Delta International Limited and Others Vs. Smt. Nupur Mitra and Others - Court Judgment

SooperKanoon Citationsooperkanoon.com/110821
CourtKolkata High Court
Decided OnAug-28-2017
JudgeSanjib Banerjee
AppellantDelta International Limited and Others
RespondentSmt. Nupur Mitra and Others
Excerpt:
in the high court at calcutta civil appellate jurisdiction original side the hon’ble justice sanjib banerjee and the hon’ble justice siddhartha chattopadhyay apo no.390 of 2017 ga no.2728 of 2017 in cs no.151 of 2017 delta international limited & others -versussmt. nupur mitra & others for the appellants: mr ranjan deb, sr adv., mr kunal gupta, adv., mr rohitendra chandra deb, adv., mr meghajit mukherjee, adv., ms shivangi thard, adv. hearing concluded on: august 23, 2017. date: august 28, 2017. sanjib banerjee, j.: – this is one of the rare appeals that has had to be heard and dealt with without reference to the respondents since the respondents had no right of audience at the stage that the order impugned was passed on july 24, 2017 in course of the trial court considering the appellants’ prayer for granting leave under clause 12 of the letters patent. the leave sought was declined on the ground that the court did not have any jurisdiction to entertain the suit; not on the ground of territoriality but in view of an express prohibition on civil courts by a statute.2. the appellants or their predecessor-in-interest had obtained credit facilities from a bank or financial institution. pursuant to a settlement arrived at between the appellants and the concerned financial institution or its successor-in-interest, the respondent trust, a substantial payment is said to have been made by the appellants to the trust. according to the case made out in the plaint, in lieu of the balance amount due, the appellants agreed to issue shares in one or more of them in favour of the trust together with a buy-back agreement simultaneously executed as the issuance of the shares. it is the further case in the plaint that disputes arose between the two sets of parties regarding the modality of the issuance of shares and the buy-back agreement following which the respondent trust has sought to revoke the settlement and fall back on its original claim.3. there is no apparent dispute that the trust enjoys the status of a financial institution and is entitled to invoke both the recovery of debts due to banks and financial institutions act, 1993 and the securitisation and reconstruction of financial assets and enforcement of security interest act, 2002 in respect of its debts and security interests as defined in such statutes.4. it may also be noticed at the outset that the appellants may have made a clean breast of things in the plaint in averring as follows at paragraph 44 thereof:“44. all of sudden on may 26, 2017 the plaintiffs received notices, all dated may 19, 2017, purportedly issued by the deputy general manager, sasf acting as the authorised officer as of sasf, under section 13(2) of the securitisation and enforcement of security interests act 2002 (sic), raising a claim on the basis of the financial arrangements, described in schedule i hereunder. these notices are not made the subject matter of this suit and no reliefs are claimed herein in respect thereof.”.5. on a reading of the plaint, the trial court perceived the suit to fall foul of the mandate in the initial part of section 34 of the act of 2002. the trial court observed that there could be no doubt that the suit for specific performance of the settlement had been filed after the issuance of a notice under section 13(2) of the said act and the purpose of the action was “to nullify indirectly the notice under section 13(2) sarfaesi act.”. after quoting several judgments of the supreme court, it was held as follows in refusing to grant leave under clause 12 of the letters patent: “ … once a notice is issued under section 13(2) of the sarfaesi act the civil court is denuded of his (sic, its) jurisdiction where the court could be required to adjudicate issues that will fall within the scope of the suit.”.6. in effect, the plaint has been rejected without it being admitted and without the defendants having so much as a look at it or even the knowledge thereof.7. the appellants contend that the matter as to the maintainability of a suit does not arise at the stage when leave of the court is sought under clause 12 of the letters patent. according to the appellants, the consideration may arise at a later stage, whether upon a defendant bringing it to the notice of the court by way of an application or the court noticing it while considering an interlocutory application. the appellants maintain that the only consideration that is relevant at the stage that leave under clause 12 of the letters patent is sought is whether a part of the cause of action of the plaintiff as pleaded in the plaint has arisen with the territorial limits of this court and some part without.8. on merits, the appellants emphasise that section 34 of the act of 2002 was not a bar to this suit being received. they suggest that section 34 of the said act would operate only upon it being evident that a debts recovery tribunal or a debts recovery appellate tribunal would have authority to adjudicate the claim made in the plaint and grant the reliefs sought. the appellants submit that both limbs have to be satisfied for the bar under the first part of section 34 of the said act to operate: that a drt or drat has to have the authority at the time of the institution of the suit to adjudicate on the matters covered thereby; and, such drt or drat has also to have the authority to grant the reliefs claimed.9. according to the appellants, it is only upon any measures being taken by a secured creditor under section 13(4) of the said act that a person affected or aggrieved by such measures may approach a drt in such regard. the appellants assert that prior to any measure being taken by a secured creditor under section 13(4) of the said act, any person aggrieved or affected thereby cannot carry a grievance to drt. thus, the appellants suggest, it was premature for the trial court to not entertain the suit at a stage when only a notice under section 13(2) of the said act had been issued and it was clearly spelt out in the plaint that no relief in respect of such notice was being sought in the action.10. the third ground canvassed by the appellants is that the trial court has referred to several judgments that were not cited or referred to in course of the limited argument while seeking leave under clause 12 of the letters patent. the appellants say that apart from the fact that the appellants were robbed of their right to deal with the precedents referred to in the impugned judgment, if they were made aware that such judicial authorities would be used against them, they may have referred to other judgments or even the authorities referred to by the trial court to demonstrate the right that they were seeking to assert.11. all the three aspects asserted by the appellants are of some importance and need to be attended to in course of this discussion.12. it is not necessary to recount at this stage how claims of banks against constituents were parked outside the civil court system and, thereafter, notified banks and financial institutions were given the authority to issue a notice of demand and follow up such notice with direct access to their securities upon the demand not being complied with. the limited authority that had been conferred on state financial corporations under the state financial corporations act, 1951 was extended under the said act of 2002 to notified banks and financial institutions to proceed against the securities without any adjudication of the debt claimed being first made.13. the basic premise of the act of 2002 is to empower banks and financial institutions notified thereunder to take possession of securities given for financial assistance and sell or lease the same or take over the management thereof in the event of default without waiting for the claim of such banks or financial institutions to be adjudicated upon. the statement of objects and reasons of the act of 2002 contains the reasons indicated in the ordinance that preceded the act and the avowed purpose of the enactment is that it “would enable banks and financial institutions to realise long term assets, manage problems of liquidity, asset liability mismatches and improve recovery by exercising powers to take possession of securities, sell them and reduce non-performing assets by adopting measures for recovery or reconstruction.”.14. the vires of the said act has been upheld in the judgment reported at (2004) 4 scc311(mardia chemicals v. union of india) and the validity of the apparently harsh provisions of such statute cannot be revisited, at least at this level. section 34 of such act places an embargo on civil courts to exercise jurisdiction even to receive any suit or proceedings in respect of any matter which a drt or drat is empowered by or under the act to determine. there are two limbs to section 34 of the act and the present discussion is largely confined to the first limb since the appeal has arisen at the receiving stage of the suit. section 34 of the act has to be seen along with section 17(1) thereof. the two provisions mandate as follows:“17. right to appeal – (1) any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorised officer under this chapter, may make an application alongwith such fee, as may be prescribed to the debts recovery tribunal having jurisdiction in the matter within forty-five days from the date on which such measures had been taken: …”.“34. civil court not to have jurisdiction – no civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a debts recovery tribunal or the appellate tribunal is empowered by or under this act to determine and 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 this act or under the recovery of debts due to banks and financial institutions act, 1993 (51 of 1993).”.15. notwithstanding the wording of section 34 of the act and the negative command on a civil court contained therein, the appellants suggest that the judicial deliberation in such regard cannot be at the stage of considering whether leave ought to be granted under clause 12 of the letters patent. in such regard they refer to the definition of ‘entertain’ in black’s law dictionary (10th ed.) which defines ‘entertain’ to mean “to bear in mind or consider; esp., to give judicial consideration to.”.16. the appellants contend that at the stage of the court considering whether leave ought to be granted or not under clause 12 of the letters patent, no other consideration is appropriate. they point out that it is not necessary that leave under clause 12 would be required for every suit to be instituted in this court: and plaints may be presented before the master; and, if no interlocutory proceedings are necessary in such suits which are instituted with the plaints being presented before the master, the plaints will receive the attention of the court only at the time of the commencement of the trial when issues are to be framed. the appellants submit that it is inconceivable that plaints espousing similar causes would be dissimilarly treated by one being permitted to be filed – and, thus, being entertained – if it is not required to be presented before a judge and other plaints encompassing a similar cause being subjected to judicial scrutiny at the time of leave being sought under clause 12 of the letters patent. the appellants say that the rational approach would be for the judge to confine his consideration to the question of territorial jurisdiction and the desirability of granting leave at the stage when such leave is sought under clause 12 of the letters patent and, not consider other matters as to the maintainability of the action at such stage. the appellants reason that, in any event, a writ of summons would be issued in due course or a copy of the plaint would be necessary to be forwarded to the defendant in case any interlocutory application is made, whereupon, it should be left to the option of the defendant whether to object to the action or the form thereof. in short, the appellants exhort that a court or the judge considering whether leave under clause 12 of the letters patent ought to be granted or not should not suo motu embark on an exercise to assess the maintainability of the action on any other score.17. the appellants’ submission on such first aspect of the matter is exceptionable. there is, indisputably, an application of the judicial mind when assessing whether leave ought to be granted or not under clause 12 of the letters patent. even clause 12 of the letters patent contains an embargo in the receipt by this court of a class of suits that has come to be known as suits for land. clause 12 of the letters patent ordains that a suit for land may be entertained in this court only if the subject land is wholly or partly situate within the territorial jurisdiction of this court. that necessarily obliges a judge approached for leave under clause 12 of the letters patent to assess at such time if the suit is a suit for land: and, if so, whether any part of the subject land is situated within the territorial limits of this court in exercise of its ordinary original jurisdiction. if, in course of such assessment, it transpires that the suit has to be regarded as a suit for land and no part of the subject land is within jurisdiction, the leave sought under clause 12 of the letters patent has to be refused. the effect the refusal to grant leave under clause 12 of the letters patent would be the pronouncement of a judicial order that the suit is not maintainable in this court. thus, even for the purpose of ascertaining whether leave under clause 12 of the letters patent ought to granted or not, there is a consideration as to the maintainability of the action in this court. if such judicial exercise is required to be undertaken for the purpose of granting leave or not under clause 12 of the letters patent, it would defy logic that the consideration should not be extended to a general assessment as to the maintainability of the suit. indeed, it is the duty of every civil court at the time of the receipt of a plaint – or, at any rate, at the time that a plaint first receives judicial attention - to ascertain on a charitable reading thereof whether the suit is maintainable at all or maintainable in such court. at least three vital aspects fall for immediate consideration when a suit is lodged before a civil court or the plaint relating thereto receives judicial attention for the first time: whether it conforms to the pecuniary and territorial authority of the court; whether it discloses a cause of action; and, whether it is ex facie barred by any law. the right of a defendant to apply under order vii rule 11 of the code of civil procedure, 1908 does not discharge the civil court’s obligation to assess the maintainability of the action at the receiving stage of a suit: it is not a safety-net for the lapse of the court to be corrected; it only gives a defendant an opportunity to demonstrate that the arguable case that the court may have found in favour of the plaintiff on any of the three counts may be illusory. the provision also acts as a default mechanism when a plaint has been filed but it has not received any judicial attention before the service of the writ of summons on the defendant.18. when a statute commands that a court shall not have jurisdiction to entertain a class of actions, it is obligatory on the part of the court to ensure that it does not act in derogation of such statutory command whenever the matter first receives the attention of any judge of the court. that there is a practice in this court that when leave is not sought under clause 12 of the letters patent, the plaint may be presented before the master and it may get admitted without any inquiry as to its maintainability, cannot dilute the responsibility of a judge being presented a plaint to ascertain whether the suit is ex facie prohibited from being received. ideally, the master should also undertake the same exercise and, if in doubt, refer the matter to the judge in chambers.19. when a statutory provision so unambiguously prohibits a civil court to entertain any suit or proceedings in the explicit language as used in section 34 of the said act, it goes to the very root of the authority of the civil court and anything done in derogation thereof would be inherently lacking in jurisdiction. when a question of inherent lack of jurisdiction is involved as a consequence of a statutory bar to receive an action, the court must at the first sight of the pleadings pertaining to the action assess whether the same is capable of being entertained. if the practice in a particular court is for the action to be routinely filed in the department and not immediately receive the attention of a judge, such practise must be amended and, till such time that the practice continues, it would be the duty of the judge seeing the plaint or the petition or the like for the first time to apply his mind to the bar.20. the statutory prohibition contained in section 34 of the act is not unique. there are several contemporary statutes, particularly in the modern trend of emasculating the judiciary and increasing the parking of matters with tribunals under executive control, which contain similar provisions: section 15y of the securities and exchange board of india act, 1992, section 23 of the depositories act, 1996, section 145 of the electricity act, 2003, section 430 of the companies act, 2013, to name a few, are examples of similar provisions along with a host of other enactments which have both limbs as in section 34 of the act of 2002.21. though it is elementary that the exclusion of the jurisdiction of civil courts is not to be readily inferred and such exclusion must either be explicitly expressed or unmistakably implied, it must also be recognised that it has been judicially held at the highest level in this country that the legislature is competent to curtail the jurisdiction of civil courts and to confer the same on any other tribunal or authority. indeed, one of the earliest provisions of similar import was contained in the now repealed displaced persons (compensation and rehabilitation) act, 1954, the operative part whereof contained both limbs as to the receipt of an action and the power to grant any injunction.22. in view of the nature of the prohibition imposed on a civil court by the uncompromising wording of section 34 of the act of 2002, the approach adopted by the trial court in the instant case cannot be faulted. the contention of the appellants on the first count fails and it is held that a bar of the kind envisaged in section 34 of the said act obliges the court to ascertain whether the action brought before it falls foul of such provision and such assessment may be made suo motu and at the earliest stage when any judge in such court has due occasion to look into the same.23. now, to the second question: whether section 34 of the said act prohibited the receipt of the suit in the manner in which it was presented.24. the extent of the exclusion of the jurisdiction of a civil court would depend not only on the construction of a provision providing for such exclusion, but also on the recognition of a provision that clothes some other authority to entertain that matter which the civil court is prohibited from receiving. it is elementary that a person seeking to assert a legally valid right must have a forum to do so. it is inconceivable that the opportunity of asserting a legal right is not curtailed or suspended by law, yet there is no forum therefor. the immediate assertion of a legal right may, however, be temporarily suspended by law; as done by the proviso to section 13(3a) of the act of 2002.25. the act of 2002 as it was enacted did not provide for the consideration of a reply to the notice of demand by the concerned banks or financial institutions. following the supreme court decision in mardia chemicals, section 13 of the act of 2002 was amended to provide for the consideration of a reply by the borrower to the notice of demand issued by a notified secured creditor under section 13(2) of the act. however, the rejection of the grounds urged by a borrower was specifically made non-justiciable, at least immediately. in other words, a borrower has to wait for the notified secured creditor to take measures under section 13(4) of the act before the borrower can carry his grievance to a drt.26. in such context, the appellants refer to the dictum in a recent judgment reported at (2014) 1 scc479(jagdish singh v. heeralal) where, at paragraph 25 of the report, the stage at which the bar under section 34 of the said act becomes operational has been highlighted:“25. we are of the view that the civil court jurisdiction is completely barred, so far as the “measures”. taken by a secured creditor under sub-section (4) of section 13 of the securitisation act, against which an aggrieved person has a right of appeal before the drt or the appellate tribunal, to determine as to whether there has been any illegality in the “measures”. taken. the bank, in the instant case, has proceeded only against secured assets of the borrowers on which no rights of respondents 6 to 8(sic respondents 1 to5) have been crystallised, before creating security interest in respect of the secured assets.”.27. the appellants refer to paragraph 50 of the report in mardia chemicals as quoted in the judgment impugned herein. the trial court laid much stress on the last two sentences of such passage in mardia chemicals and construed the same to cover a situation where no measure may have been adopted by a bank or financial institution under section 13(4) of the act but such measures may have been in the offing. the last two sentences of paragraph 50 of the report in mardia chemicals, as relied upon by the trial court, may be seen:“50. … therefore, any matter in respect of which an action may be taken even later on, the civil court shall have no jurisdiction to entertain any proceeding thereof. the bar of civil court thus applies to all such matters which may be taken cognizance of by the debts recovery tribunal, apart from those matters in which measures have already been taken under sub-section (4) of section 13.”.28. according to the appellants, the law as laid down in the above passage from mardia chemicals cannot be considered to hold the field in view of a later supreme court judgment noticing mardia chemicals in jagdish singh and restricting the operation of the bar on the civil court for receiving a suit to set in only upon any measure being adopted by a bank or financial institution under section 13(4) of the act.29. a single bench judgment of this court and the judgment in the appeal arising therefrom have also been placed by the appellants for the proposition that merely because a suit appears to be in the form of a defence to the measures taken by a bank or financial institution under section 13(4) of the act would not entail the suit not being maintainable if the reliefs sought are incapable of being granted by a drt or drat. in the case pertaining to the unreported decision of the single bench in ga2352of 2014 in cs217of 2013 (frontline corporation limited v. punjab and sind bank) rendered on november 2, 2016, the plaintiff had obtained a loan from the defendant bank to develop an immovable property whereat the defendant was a tenant. the agreement between the parties envisaged the defendant would shift out temporarily to enable the construction to be undertaken and completed before returning to enjoy possession of a part of the new building. a loan for the project was obtained by the plaintiff from the bank. such loan was recalled by the bank and measures taken under section 13(4) of the said act in respect of the very property which was to be constructed upon in terms of the agreement between the parties. the plaintiff applied for the specific performance of the agreement (for the bank to vacate the premises and re-enter thereupon after the completion of the construction) and complained of the project having failed to take off since the bank did not remove itself from the property which resulted in the repayment being rendered impossible. the single bench held that since the relief for specific performance could not be sought before the drt or granted by such forum, to such extent the suit was maintainable. however, the injunction that was subsisting in the suit, restraining the bank from effectuating the measures taken under section 13(4) of the act, was vacated. an appeal was carried from such order and in the appellate judgment reported at (2017) scc online cal 123 (frontline corporation limited v. punjab and sind bank), the suit was permitted to continue, though the injunction was revived on grounds that are not relevant for the present purpose.30. the decisions in frontline corporation limited are of little assistance to the appellants herein except for the proposition that merely because an action in a civil court is perceived to be the defence to the claim of a notified secured creditor who has adopted measures under section 13(4) of the said act, would not make the suit not maintainable; the reliefs claimed in the suit must be capable of being granted by the drt for the entirety of the suit to be rendered bad. however, no injunction can be granted by a civil court in respect of any action taken or to be taken in pursuance of any power conferred by or under the said act or the act of 1993.31. with respect, the passage from mardia chemicals that has weighed with the interlocutory court in not admitting the plaint does not appear to be the correct legal position. thankfully, the appropriate legal position has been enunciated at paragraph 25 of the decision in jagdish singh. as noticed earlier, section 34 of the act of 2002 has two parts: the first limb prohibits the receipt of a civil suit in certain cases; and, the second bars the issuance of an injunction by a civil court in certain situations. the sets of situations covered by the two limbs are not identical, though they may be geared towards the same goal. the emphasis in the first limb is on “any matter which a … tribunal is empowered by or under this act to determine”., whereas the second part covers “any action taken or to be taken in pursuance of any power conferred by or under”. the acts of 2002 and 1993. a drt will be empowered by or under the said act of 2002 to determine any matter once any measure under section 13(4) of such act is taken by a notified secured creditor or its authorised officer under chapter iii of the act of 2002. in other words, till such time that any measure under section 13(4) is taken by a notified secured creditor or its authorised officer, the jurisdiction to determine the propriety of such measure does not vest in any drt or drat. thus, merely because a notified secured creditor has issued a notice under section 13(2) of the act of 2002, it does not imply that the bar under the first limb of section 34 of the said act is kicked in, so to say. the bar under such first limb of section 34 of the said act begins with any measure being taken by a notified secured creditor or its authorised officer under section 13(4) of such act.32. but even in a civil suit which is instituted at a time when no measures have been taken by a notified secured creditor or its authorised officer under section 13(4) of the act, no injunction can issue – even quia timet – in respect of any action taken or to be taken in pursuance of any power conferred by or under the said act of 2002 or the act of 1993. the two limbs of section 34 of the said act are complementary, operate in tandem and are designed to serve the same objective. at the stage when the provision first appeared in the ordinance that preceded the act of 2002, it could not have had retrospective operation. thus, any suit filed prior to section 34 of the said act, or the corresponding provision in the preceding ordinance, coming into operation could not be regarded as bad even if the matters covered thereby were capable of being determined by a drt or drat under the said act or its preceding ordinance. but from the date that the provision became effective, no injunction in respect of any action taken or to be taken in pursuance of any power conferred by or under the said act (or its preceding ordinance) or under the act of 1993 could be issued by any civil court. in suits filed after such provision has come into effect, it is possible that the entirety of the reliefs claimed may not be capable of being granted by a drt or drat. it is here that the second limb of the provision acts as a fall-back safety-net to arrest the mischief that it seeks to do. even if a civil suit is entertained which contains some matter that a drt or drat is empowered to determine by or under the act of 2002, but the plaint thereof cannot be rejected since the entirety of the subject-matter of such suit may not be capable of determination by a drt or drat; the second limb of section 34 prohibits any injunction to be issued by the civil court in respect of any action taken or to be taken in pursuance of any power conferred by or under the said act or under the act of 1993.33. as comprehensive as the bar is under the first limb of section 34 of the act, the only construction thereof is that the word “is”. in the expression “is empowered by or under this act to determine”. operates only in presenti. a drt or drat has to have authority to determine the entire-subject-matter of a suit at the time of its institution, for the bar under the first limb of such provision to be attracted. if the authority to determine the subject-matter of the suit vests in a drt or drat after the institution of the suit, the suit cannot be regarded as bad. it is here that the second limb of the provision takes over as it prohibits the interdiction of any action taken or to be taken in pursuance of any power conferred by or under the act or under the act of 1993. thus, a plaint cannot be rejected – and, similarly, refused to be received – if no drt or drat is empowered to determine the subject-matter thereof at the time of its institution. that is not to say, however, that even if the bar operates and a suit is accidentally received, the plaint relating to such suit cannot be rejected later. it must only emphasised that the bar operates at the threshold and not if a drt or drat becomes vested with the authority to determine the subject-matter of the suit at any time after the institution of the suit.34. again, in all humility, it must be pointed out that the last two sentences in paragraph 50 of the report in mardia chemicals fails to notice the distinction between the two limbs of section 34 of the said act. what is said in such two sentences would be true of the second limb of section 34: the bar thereunder to issue an injunction would apply to all matters which may be taken cognisance of by a drt at a later date apart from those matters in which measures may already have been taken under section 13(4) of the act. but the bar as to the receipt of a civil suit, under the first limb of section 34 of the act, would not operate when the authority is not vested in any drt or drat to determine any matter which is the subject-matter of the suit. the authority to determine any such matter vests in the drt, by virtue of section 17(1) of the act, only upon any measure being taken under section 13(4) of the act.35. it must be admitted at this stage that in view of article 141 of the constitution, the dictum in the last two sentences at paragraph 50 of the report in mardia chemicals would, ordinarily, be binding, and certainly at this level. it is equally true that the judgment in jagdish singh was rendered by a two-member bench of the supreme court. but the later judgment noticed and considered the earlier judgment and appropriately held that the expression “in respect of any matter”. in section 34 of the act would only be relatable to the “measures”. provided under section 13(4) of the act. such legal position is clarified not only in the opening sentence of paragraph 25 of the report in jagdish singh but also in the following passage at paragraph 24 thereof, which has also been quoted in the judgment and order impugned herein:“24. … the opening portion of section 34 clearly states that no civil court shall have jurisdiction to entertain any suit or proceeding ‘in respect of any matter’ which a drt or an appellate tribunal is empowered by or under the securitisation act to determine. the expression ‘in respect of any matter’ referred to in section 34 would take in the ‘measures’ provided under sub-section (4) of section 13 of the securitisation act. consequently, if any aggrieved person has got any grievance against any ‘measures’ taken by the borrower (sic, secured creditor) under sub-section (4) of section 13, the remedy open to him is to approach the drt or the appellate tribunal and not the civil court.”.36. it is also evident from paragraph 26 of the report in jagdish singh that what fell for consideration before the supreme court in that case was whether the high court was in error in holding that a civil court had the jurisdiction to examine whether the measures taken by a notified secured creditor under section 13(4) of the act were legal or not.37. a line may be added here on the operation and working of the doctrine of precedents. as far as a high court is concerned, if divergent opinions of two supreme court judgments rendered by benches of varying strengths are cited on a legal issue, where the subsequent judgment does not notice the earlier judgment, it is the view of the bench of greater strength that is binding. but if an earlier view of a supreme court bench of greater strength is noticed and the dictum in such earlier bench is read down or explained or modified, it is the later judgment – irrespective of the fact that it may have been passed by a bench of lesser strength – that becomes binding.38. on such consideration, the present suit was maintainable at the time that it was presented for admission and leave under clause 12 of the letters patent was sought: not because any of the reliefs claimed in such suit is incapable of being granted by a drt or drat; but only because at the time of such institution, no drt or drat was empowered by or under the act of 2002 to determine any part of the subject-matter of the suit. though a relief for specific performance of the settlement agreement has been carried in the plaint and, ordinarily, a drt or drat may not have the authority to consider or grant a relief for specific performance of an agreement, the nature of the agreement of which specific performance has been sought herein is one that is capable of being indirectly granted by the drt or drat if a petition in such regard were to be carried by these appellants to such forum upon any measure being taken by the respondent trust under section 13(4) of the act. in frontline corporation limited, the relief for specific performance that was sought pertained to a matter beyond the domain of a drt or drat. but the relief for specific performance as claimed in the instant suit pertains to a settlement agreement which was to govern the claim of the respondent trust; and, as such, the propriety of the measures if taken by the respondent trust under section 13(4) of the said act may be tested against the settlement pleaded by the appellants herein.39. the final aspect in this appeal pertains to the desirability of judicial precedents being cited in a judgment or order without such authorities being brought to the notice of the parties. viewed from the perspective of a party against whom a decision is made on the basis of a judicial precedent not referred to in course of the arguments, it would amount to a breach of the most elementary canons of natural justice. it is possible that the perspective in which a judicial precedent is read or understood may be altered upon a party to the action having a chance to explain the same or being afforded an opportunity to bring any other authority to bear on the issue.40. indeed, the miscarriage of justice that may be occasioned by a judgment referring to judicial authorities without such precedents being brought to the notice of the parties or the party likely to be affected thereby, is evident from the judgment and order impugned. the passage from mardia chemicals that was relied upon in the judgment impugned and appears to have weighed heavily with the trial court was clearly not the dictum laid down in jagdish singh. upon jagdish singh noticing mardia chemicals and interpreting the law to be as evident from paragraph 25 of the report therein, it was the later dictum which was binding on the trial court. if the appellants herein were made aware of these two judgments being cited against them, they may have had the opportunity to point out such aspect of the matter as has been done in course of the present appeal.41. it is, therefore, held that it is generally undesirable that judicial precedents be referred to or made the basis for any finding in a judgment without the attention of the parties represented before the court first being drawn to them.42. though this may only be a pyrrhic and short-lived victory for the appellants, yet it must be held that the suit as framed was maintainable at the time of its institution and when leave was sought under clause 12 of the letters patent, notwithstanding section 34 of the act of 2002. accordingly, apo390of 2017 and ga2728of 2017 are allowed by setting aside the judgment and order impugned dated july 24, 2017 and by granting leave under clause 12 of the letters patent. the suit will be deemed to have been instituted on july 24, 2017 when the plaint relating thereto was presented. nothing in this order will prevent the respondent trust from taking any objection that it may be entitled to in accordance with law.43. there will be no order as to costs.44. urgent certified website copies of this judgment, if applied for, be supplied to the parties subject to compliance with all requisite formalities. (sanjib banerjee, j.) i agree. (siddhartha chattopadhyay, j.)
Judgment:

IN THE HIGH COURT AT CALCUTTA CIVIL APPELLATE JURISDICTION ORIGINAL SIDE The Hon’ble JUSTICE SANJIB BANERJEE And The Hon’ble JUSTICE SIDDHARTHA CHATTOPADHYAY APO No.390 of 2017 GA No.2728 of 2017 In CS No.151 of 2017 DELTA INTERNATIONAL LIMITED & OTHERS -VERSUSSMT. NUPUR MITRA & OTHERS For the Appellants: Mr Ranjan Deb, Sr Adv., Mr Kunal Gupta, Adv., Mr Rohitendra Chandra Deb, Adv., Mr Meghajit Mukherjee, Adv., Ms Shivangi Thard, Adv. Hearing concluded on: August 23, 2017. Date: August 28, 2017. SANJIB BANERJEE, J.

: – This is one of the rare appeals that has had to be heard and dealt with without reference to the respondents since the respondents had no right of audience at the stage that the order impugned was passed on July 24, 2017 in course of the trial court considering the appellants’ prayer for granting leave under Clause 12 of the Letters Patent. The leave sought was declined on the ground that the court did not have any jurisdiction to entertain the suit; not on the ground of territoriality but in view of an express prohibition on civil courts by a statute.

2. The appellants or their predecessor-in-interest had obtained credit facilities from a bank or financial institution. Pursuant to a settlement arrived at between the appellants and the concerned financial institution or its successor-in-interest, the respondent Trust, a substantial payment is said to have been made by the appellants to the Trust. According to the case made out in the plaint, in lieu of the balance amount due, the appellants agreed to issue shares in one or more of them in favour of the Trust together with a buy-back agreement simultaneously executed as the issuance of the shares. It is the further case in the plaint that disputes arose between the two sets of parties regarding the modality of the issuance of shares and the buy-back agreement following which the respondent Trust has sought to revoke the settlement and fall back on its original claim.

3. There is no apparent dispute that the Trust enjoys the status of a financial institution and is entitled to invoke both the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 in respect of its debts and security interests as defined in such statutes.

4. It may also be noticed at the outset that the appellants may have made a clean breast of things in the plaint in averring as follows at paragraph 44 thereof:

“44. All of sudden on May 26, 2017 the plaintiffs received notices, all dated May 19, 2017, purportedly issued by the Deputy General Manager, SASF acting as the Authorised Officer as of SASF, under Section 13(2) of the Securitisation and Enforcement of Security Interests Act 2002 (sic), raising a claim on the basis of the Financial arrangements, described in Schedule I hereunder. These notices are not made the subject matter of this suit and no reliefs are claimed herein in respect thereof.”

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5. On a reading of the plaint, the trial court perceived the suit to fall foul of the mandate in the initial part of Section 34 of the Act of 2002. The trial court observed that there could be no doubt that the suit for specific performance of the settlement had been filed after the issuance of a notice under Section 13(2) of the said Act and the purpose of the action was “to nullify indirectly the notice under Section 13(2) SARFAESI Act.”

. After quoting several judgments of the Supreme Court, it was held as follows in refusing to grant leave under Clause 12 of the Letters Patent: “ … once a notice is issued under Section 13(2) of the SARFAESI Act the Civil Court is denuded of his (sic, its) jurisdiction where the Court could be required to adjudicate issues that will fall within the scope of the suit.”

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6. In effect, the plaint has been rejected without it being admitted and without the defendants having so much as a look at it or even the knowledge thereof.

7. The appellants contend that the matter as to the maintainability of a suit does not arise at the stage when leave of the court is sought under Clause 12 of the Letters Patent. According to the appellants, the consideration may arise at a later stage, whether upon a defendant bringing it to the notice of the court by way of an application or the court noticing it while considering an interlocutory application. The appellants maintain that the only consideration that is relevant at the stage that leave under Clause 12 of the Letters Patent is sought is whether a part of the cause of action of the plaintiff as pleaded in the plaint has arisen with the territorial limits of this court and some part without.

8. On merits, the appellants emphasise that Section 34 of the Act of 2002 was not a bar to this suit being received. They suggest that Section 34 of the said Act would operate only upon it being evident that a Debts Recovery Tribunal or a Debts Recovery Appellate Tribunal would have authority to adjudicate the claim made in the plaint and grant the reliefs sought. The appellants submit that both limbs have to be satisfied for the bar under the first part of Section 34 of the said Act to operate: that a DRT or DRAT has to have the authority at the time of the institution of the suit to adjudicate on the matters covered thereby; and, such DRT or DRAT has also to have the authority to grant the reliefs claimed.

9. According to the appellants, it is only upon any measures being taken by a secured creditor under Section 13(4) of the said Act that a person affected or aggrieved by such measures may approach a DRT in such regard. The appellants assert that prior to any measure being taken by a secured creditor under Section 13(4) of the said Act, any person aggrieved or affected thereby cannot carry a grievance to DRT. Thus, the appellants suggest, it was premature for the trial court to not entertain the suit at a stage when only a notice under Section 13(2) of the said Act had been issued and it was clearly spelt out in the plaint that no relief in respect of such notice was being sought in the action.

10. The third ground canvassed by the appellants is that the trial court has referred to several judgments that were not cited or referred to in course of the limited argument while seeking leave under Clause 12 of the Letters Patent. The appellants say that apart from the fact that the appellants were robbed of their right to deal with the precedents referred to in the impugned judgment, if they were made aware that such judicial authorities would be used against them, they may have referred to other judgments or even the authorities referred to by the trial court to demonstrate the right that they were seeking to assert.

11. All the three aspects asserted by the appellants are of some importance and need to be attended to in course of this discussion.

12. It is not necessary to recount at this stage how claims of banks against constituents were parked outside the civil court system and, thereafter, notified banks and financial institutions were given the authority to issue a notice of demand and follow up such notice with direct access to their securities upon the demand not being complied with. The limited authority that had been conferred on State financial corporations under the State Financial Corporations Act, 1951 was extended under the said Act of 2002 to notified banks and financial institutions to proceed against the securities without any adjudication of the debt claimed being first made.

13. The basic premise of the Act of 2002 is to empower banks and financial institutions notified thereunder to take possession of securities given for financial assistance and sell or lease the same or take over the management thereof in the event of default without waiting for the claim of such banks or financial institutions to be adjudicated upon. The Statement of Objects and Reasons of the Act of 2002 contains the reasons indicated in the Ordinance that preceded the Act and the avowed purpose of the enactment is that it “would enable banks and financial institutions to realise long term assets, manage problems of liquidity, asset liability mismatches and improve recovery by exercising powers to take possession of securities, sell them and reduce non-performing assets by adopting measures for recovery or reconstruction.”

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14. The vires of the said Act has been upheld in the judgment reported at (2004) 4 SCC311(Mardia Chemicals v. Union of India) and the validity of the apparently harsh provisions of such statute cannot be revisited, at least at this level. Section 34 of such Act places an embargo on civil courts to exercise jurisdiction even to receive any suit or proceedings in respect of any matter which a DRT or DRAT is empowered by or under the Act to determine. There are two limbs to Section 34 of the Act and the present discussion is largely confined to the first limb since the appeal has arisen at the receiving stage of the suit. Section 34 of the Act has to be seen along with Section 17(1) thereof. The two provisions mandate as follows:

“17. Right to appeal – (1) Any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorised officer under this Chapter, may make an application alongwith such fee, as may be prescribed to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measures had been taken: …”.

“34. Civil Court not to have jurisdiction – No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and 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 this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993).”

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15. Notwithstanding the wording of Section 34 of the Act and the negative command on a civil court contained therein, the appellants suggest that the judicial deliberation in such regard cannot be at the stage of considering whether leave ought to be granted under Clause 12 of the Letters Patent. In such regard they refer to the definition of ‘entertain’ in Black’s Law Dictionary (10th Ed.) which defines ‘entertain’ to mean “to bear in mind or consider; esp., to give judicial consideration to.”

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16. The appellants contend that at the stage of the court considering whether leave ought to be granted or not under Clause 12 of the Letters Patent, no other consideration is appropriate. They point out that it is not necessary that leave under Clause 12 would be required for every suit to be instituted in this court: and plaints may be presented before the Master; and, if no interlocutory proceedings are necessary in such suits which are instituted with the plaints being presented before the Master, the plaints will receive the attention of the court only at the time of the commencement of the trial when issues are to be framed. The appellants submit that it is inconceivable that plaints espousing similar causes would be dissimilarly treated by one being permitted to be filed – and, thus, being entertained – if it is not required to be presented before a judge and other plaints encompassing a similar cause being subjected to judicial scrutiny at the time of leave being sought under Clause 12 of the Letters Patent. The appellants say that the rational approach would be for the judge to confine his consideration to the question of territorial jurisdiction and the desirability of granting leave at the stage when such leave is sought under Clause 12 of the Letters Patent and, not consider other matters as to the maintainability of the action at such stage. The appellants reason that, in any event, a writ of summons would be issued in due course or a copy of the plaint would be necessary to be forwarded to the defendant in case any interlocutory application is made, whereupon, it should be left to the option of the defendant whether to object to the action or the form thereof. In short, the appellants exhort that a court or the judge considering whether leave under Clause 12 of the Letters Patent ought to be granted or not should not suo motu embark on an exercise to assess the maintainability of the action on any other score.

17. The appellants’ submission on such first aspect of the matter is exceptionable. There is, indisputably, an application of the judicial mind when assessing whether leave ought to be granted or not under Clause 12 of the Letters Patent. Even Clause 12 of the Letters Patent contains an embargo in the receipt by this court of a class of suits that has come to be known as suits for land. Clause 12 of the Letters Patent ordains that a suit for land may be entertained in this court only if the subject land is wholly or partly situate within the territorial jurisdiction of this court. That necessarily obliges a judge approached for leave under Clause 12 of the Letters Patent to assess at such time if the suit is a suit for land: and, if so, whether any part of the subject land is situated within the territorial limits of this court in exercise of its ordinary original jurisdiction. If, in course of such assessment, it transpires that the suit has to be regarded as a suit for land and no part of the subject land is within jurisdiction, the leave sought under Clause 12 of the Letters Patent has to be refused. The effect the refusal to grant leave under Clause 12 of the Letters Patent would be the pronouncement of a judicial order that the suit is not maintainable in this court. Thus, even for the purpose of ascertaining whether leave under Clause 12 of the Letters Patent ought to granted or not, there is a consideration as to the maintainability of the action in this court. If such judicial exercise is required to be undertaken for the purpose of granting leave or not under Clause 12 of the Letters Patent, it would defy logic that the consideration should not be extended to a general assessment as to the maintainability of the suit. Indeed, it is the duty of every civil court at the time of the receipt of a plaint – or, at any rate, at the time that a plaint first receives judicial attention - to ascertain on a charitable reading thereof whether the suit is maintainable at all or maintainable in such court. At least three vital aspects fall for immediate consideration when a suit is lodged before a civil court or the plaint relating thereto receives judicial attention for the first time: whether it conforms to the pecuniary and territorial authority of the court; whether it discloses a cause of action; and, whether it is ex facie barred by any law. The right of a defendant to apply under Order VII Rule 11 of the Code of Civil Procedure, 1908 does not discharge the civil court’s obligation to assess the maintainability of the action at the receiving stage of a suit: it is not a safety-net for the lapse of the court to be corrected; it only gives a defendant an opportunity to demonstrate that the arguable case that the court may have found in favour of the plaintiff on any of the three counts may be illusory. The provision also acts as a default mechanism when a plaint has been filed but it has not received any judicial attention before the service of the writ of summons on the defendant.

18. When a statute commands that a court shall not have jurisdiction to entertain a class of actions, it is obligatory on the part of the court to ensure that it does not act in derogation of such statutory command whenever the matter first receives the attention of any judge of the court. That there is a practice in this court that when leave is not sought under Clause 12 of the Letters Patent, the plaint may be presented before the Master and it may get admitted without any inquiry as to its maintainability, cannot dilute the responsibility of a judge being presented a plaint to ascertain whether the suit is ex facie prohibited from being received. Ideally, the Master should also undertake the same exercise and, if in doubt, refer the matter to the judge in chambers.

19. When a statutory provision so unambiguously prohibits a civil court to entertain any suit or proceedings in the explicit language as used in Section 34 of the said Act, it goes to the very root of the authority of the civil court and anything done in derogation thereof would be inherently lacking in jurisdiction. When a question of inherent lack of jurisdiction is involved as a consequence of a statutory bar to receive an action, the court must at the first sight of the pleadings pertaining to the action assess whether the same is capable of being entertained. If the practice in a particular court is for the action to be routinely filed in the department and not immediately receive the attention of a judge, such practise must be amended and, till such time that the practice continues, it would be the duty of the judge seeing the plaint or the petition or the like for the first time to apply his mind to the bar.

20. The statutory prohibition contained in Section 34 of the Act is not unique. There are several contemporary statutes, particularly in the modern trend of emasculating the judiciary and increasing the parking of matters with tribunals under executive control, which contain similar provisions: Section 15Y of the Securities and Exchange Board of India Act, 1992, Section 23 of the Depositories Act, 1996, Section 145 of the Electricity Act, 2003, Section 430 of the Companies Act, 2013, to name a few, are examples of similar provisions along with a host of other enactments which have both limbs as in Section 34 of the Act of 2002.

21. Though it is elementary that the exclusion of the jurisdiction of civil courts is not to be readily inferred and such exclusion must either be explicitly expressed or unmistakably implied, it must also be recognised that it has been judicially held at the highest level in this country that the legislature is competent to curtail the jurisdiction of civil courts and to confer the same on any other tribunal or authority. Indeed, one of the earliest provisions of similar import was contained in the now repealed Displaced Persons (Compensation and Rehabilitation) Act, 1954, the operative part whereof contained both limbs as to the receipt of an action and the power to grant any injunction.

22. In view of the nature of the prohibition imposed on a civil court by the uncompromising wording of Section 34 of the Act of 2002, the approach adopted by the trial court in the instant case cannot be faulted. The contention of the appellants on the first count fails and it is held that a bar of the kind envisaged in Section 34 of the said Act obliges the court to ascertain whether the action brought before it falls foul of such provision and such assessment may be made suo motu and at the earliest stage when any judge in such court has due occasion to look into the same.

23. Now, to the second question: whether Section 34 of the said Act prohibited the receipt of the suit in the manner in which it was presented.

24. The extent of the exclusion of the jurisdiction of a civil court would depend not only on the construction of a provision providing for such exclusion, but also on the recognition of a provision that clothes some other authority to entertain that matter which the civil court is prohibited from receiving. It is elementary that a person seeking to assert a legally valid right must have a forum to do so. It is inconceivable that the opportunity of asserting a legal right is not curtailed or suspended by law, yet there is no forum therefor. The immediate assertion of a legal right may, however, be temporarily suspended by law; as done by the proviso to Section 13(3A) of the Act of 2002.

25. The Act of 2002 as it was enacted did not provide for the consideration of a reply to the notice of demand by the concerned banks or financial institutions. Following the Supreme Court decision in Mardia Chemicals, Section 13 of the Act of 2002 was amended to provide for the consideration of a reply by the borrower to the notice of demand issued by a notified secured creditor under Section 13(2) of the Act. However, the rejection of the grounds urged by a borrower was specifically made non-justiciable, at least immediately. In other words, a borrower has to wait for the notified secured creditor to take measures under Section 13(4) of the Act before the borrower can carry his grievance to a DRT.

26. In such context, the appellants refer to the dictum in a recent judgment reported at (2014) 1 SCC479(Jagdish Singh v. Heeralal) where, at paragraph 25 of the report, the stage at which the bar under Section 34 of the said Act becomes operational has been highlighted:

“25. We are of the view that the civil court jurisdiction is completely barred, so far as the “measures”. taken by a secured creditor under sub-section (4) of Section 13 of the Securitisation Act, against which an aggrieved person has a right of appeal before the DRT or the Appellate Tribunal, to determine as to whether there has been any illegality in the “measures”. taken. The Bank, in the instant case, has proceeded only against secured assets of the borrowers on which no rights of Respondents 6 to 8(sic Respondents 1 to

5) have been crystallised, before creating security interest in respect of the secured assets.”

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27. The appellants refer to paragraph 50 of the report in Mardia Chemicals as quoted in the judgment impugned herein. The trial court laid much stress on the last two sentences of such passage in Mardia Chemicals and construed the same to cover a situation where no measure may have been adopted by a bank or financial institution under Section 13(4) of the Act but such measures may have been in the offing. The last two sentences of paragraph 50 of the report in Mardia Chemicals, as relied upon by the trial court, may be seen:

“50. … Therefore, any matter in respect of which an action may be taken even later on, the civil court shall have no jurisdiction to entertain any proceeding thereof. The bar of civil court thus applies to all such matters which may be taken cognizance of by the Debts Recovery Tribunal, apart from those matters in which measures have already been taken under sub-section (4) of Section 13.”

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28. According to the appellants, the law as laid down in the above passage from Mardia Chemicals cannot be considered to hold the field in view of a later Supreme Court judgment noticing Mardia Chemicals in Jagdish Singh and restricting the operation of the bar on the civil court for receiving a suit to set in only upon any measure being adopted by a bank or financial institution under Section 13(4) of the Act.

29. A single bench judgment of this court and the judgment in the appeal arising therefrom have also been placed by the appellants for the proposition that merely because a suit appears to be in the form of a defence to the measures taken by a bank or financial institution under Section 13(4) of the Act would not entail the suit not being maintainable if the reliefs sought are incapable of being granted by a DRT or DRAT. In the case pertaining to the unreported decision of the single bench in GA2352of 2014 in CS217of 2013 (Frontline Corporation Limited v. Punjab and Sind Bank) rendered on November 2, 2016, the plaintiff had obtained a loan from the defendant bank to develop an immovable property whereat the defendant was a tenant. The agreement between the parties envisaged the defendant would shift out temporarily to enable the construction to be undertaken and completed before returning to enjoy possession of a part of the new building. A loan for the project was obtained by the plaintiff from the bank. Such loan was recalled by the bank and measures taken under Section 13(4) of the said Act in respect of the very property which was to be constructed upon in terms of the agreement between the parties. The plaintiff applied for the specific performance of the agreement (for the bank to vacate the premises and re-enter thereupon after the completion of the construction) and complained of the project having failed to take off since the bank did not remove itself from the property which resulted in the repayment being rendered impossible. The single bench held that since the relief for specific performance could not be sought before the DRT or granted by such forum, to such extent the suit was maintainable. However, the injunction that was subsisting in the suit, restraining the bank from effectuating the measures taken under Section 13(4) of the Act, was vacated. An appeal was carried from such order and in the appellate judgment reported at (2017) SCC Online Cal 123 (Frontline Corporation Limited v. Punjab and Sind Bank), the suit was permitted to continue, though the injunction was revived on grounds that are not relevant for the present purpose.

30. The decisions in Frontline Corporation Limited are of little assistance to the appellants herein except for the proposition that merely because an action in a civil court is perceived to be the defence to the claim of a notified secured creditor who has adopted measures under Section 13(4) of the said Act, would not make the suit not maintainable; the reliefs claimed in the suit must be capable of being granted by the DRT for the entirety of the suit to be rendered bad. However, no injunction can be granted by a civil court in respect of any action taken or to be taken in pursuance of any power conferred by or under the said Act or the Act of 1993.

31. With respect, the passage from Mardia Chemicals that has weighed with the interlocutory court in not admitting the plaint does not appear to be the correct legal position. Thankfully, the appropriate legal position has been enunciated at paragraph 25 of the decision in Jagdish Singh. As noticed earlier, Section 34 of the Act of 2002 has two parts: the first limb prohibits the receipt of a civil suit in certain cases; and, the second bars the issuance of an injunction by a civil court in certain situations. The sets of situations covered by the two limbs are not identical, though they may be geared towards the same goal. The emphasis in the first limb is on “any matter which a … Tribunal is empowered by or under this Act to determine”., whereas the second part covers “any action taken or to be taken in pursuance of any power conferred by or under”. the Acts of 2002 and 1993. A DRT will be empowered by or under the said Act of 2002 to determine any matter once any measure under Section 13(4) of such Act is taken by a notified secured creditor or its authorised officer under Chapter III of the Act of 2002. In other words, till such time that any measure under Section 13(4) is taken by a notified secured creditor or its authorised officer, the jurisdiction to determine the propriety of such measure does not vest in any DRT or DRAT. Thus, merely because a notified secured creditor has issued a notice under Section 13(2) of the Act of 2002, it does not imply that the bar under the first limb of Section 34 of the said Act is kicked in, so to say. The bar under such first limb of Section 34 of the said Act begins with any measure being taken by a notified secured creditor or its authorised officer under Section 13(4) of such Act.

32. But even in a civil suit which is instituted at a time when no measures have been taken by a notified secured creditor or its authorised officer under Section 13(4) of the Act, no injunction can issue – even quia timet – in respect of any action taken or to be taken in pursuance of any power conferred by or under the said Act of 2002 or the Act of 1993. The two limbs of Section 34 of the said Act are complementary, operate in tandem and are designed to serve the same objective. At the stage when the provision first appeared in the Ordinance that preceded the Act of 2002, it could not have had retrospective operation. Thus, any suit filed prior to Section 34 of the said Act, or the corresponding provision in the preceding Ordinance, coming into operation could not be regarded as bad even if the matters covered thereby were capable of being determined by a DRT or DRAT under the said Act or its preceding Ordinance. But from the date that the provision became effective, no injunction in respect of any action taken or to be taken in pursuance of any power conferred by or under the said Act (or its preceding Ordinance) or under the Act of 1993 could be issued by any civil court. In suits filed after such provision has come into effect, it is possible that the entirety of the reliefs claimed may not be capable of being granted by a DRT or DRAT. It is here that the second limb of the provision acts as a fall-back safety-net to arrest the mischief that it seeks to do. Even if a civil suit is entertained which contains some matter that a DRT or DRAT is empowered to determine by or under the Act of 2002, but the plaint thereof cannot be rejected since the entirety of the subject-matter of such suit may not be capable of determination by a DRT or DRAT; the second limb of Section 34 prohibits any injunction to be issued by the civil court in respect of any action taken or to be taken in pursuance of any power conferred by or under the said Act or under the Act of 1993.

33. As comprehensive as the bar is under the first limb of Section 34 of the Act, the only construction thereof is that the word “is”. in the expression “is empowered by or under this act to determine”. operates only in presenti. A DRT or DRAT has to have authority to determine the entire-subject-matter of a suit at the time of its institution, for the bar under the first limb of such provision to be attracted. If the authority to determine the subject-matter of the suit vests in a DRT or DRAT after the institution of the suit, the suit cannot be regarded as bad. It is here that the second limb of the provision takes over as it prohibits the interdiction of any action taken or to be taken in pursuance of any power conferred by or under the Act or under the Act of 1993. Thus, a plaint cannot be rejected – and, similarly, refused to be received – if no DRT or DRAT is empowered to determine the subject-matter thereof at the time of its institution. That is not to say, however, that even if the bar operates and a suit is accidentally received, the plaint relating to such suit cannot be rejected later. It must only emphasised that the bar operates at the threshold and not if a DRT or DRAT becomes vested with the authority to determine the subject-matter of the suit at any time after the institution of the suit.

34. Again, in all humility, it must be pointed out that the last two sentences in paragraph 50 of the report in Mardia Chemicals fails to notice the distinction between the two limbs of Section 34 of the said Act. What is said in such two sentences would be true of the second limb of Section 34: the bar thereunder to issue an injunction would apply to all matters which may be taken cognisance of by a DRT at a later date apart from those matters in which measures may already have been taken under Section 13(4) of the Act. But the bar as to the receipt of a civil suit, under the first limb of Section 34 of the Act, would not operate when the authority is not vested in any DRT or DRAT to determine any matter which is the subject-matter of the suit. The authority to determine any such matter vests in the DRT, by virtue of Section 17(1) of the Act, only upon any measure being taken under Section 13(4) of the Act.

35. It must be admitted at this stage that in view of Article 141 of the Constitution, the dictum in the last two sentences at paragraph 50 of the report in Mardia Chemicals would, ordinarily, be binding, and certainly at this level. It is equally true that the judgment in Jagdish Singh was rendered by a two-member bench of the Supreme Court. But the later judgment noticed and considered the earlier judgment and appropriately held that the expression “in respect of any matter”. in Section 34 of the Act would only be relatable to the “measures”. provided under Section 13(4) of the Act. Such legal position is clarified not only in the opening sentence of paragraph 25 of the report in Jagdish Singh but also in the following passage at paragraph 24 thereof, which has also been quoted in the judgment and order impugned herein:

“24. … The opening portion of Section 34 clearly states that no civil court shall have jurisdiction to entertain any suit or proceeding ‘in respect of any matter’ which a DRT or an Appellate Tribunal is empowered by or under the Securitisation Act to determine. The expression ‘in respect of any matter’ referred to in Section 34 would take in the ‘measures’ provided under sub-section (4) of Section 13 of the Securitisation Act. Consequently, if any aggrieved person has got any grievance against any ‘measures’ taken by the borrower (sic, secured creditor) under sub-section (4) of Section 13, the remedy open to him is to approach the DRT or the Appellate Tribunal and not the civil court.”

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36. It is also evident from paragraph 26 of the report in Jagdish Singh that what fell for consideration before the Supreme Court in that case was whether the High Court was in error in holding that a civil court had the jurisdiction to examine whether the measures taken by a notified secured creditor under Section 13(4) of the Act were legal or not.

37. A line may be added here on the operation and working of the doctrine of precedents. As far as a High Court is concerned, if divergent opinions of two Supreme Court judgments rendered by benches of varying strengths are cited on a legal issue, where the subsequent judgment does not notice the earlier judgment, it is the view of the bench of greater strength that is binding. But if an earlier view of a Supreme Court bench of greater strength is noticed and the dictum in such earlier bench is read down or explained or modified, it is the later judgment – irrespective of the fact that it may have been passed by a bench of lesser strength – that becomes binding.

38. On such consideration, the present suit was maintainable at the time that it was presented for admission and leave under Clause 12 of the Letters Patent was sought: not because any of the reliefs claimed in such suit is incapable of being granted by a DRT or DRAT; but only because at the time of such institution, no DRT or DRAT was empowered by or under the Act of 2002 to determine any part of the subject-matter of the suit. Though a relief for specific performance of the settlement agreement has been carried in the plaint and, ordinarily, a DRT or DRAT may not have the authority to consider or grant a relief for specific performance of an agreement, the nature of the agreement of which specific performance has been sought herein is one that is capable of being indirectly granted by the DRT or DRAT if a petition in such regard were to be carried by these appellants to such forum upon any measure being taken by the respondent Trust under Section 13(4) of the Act. In Frontline Corporation Limited, the relief for specific performance that was sought pertained to a matter beyond the domain of a DRT or DRAT. But the relief for specific performance as claimed in the instant suit pertains to a settlement agreement which was to govern the claim of the respondent Trust; and, as such, the propriety of the measures if taken by the respondent Trust under Section 13(4) of the said Act may be tested against the settlement pleaded by the appellants herein.

39. The final aspect in this appeal pertains to the desirability of judicial precedents being cited in a judgment or order without such authorities being brought to the notice of the parties. Viewed from the perspective of a party against whom a decision is made on the basis of a judicial precedent not referred to in course of the arguments, it would amount to a breach of the most elementary canons of natural justice. It is possible that the perspective in which a judicial precedent is read or understood may be altered upon a party to the action having a chance to explain the same or being afforded an opportunity to bring any other authority to bear on the issue.

40. Indeed, the miscarriage of justice that may be occasioned by a judgment referring to judicial authorities without such precedents being brought to the notice of the parties or the party likely to be affected thereby, is evident from the judgment and order impugned. The passage from Mardia Chemicals that was relied upon in the judgment impugned and appears to have weighed heavily with the trial court was clearly not the dictum laid down in Jagdish Singh. Upon Jagdish Singh noticing Mardia Chemicals and interpreting the law to be as evident from paragraph 25 of the report therein, it was the later dictum which was binding on the trial court. If the appellants herein were made aware of these two judgments being cited against them, they may have had the opportunity to point out such aspect of the matter as has been done in course of the present appeal.

41. It is, therefore, held that it is generally undesirable that judicial precedents be referred to or made the basis for any finding in a judgment without the attention of the parties represented before the court first being drawn to them.

42. Though this may only be a pyrrhic and short-lived victory for the appellants, yet it must be held that the suit as framed was maintainable at the time of its institution and when leave was sought under Clause 12 of the Letters Patent, notwithstanding Section 34 of the Act of 2002. Accordingly, APO390of 2017 and GA2728of 2017 are allowed by setting aside the judgment and order impugned dated July 24, 2017 and by granting leave under Clause 12 of the Letters Patent. The suit will be deemed to have been instituted on July 24, 2017 when the plaint relating thereto was presented. Nothing in this order will prevent the respondent Trust from taking any objection that it may be entitled to in accordance with law.

43. There will be no order as to costs.

44. Urgent certified website copies of this judgment, if applied for, be supplied to the parties subject to compliance with all requisite formalities. (Sanjib Banerjee, J.) I agree. (Siddhartha Chattopadhyay, J.)