27 March 2024

Dispute Resolution & Arbitration Monthly Update | March 2024

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HSA | Dispute Resolution & Arbitration Monthly Update | March 2024...
India Litigation, Mediation & Arbitration
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Asma Lateef & Anr v. Shabbir Ahmad & Ors

Supreme Court of India | Civil Appeal No. 9695 of 2013

Background facts

  • Asma Lateef and another (Appellants) instituted a Civil Suit under Section 38 of the Specific Relief Act, 1963 (Specific Relief Act) praying for a permanent injunction against Shabbir Ahmad and others (Respondents) from interfering with the Appellants' peaceful possession of the suit property.
  • Thereafter, one of the Respondents i.e., Kazmi filed his written statement before the Trial Court contending that the Suit was not maintainable on the ground that it was barred in view of Section 41(h) of the Specific Relief Act. There was no written statement filed on behalf of the other 2 Respondents. Subsequently, Respondent Kazmi passed away and thus, the suit against him stood dismissed as abated.
  • The Appellants thereafter moved an application before the Trial Court under Order VIII Rule 5 and 10 of the Code of Civil Procedure, 1908 (CPC) for pronouncement of judgment against the remaining 2 Respondents, which was allowed by the Trial Court by its order dated August 5, 1991.
  • The Appellants then filed an Execution Application before the Executing Court and prayed for interim reliefs to restrain the Respondents from interfering with the suit property, which was granted vide Interim order dated January 16, 1998. Consequently, the Respondents filed objections under Section 47 of CPC submitting that the order dated August 5, 1991, was neither a 'judgement' nor a 'decree', and therefore was not capable of execution. The said objections were duly allowed by the Executing Court, resulting in the dismissal of the Execution Application.
  • Thereafter, the Appellants filed a Revision Application against the order of dismissal by the Execution Court. The same was considered and the Revisional Court found merit in it, thereby directing the Execution Court to proceed with the execution of the decree.
  • Being aggrieved by the order passed by the Revisional Court, the Respondents approached the Allahabad High Court (HC) under Article 227 of the Constitution of India. Vide judgment dated February 04, 2011, the HC quashed the order passed by the Revisional Court and relegated the parties to the remedy of having their rights in respect of the suit property adjudicated by the appropriate forum.
  • Being aggrieved by the judgment dated February 04, 2011, passed by the HC, the Appellants filed the present Special Leave Petition before the Supreme Court (SC).

Issue at hand?

  • Whether the order dated August 5, 1991, suffered from a jurisdictional error so grave that the decree drawn up subsequently is incapable of execution by the Executing Court and an objection that it is inexecutable was available to be raised under Section 47 of the CPC by the Respondents?

Decision of the Court

  • At the outset, the SC extensively analyzed the scheme of Order VIII Rule 10 of the CPC and the scope and nature of Section 47 of the CPC. The SC observed the procedure as laid down in Order VIII Rule 10 of the CPC, wherein if a party fails to present a written statement within the stipulated time, the Court may pronounce the judgment against such party, or make such order in relation to the suit as it deems fit. Upon pronouncement of such judgment, a decree shall subsequently be drawn up. The SC held that the same is permissive in nature and not a mandatory provision. The SC placed reliance upon the case of Balraj Taneja v. Sunil Madan1 , wherein it was held that a Court need not pass a mechanical judgment merely relying on the plaint when no written statement is forthcoming from the respondent.
  • The SC noted that the power under Order VIII Rule 10 of the CPC ought to be invoked with care, caution, and circumspection, and only in cases were none of several defendants have filed their written statements. Moreover, if the plaint itself consists of disputed questions of fact, it held that it would be advisable to avoid passing a judgment in favor of such plaintiff without due consideration to the evidence adduced and submissions made.
  • Thereafter, the SC noted that Section 47 of the CPC mandates that an Executing Court must determine all questions arising between parties to a suit. The SC referred to the decision in Vasudev Dhanjibai Modi v. Rajabhai Abdul Rehman2 wherein it was held that an Executing Court can dismiss an execution application if the decree put to execution is unmistakably found to suffer from an inherent lack of jurisdiction, rendering it a nullity in the eyes of law.
  • Further, the SC relied upon the Calcutta High Court's decision in Hirday Nath Roy v. Ramachandra Barna Sarma3 wherein the Court opined as to what is meant by 'jurisdiction', 'lack of jurisdiction' and 'error in the exercise of jurisdiction'. The SC then noted that it is no longer res integra that a Court must not only have the jurisdiction in respect of the subject matter of the dispute, but also the jurisdiction to grant relief that is sought for.
  • The SC further observed that at the stage of considering the question of grant of interim relief, if the opposing party raises a point of maintainability thereof, the Court ought to record at least a prima facie satisfaction that the suit before it is maintainable and not barred by law.
  • n view of the above, the SC, while upholding the order of the HC, held that the Trial Court had no authority to decree the suit against the Respondent under Order VIII Rule 10, CPC for nonsubmission of their written statements.

HSA Viewpoint

Through this judgment, the SC has held that Order VIII Rule 10 of CPC is not a mandatory provision, and a Court is not bound to pass a judgment in favor of the plaintiff merely because the defendant has failed or neglected to file his written statement. The Court may only proceed to pass a judgment/decree against the defendant, who has not filed a written statement on being satisfied that none of the several defendants have filed their written statement(s) and there is no fact which needs to be proved on account of deemed admission. This judgment underscores that mere non-filing of a written statement by the defendant does not automatically entitle a plaintiff to have a decree drawn up in its favor, without proving its own case through leading evidence. This ruling reinforces the nuanced application of procedural rules for a fair and just legal outcome

Shri Dharmesh Jethanand Lohana v. State Bank of India & Shri Manishbhai Mahendrabhai Patel

Gujarat State Real Estate Regulatory Authority | Complaint No. CMP/A/ONLINE/VADODARA/14072022/00066

Background facts

  • Manishbhai Mahendrabhai Patel (Opponent No. 2) floated a scheme in respect of a property in Vadodara and had the same registered with the RERA Authority. As per the declaration in the scheme, the project was to be completed by March 31, 2028.
  • Dharmesh Jethanand Lohana (Complainant) had booked 4 shops along with Opponent No. 2 as per the said scheme. Thereafter, an Agreement for Sale and an Allotment Letter was provided to the Complainant by Opponent No. 2, making the Complainant a co-allottee.
  • The Complainant paid INR 70,53,700 of the total INR 86,00,000 and affirmed to pay the remainder. It was later discovered by the Complainant that the State Bank of India (Opponent No. 1) had taken symbolic possession of the assets of the promoter which included the Complainant's shops due to the developer's failure to repay the loan under Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).
  • The Complainant became anxious that the bank may sell or assign the 4 shops by way of auction and contended that the right to get a registered conveyance deed and possession of the 4 shops under Section 17(1) read with Section 19(3) of the Real Estate (Regulation and Development) Act, 2016 (RERA Act) would be prejudiced if the bank is able to auction the properties. Therefore, the Complainant sought a direction against Opponent No.1 under Section 37 of the RERA Act.

Issues at hand?

  • Whether RERA provisions prevail over SARFAESI Act provisions?
  • Whether RERA Authority has jurisdiction to entertain complaints by an aggrieved person against a bank as a secured creditor?

Decision of the Authority

  • The Gujarat RERA Authority observed that the Complainant is willing to pay the remaining 10% consideration, thus entitling the Complainant to get the shops booked along with Opponent No. 2. The Court relied on the Supreme Court's judgment in Bikram Chatterji v. Union of India4 , wherein it was held that in the event of a direct conflict between the RERA and SARFAESI Act, the provisions contained in RERA would prevail as it came into force later than the SARFAESI Act.
  • The Gujarat RERA Authority also relied on Union Bank of India v. Rajasthan Real Estate Regulatory Authority & Ors5 and held that the RERA Authority has the jurisdiction to entertain a complaint by an aggrieved person against the bank as a secured creditor in case the bank takes recourse to any of the provisions contained in Section 13(4) of the SARFAESI Act.

HSA Viewpoint

This decision clarifies that the RERA provisions take precedence over SARFAESI provisions because the latter came into force subsequently, and that the RERA Authority has jurisdiction to hear complaints by aggrieved persons against a bank as a secured creditor if the bank invokes any of the provisions outlined in the Section 13(4) of the SARFAESI Act.

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1. (1999) 8 SCC 396

2. (1970) 1 SCC 670

3. 1920 SCC OnLine Cal 85

4. MANU/SC/1484/2022

5. Petition for Special Leave to Appeal (C) Nos. 1861-1871/2022

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