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of <h1>Civil courts lack jurisdiction to restrain secured creditors from SARFAESI Act recovery proceedings under Section 34</h1> The HC quashed orders granting interim injunction and restraining secured creditor from recovery proceedings. The lower court lacked jurisdiction under ... Maintainence of status quo till disposal of the suit - seeking a permanent injunction of the revocation notice and the Expression of Interest - Jurisdiction of Lower Court - applicability of Section 34 of SARFAESI Act - HELD THAT:- From the records, it appears that, the petitioner herein, contested the suit and had filed a written statement and also the suggested issues. As noted earlier, challenge has been made to the proceedings and the orders passed by the Lower Court on the following grounds, that is, lack of jurisdiction, the bar created by Section 34 of the SARFAESI Act, and Section 41(b) of The Specific Relief Act, 1963. The proceedings therefore, in view of the specific bar imposed by Section 34 of the SARFAESI Act, will no doubt be not maintainable in law, as the non-discharge of liabilities to the secured creditor will surely come within the purview of a dispute that should go before the Debts Recovery Tribunal. The impugned orders in this regard, having in effect restrained the petitioner from seeking relief under a special act, are hit by Section 34. On the point of the orders being violative of Section 41(b) of the Specific Relief Act, 1963, this Court finds force in the submissions of the learned Senior counsel for the petitioner that, a Court cannot grant an injunction restraining any person from instituting a proceeding in a Court of co-ordinate or superior jurisdiction. This submission is accepted, inasmuch as, by the impugned orders, the petitioner has been effectively restrained from instituting other proceedings before a special forum, which is not subordinate to the Lower Court, that is, the Debts Recovery Tribunal or before the Company Law Tribunal. Coming to the maintainability of the instant Revision Application under Article 227 of the Constitution, it is correct that procedural appeal was available to the petitioner in assailing the impugned orders which has not been availed of, but rather interference is sought, by praying for the invocation of the powers of superintendence by this Court. It is a common refrain that, in cases where alternative remedy is available in terms of the CPC, Courts are normally reluctant to exercise supervisory jurisdiction, but it is also true that depending upon the peculiar facts of a case, a remedy of appeal may not always be a bar in the exercise of such powers - The instant case to the mind of the Court, is such a case, wherein, the manner of involvement of public money is clearly against public policy, and a secured creditor is being thwarted from taking steps for recovery of outstanding debts from the respondent No. 1, whose account has already been declared a non-performing asset. Article 227 of the Constitution, vests in the High Court the power to interfere in cases of erroneous assumption of jurisdiction or acting beyond the jurisdiction conferred and to correct a patent error, procedural or otherwise. This Court in exercise of supervisory jurisdiction under Article 227 of the Constitution, deems the instant case to be a fit case for interference, in view of the error of law apparent on record. As such, the impugned orders 28.01.2022 and 17.08.2022, are accordingly quashed and set aside, and the Learned Lower Court in view of the specific bar in such matters is held to be without jurisdiction to try T.S. No. 1 of 2022, pending in its Court. The instant Revision Application stands allowed. Issues Involved:1. Jurisdiction of the Lower Court.2. Application of Section 34 of the SARFAESI Act.3. Violation of Section 41(b) of the Specific Relief Act, 1963.4. Maintainability of the Revision Petition under Article 227 of the Constitution of India.Detailed Analysis:1. Jurisdiction of the Lower Court:The primary issue concerns whether the Lower Court had jurisdiction to entertain the suit. The petitioner argued that the jurisdiction was exclusively with the Courts of Mumbai and Guwahati as per the Restructuring Agreement dated October 3, 2019. The agreement explicitly stated that disputes would be subject to these courts' jurisdiction, which was supported by the legal maxim 'expressio unius est exclusio alterius,' meaning the expression of one is the exclusion of another. The court found that the intention of the parties was clear in conferring exclusive jurisdiction to the specified courts, thus excluding the jurisdiction of other courts, including the Lower Court.2. Application of Section 34 of the SARFAESI Act:The petitioner contended that the suit was barred under Section 34 of the SARFAESI Act, which prohibits civil courts from entertaining suits in matters that fall within the jurisdiction of the Debts Recovery Tribunal. The court agreed, noting that the non-discharge of liabilities by the respondent fell within the purview of disputes to be addressed by the Tribunal. The court referenced the decision in Mardia Chemicals Ltd. vs. Union of India, which clarified that the bar of civil court jurisdiction applies to matters cognizable by the Debts Recovery Tribunal, even if no action has been taken under Section 13(4) of the SARFAESI Act.3. Violation of Section 41(b) of the Specific Relief Act, 1963:The petitioner argued that the injunction order violated Section 41(b) of the Specific Relief Act, which prohibits courts from granting injunctions that restrain a person from instituting or prosecuting proceedings in a court not subordinate to the one granting the injunction. The court found merit in this argument, as the impugned orders effectively restrained the petitioner from initiating proceedings before superior forums like the Debts Recovery Tribunal or the Company Law Tribunal. The court cited the Supreme Court's judgment in Cotton Corporation of India Limited vs. United Industrial Bank Limited, which emphasized that an injunction should not preclude a person from seeking relief in a court of co-ordinate or superior jurisdiction.4. Maintainability of the Revision Petition under Article 227:The respondent argued that the petition under Article 227 was not maintainable due to the availability of an alternative remedy. However, the court noted that the powers under Article 227 could be invoked in cases of erroneous jurisdiction assumption or procedural errors. Given the involvement of public money and the thwarting of the secured creditor's rights, the court deemed it appropriate to exercise its supervisory jurisdiction. The court concluded that the peculiar facts of the case justified interference, as the Lower Court's orders were contrary to law and public policy.Conclusion:The court quashed the impugned orders dated 28.01.2022 and 17.08.2022, holding that the Lower Court lacked jurisdiction to try the suit. The Revision Application was allowed, enabling the petitioner to pursue its legal and statutory rights for recovery of debts through appropriate forums. No order as to costs was made.
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