Sunday, 2 August 2015

Whether suit for injunction simplicitor is maintainable when declaration is not claimed?

The plaintiff has instituted present suit claiming for perpetual
injunction against the defendants restraining them from disturbing
his settled and peaceful possession over the suit land on the basis of
the alleged auction of 17.08.2004. The plaintiff has not sought any
declaration as regards the auction held on 17.08.2004. The learned
trial Judge observed that in view of Section 41(h) of the Specific
Relief Act, 1963, injunction cannot be granted when an equally
efficacious relief can certainly be obtained by any other usual mode
of proceeding. Since the plaintiff did not seek declaration, in view
of Section 41(h) of the Specific Relief Act, 1963, no injunction can
be granted. The courts below also held that the plaintiff did not
establish the ground of fraud raised in the suit.
 The learned
trial Judge rightly held that the plaintiff ought to have sought declaration as
regards actions taken by defendant No.1. In the present case, the plaintiff
has instituted suit for injunction simplicitor. In view of Section 41(h) of
the Specific Relief Act, 1963, no injunction can be granted in favour of the
plaintiff. 
IN THE HIGH COURT OF JUDICATURE AT MUMBAI
CIVIL APPELLATE JURISDICTION
SECOND APPEAL NO.303 OF 2008
WITH
CIVIL APPLICATION NO.792 OF 2008
Yashwant Raghuram Jadhav … Appellant
Vs.
Ratnagiri District Central Co-operative Bank
Limited and others … Respondents

 CORAM : R. G. KETKAR, J.

Pronounced on: 6 TH MAY, 2014



Heard Mr. Rajiv Patil, learned Senior Counsel for the appellant and
Mr. Rakesh Bhatkar, learned Counsel for respondent Nos.1 to 4 at length.
2. By this Appeal under Section 100 of the Code of Civil Procedure,
1908 (for short 'C.P.C.'), the original plaintiff has challenged the judgment
and decree dated 20.09.2005 passed by the learned Civil Judge, Junior
Division, Chiplun in Regular Civil Suit No.97 of 2004 as also the judgment
and decree dated 19.03.2008 passed by the learned Ad-hoc District Judge-
1, Khed in Civil Appeal No.54 of 2005. By these orders, the courts below
dismissed the Suit instituted by the appellant on the preliminary issue of
jurisdiction. The courts below held that in view of provisions of Sections
91, 101 and 164 of the Maharashtra Co-operative Societies Act, 1960 (for
short 'Act') and Section 34 of the Securitization and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002 (for short
'SARFAESI Act'), the Civil Court has no jurisdiction to entertain and try
the suit. The facts and circumstances, giving rise to filing of the present
Second Appeal, briefly stated, are as follows:

3. The appellant (plaintiff) has instituted Suit against respondent No.1
(defendant No.1-Bank), respondent No.2 (defendant No.2-borrower),
respondent No.3 - Yadav Charity Trust, Chiplun (defendant No.3 - auction
purchaser) and respondent No.4 (defendant No.4 - recovery officer of
respondent No.1) for perpetual injunction restraining these defendants from
disturbing plaintiff's settled and peaceful possession of land bearing Survey
No.33, Hissa No.2-A-3 admeasuring 0.06-3 H situate at Village Kherdi,
Taluka Chiplun, District Ratnagiri (for short 'suit land') on the basis of
alleged auction conducted by respondent No.4 on 17.08.2004. The parties
shall hereinafter be referred to as per their status in the trial Court.
4. It is the case of the plaintiff that defendant No.1 had advanced loan
of Rs.5,00,000/- to defendant No.2 in the form of cash-credit facility. The
plaintiff's stood as a supplementary surety to the loan granted by defendant
No.1 to defendant No.2. Defendant No.2 is a building contractor and he
was entrusted work by Building Department, Chiplun of Zilla Parishad
Ratnagiri. Defendant No.2 obtained loan from defendant No.1 for
completing the said work. It is the case of the plaintiff that Zilla Parishad
was to issue cheque in the joint names of defendant Nos.1 and 2 for
payment of the bills of the contractual work done by defendant No.2. Zilla
Parishad Ratnagiri issued several cheques to defendant No.2 to the tune of
Rs.14,08,032/- towards payment of loan. In the year 2002, defendant No.2
was liable to pay Rs.8,12,429/-. There was also proposal for One Time
Settlement (O.T.S.) for Rs.5,98,000/-.
5. It is the case of the plaintiff that though cheques were received by
defendant No.1 for the work done by the defendant No.2, the cheques were
not encashed by the defendant No.1. There was collusion between
defendant No.1 and defendant Nos.2 and 3. The plaintiff is running hotel
in the suit land. With a view to grabbing the suit land, defendant No.1
invoked SARFAESI Act. There was no wide publicity to the public
auction. Defendant No.1 fraudulently disposed of the suit land in favour of

the defendant No.3 at a considerably low price. Thus, the defendants have
played fraud upon the plaintiff. On the basis of the auction conducted by
the defendant No.4 on 17.08.2004, the plaintiff is likely to be dispossessed
from the suit land. It is in these circumstances, the plaintiff instituted suit
for perpetual injunction.
6. Defendant No.1 filed written statement at exhibit-25 resisting the
suit. Defendant No.1 contended that the plaintiff did not raise objection
when the notice of repayment of loan was issued. On 06.05.2003, notice
under Section 13(2) of SARFAESI Act was issued. Notices dated
16.07.2004 and 17.08.2004 as regards public auction were issued. The
plaintiff however did not give reply to that notice. Defendant No.1 denied
that there was any understanding among the parties for issuing cheques in
the joint names of defendant Nos.1 and 2 by Zilla Parishad, Ratnagiri.
Defendant No.1 further contended that plaintiff had instituted dispute under
Section 91 of the Act being dispute No.146 of 2003 before Co-operative
Court, Alibaug. The same was dismissed in default. Defendant No.1 had
instituted proceedings under Section 91 of the Act against the plaintiff and
defendant No.2 and other surety. Though plaintiff was duly served with the
summons in those proceedings, he did not file written statement and the
dispute proceeded ex-parte against him. Defendant No.2 resisted that
dispute by filing written statement. Defendant No.2 participated in the trial
by cross-examining the witness examined by defendant No.1. Defendant
No.2 also led his evidence. After considering the material on record, the
dispute was allowed by the Co-operative Court. On the basis of the order
passed by the Co-operative Court in favour of the defendant No.1, it had
obtained recovery certificate under Section 101 of the Act. In view of the
provisions of Section 91 and 101 of the Act, the suit instituted by the
plaintiff is not maintainable. That apart, for non-compliance of Section 164
of the Act, the Suit is also liable to be dismissed. Defendant No.1 further
asserted that in view of Section 34 of the SARFAESI Act, suit is barred.
Defendant No.2 filed written statement at exhibit-45 and denied the

assertions made in the plaint. Defendant No.2 contended that plaintiff is
not the supplementary surety as alleged by him but had mortgaged suit land
with defendant No.1. There was no understanding for issuing cheques in
the joint names of defendant Nos.1 and 2. Defendant No.2 further denied
that Rs.14 lacs were available to defendant No.1 for appropriating the loan
amount. He also denied O.T.S. Defendant No.3 filed written statement at
exhibit-29 inter alia contending that public auction was held on
17.08.2004. It was neither stayed nor its validity was challenged before
any Court. Defendant No.3 is a bonafide purchaser. Defendant No.4
adopted written statement of defendant No.1 by filing purshis at exhibit-26.
7. On the basis of the pleadings of the parties, the learned trial Judge
framed preliminary issues as regards maintainability of the suit as also
jurisdiction of the Civil Court to entertain and try the suit. The plaintiff
filed purshis at exhibit-63 on 11.07.2005 to the effect that he does not wish
to lead any oral evidence on preliminary issues. By judgment and decree
dated 20.09.2005, the learned trial Judge held that in view of Section 91 of
the Act, Civil Court has no jurisdiction to entertain and try the Suit. It was
further held that the suit is bad for non-compliance of Section 164 of the
Act. The learned trial Judge held that jurisdiction of the Civil Court is
barred in view of Section 34 of the SARFAESI Act. Aggrieved by this
decision, plaintiff preferred appeal before the District Court. By the
impugned judgment, the learned Ad-hoc District Judge-1, Khed dismissed
the appeal. It is against these decisions, the plaintiff has instituted the
above second appeal.
8. After hearing both the sides, the appeal was admitted on 16.04.2008
by passing the following order:
“ 1. Heard both sides.
2. Appeal admitted on the substantial questions of law as
formulated as (A), (B), (C) and (D).
(A) The substantial question of law involved in the present
Second Appeal is that, whether is the Trial Court was in its competence

and jurisdiction to dismiss the suit on the ground of preliminary issue
of jurisdiction, when there is specific averment in the suit that the
agreement or the transaction between the parties are fabricated and
based on fraud and misrepresentation;
(B) The substantial question of law involved in the present
Second Appeal is that, whether the learned Trial Court could exercise
its Jurisdiction to dismiss the suit with contention of fraud without
recording evidence and preventing the plaintiff to prove the fraud;
(C) The substantial question involved in the present Second
Appeal is whether the authorities under the Securitization and the
Reconstruction of Financial Assets and Enforcement of Security
Interest Act of 2002, were in position to allow the respondent Bank to
proceed with action under Section 13 and 14 of the Securitization and
the Reconstruction of Financial Assets and Enforcement of Security
Interest Act of 2002;
(D) The substantial question of law involved in the present
Second Appeal is that, whether the suit filed by the appellant seeking
relief of perpetual injunction based on the fraudulent act of the
respondent is barred by Section 34 of Securitization and the
Reconstruction of Financial Assets and Enforcement of Security
Interest Act of 2002.”
9. In support of this Appeal, Mr. Patil reiterated the submissions that
were advanced before the courts below. He submitted that basically the
plaintiff was denied an opportunity to lead evidence for substantiating the
plea of fraud specifically raised by him in the suit. He invited my attention
to paragraphs 2 to 5 of the plaint. He submitted that from the perusal of
assertions made in the plaint, and in particular paragraphs 2 to 5, it would
be apparent that defendant No.1 played fraud upon the plaintiff. The suit
land worth Rs.30 lac was sold for a paltry sum of Rs.6 lac approximately.
He submitted that it was agreed between the parties that for the work done
by defendant No.2, Zilla Parishad will issue cheques in the joint names of
defendant Nos.1 and 2. Though in fact cheques were issued by Zilla
Parishad in the joint names of defendant Nos. 1 and 2, the cheques were not
credited in the loan account of defendant No.2. He invited my attention to
the communication dated 02.08.2000 issued by Executive Engineer,
Building Department, Chiplun, Zilla Parishad - Ratnagiri addressed to the
Branch Manager of defendant No.1. In that letter, it was specifically stated
that cheque of Rs.6,52,257/- was issued in the name of defendant No.2 and

the same may be credited to the loan account of defendant No.2. By not
crediting the cheque so issued by Zilla Parishad, defendant No.1 played
fraud on plaintiff. Defendant Nos.1 to 3, in collusion, conducted the
auction. He further submitted that the notice dated 09.05.2003 issued
under Section 13(2) of the SARFAESI Act was not issued to the plaintiff.
Even while conducting the auction, no wide publicity was given. He
submitted that having regard to the fact that defendants have played fraud
upon the plaintiff, the suit instituted by him is not barred in view of Section
34 of the SARFAESI Act. He relied upon the decision of the Apex Court in
the case of Mardia Chemicals Limited Vs. Union of India, (2004) 4 SCC
311. He, therefore, submitted that the appeal requires to be allowed by
setting aside the impugned orders and the suit is required to be disposed of
on merits by issuing appropriate directions to the trial court.
10. On the other hand, Mr. Bhatkar supported the impugned orders. He
submitted that notice under Section 13(2) of the SARFAESI Act was issued
to the plaintiff. He did not give any reply to that notice. Even before
holding public auction, notices were issued to the plaintiff. However, he did
not respond to these notices. That apart, plaintiff had instituted dispute
under Section 91 of the Act being dispute No.146 of 2003 before the Cooperative
Court, Alibaug, which was dismissed in default. Defendant No.1
had instituted proceedings against plaintiff and defendant No.2 by filing
dispute No.41 of 2007 in the Co-operative Court, Raigad, Ratnagiri. The
dispute was allowed. On the basis of that, defendant No.1 obtained
certificate under Section 101 and thereafter, invoked provisions of
SARFAESI Act. He invited my attention to the written statement filed by
defendant No.1, and in particular paragraph 13 thereof. It was asserted
therein that defendant No.2 discounted the cheques received from Zilla
Parishad Ratnagiri of Chiplun Urban Co-operative Bank. In other words,
the cheques issued by Zilla Parishad towards payment of works done by
defendant No.2 were not submitted to the defendant No.1. He further
submitted that there was no understanding between the parties for issuing

cheques by Zilla Parishad Ratnagiri in the joint names of defendant Nos.1
and 2. In any case, he submitted that the plaintiff has not only to plead
fraud but has to prove it. In the present case, the plaintiff did not establish
the alleged fraud played by defendants. He submitted that the courts below
rightly held that the suit is not maintainable in view of Section 91 of the
Act as also Section 34 of the SARFAESI Act. Even there is no compliance
of Section 164 of the Act before institution of the present suit. For all these
reasons, he submitted that no case is made out for invocation of powers
under Section 100 of the C.P.C.
11. I have considered the rival submissions made by the learned Counsel
appearing for the parties. I have also perused the material on record. After
considering the material on record, following things emerge:
a. Defendant No.2 had availed loan of Rs. 5 lac in the form of cashcredit
facility. Plaintiff stood surety for repayment of the loan. The
loan documents filed by the plaintiff consists hypothecation deed.
The principal debtor i.e. defendant No.2 had hypothecated his goods
with defendant No.1 for security of repayment of loan. Plaintiff
being the surety also executed an agreement simultaneously with
defendant No.1 undertaking to repay the loan amount with interest,
if not paid by the defendant No.2. The said document also reveals
that if the guarantors failed to make such repayment, defendant No.1
was entitled to sell the immovable property of guarantors and
recover the amount of sale proceeds thereof. The recital in the
hypothecation deed also mentions specific properties including the
suit land, which is mortgaged for the purpose of repayment of loan
amount.
b. Plaintiff has instituted dispute being dispute No.146 of 2003
before the Co-operative Court. The said proceedings are produced at
exhibit-4/4. Plaintiff contended therein that the plaintiff and
defendant No.2 are the members of defendant No.1 Society. The

dispute was dismissed in default.
c. Defendant No.1 instituted dispute under Section 91 of the Act
being dispute No.41 of 2001 before the Co-operative Court.
Plaintiff was duly served in that suit. He did not file written
statement and the dispute proceed ex-parte against the plaintiff.
Defendant No.2 participated in that suit by filing written statement.
Defendant No.2 cross-examined the witness examined by defendant
No.1 as also led his oral evidence. After considering the material on
record, the learned Judge of Co-operative Court, Raigad, Ratnagiri at
Alibaug allowed the dispute on 06.08.2001 and directed plaintiff,
defendant No.2 and one Dattaram Maruti Pawar (other surety) to
jointly and severally pay to defendant No.1 Rs.4,17,426/- with
interest at the rate of 16.5% from 01.10.2000 till the realization of
the entire claim in monthly installment of Rs.23,000/- from
10.10.2001. Upon failure of any two consecutive installments,
defendant No.1 is entitled to recover the balance due in lumpsum.
Plaintiff and defendant No.2 have not brought any material on record
to indicate that the said decision was challenged.
d. Defendant No.1 had issued notice under Section 13(2) of
SARFAESI Act on 09.05.2003. Defendant No.1 thereafter issued
notice in Daily Sagar on 31.05.2003 and called upon defendant No.2
to pay Rs.7,41,953/- within 60 days from 09.05.2003. Neither the
plaintiff nor defendant No.2 complied notice dated 09.05.2003. In
view thereof, defendant No.1 took possession of the suit land on
31.12.2003 and to that effect, Panchnama was made. On the same
day, public notice was issued calling upon the plaintiff, defendant
No.2 and other surety (Dattaram Maruti Pawar) to pay the loan
amount within 30 days failing which the suit land will be sold in
public auction.

e. Thereafter notices dated 16.07.2004 and 17.08.2004 were
issued by defendant No.1. Plaintiff did not give any reply to these
notices. Since there was no payment of loan, the auction was held
on 17.08.2004 and in pursuance thereof sale deed was executed by
defendant No.1 in favour of defendant No.3 on 21.08.2006. There is
also recital to the effect that defendant No.1 has handed over
possession of the suit land to the defendant No.3.
f. The plaintiff has instituted present suit claiming for perpetual
injunction against the defendants restraining them from disturbing
his settled and peaceful possession over the suit land on the basis of
the alleged auction of 17.08.2004. The plaintiff has not sought any
declaration as regards the auction held on 17.08.2004. The learned
trial Judge observed that in view of Section 41(h) of the Specific
Relief Act, 1963, injunction cannot be granted when an equally
efficacious relief can certainly be obtained by any other usual mode
of proceeding. Since the plaintiff did not seek declaration, in view
of Section 41(h) of the Specific Relief Act, 1963, no injunction can
be granted. The courts below also held that the plaintiff did not
establish the ground of fraud raised in the suit.
12. Mr. Patil submitted that the plaintiff was not given an opportunity to
lead evidence in support of his plea of fraud. It is not possible to accept
this submission. Perusal of purshis at exhibit-63 filed by the plaintiff on
11.07.2005 shows that plaintiff chose not to lead oral evidence. Mr. Patil
invited my attention to communication dated 02.08.2000 addressed by
Executive Engineer, Building Department, Chiplun, Zilla Parishad –
Ratnagiri wherein it is set out that cheque of Rs.6,52,257/- was issued by
Zilla Parishad in the name of defendant No.2 towards the work done by
him and request was made for crediting that cheque. The courts below
rightly held that the plaintiff did not examine any witness from Zilla
Parishad to substantiate that in fact the said cheque was tendered in the

defendant No.1 Bank. This is more so when defendant No.1 in the written
statement specifically asserted that defendant No.2 had discounted the
cheques issued by Zilla Parishad from Chiplun Urban Co-operative Bank.
Apart from that, letter dated 06.11.2006 issued by Chief Auditor and
Finance Officer, Zilla Parishad Ratnagiri addressed to the Executive
Engineer, Building Department, Chiplun, Zilla Parishad Ratnagiri sets out
that cheque for Rs.6,52,257/- was cancelled and fresh cheque bearing
No.538824 was issued on 22.08.2005. The said cheque was issued in the
name of defendant No.2. It was in these circumstances, absolutely
necessary for the plaintiff to lead oral evidence for substantiating the plea
of fraud. The plea of fraud is required to be specifically pleaded and
proved. Merely by taking plea in the suit will not serve the purpose.
13. The courts below, after considering the material on record, have
concurrently held that the plaintiff did not establish the plea of fraud. Once
the plaintiff has not established the plea of fraud, obviously in view of
Section 34 of the SARFAESI Act, Civil Court will have no jurisdiction to
entertain and try the suit. That apart, plaintiff and defendant No.2 are
members of defendant No.1. In view of Section 91 of the Act even
otherwise, Civil Court will have no jurisdiction to entertain and try the suit.
It is also evident that before instituting the present suit, the plaintiff did not
issue notice under Section 164 of the Act. The suit is, therefore, bad for
non-compliance of requirements of Section 164 of the Act. The learned
trial Judge rightly held that the plaintiff ought to have sought declaration as
regards actions taken by defendant No.1. In the present case, the plaintiff
has instituted suit for injunction simplicitor. In view of Section 41(h) of
the Specific Relief Act, 1963, no injunction can be granted in favour of the
plaintiff. After considering the material on record, it is evident that the
plaintiff has failed to establish plea of fraud. He has also failed to establish
that there was any understanding between the parties for issuing cheques in
the joint names of defendant No.1 and defendant No.2 by Zilla Parishad -
Ratnagiri. The plaintiff also failed to establish that though the cheques

were deposited with defendant No.1 for crediting in the loan account of
defendant No.2, the same was not credited to the loan account. Plaintiff
failed to prove that in fact the cheques were delivered to defendant No.1
for crediting in the loan account.
14. In view thereof, I do not find that the Courts below committed any
error in dismissing the suit. Accordingly Appeal fails and the same is
dismissed.
15. In view of the dismissal of the Second Appeal, nothing survives in
Civil Application No.792 of 2008 and the same is also dismissed.
16. At this stage, Mr. Patil orally applies for continuation of ad-interim
order dated 16.04.2008 passed by this Court in Civil Application No.792 of
2008 for a period of twelve weeks from today.
17. Having regard to the fact that ad-interim order is operating since
16.04.2008 and having further due regard to the fact that appellant intends
to challenge this order before the higher Court, in my opinion, the request
made by Mr. Patil is reasonable.
18. Hence, notwithstanding dismissal of the appeal, ad-interim order
dated 16.04.2008 passed in terms of prayer clause (c) of Civil Application
No.792 of 2008 shall remain in force for a period of twelve weeks from
today.
19. Order accordingly.
 (R. G. KETKAR, J.)

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