CANARA BANK versus P. SELATHAL AND ORS. ETC.ETC.

CANARA BANK versus P. SELATHAL AND ORS. ETC.ETC.

The Supreme Court held both the trial Court and High Court erred in not rejecting the plaints under Order 7 Rule 11(d) CPC: the suits essentially challenge the DRT decree and the statutory remedy of appeal to the DRAT under Section 20 RDDBFI Act was available and unexhausted; the pleaded fraud was illusory and related to the partnership deed not to the guarantor’s guarantee or mortgage, the plaintiffs’ pleaded title was factually inconsistent with the sale deeds and prior mortgage, and vague limitation averments failed; therefore the plaints were vexatious and liable to be rejected.

Parties
Appellant / Original Defendant: Canara Bank; Respondents / Original Plaintiffs: P. Selathal and Ors.; Principal Borrower / Partnership Firm: M/s. Coimbatore Hatcheries; Guarantor / Defendant in DRT Proceedings: Shri M.C. Kallikutty
Jurisdiction
India
Judgment Date
28 February 2020
Procedural Posture
Civil Appeal (civil Appeal Nos. 1863 1864 of 2020) / Appeal to Supreme Court Against High Court Judgment in C.r.p.(pd) Nos. 2586 and 2587 of 2013 Confirming Trial Court Orders
Outcome
Appeals allowed
Legal Topics
Order 7 Rule 11 CPC, Jurisdiction Under RDDBFI Act, Appeal to DRAT Under Section 20 RDDBFI Act, Allegations of Fraud, Limitation
Civil Procedure Banking and Finance Recovery of Debts Order 7 Rule 11 CPC Jurisdiction Under RDDBFI Act Appeal to DRAT Under Section 20 RDDBFI Act Allegations of Fraud Limitation

Case Brief

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Parties

Canara Bank

Appellant / Original Defendant

P. Selathal and Ors.

Respondents / Original Plaintiffs

M/s. Coimbatore Hatcheries

Principal Borrower / Partnership Firm

Shri M.C. Kallikutty

Guarantor / Defendant in DRT Proceedings

Procedural Posture

Civil Appeal (civil Appeal Nos. 1863 1864 of 2020) / Appeal to Supreme Court Against High Court Judgment in C.r.p.(pd) Nos. 2586 and 2587 of 2013 Confirming Trial Court Orders

Legal Issues

  1. 1 Whether suits filed by purchasers challenging a DRT decree are liable to be rejected under Order 7 Rule 11(d) CPC
  2. 2 Whether civil courts have jurisdiction to entertain suits challenging decrees of Debt Recovery Tribunal when remedy under the RDDBFI Act (appeal to DRAT under Section 20) exists
  3. 3 Whether allegations of fraud in the plaints are sufficiently pleaded or are illusory to escape statutory remedy and limitation

Ratio Decidendi

The Supreme Court held both the trial Court and High Court erred in not rejecting the plaints under Order 7 Rule 11(d) CPC: the suits essentially challenge the DRT decree and the statutory remedy of appeal to the DRAT under Section 20 RDDBFI Act was available and unexhausted; the pleaded fraud was illusory and related to the partnership deed not to the guarantor’s guarantee or mortgage, the plaintiffs’ pleaded title was factually inconsistent with the sale deeds and prior mortgage, and vague limitation averments failed; therefore the plaints were vexatious and liable to be rejected.

Court Disposition

Appeals allowed

Orders

  • Impugned common judgment and order dated 09.11.2017 of the High Court of Madras in C.R.P.(PD) Nos. 2586/2013 and 2587/2013 quashed and set aside
  • Orders of the trial Court refusing to reject the plaints under Order 7 Rule 11(d) CPC quashed and set aside