Clause 12 leave and SARFAESI bar: maintainability must be checked at filing, while a Section 13(2) notice alone does not oust suit jurisdiction.

At the stage of seeking leave under Clause 12 of the Letters Patent, the court must examine whether the plaint is maintainable, territorially competent, and not ex facie barred by statute, so the suit can be refused at the threshold if law prohibits its reception. Section 34 of the SARFAESI Act did not bar the suit when instituted, because the civil court exclusion under the first limb operates only when the DRT or DRAT is empowered at the time of filing, which arises upon measures under Section 13(4); a Section 13(2) notice alone is insufficient. Reliance on undisclosed precedents was held generally undesirable and contrary to fairness, as parties must have an opportunity to address authorities used against them.

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Issues: (i) Whether, at the stage of considering leave under Clause 12 of the Letters Patent, the court is bound to examine whether the plaint is ex facie barred by statute and maintainable; (ii) Whether Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 barred receipt of the suit before any measure under Section 13(4) had been taken by the secured creditor; (iii) Whether reliance on precedents not disclosed to the parties before decision was generally undesirable and contrary to natural justice.

Issue (i): Whether, at the stage of considering leave under Clause 12 of the Letters Patent, the court is bound to examine whether the plaint is ex facie barred by statute and maintainable?

Analysis: A court asked to receive a plaint or grant leave under Clause 12 necessarily applies judicial mind to the action's maintainability. The court must examine territorial competence, disclosure of cause of action, and whether the suit is barred by law. A statutory prohibition against entertaining a class of actions cannot be ignored until a later stage, because the first judicial scrutiny of the plaint must test whether the suit can be received at all.

Conclusion: The court was entitled, indeed obliged, to examine maintainability at the stage of leave under Clause 12, and this issue was decided against the appellants.

Issue (ii): Whether Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 barred receipt of the suit before any measure under Section 13(4) had been taken by the secured creditor?

Analysis: The bar in Section 34 has to be read with Section 17(1). The first limb of Section 34 excludes civil court jurisdiction only when the Debts Recovery Tribunal or Appellate Tribunal is empowered at the time of institution to determine the subject-matter of the suit, which occurs upon measures under Section 13(4). A notice under Section 13(2) by itself does not attract that bar. The second limb independently prohibits injunctions in respect of action taken or to be taken under the Act, but it does not convert a pre-Section 13(4) suit into an incompetent one where the tribunal has not yet acquired jurisdiction over the matter.

Conclusion: Section 34 did not bar the suit at the time it was presented, and this issue was decided in favour of the appellants.

Issue (iii): Whether reliance on precedents not disclosed to the parties before decision was generally undesirable and contrary to natural justice?

Analysis: Fairness requires that authorities proposed to be relied upon in decision-making be made known to the parties so they may address their effect. A decision based on unnotified precedents may cause prejudice because the parties are denied an opportunity to explain, distinguish, or supplement the authorities.

Conclusion: Such reliance was held to be generally undesirable, and this issue was decided in favour of the appellants.

Final Conclusion: The suit was maintainable when instituted, the order refusing leave was set aside, and leave under Clause 12 of the Letters Patent was granted.

Ratio Decidendi: For the first limb of a statutory civil-court bar like Section 34 of the SARFAESI Act, jurisdiction is excluded only when the tribunal is empowered to determine the subject-matter at the time of institution, while a pre-emptive notice alone does not oust the civil court's power to receive the suit.

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