Civil suit barred after secured creditor action, while refusal of leave remained appealable as a decree

An appeal against refusal of leave and rejection of the plaint was maintainable because the order was treated as a rejection of plaint and, in substance, as an appealable decree under the civil procedure framework. The civil suit was barred once the secured creditor had invoked enforcement measures under the securitisation statute, because disputes over the creditor's entitlement, the assignment relied on, and the validity of action under the statute fell within the Debts Recovery Tribunal's jurisdiction. Declarations and injunctions seeking to restrain such action could not be pursued in civil court, and the impugned order was therefore not interfered with.

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Issues: (i) Whether the appeal was maintainable against the order refusing leave and rejecting the plaint. (ii) Whether the suit was barred by Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 once the secured creditor had invoked the statute.

Issue (i): Whether the appeal was maintainable against the order refusing leave and rejecting the plaint.

Analysis: The appellate provision in Section 13 of the Commercial Courts Act, 2015 was read in its context to include a decree within the expression "judgment or order". The refusal of leave under Clause 12 of the Letters Patent was treated as an order rejecting the plaint, and therefore as an appealable decree under the Code of Civil Procedure, 1908.

Conclusion: The appeal was maintainable.

Issue (ii): Whether the suit was barred by Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 once the secured creditor had invoked the statute.

Analysis: Once measures were taken under Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the jurisdictional Debts Recovery Tribunal became competent to determine the inter se rights and the validity of the creditor's action. The plaint sought declarations and an injunction that would directly restrain action under the statute, and the tribunal could also examine the validity of the assignment and the creditor's entitlement to proceed. In that situation, the civil suit could not be entertained.

Conclusion: The suit was barred and could not proceed in civil court.

Final Conclusion: The appellate court found no ground to interfere with the impugned order because the suit was not entertainable in the civil forum in view of the statutory scheme governing secured creditor action and the remedy before the Debts Recovery Tribunal.

Ratio Decidendi: When a secured creditor invokes Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, a civil suit seeking declarations and injunctions against that action is barred by Section 34, and the validity of the creditor's entitlement, including the assignment on which it relies, falls within the tribunal's remedial jurisdiction.

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