Challenge notice issued under Section 13 of SARFAESI Act in the civil court. The bank has filed an objection under order 7 rule 11 of code of civil procedure for rejection of plaint. The bank says that the subject matter is beyond the jurisdiction of the civil court. As per the legal advice, if the amount of borrowed money is less than ten lakh the civil court has the jurisdiction and beyond ten lakh the debt recovery tribunal has the jurisdiction. In those circumstances I filed a civil suit in the civil court. Bank has issued that notice and demanded to deposit the entire loan amount and outstanding amount. Whereas the interest is more than that mentioned in the loan agreement. The bank is extorting money by levying higher interest rates on the borrowed money. It is a violation of contract hence, I filed a civil suit to stay the proceedings and direct the bank to settle the outstanding as the rate of interest mentioned in the loan agreement.
Asked from: Uttar Pradesh
To some extent, your advocate is correct, but your case does not fall under the original jurisdiction of the DRT. You want to challenge the validity of the notice or the action initiated by the bank under Section 13(4) of the SARFAESI Act. This matter does not relate to the original jurisdiction of the DRT; it falls under the appellate jurisdiction. According to Section 17 of the RDB Act (Recovery of Debt and Bankruptcy Act, 1993), a person aggrieved by any measures referred to in Section 13(4) taken by a secured creditor can make an application to the DRT.
Therefore, the tribunal has the jurisdiction to entertain your application irrespective of the loan amount. Thus, the borrower has a remedy to challenge the validity of the notice issued under Section 13 by filing a Securitization Application (SA) in the DRT. Section 18 of the RDB Act prohibits the civil court from entertaining any suit regarding the action taken by a secured creditor under Section 13 of the SARFAESI Act. The tribunal has exclusive jurisdiction in this matter.
According to Section 1(4) of the RDB Act, the provisions of this Act shall not apply where the amount of debt due to any bank or financial institution, or a consortium of banks or financial institutions, is less than ten lakh rupees. However, this restriction only applies to the original jurisdiction. Challenging the validity of the notice under Section 13(4) does not fall under the original jurisdiction of the DRT.
Challenging notice issued under Section 13 of SARFAESI Act is subject matter to debt recovery tribunal instead of the civil court. In the prevailing circumstances, the application filed by the bank under Order VII, Rule 11 of the Code of Civil Procedure is absolutely correct.