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Wednesday, April 8, 2015

JURISDICTION - Section 17 of SARFAESI Act - Private Treaty Agreement - specific performance of an agreement to sell - immovable property was situate in New Mumbai, Maharashtra. - Clause 9(e)(viii) of the Agreements :"Disputes, if any, shall be subject to the jurisdiction of Mumbai Court/Tribunals only" - Hence Calcutta High court has no jurisdiction - Mumbai court only has got jurisdiction - 2015 S.C. MSK LAW REPORTS




Whether the suit for specific performance filed by Excel  was  a  "suit  for
land"?
Whether the Private Treaty Agreement conferred an exclusive jurisdiction  on
the Court of Mumbai and if so, Whether or not ARCIL waived  this  clause  by
participating in impleadment application without protest?
Whether the jurisdiction of civil Court is barred in  the  present  case  by
virtue of Section 17 of SARFAESI Act?

The suit was effectively a "suit for land" and the  immovable  property  was
situate in New Mumbai, Maharashtra. 
Therefore, as per clause 12  of  Letters
Patent the suit should be filed in a Court having  territorial  jurisdiction
over the immovable property.
That the alleged Private  Treaty  Agreement  between  ARCIL  and  Excel  was
entered into pursuant to Section 13(4) of the  SARFAESI  Act  and  even  the
sale was to be conducted by execution of sale  certificate  as  provided  in
Security Interest (Enforcement) Rules,  2002  (hereinafter  referred  to  as
"Rules"). 
Therefore, the jurisdiction of civil court is excluded.
That the Private Treaty Agreement provided  that  Mumbai  Court  would  have
exclusive jurisdiction.
On the question of suit for specific performance of  an  agreement  to  sell
being a suit for land, this Court has laid down a clear principle  in  Adcon
Electronics Pvt. Ltd. vs. Daulat Ram and Anr., (2001)  7  SCC  698,  that  a
suit for specific performance simplicitor without a prayer for  delivery  of
possession is not a suit for land as Section 22 of the Specific Relief  Act,
1963 categorically bars any Court to grant such relief of  possession  in  a
suit for specific performance unless specifically sought
In  view  of  this
judgment, in the present case, the only question for  our  determination  in
the plaint is whether a prayer for delivery of possession is sought  or  not
? The prayer sought is issuance of sale certificate  which  is  provided  in
Appendix V to the Rules under SARFAESI Act. 
The sale  certificate  reads  as
follows:
"Whereas   the   undersigned   being   the   authorised   officer   of   the
............................   (name   of   the   institution)   under   the
Securitization and Reconstruction of Financial  Assets  and  Enforcement  of
Security Interest Act, 2002 and in exercise of the  powers  conferred  under
Section 13 read with Rule 12 of the  Security  Interest  Enforcement  Rules,
2002  sold  on  behalf  of  the  ...........................  (name  of  the
secured creditor/institution) in favour of the  ............................
(purchaser), the immoveable property shown in the schedule below secured  in
favour of the ............................ (name of  the  secured  creditor)
by  ........................  (the  names  of  the  borrowers)  towards  the
financial facility .............................  (description)  offered  by
.............................   (secured    creditor).    The    undersigned
acknowledge the receipt of the sale  price  in  full  and  handed  over  the
delivery  and  possession  of  the  scheduled  property.  The  sale  of  the
scheduled property was made free from all encumbrances known to the  secured
creditor listed below on deposit of the money demanded by the undersigned."


It may be noted that the sale certificate sought under the  prayer  requires
the delivery of possession of the suit property.  Thus,  we  find  that  the
prayer for delivery of possession was an implicit one in the  present  case.
The prayer as sought in the plaint could not have been granted  without  the
delivery of possession of the suit property as the sale  certificate  itself
contemplates the delivery of the immovable property.
 Thus, in view  of  this
we find that the Adcon Electronics would not apply as  there  was  a  prayer
for delivery of possession in the present case. Therefore, we hold that  the
present suit was indeed a suit for land.

Exclusive jurisdiction
Now, we shall consider as to which court has the jurisdiction  to  entertain
and try the suit. 
Clause  5  of  the  Agreement  entered  into  between  the
parties reads as under:

"The  payment/cheque  shall  be  drawn  and  made  payable  in  Mumbai.  The
jurisdiction shall be Courts of Mumbai."


Clause 9(e)(viii) of the Agreements further reads as follows:

"Disputes,  if  any,  shall  be  subject  to  the  jurisdiction  of   Mumbai
Court/Tribunals only"

It is clear from these two clauses that the intention of the parties to  the
Agreement was to restrict limitation to the forums/courts  of  Mumbai  only.

This Court in Swastik Gases P. Ltd. vs. Indian Oil Corporation Ltd.,  (2013)
9 SCC 32, has held as under:

"The very existence of a jurisdiction  clause  in  an  agreement  makes  the
intention of the  parties  to  an  agreement  quite  clear  and  it  is  not
advisable to read such a clause in the agreement  like  a  statute.  In  the
present case, only the Courts in Kolkata had jurisdiction to  entertain  the
disputes between the parties."

Therefore,  we are of the opinion that the Courts  of  Mumbai  were  granted
exclusive jurisdiction as per the Agreement and we find no reason to  create
any exception to the intention of the parties.

In view of the above-mentioned two findings that the present suit is a  suit
for land, and that the parties had granted  exclusive  jurisdiction  to  the
Court of Mumbai, the jurisdiction  of  the  Court  at  Calcutta  is  clearly
ousted as per law. Thus, from the  above  conclusion  it  appears  that  the
plaint will have to be returned by the Calcutta High Court as  it  does  not
have the jurisdiction. 
Therefore, we are of the view that  the  question  of
jurisdiction  of  the  Debt  Recovery  Tribunal  need   not   be   answered.
Consequently, this appeal is dismissed. 
The parties may proceed to take  any
appropriate measure in an appropriate forum as provided in  law  to  enforce
their rights. - 2015 S.C. MSK LAWREPORTS

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