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of <h1>Suit barred under Section 80 CPC for no prior notice but not under Section 34 SARFAESI Act; concurrent jurisdiction upheld</h1> The HC held the suit barred under Section 80 CPC for non-compliance of the mandatory two months' prior notice to a Public Officer, with no leave sought ... Suit for damages/compensation - rejection of plaint primarily on the grounds that the suit was barred under Section 80 of the Code of Civil Procedure and Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Whether the suit was barred under Section 80 of the Code of Civil Procedure? - HELD THAT:- Section 80 mandates two months’ prior notice to a Public Officer in the event a suit is filed against such an officer. The Section is couched in negative language, debarring any suit from being filed without such compliance, unless leave to file without such notice is granted specifically under Section 80(2) of the Code of Civil Procedure. It is nobody’s case that leave under Section 80(2) was taken by the plaintiffs prior to filing the suit, nor has it been pleaded in the plaint that a prior notice was issued under Section 80 of the Code. Thus, the suit was definitely barred by Section 80 of the Code of Civil Procedure and was not maintainable in law for non-compliance of the said provision. In V. Rajendran and another v. Annasamy Pandian (dead) through Legal Representatives Karthyayani Natchiar, [2017 (1) TMI 1753 - SUPREME COURT], the Supreme Court observed that ‘formal defects’ or ‘sufficient grounds’ under Order XXIII Rule 1 of the Code of Civil Procedure include want of notice under Section 80 of the Code. Thus, the plaintiffs were entitled to seek withdrawal of the suit with liberty to sue afresh within the contemplation of Order XXIII Rules 1 and 3 of the Code in view of want of notice under Section 80 being a ‘formal defect’ within the contemplation of the said provision. In any event, Order VII Rule 13 of the Code of Civil Procedure provides that a fresh suit on the same cause of action is not barred per se due to rejection of the plaint, which applies all the more in case of a formal defect - although the suit was not maintainable due to non-compliance of Section 80 of the Code of Civil Procedure, such bar does not, by itself, prevent the appellants from preferring a fresh suit on the same cause of action. Bar under Section 34 of the SARFAESI Act - HELD THAT:- The jurisdiction of the Tribunal under the SARFAESI Act is of a limited nature, to consider only whether the measures under Section 13 (4) are in consonance with the provisions of the said Act. The bar under Section 34 relates to suits which seek to usurp such limited jurisdiction of the Tribunal. However, the powers of a Civil Court to adjudicate a claim for damages/compensation for loss/deterioration of property are much wider than such restricted jurisdiction of the Tribunal. It is trite law that in applications under Order VII Rule 11 of the Code, the principal relief is the determinant of whether a suit is barred by any law. Permanent injunction, being a consequential relief, could not be held to be an indicator of the maintainability of the suit, since it was not a stand-alone or principal relief but only an ancillary remedy - It is well-settled that a plaint cannot be segregated for the purpose of considering a prayer for rejection of plaint and there cannot be any partial rejection of plaint - the suit was not barred under Section 34 of the SARFAESI Act. Whether the pendency of the winding up proceeding operates as a bar to the suit? - HELD THAT:- The introduction of Section 430 in the 2013 Act highlights by contrast that such a total bar of jurisdiction of Civil Courts in respect of matters which can be dealt with by the Company Court was absent in the 1956 Act. Hence, the powers of the Company Court/Tribunal under the 1956 Act were parallel to that of the Civil Court and did not exclude the powers of the Civil Court. Even if there was an overlap between the jurisdictions of the two, the powers of the Company Court were over and above and in addition to those of the Civil court in their respective spheres - the argument that the Civil Court was denuded of jurisdiction to entertain or try the present suit due to pendency of the winding up proceeding under the 1956 Act before the Company Court and as the latter was in seisin of the matter, is not tenable in the eye of law and is hereby turned down. Whether the suit was maintainable at the instance of one Sandeep Khandelwal, the alleged authorised representative of the plaintiffs, who affirmed the verification and affidavit of the plaint? - HELD THAT:- It is well-settled that there cannot be a partial rejection of plaint and/or the reliefs claimed in the suit cannot be segregated for the purpose of rejection of plaint. A plaint has to be rejected either as a whole or not at all. Even if the suit was not maintainable vis-a-vis the Company at the behest of Sandeep Khandelwal, since he did not have the authority at the relevant time (that is, April, 2016) to represent the plaintiff no. 1-Company since the winding up proceeding had already commenced, it would at best be open to the Trial Court, at the time of final adjudication of the suit, to refuse the reliefs to the plaintiff no. 1-Company on such ground, by holding that the reliefs claimed in the suit were not maintainable at the behest of the Company. Thus, for the purpose of rejection of plaint, the incompetence of the signatory to the plaint to represent the plaintiff no. 1-Company pales into insignificant, since the signatory could very well represent the other two plaintiffs/present appellants. In any event, the court could, at the final hearing of the suit, always refuse the reliefs to the plaintiff no. 1 on such ground and/or transpose the plaintiff no. 1 to the category of defendants/proforma defendants. However, the plaint could not be partially rejected at least insofar as the plaintiff nos. 2 and 3 are concerned, on such ground. Effect of the CIRP and Resolution Plan on the maintainability of the suit before the Civil Court - HELD THAT:- The scope of an appeal against the rejection of a plaint is limited only to the plaint pleadings and whether such pleadings reveal any bar of law or are otherwise tainted by non-disclosure of cause of action or vitiated by any of the other clauses of Order VII Rule 11. The consideration is confined to the parameters of Order VII Rule 11 of the Code and the Appellate Court cannot delve into questions beyond those taken in the Trial Court for the purpose of rejection of the plaint. Not only did the Trial Court reject the plaint in the present case only on the grounds of Section 80 of the Code and Section 34 of the SARFAESI Act and did not adjudicate specifically on the other grounds taken, it is also to be noted that the bar under the IBC was never pleaded, argued or mentioned in the applications for rejection of plaint by any of the parties to the suit before the Trial Court. Thus, the Appellate Court cannot, for the first time, permit a new ground of rejection of plaint to be taken, which was not taken before the Court of first instance. Although a Trial Court can even suo moto reject a plaint if it so feels, the Appellate Court cannot arrogate to itself the powers of a Trial Court, thus, usurping the jurisdiction of the Court of first instance, inasmuch as the scope of hearing of an application under Order VII Rule 11 of the Code is concerned. Hence, the CIRP ground now sought to be taken by the RP cannot even be gone into within the limited scope of this appeal. Thus, the suit is not barred by any law other than Section 80 of the Code of Civil Procedure - Order VII Rule 13 of the Code, in any event, permits a fresh suit to be filed on the self-same cause of action and does not debar the same merely due to rejection of the plaint on a technical ground - the appellants’ application under Order XXIII Rule 1 of the Code of Civil Procedure filed in M.S. Case No. 49 of 2017 stands disposed of. ISSUES: Whether the suit is barred for non-compliance of Section 80 of the Code of Civil Procedure (CPC) requiring prior notice before instituting a suit against a Public Officer.Whether the suit is barred under Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) due to the jurisdiction of the Debts Recovery Tribunal (DRT) over the subject matter.Whether the pendency of winding up proceedings under the Companies Act, 1956 (1956 Act) operates as a bar to the suit before the Civil Court.Whether the suit is maintainable at the instance of the alleged authorised representative who affirmed the verification and affidavit of the plaint during the pendency of winding up proceedings.Whether the pendency of the Corporate Insolvency Resolution Process (CIRP) and the submission of a Resolution Plan affect the maintainability of the suit before the Civil Court. RULINGS / HOLDINGS: The suit was barred under Section 80 of the CPC for non-compliance of the mandatory two months' prior notice requirement to the Official Liquidator (O/L), who qualifies as a 'Public Officer' within the meaning of Section 2(17), clauses (g) and (h) of the CPC. However, this bar is a 'formal defect' permitting withdrawal of the suit with liberty to sue afresh.The suit was not barred under Section 34 of the SARFAESI Act as the plaint did not disclose any measures taken under Section 13(4) of the Act, which is a precondition for the DRT's jurisdiction and the bar under Section 34. The principal relief for damages/compensation for negligence in preserving company property lies outside the limited jurisdiction of the Tribunal under the SARFAESI Act.The pendency of winding up proceedings under the 1956 Act does not oust the jurisdiction of the Civil Court to entertain the suit, as the 1956 Act lacks a provision equivalent to Section 430 of the Companies Act, 2013, which bars Civil Court jurisdiction. Sections 448(6)(c), 460(6), and 543 of the 1956 Act do not confer exclusive jurisdiction on the Company Court to the exclusion of the Civil Court.The suit cannot be rejected for being instituted by the alleged authorised representative during winding up proceedings since partial rejection of plaint is impermissible. The representative could represent the guarantors, who have an independent cause of action, even if not authorised to represent the company in liquidation.The pendency of CIRP and the submission of a non-approved Resolution Plan do not bar the suit filed by guarantors seeking damages/compensation against third parties. The suit operates independently and does not conflict with the interests of the corporate debtor or the CIRP under the Insolvency and Bankruptcy Code, 2016 (IBC). RATIONALE: The Court applied the definition of 'Public Officer' under Section 2(17) of the CPC and the statutory scheme of the 1956 Act, which vests control over the O/L in the Central Government, to conclude that the O/L is a Public Officer for purposes of Section 80 of the CPC. Non-compliance of the mandatory prior notice under Section 80 is a formal defect, allowing withdrawal and re-filing.The Court confined its consideration under Order VII Rule 11 CPC to the pleadings in the plaint and rejected reliance on extraneous affidavits or applications. The Court interpreted Section 34 of the SARFAESI Act as a bar only when measures under Section 13(4) have been taken and challenged before the DRT under Section 17, which was not pleaded. The principal relief for damages is outside the Tribunal's limited jurisdiction, which relates only to enforcement measures under SARFAESI.The Court undertook a comparative statutory interpretation between the 1956 Act and the 2013 Act, noting the absence of a provision equivalent to Section 430 of the 2013 Act in the 1956 Act. It held that the Company Court's jurisdiction under the 1956 Act is concurrent and not exclusive, and the Civil Court retains jurisdiction unless expressly barred. The ejusdem generis principle was applied to interpret the scope of Section 460(6) of the 1956 Act as limited to acts related to administration and distribution of assets, not to claims for damages.The Court recognized the settled principle that a plaint cannot be partially rejected and that the representative's lack of authority to represent the company does not affect the maintainability of the suit insofar as the guarantors are concerned, who have a separate cause of action and valid representation.The Court examined the provisions of the IBC, particularly Sections 14, 17, 31, and 180, holding that the moratorium under Section 14 does not bar suits by guarantors for damages against third parties. The Resolution Plan's lack of approval by the Adjudicating Authority means it has no binding effect. The Court also emphasized the limited scope of appellate review against rejection of plaint under Order VII Rule 11 CPC and declined to entertain new grounds not raised before the Trial Court.
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