2017 (8) TMI 1589 - HC - Indian Laws

Court allows suit under Letters Patent, sets aside SARFAESI Act, grants leave. Respondent can raise objections.

Delta International Limited and Ors. Versus Nupur Mitra and Ors.

The court held that the suit was maintainable at the time of its institution and when leave was sought under Clause 12 of the Letters Patent, ... Grant of Leave - Clause 12 of the Letters Patent - leave sought was declined on the ground that the court did not have any jurisdiction to entertain the suit; not on the ground of territoriality but in view of an express prohibition on civil courts by a statute - HELD THAT:- When a statute commands that a court shall not have jurisdiction to entertain a class of actions, it is obligatory on the part of the court to ensure that it does not act in derogation of such statutory command whenever the matter first receives the attention of any judge of the court. That there is a practice in this court that when leave is not sought under Clause 12 of the Letters Patent, the plaint may be presented before the Master and it may get admitted without any inquiry as to its maintainability, cannot dilute the responsibility of a judge being presented a plaint to ascertain whether the suit is ex facie prohibited from being received. Ideally, the Master should also undertake the same exercise and, if in doubt, refer the matter to the judge in chambers - If the practice in a particular court is for the action to be routinely filed in the department and not immediately receive the attention of a judge, such practise must be amended and, till such time that the practice continues, it would be the duty of the judge seeing the plaint or the petition or the like for the first time to apply his mind to the bar. In view of the nature of the prohibition imposed on a civil court by the uncompromising wording of Section 34 of the Act of 2002, the approach adopted by the trial court in the instant case cannot be faulted. The contention of the appellants on the first count fails and it is held that a bar of the kind envisaged in Section 34 of the said Act obliges the court to ascertain whether the action brought before it falls foul of such provision and such assessment may be made suo motu and at the earliest stage when any judge in such court has due occasion to look into the same. Whether Section 34 of the said Act prohibited the receipt of the suit in the manner in which it was presented? - HELD THAT:- he present suit was maintainable at the time that it was presented for admission and leave under Clause 12 of the Letters Patent was sought: not because any of the reliefs claimed in such suit is incapable of being granted by a DRT or DRAT; but only because at the time of such institution, no DRT or DRAT was empowered by or under the Act of 2002 to determine any part of the subject-matter of the suit. Though a relief for specific performance of the settlement agreement has been carried in the plaint and, ordinarily, a DRT or DRAT may not have the authority to consider or grant a relief for specific performance of an agreement, the nature of the agreement of which specific performance has been sought herein is one that is capable of being indirectly granted by the DRT or DRAT if a petition in such regard were to be carried by these appellants to such forum upon any measure being taken by the respondent Trust under Section 13(4) of the Act. Desirability of judicial precedents being cited in a judgment or order without such authorities being brought to the notice of the parties - HELD THAT:- Viewed from the perspective of a party against whom a decision is made on the basis of a judicial precedent not referred to in course of the arguments, it would amount to a breach of the most elementary canons of natural justice. It is possible that the perspective in which a judicial precedent is read or understood may be altered upon a party to the action having a chance to explain the same or being afforded an opportunity to bring any other authority to bear on the issue. Indeed, the miscarriage of justice that may be occasioned by a judgment referring to judicial authorities without such precedents being brought to the notice of the parties or the party likely to be affected thereby, is evident from the judgment and order impugned - It is, therefore, held that it is generally undesirable that judicial precedents be referred to or made the basis for any finding in a judgment without the attention of the parties represented before the court first being drawn to them. Application disposed off. Issues Involved:1. Jurisdiction of the trial court to entertain the suit.2. Applicability of Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).3. Maintainability of the suit at the stage of seeking leave under Clause 12 of the Letters Patent.4. Judicial precedents cited without being brought to the notice of the parties.Detailed Analysis:Jurisdiction of the Trial Court to Entertain the Suit:The trial court declined the appellants' prayer for leave under Clause 12 of the Letters Patent on the ground that it lacked jurisdiction to entertain the suit due to an express prohibition by statute, specifically Section 34 of the SARFAESI Act. The appellants argued that the matter of maintainability should not arise at the stage of seeking leave under Clause 12 and should only consider whether part of the cause of action arose within the court's territorial limits. The court, however, emphasized that it is obligatory for a civil court to ascertain whether the suit is maintainable at the time of receiving the plaint, especially when a statutory bar is involved.Applicability of Section 34 of the SARFAESI Act:Section 34 of the SARFAESI Act prohibits civil courts from entertaining any suit or proceeding in respect of any matter which a Debts Recovery Tribunal (DRT) or Debts Recovery Appellate Tribunal (DRAT) is empowered to determine. The appellants contended that this bar should only apply once measures under Section 13(4) of the Act are taken by a secured creditor. The court noted that the bar under Section 34 applies at the threshold and not after the institution of the suit. However, the court also clarified that the bar under Section 34 does not operate if no DRT or DRAT is empowered to determine the subject matter of the suit at the time of its institution.Maintainability of the Suit at the Stage of Seeking Leave under Clause 12 of the Letters Patent:The appellants argued that the trial court should not have assessed the maintainability of the suit at the stage of seeking leave under Clause 12 of the Letters Patent. The court held that it is the duty of the judge to assess the maintainability of the suit at the earliest stage, including whether it conforms to the pecuniary and territorial authority of the court, whether it discloses a cause of action, and whether it is ex facie barred by any law. The court concluded that the trial court's approach in assessing the maintainability at the stage of seeking leave was correct.Judicial Precedents Cited Without Being Brought to the Notice of the Parties:The appellants contended that the trial court referred to several judgments that were not cited or referred to during the limited argument while seeking leave under Clause 12. The court agreed that it is generally undesirable for judicial precedents to be referred to or made the basis for any finding in a judgment without first bringing them to the notice of the parties. The court noted that the trial court's reliance on a passage from Mardia Chemicals was incorrect and that the correct legal position was enunciated in Jagdish Singh, which should have been brought to the notice of the parties.Conclusion:The court held that the suit was maintainable at the time of its institution and when leave was sought under Clause 12 of the Letters Patent, notwithstanding Section 34 of the SARFAESI Act. The court set aside the trial court's judgment and order dated July 24, 2017, and granted leave under Clause 12 of the Letters Patent. The suit will be deemed to have been instituted on July 24, 2017, when the plaint was presented. The respondent Trust is not prevented from taking any objection in accordance with the law. There will be no order as to costs.