Some home-buyers had filed a suit against a builder and others, including Axis Bank. The bank filed a Notice of Motion under Order 7 Rule of 11(d) CPC, seeking dismissal of the suit, as it is barred by provisions of Section 34 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, which means the court, has no jurisdiction.
Although, the single bench dismissed it, but the division bench the Bombay High Court allowed it, stating that the plaint against the bank is not maintainable.
The home-buyers moved the apex court challenging the high court order. They contended that the plaint cannot be rejected partially against one defendant; instead it has to be rejected as a whole. A bench comprising Justices A.M. Khanwilkar and Ajay Rastogi said: "The plaint as presented must proceed as a whole or can be rejected as a whole, but not in part."
The home-buyers, who were seeking to purchase flats in a project called Orbit Heaven at tony Nepean Sea Road, made huge payment in several crores to the builder while the project was under construction. They have been paying instalments against the flats since 2009. But, the builder did not execute the registration agreement/document for purchase of the flats, though, a letter of allotment was issued by the builder.
The bank granted loan to the builder against the project in 2013, "aggregating to Rs 150 crore in respect of which a mortgage deed was executed between the builder and the bank." Therefore the project was mortgaged, which jeopardized the rights of the home-buyers to receive possession of the flats, said their plea.
The bank contended that these are not genuine home-buyers, instead investors of the project developers.
Setting aside the High Court, the apex court observed that appeals must succeed on the sole ground that the principal relief claimed in the notice of motion filed by bank " to reject the plaint only qua (partially) the said respondent(bank) and which commended to the High Court, is replete with jurisdictional error.
The court also pointed out that such a relief "cannot be entertained" in exercise of power under Order 7 Rule 11(d) of CPC, and the power is limited to rejection of the plaint as a whole or not at all.
( With inputs from IANS )