cognizance of the

dispute in view of Section 34 of the SARFAESI Act. The application is resisted by the

original plaintiff, who submitted that the relief claimed is within the jurisdiction of the

Civil Court, since the plaintiff has not challenged the proceedings initiated against the



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defaulting borrower under the SARFAESI Act. The plaintiff has also opposed the

application by contending that he has alleged fraud and misrepresentation, which has

resulted in legal injury and in view of this, the reliefs claimed in the suit cannot be granted

by the Debt Recovery Tribunal.


7.     Adv. Drupad Patil, learned counsel for applicant submitted that the Trial Court has

failed to consider the purport of the provisions of Section 34 of the SARFAESI Act, which

provides for a bar of jurisdiction of the Civil Court. In support of his submissions, he

placed reliance on the judgments of Hon'ble Supreme Court in the matter of (i) Charu

Kishor Mehta Vs. Prakash Patel & Ors. reported at 2022 SCC Online SC 1962, (ii)

Mardia Chemicals Ltd. & Ors Vs. Union of India & Ors reported at (2004) 4 SCC 311

and (iii) Jagdish Singh Vs. Heeralal & Ors reported at (2014) 1 SCC 479, and pointed

out the position of law as laid down in these judgments.

8.     Learned counsel for applicant also submitted that the property was sold on ‘as is

where is basis’ and as such the plaintiff cannot raise any grievance after the            sale

certificate is issued. He thus submitted that the plaintiff failed to exercise due diligence

while participating in the auction. By pointing out the scope of ‘any person’, as

mentioned in Section 17 of SARFAESI Act, he submitted that the expression ‘any person’

as used in Section 17 is of wide import and accordingly, the plaintiff had the remedy to

approach to the Debts Recovery Tribunal. Apart from this, it is submitted that the

defendant bank has supplied all the relevant documents at the time of the auction process

to the plaintiff and as such no grievance can be raised alleging subsequent revelations on

the basis of documents.




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9.     The Civil Revision Application is opposed by the respondents who have justified

the impugned order. Learned counsel for respondents submitted that the suit as filed by

the original plaintiff is purely civil in nature by which he has asserted his civil rights to

challenge the sale certificate alleging the same to be based on fraud and

misrepresentation. He invited attention to the reply to the application under Order VII

Rule 11 of CPC and submitted that the plaintiff has opposed the application by stating

that the grievance of the plaintiff is based on the premise that a false representation was

made to the plaintiff on the basis of fabricated documents which led to an inducement to

purchase the property. It has been stated that the dispute raised by way of the suit is not

connected with any    challenge to the proceedings initiated under the SARFAESI Act and

the plaintiff being the bona-fide purchaser is entitled to agitate his grievance against the

fraud committed upon him and is entitled to seek costs and damages. Learned counsel for

respondent thus submitted that the Trial Court has appropriately considered the

application under Order VII Rule 11 by considering pleadings in the plaint, which does

not show any jurisdictional error, and as such interference by way of revisional jurisdic-

tion of this Court is not warranted.

10.    In the backdrop of these arguments, rival contentions fall for my consideration.

11.    At the outset, it has to be noted that the instant Civil Revision Application has to be

considered by keeping in mind the scope of revisional jurisdiction under Section 115 of

Code Of Civil Procedure. Thus, it is crucial to see as to whether the Trial Court has

committed any material irregularity, while exercising its jurisdiction to decide the

application under Order VII Rule 11 of Code of Civil Procedure.




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12.    The primary issue while considering the application under Order VII Rule 11, is as

to whether the plaint as filed deserved to be rejected in view of bar of jurisdiction under

Section 34 of the SARFAESI Act. It has to be noted that while considering this

application, only the pleadings in the plaint and the document filed along with the plaint

need to be considered. On considering the pleadings in the plaint, it has to be noted that

the plaintiff has filed the suit against the bank and it’s authorised officer and chief

manager, so also the other individual persons who had mortgaged the property with the

bank against which loan was advanced to them. The plaintiff has narrated the sequence of

events in the plaint with respect to execution of the Sale Certificate dated 07-04- 2016 in

favour of the plaintiff and has incorporated pleadings about the documents on the basis of

which it was revealed to the plaintiff that the defendant nos. 1 to 6 had misrepresented the

public at large and a false public notice for the e-auction of the suit property was

published. In paragraph no. 14 of the plaint, it is specifically averred that the defendant

nos. 1 to 3 had misrepresented and induced the plaintiff to participate in the e-auction by

showing forged and fabricated documents that the suit property is meant for commercial

use. He has averred that the documents were not earlier shown to the plaintiff before

participating in the bid. A perusal of the entire plaint reveals that the grievance of the

plaintiff mainly relates to the fraud committed by the defendants on the basis of which the

sale certificate came to be issued in favour of the plaintiff and in this background, a

challenge is raised to the Sale Certificate dated 07-04- 2016. It has to be noted that the

plaintiff has not challenged the procedure followed by the bank under SARFAESI Act.

The plaintiff has also prayed for the refund of amount of Rs. 8 crore, including the amount

of consideration and other expenses. As such, it becomes clear that there are specific




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pleadings in the plaint alleging misrepresentation and fraud by the defendant no. 1 to 6. In

this background, if the plaint is considered from the perspective of Section 34 of the

SARFAESI Act, it has to be noted that the subject matter and relief claimed in the suit is

not the matter which the Debt Recovery Tribunal is empowered to adjudicate. It is crucial

to note that the plaintiff was not the borrower or the guarantor of the defendant bank.

Further, the plaintiff has not challenged any action taken by the bank against their

borrowers i.e. the defendant nos. 4 to 6. The plaintiff claims to have participated in the

e- auction and in that process, it is alleged that the plaintiff was induced to participate on

the basis of false representations made by the bank and in this background by alleging

fraud and cheating, the reliefs are claimed in the suit. Considering the reliefs claimed in

the suit, it appears that the same reliefs cannot be granted by the Debt Recovery Tribunal

under the provisions of SARFAESI Act.

13.    Although learned counsel for applicant has tried to submit that the relevant

documents were supplied to the plaintiff at the time of e-auction process, it has to be

noted that there are specific pleadings in the plaint that the plaintiff was not made aware

that the suit property was not meant for commercial use. It has to be noted that this crucial

aspect is subject matter of evidence. However, it is difficult to believe at this stage, that

being aware that the suit property was meant only for residential purpose, the plaintiff

after participating in the e- auction would still purchase it for the purpose of commercial

use. The issue as to whether the consideration of the suit property was decided by

considering its value for residential or commercial use is also a subject matter of

evidence.




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14.    As regards the reliance placed by the applicant on the judgment of Hon’ble

Supreme Court in the matter of Charu Kishore Mehta ( referred supra ) it has to be noted

that in absence of any particulars of fraud being pleaded in the plaint in that case, it has

been observed by the Hon’ble Supreme Court that mere recital of fraud without

mentioning the particulars as required under Order VI Rule 4 of CPC may warrant

rejection of plaint in a given case. Considering the pleadings in the instant suit, even from

the perspective of Order VI Rule 4 of CPC, it has to be noted that there are pleadings in

the plaint with respect to the particulars of misrepresentation and fraud. In view of this, I

am of the considered opinion, that the judgment in the matter of Charu Kishore Mehta

(referred supra) is of no assistance to the revision applicant.

15.    The position of law as laid down by Hon’ble Supreme Court in the matter of

Mardia Chemicals Ltd, (referred supra) regarding scope of powers under Section 34 of

the Act is not disputed. It has to be noted that, in the instant case, the Civil Suit is not

filed by the borrower or the guarantor and since the suit is filed by a bona-fide purchaser,

he is entitled to claim reliefs as claimed in the suit. Having regard to the pleadings in the

plaint, categorically pointing out the misrepresentation and acts of collusion by the

defendants nos. 1 to 6, I am of the opinion that the judgment of Hon’ble Supreme Court in

the matter of Mardia chemicals Limited (referred supra) is also not of any assistance to

the applicant.

16.    Similarly, even the judgment of Hon’ble Supreme Court in the matter of Jagdish

Singh (referred supra) dealing with scope of Section 17 of the SARFAESI Act is not

relevant in the facts and circumstances of the instant case.




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17.    As regards the contentions canvassed on behalf of the revision applicant, it has to

be seen as to whether the Trial Court has committed any illegality in rejecting the

application under Order VII Rule 11 of CPC. In view of the position of law as laid down

by the Hon’ble Supreme Court in the matter of Shiv Shakti Cooperative Housing Society

Nagpur versus Swaraj Developers reported at (2003) 6 SCC 659, it has to be seen as to

whether the Trial Court has committed any illegality while rejecting the application under

Order VII Rule 11 of CPC. On consideration of the pleadings in the plaint and after

reading the reasoning recorded by the Trial Court, it appears that the Trial Court has given

due consideration to the relevant aspects, including the pleadings in the plaint and

provisions of Section 34 of SARFAESI Act. Further, by considering the position of law as

clarified by this Court in the matter of Bank of Baroda versus Gopal Sriram Panda And

Anr. 2021 SCC Online 466, dated 25 March 2021, dealing with jurisdiction of Civil

Court vis-a-vis the Debt Recovery Tribunal in the backdrop of Section 34 of the Act, the

Trial Court has rejected the application. I do not find any perversity or illegality with the

approach adopted by the Trial Court in rejecting the application, warranting interference

under revisional jurisdiction of this Court.

18.    On consideration of all the above mentioned factual and legal aspects, I am of the

considered view, that the applicant has failed to demonstrate any illegality with the

impugned order and therefore the instant Revision Application needs to be rejected.

Hence, the Civil Revision Application is rejected with no order as to costs.




                                                    (PRAFULLA S. KHUBALKAR, J.)




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