Leela U.K. and T. Gangadaran Nair v. South Indian Bank Ltd. and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE** ## **FRIDAY, THE 24TH DAY OF JUNE 2016/3RD ASHADHA, 1938** ## **WP(C).No. 21479 of 2016 (H)** ## **----------------------------** ## **PETITIONER(S) :** - **---------------------------** **1. LEELA U.K., AGED 75 YEARS, W/O.GOPINATHAN NAIR, RESIDING AT PRAYAGA (H), P.O. WEST HILL, KOZHIKODE TALUK, PIN-673 005.** **2. T. GANGADHARAN NAIR** - **AGED 70 YEARS, S/O.NARAYANAN NAIR, GOVIND VINTAGE PALACE, AYYANTHOLE, THRISSUR.** **BY SENIOR ADVOCATE SRI.A.SUDHI VASUDEVAN BY ADV.SRI.E.NARAYANAN** **RESPONDENT(S) :** - **----------------------------** **1. THE SOUTH INDIAN BANK LTD., REPRESENTED BY CHIEF MANAGER (AUTHORIZED OFFICER), MAVOOR ROAD BRANCH, KOZHIKODE, REGIONAL OFFICE, HAPPY TOWERS, VAIKOM MUHAMMED BASHEER ROAD, KOZHIKODE-673 001.** **2. MANOHAR S., S/O.P.SUBRAMANIAN, RESIDING AT M7/17, MALAPARAMBA HOUSING COLONY, P.O.MALAPARAMBA, KOZHIKODE-673 009.** **3. ANIL JAYADEV RAO S/O.JAYADEV RAO, SWARGAMADAM SAMOOTHAM ROAD, THALI, KOZHIKODE-673 002.** **4. KUMUDA J.RAO W/O.ANIL J.RAO, SWARGAMADAM SAMOOTHAM ROAD, THALI, KOZHIKODE-673 002.** **5. SREEKANTH U.K., S/O.T.GANGADHARAN NAIR, CHELANGAT HOUSE, 47/467, NEAR CIVIL STATION, CIVIL STATION P.O., KOZHIKODE TALUK-673 020.** **R1 BY ADV. SRI.GEORGE VARGHESE, SC** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 24-06-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **Mn** **...2/-** **WP(C).No. 21479 of 2016 (H)** ## **---------------------------------------** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS :** ## **----------------------------------------** **EXT. P1 A TRUE COPY OF THE REGISTERED ASSIGNMENT DEED DATED 5.11.1984 EXECUTED BY P.T.SARADHA AMMA AND OTHERS IN FAVOUR OF THE 1ST PETITIONER BEREFT OF ENDORSEMENTS ON THE REVERSE OF THE PAGES OF THE DOCUMENT.** **EXT. P2 A TRUE COPY OF THE REGISTERED POWER OF ATTORNEY EXECUTED ON 18.2.2005 BY THE 1ST PETITIONER IN FAVOUR OF THE 5TH RESPONDENT. EXT. P3 A TRUE COPY OF THE LETTER DATED 12.5.2005 ISSUED BY THE KERALA STATE CO-OPERATIVE BANK, KOZHIKODE CERTIFYING THAT THE 5TH RESPONDENT HAS SUBMITTED THE SAID ASSIGNMENT DEED BEFORE THE KERALA STATE CO-OPERATIVE BANK, KOZHIKODE FOR AVAILING A MORTGAGE LOAN.** **EXT. P4 A TRUE COPY OF THE SHAM SALE DEED REGISTERED AS DOCUMENT NO.2739 OF 2006 OF SRO WEST HILL IN FAVOUR OF THE 2ND RESPONDENT. EXT. P5 A TRUE COPY OF THE DEMAND DRAFT DATED 23.9.2006 FOR A SUM OF RS.5,06,692/- ISSUED BY FEDERAL BANK AND DRAWN IN THE NAME OF THE KERALA STATE CO-OPERATIVE BANK, BEARING ACKNOWLEDGMENT BY KERALA STATE CO-OPERATIVE BANK. EXT. P6 A TRUE COPY OF THE ORDER DATED 20.6.2011 ISSUED BY SECRETARY OF KOZHIKODE CORPORATION EFFECTING MUTATION IN THE NAME OF 2ND RESPONDENT IN RESPECT OF THE HOUSE.** **EXT. P7 A TRUE COPY OF THE SHAM SALE DEED DATED 28.7.2011 IN FAVOUR OF THE 3RD RESPONDENT.** **EXT. P8 A TRUE COPY OF THE STATEMENT OF ACCOUNT DATED 23.12.2015 IN RELATION TO LOAN ACCOUNT OF THE 2ND RESPONDENT WITH THE FEDERAL BANK LTD SHOWING THE TRANSACTION DETAILS FROM 23.9.2006 TILL 27.7.2011.** **EXT. P9 A TRUE COPY OF THE TWO CHEQUES DATED 27.7.2011 FOR A SUM OF RS. 8,52,000 AND RS.3,00,000/- DRAWN ON AXIS BANK, YMCA CROSS ROAD, KOZHIKODE IN THE NAME OF THE 5TH RESPONDENT. EXT. P10 A TRUE COPY OF THE RECEIPT DATED 28.2.2014 ISSUED BY THE THIRD RESPONDENT TO THE FIRST PETITIONER. EXT. P11 A TRUE COPY OF STATEMENT OF ACCOUNTS DATED 23.12.2015 IN RELATION TO THE SECOND PETITIONERS ACCOUNT NUMBER 937019519 AT THE INDIAN, THRISSUR, SHOWING TRANSACTION FROM 1.1.2012 TO 23.12.2015.** **(Contd...)** ## **WP(C).No. 21479 of 2016 (H)** **EXT. P12 A TRUE COPY OF THE STATEMENT OF ACCOUNTS DATED 14.3.2016 IN RELATION TO THE 2ND PETITIONER'S ACCOUNT NO.777813955 AT THE INDIAN BANK, KOZHIKODE SHOWING TRANSACTION FROM 29.9.2013 TO 14.3.2016.** **EXT. P13 A TRUE COPY OF THE PAY IN SLIP DATED 21.7.2014 OF THE STATE BANK OF TRAVANCORE, FILLED UP IN THE HANDWRITING OF THE 5TH RESPONDENT FOR MAKING PAYMENT TO THE ACCOUNT NO.57023960451 OF THE 3RD RESPONDENT.** **EXT. P14 A TRUE COPY OF THE PAY IN SLIP DATED 13.11.2014 OF THE SOUTH INDIAN BANK, FILLED UP IN THE HANDWRITING OF THE 5TH RESPONDENT FOR MAKING PAYMENT TO THE LOAN ACCOUNT NO.347655250 OF THE 1ST RESPONDENT.** **EXT. P15 A TRUE COPY OF THE PAY IN SLIP DATED 24.3.2015 OF THE SOUTH INDIAN BANK, FILLED UP IN THE HANDWRITING OF THE 5TH RESPONDENT FOR MAKING PAYMENT TO THE LOAN ACCOUNT NO.347655250 OF THE 1ST RESPONDENT.** **EXT. P16 A TRUE COPY OF THE PAY IN SLIP DATED 22.4.2015 OF THE SOUTH INDIAN BANK, FILLED UP IN THE HANDWRITING OF THE 5TH RESPONDENT FOR MAKING PAYMENT TO THE ACCOUNT NO.347655250 OF THE 1ST RESPONDENT.** **EXT. P17 A TRUE COPY OF THE PAY IN SLIP DATED 28.5.2015 OF THE SOUTH INDIAN BANK, FILLED UP IN THE HANDWRITING OF THE 5TH RESPONDENT FOR MAKING PAYMENT TO THE ACCOUNT NO.347655250 OF THE 1ST RESPONDENT.** **EXT. P18 A TRUE COPY OF THE CHEQUE DATED 20.11.2015 OF THE FEDERAL BANK DRAWN BY 5TH RESPONDENT IN FAVOUR OF THE 3RD RESPONDENT TOWARDS THE LOAN ACCOUNT OF THE 1ST RESPONDENT.** **EXT. P19 A TRUE COPY OF THE PAY IN SLIP DATED 20.11.2015 OF THE SOUTH INDIAN BANK, FILLED UP BY 5TH RESPONDENT FOR DEPOSITING EXT.P18.** **EXT. P20 A TRUE COPY OF THE PAY IN SLIP DATED 31.3.2016 OF THE SOUTH INDIAN BANK, FILLED UP IN THE HANDWRITING OF THE 5TH RESPONDENT FOR MAKING PAYMENT TO THE LOAN ACCOUNT NO.347655250 OF THE 1ST RESPONDENT.** **EXT. P21 A TRUE PHOTOCOPY OF THE BASIC TAX RECEIPT DATED 12.3.2007 ISSUED BY THE VILLAGE OFFICER, PUTHIYANGADI VILLAGE EVIDENCING PAYMENT OF BASIC TAX BY THE 1ST PETITIONER FOR THE YEAR 2006-07.** **EXT. P22 A TRUE PHOTOCOPY OF THE BASIC TAX RECEIPT DATED 25.10.2012 ISSUED BY THE VILLAGE OFFICER, PUTHIYANGADI VILLAGE EVIDENCING PAYMENT OF BASIC TAX FOR THE YEAR 2012-13.** **(Contd...)** **WP(C).No. 21479 of 2016 (H)** - **EXT. P23 A TRUE PHOTOCOPY OF THE BASIC TAX RECEIPT DATED 13.1.2014 ISSUED BY THE VILLAGE OFFICER, PUTHIYANGADI VILLAGE.** - **EXT. P24 A TRUE PHOTOCOPY OF THE RECEIPT DATED 20.2.2015 ISSUED BY THE VILLAGE OFFICER EVIDENCING PAYMENT OF BASIC TAX FOR THE YEAR 2014-15.** - **EXT. P25 A TRUE COPY OF THE CERTIFICATE DATED 22.6.2016 ISSUED BY THE REVENUE OFFICER OF KOZHIKODE CORPORATION TO THE 1ST PETITIONER.** - **EXT. P26 A TRUE PHOTOCOPY OF THE PROPERTY TAX RECEIPT DATED 13.1.2014 ISSUED BY THE KOZHIKODE CORPORATION EVIDENCING PAYMENT OF PROPERTY TAX FOR THE YEAR 2013-14.** - **EXT. P27 A TRUE PHOTOCOPY OF THE PROPERTY TAX RECEIPT DATED 26.6.2014 ISSUED BY THE KOZHIKODE CORPORATION EVIDENCING PAYMENT OF PROPERTY TAX FOR THE YEAR 2014-15.** - **EXT. P28 A TRUE PHOTOCOPY OF THE PROPERTY TAX RECEIPT DATED 22.7.2015 ISSUED BY THE KOZHIKODE CORPORATION EVIDENCING PAYMENT OF PROPERTY TAX FOR THE YEAR 2015-16.** - **EXT. P29 A TRUE COPY OF THE RELEVANT PAGES OF THE PASSPORT OF THE 1ST PETITIONER ISSUED BY THE ASST. PASSPORT OFFICER, KOZHIKODE.** - **EXT. P30 A TRUE COPY OF THE IDENTITY CARD DATED 31.1.2009 ISSUED BY THE ELECTION COMMISSION OF INDIA TO THE 1ST PETITIONER.** - **EXT. P31 A TRUE COPY OF THE RELEVANT PAGES OF THE RATION CARD ISSUED TO 1ST PETITIONER'S HUSBAND.** - **EXT. P32 A TRUE COPY OF THE TELEPHONE BILL DATED 06.05.2016 ISSUED BY BSNL, KOZHIKODE TO THE 1ST PETITIONER AT THE HOUSE MENTIONED IN EXT.P4 AND P7.** - **EXT. P33 A TRUE COPY OF THE FIR LODGED IN CRIME BEARING NO.13/2016 OF NADAKAVU POLICE STATION.** - **EXT. P34 A TRUE COPY OF THE I.A.1922/2016 IN O.S.43/2016 ACCOMPANIED BY THE AFFIDAVIT FILED BY THE PETITIONERS AND THE 5TH RESPONDENT BEFORE THE SUB-COURT, KOZHIKODE.** - **EXT. P35 A TRUE COPY OF THE TEMPORARY ORDER OF INJUNCTION PASSED BY THE SUB-COURT KOZHIKKODE ON 6.4.2016 IN I.A. 1922/2016 IN O.S.43/2016.** - **EXT. P36 A TRUE COPY OF THE REPORT DATED 21.5.2016 SUBMITTED BY THE ADVOCATE COMMISSIONER IN O.S.43/2016.** - **EXT. P37 A TRUE COPY OF THE NOTICE DATED 24.2.2016 ISSUED BY THE 1ST RESPONDENT.** **(Contd...)** ## **WP(C).No. 21479 of 2016 (H)** **EXT. P38 A TRUE COPY OF JUDGMENT DATED 24.5.2016 OF THIS HON'BLE COURT IN WP[C] 15440/2016.** **EXT. P39 A TRUE COPY OF THE APPLICATION DATED 11.5.2016 FILED BY THE FIRST RESPONDENT UNDER SECTION 14 OF THE SARFAESI ACT BEFORE THE CJM.** **EXT. P40 A TRUE COPY OF THE AFFIDAVIT DATED 11.5.2016 FILED BY THE FIRST RESPONDENT ALONG WITH EXT.P39 BEFORE THE CHIEF JUDICIAL MAGISTRATE.** **EXT. P41 A TRUE COPY OF THE ORDER DATED 12.5.2016 PASSED BY THE CHIEF JUDICIAL MAGISTRATE IN CMP 819/2016 FILED BY THE FIRST RESPONDENT.** **EXT. P42 A COPY OF THE CERTIFICATE DATED 23.6.2016 ISSUED BY THE VILLAGE OFFICER, PUTHIYANGADI TO THE IST PETITIONER.** **RESPONDENT(S)' EXHIBITS : NIL** **----------------------------------------------------------------** **//TRUE COPY//** **P.A. TO JUDGE** **Mn** **A.M.SHAFFIQUE, J. ------------------------------------** W.P.(C).No.21479 of 2016 **-----------------------------------** Dated this the 24[th] day of June, 2016 ## **J U D G M E N T** This writ petition is disposed of at the admission stage itself after hearing the learned counsel for the petitioners and the 1[st] respondent. No notice is being issued to respondents 2 to 5 in the nature of order I intend to pass. 2. The petitioners challenge Ext.P41 order passed by the Chief Judicial Magistrate Court, Kozhikode by exercising power under Section 14 of the SARFAESI Act at the instance of the 1[st] respondent Bank. The short facts involved in the writ petition would disclose that the 1[st] petitioner claims to be the owner of the secured asset, which is having an extent 9.83 cents of land. It is contended that the petitioners had given a power of attorney in favour of the grant son, who is the 5[th] respondent, for mortgaging the property for availing certain loan from the Kerala State Co-operative Bank, Kozhikode. The 5[th] respondent had availed certain loan and he was unable to repay the same. The 1[st] petitioner had transferred the property in favour of the 2[nd] respondent who thereafter transferred the property in favour of the 3[rd] respondent. Respondents 3 and 4 availed of a loan facility from the respondent Bank and which became overdue. As a result of which, the Bank took proceedings under the SARFAESI Act. The 1[st] petitioner being served with a W.P.(C).No.21479 of 2016 2 notice for taking possession of the premises in terms of Rule 8 (1) of the Security Interest Enforcement Rules, 2002 approached this Court by filing W.P.(C).No.15440 of 2016. By judgment dated 24.05.2016, this Court did not entertain the writ petition and the same was dismissed with the observation that the issues projected by the petitioner cannot be adjudicated by this Court in a proceedings under Article 226 of the Constitution of India and that, it shall be open for the petitioner to approach the Tribunal, if the petitioner has any valid contentions regarding the validity of notice issued. It is submitted that in the meantime, steps were taken by the respondent Bank by approaching the Chief Judicial Magistrate who passed Ext.P41 order appointing an Advocate Commissioner to take possession of the premises. According to the petitioner, they had already filed a suit as O.S.No.43 of 2016 on the allegation that the sale deed executed by the 1[st] petitioner in favour of 2[nd] respondent and the subsequent transfer in favour of the 3[rd] respondent are sham documents and were not acted upon and liable to be set aside. It is contended that the petitioners are still in possession of the premises and possession was not handed over to either the 2[nd] respondent or the 3[rd] respondent. In the above facts, the petitioners seek for quashing Ext.P41 order passed by the Chief Judicial Magistrate. 3. It is also contended that the Bank while filing an application W.P.(C).No.21479 of 2016 3 under Section 14 of the Act, did not disclose the fact that the petitioners are in possession of the property, whereas, they have stated in the affidavit that the 3[rd] respondent is in possession. The application filed before the Magistrate is produced as Ext.P39 and the affidavit is Ext.P40. The contention urged is that when the petitioners are in possession of the property and there are sufficient materials to indicate the same, without disclosing the said fact the Bank had approached the Chief Judicial Magistrate. 4. On the other hand the learned counsel for the respondent Bank submits that their enquriy revealed that the 3[rd] respondent was in possession of the premises. But it is apparent from the materials now placed on record that the petitioners have a case that the 1[st] petitioner had not handed over possession of the premises. The petitioners have also obtained an injunction against respondents 3 and 4 restraining them from forcibly evicting the petitioners from the premises in question. ## 5. The suit is filed seeking the following declaration : _“Declaring that the Document bearing No.2739/2006 of West Hill SRO executed by 1[st] Plaintiff in favour of 2[nd] defendant and document bearing Number 1996/2011 of West Hill SRO executed by 2[nd] defendant in favour of 1[st] defendant pertaining to Plaint Schedule Property are sham documents intended and executed as a security for a sum of Rs.15,00,000/- (Fifteen Lakh) and Rs.26,00,000/- (Twenty Six Lakhs), respectively, for availing loan and does not confer_ W.P.(C).No.21479 of 2016 4 _valid right or title over defendants effecting the right and title of 1[st] plaintiff over the Plaint Schedule Property.”_ Allegations have been raised in the suit that the sale deed was a sham document and was not intended to be acted upon. Further allegation has been made in paragraph 26 regarding the alleged fraud committed by the 1[st] defendant. Paragraph 26 reads as under : _“26. The 1[st] defendant acts and conduct by itself evidences the deceit and fraud from 1[st] defendants part in the transaction the plaintiffs had with 1[st] defendant, that too against the faith and confidence reposed by the plaintiff. The malfide move and threatening mode of conduct from the side of the 1[st] defendant resting upon the document with respect to Plaint Schedule Property got registered in the name of 1[st] defendant has no legal or factual backing. The attempted highhanded acts from the side of the 1[st] defendant pretending to be the true owner of the property can never gain any support under law nor or facts. Extortion of money by 1[st] defendant from the plaintiffs restring upon a false claim over the Plaint Schedule Property are all matters which deserves serious consideration. The registered documents with respect to Plaint Schedule property executed and got executed were intended to avail loan and the same would never confer any valid title, interest or possession for 1[st] defendant or defendant over the Plaint schedule property. The 1[st] defendant nor the 2[nd] defendant ever had acquired any right or interest over Plaint Schedule Property. The said documents cannot be made binding over 1[st] plaintiffs right and title over Plaint Schedule Property. The documents so got registered had never_ W.P.(C).No.21479 of 2016 5 _been acted upon in the said manner. The false claim and pretensions from the side of the 1[st] defendant otherwise in the matter are all fraudulent moves to extort more money from plaintiffs. The 1[st] defendant had received more amount than what is required to discharge the liability towards South Indian Bank. Being so, the 1[st] defendant is to execute document pertaining to Plaint Schedule Property back in favour of plaintiff as promised, agreed and assured. The 1[st] defendant is also liable to return the excess amount of Rs.17,96,300/- fraudulently collected from the plaintiff. The act and conduct from the side of the 1[st] defendant is highly unjustifiable, illegal and detrimental to the otherwise protected rights of the plaintiff and also over the rights of plaintiffs over Plaint Schedule Property.”_ 6. Having regard to the aforesaid factual situation, it is rather clear that the petitioners have approached the civil court alleging that the sale deeds executed by them were not intended to be acted upon and are sham. The Bank is also a party to the said proceedings. There is an allegation of fraud against the 1[st] defendant as well and a reading of the averments in the plaint discloses the fact that the petitioners have raised substantial contentions to avoid the sale deed. 7. The learned counsel for the respondent Bank submits that the suit is not maintainable in view of the specific bar under the SARFAESI Act and they intend to file a written statement raising all the contentions in that regard. It is also contended that since the W.P.(C).No.21479 of 2016 6 petitioner had already approached this Court by filing W.P.(C). No.15440 of 2016 and this Court did not interfere with the notice issued, there is no reason why this Court should interfere with the SARFAESI proceedings in the present writ petition. That apart, it is stated that an appeal has been filed by the petitioner against the judgment dated 24.05.2016 in W.P.(C).No.15440 of 2016, which is pending. 8. In regard to the maintainability of the present writ petition on account of disposal of W.P.(C).No.15440 of 2016, I don't think that this writ petition can be dismissed on the ground of maintainability. The petitioner had approached this Court on a different cause of action especially, when an order has been passed under Section 14 of the SARFAESI Act. 9. It is not disputed that a suit has been filed by the petitioners to substantiate their claim. At this stage of proceedings, it may not be possible for this Court to ignore the pending suit and direct the petitioners to approach the Tribunal. This is a case where there is an allegation of fraud and it is contended that the document executed by the 1[st] petitioner is sham and not intended to be acted upon. The Chief Judicial Magistrate may not be in a position to decide such issues nor is any jurisdiction conferred on the Chief Judicial Magistrate to decide such aspects in the matter. Of course in _**Harshad Govardhan Sondagar v. International Assets**_ W.P.(C).No.21479 of 2016 7 ## _**Reconstruction Company Ltd. and Others (2014) 6 SCC 1**_ , the Apex Court had issued certain directions in which the right of tenants could be decided by the Chief Judicial Magistrate. I don't think that the Magistrate should be entrusted with the jurisdiction to decide on the question as to whether the document is sham and whether any fraud had been played on the petitioners. Section 34 of the SARFAESI Act reads as under : **“34. Civil court not to have jurisdiction.-** _No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993).”_ The bar of jurisdiction is apparently with reference to the matters to be determined by the Tribunal. However, it is for the civil court to consider the maintainability of the suit. Position of law has been elaborated in _**Mardia Chemicals Ltd. v. Union of India [(2004) 4 SCC 311]**_ and _**Jagdish Singh v. Heeralal [(2014) 1 SCC 479]**_ . However, since the suit is pending and the secured creditor is a party to the suit, it is for the civil court to decide on such issues. Having regard to the aforesaid factual situation, I am of the view that the direction issued by the Chief Judicial Magistrate can be kept W.P.(C).No.21479 of 2016 8 in abeyance until a final decision is arrived at in O.S.No.43 of 2016. In the result, this writ petition is disposed of as under : Ext.P41 order issued by the Chief Judicial Magistrate shall be kept in abeyance until a final decision is taken by the Sub Court, Kozhikode in O.S.No.43 of 2016. The Sub Court shall endeavour to dispose of the suit as expeditiously as possible and within a period of six months from the date of receipt of a copy of this judgment. Sd/- **A.M.SHAFFIQUE, JUDGE.** AV