Introduction
The Himachal Pradesh High Court recently made a significant ruling regarding the jurisdiction of civil courts in Debt Recovery cases where the action of the secured creditor is alleged to be fraudulent or untenable. The case is referred to as Nishant Guleria Vs. Punjab National Bank and Anr.
The Case and Its Context
The Hon’ble Bench, presided over by Mr. Justice Sushil Kukreja, examined the provisions of the SARFAESI Act, specifically Section 34, and the Civil Procedure Code (CPC), specifically Section 100 and Order 6 Rule 4.
Himachal Pradesh HC: Key Ruling on Debt Recovery Jurisdiction
The Court held that:
(i) The existence of a substantial question of law is a prerequisite for the exercise of jurisdiction under the provisions of Section 100 CPC. The second appeal does not lie on the ground of erroneous findings of facts based on the appreciation of the relevant evidence.
(ii) Upon perusal of Section 34 of the SARFAESI Act, it is clear that no civil court shall have any jurisdiction to entertain any suit or proceeding in respect of any matter, which the Debt Recovery Tribunal is empowered by or under the SARFAESI Act to determine. Furthermore, no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under the said Act.
(iii) The jurisdiction of the civil court would not be absolutely barred where the action of the secured creditor is alleged to be fraudulent or his claim may be so absurd and untenable which may not require any probe whatsoever.
(iv) In the instant case, except for the use of the word “fraud”, no particulars of the allegations of fraud have been specifically pleaded as mandated by the provisions of Order 6 Rule 4 of the Civil Procedure Code, 1908.
Conclusion: Debt Recovery Legal Insights
This judgment provides valuable insights into the interpretation of the SARFAESI Act and the Civil Procedure Code in the context of debt recovery. It underscores the importance of the jurisdiction of civil courts and the role of the Debt Recovery Tribunal in such cases. The ruling serves as a crucial reminder for all stakeholders in the debt recovery process to adhere to the principles and procedures laid down by the law.
