Consumer Commission Has No Jurisdiction To Entertain Matters Coming Under Purview Of SARFAESI Act: Orissa High Court
The Orissa High Court has held that the Consumer Commissions do not have jurisdiction to entertain any suit or proceeding which is subject matter of adjudication by Debt Recovery Tribunal (DRT) or Appellate Tribunal under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ('SARFAESI Act').Clarifying the jurisdictional issue, the Division...
The Orissa High Court has held that the Consumer Commissions do not have jurisdiction to entertain any suit or proceeding which is subject matter of adjudication by Debt Recovery Tribunal (DRT) or Appellate Tribunal under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ('SARFAESI Act').
Clarifying the jurisdictional issue, the Division Bench of Justice Debabrata Dash and Justice V. Narasingh observed –
“…it is evident that Section 34 prescribes the jurisdictional bar for entertaining any suit or proceeding which can be entertained by the Debt Recovery Tribunal or the Appellate Tribunal and specifically it has been mentioned that no injunction shall be granted by any Court or other authority in respect of any action in present day or in future to be taken under the SARFAESI Act.”
Factual Background
The first opposite party was one of the mortgagors and guarantors for the credit facilities availed by one company. As the borrower/company failed to repay the loan, the petitioner-bank recalled the loan and issued demand notice.
As no step was taken for repayment of loan despite of demand notice, further notice under Section 13(4) of the SARFAESI Act read with Rule 8 of the Security Interest (Enforcement) Rules, 2002 for possession of the property was issued. Against such action, the first opposite party filed an appeal under Section 17(1) of the Act.
Subsequent to this development, the petitioner-bank published an e-auction sale notice. Challenging such notice, the first opposite party approached the District Consumer Commission, Jharsuguda under Section 35 of the Consumer Protection Act.
The Consumer Commission passed an ex-parte order granting stay on the auction. Being aggrieved by such order, the petitioner-bank approached the High Court in this writ petition.
Court's Observations
The Court referred to the provisions enshrined under Sections 34 (bar of jurisdiction of Civil Court), 35 (provisions of SARFAESI to override over other laws) and 37 (application of other laws not barred) of the SARFAESI Act.
The Court noted that Section 34 provides for jurisdictional bar for entertaining any suit or proceeding which can be entertained by the DRT or Appellate Tribunal and it also says that no injunction shall be granted by any Court or 'other authority' in respect of any action in present or in future to be taken under the SARFAESI Act.
“Even if the reference to “Civil Court” in heading of the Section 37 of SARFAESI Act as well as in the narration of the sections is interpreted and understood in the context of section 9 of the CPC, the expression “other authority” must be given its full play, otherwise the legislative intent of Section 37 would be set at naught. There cannot be any iota of doubt that the expression “other authority” will encompass the “Consumer Commissions”.”
Further, it held that if Section 35 of SARFAESI Act is read along with Section 37 juxtaposed with Section 100 of the Consumer Protection Act, it is clear that any action that is taken or contemplated under the SARFAESI Act or RDDB Act has to be governed by the SARFAESI Act or RDDB Act alone and all other laws except those mentioned in Section 37 of SARFAESI Act have to yield to the same.
Duty Of Consumer Commission
The Court reminded that an onerous duty has been cast on the President and Members of the Consumer Commissions while considering the reliefs sought under the Special Acts and to act and function within the purview provided thereunder.
“The least that can be expected from the learned President and the Members of the District Commissions that before passing any order relating to any alleged violation vis-à-vis the provisions of any Special Act they will test the propositions claiming the reliefs on the touchstone of law governing the field which would enable them not to embark upon a journey which will lead to avoidable litigation and denude the faith of the common man in the fairness and effectiveness of the redressal mechanism and which will also not render otiose, the intent of the legislature in enacting Special Statutes.”
The Court also hoped that the Consumer Commissions will refrain from 'judicial adventurism' while dealing with special legislations.
Having regard for the aforesaid, the Court held that the Consumer Commission could not have granted the ex-parte stay on the e-auction notice. Therefore, it quashed the impugned order.
Above all, the Court took serious note of the fact that the first opposite party concealed about the proceeding pending in the DRT while seeking relief from the District Consumer Commission.
Therefore, the Court imposed of rupees one lakh on the first opposite party and directed it amount deposit the amount with the Welfare Fund of Jharsuguda District Bar Association.
Case Title: The Chief Manager-cum-Authorized Officer, Union Bank of India, Jharsuguda v. Rajesh Kumar Agrawal & Anr.
Case No: W.P.(C) No. 41680 of 2023
Date of Judgment: July 01, 2024
Counsel for the Petitioner: Mr. B.C. Panda, Advocate
Counsel for the Respondents: Mr. S.K. Jethy, Advocate
Citation: 2024 LiveLaw (Ori) 54