Central Bank of India & Anr. v. Smt. Prabha Jain & Ors.

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56. In view of the discussion aforesaid, the questions framed above are to be answered as under: (c) Is the jurisdiction of a civil court to try a suit filed by a borrower against a bank or financial institution ousted by virtue of the scheme of the RDB Act in relation to the proceedings for recovery of debt by a bank or financial institution? The aforesaid question ought to be answered first and is answered in the negative. (a) Whether an independent suit filed by a borrower against a bank or financial institution, which has applied for recovery of its loan against the plaintiff under the RDB Act, is liable to be transferred and tried along with the application under the RDB Act by DRT? In the absence of any such power existing in the civil court, an independent suit filed by the borrower against the Bank or financial institution cannot be transferred to be tried along with application under the RDB Act, as it is a matter of option of the defendant in the claim under the RDB Act. However, the proceedings under the RDB Act will not be impeded in any manner by filing of a separate suit before the civil court. (b) If the answer is in the affirmative, can such transfer be ordered by a court only with the consent of the plaintiff? Since there is no such power with the civil court, there is no question of transfer of the suit whether by consent or otherwise.” (emphasis supplied)

HOW TO INTERPRET THE CLAUSES WHICH BAR THE CIVIL COURT’S JURISDICTION

43. This Court in Dwarka Prasad Agarwal (Dead) by LRs. & Anr. v. Ramesh Chander Agarwal & Ors. reported in (2003) 6 SCC 220 (3 Judge Bench) has explained that bar of jurisdiction of the civil court is not to be readily inferred. Such a provision requires strict interpretation. It was further held that this Court would lean in favour

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of construction which would uphold the retention of the civil court’s jurisdiction. The relevant paragraphs are: “22. The dispute between the parties was eminently a civil dispute and not a dispute under the provisions of the Companies Act. Section 9 of the Code of Civil Procedure confers jurisdiction upon the civil courts to determine all disputes of civil nature unless the same is barred under a statute either expressly or by necessary implication. Bar of jurisdiction of a civil court is not to be readily inferred. A provision seeking to bar jurisdiction of a civil court requires strict interpretation. The court, it is well settled, would normally lean in favour of construction, which would uphold retention of jurisdiction of the civil court. The burden of proof in this behalf shall be on the party who asserts that the civil court’s jurisdiction is ousted. (See Sahebgouda v. Ogeppa [(2003) 6 SCC 151 : (2003) 3 Supreme 13].) Even otherwise, the civil court’s jurisdiction is not completely ousted under the Companies Act, 1956. XXX XXX XXX

25. In that view of the matter, we are of the opinion that the civil suit was maintainable. In any event, we fail to understand and rather it is strange as to how the High Court while rejecting relief to the original plaintiff (late Dwarka Prasad Agarwal), granted a similar relief in favour of the first respondent herein.” (emphasis supplied)

44. Before we close this litigation, we deem it necessary to observe that Banks should remain very careful with inadequate title clearance reports, more particularly, when such reports are obtained cheaply and at times for external reasons. This concerns the protection of public money and is in the larger public interest. Therefore, it is essential for the Reserve Bank of India and other stakeholders to collaborate in developing a standardized and practical approach for preparing title search report before sanctioning loans and also for the purpose of determining liability (including potential criminal action) of the Officer who approves loan. Additionally, there should be standard guidelines for fees and costs associated with title search reports so as to ensure that they maintain high quality.

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45. In such circumstances referred to above, no error not to speak of any error of law could be said to have been committed by the High Court in passing the impugned order.

46. In the result, this appeal fails and is hereby dismissed. The interim order earlier granted by this Court stands vacated. The civil suits shall now proceed further expeditiously in accordance with law. All connected appeals stand disposed of in the aforesaid terms.

47. Pending application(s), if any, shall stand disposed of.

Result of the case: Appeals disposed of.