A) ABSTRACT / HEADNOTE

This judgment considers whether Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the SARFAESI Act) completely ousts civil-court jurisdiction to try suits that touch upon security enforcement measures taken by secured creditors. The dispute arose from a family inheritance where the plaintiff (wife) claimed a 1/3 share in land which her co-heir sold without partition; a subsequent buyer mortgaged the plot to the Bank and defaulted, whereupon the Bank took possession under Section 13.

The plaintiff sued in the civil court for:

(i) a declaration that the antecedent sale deed was illegal;

(ii) a declaration that the mortgage deed in favour of the Bank was illegal;

(iii) possession of the plot. The Bank moved under Order VII, r.11 CPC to reject the plaint on the ground that Section 34 ousted civil jurisdiction and that remedies lay before the Debts Recovery Tribunal (DRT) under Section 17 of the SARFAESI Act.

The trial court rejected the plaint; the High Court restored it holding that the DRT could not determine title disputes between third parties and borrowers; the Bank appealed. The Supreme Court held that declarations regarding the antecedent sale and mortgage (reliefs 1 & 2) were not measures taken under Section 13(4) and therefore lay within civil jurisdiction; the DRT lacked power under Section 17 to adjudicate title or invalidate antecedent documents; as to possession (relief 3), under the unamended statutory language the DRT’s power under Section 17(3) was to restore possession to the person who had possession when the secured creditor took it (i.e., the borrower), not to hand possession to third parties who had no prior possession. Finally, the Court emphasised that partial rejection of a plaint under Order VII, r.11 CPC is impermissible: if any relief survives, the plaint must not be rejected.

Keywords: SARFAESI Act, Section 34, Section 17, jurisdiction, DRT, title, mortgage, Order VII r.11 CPC, restoration of possession, title search reports.

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGMENT

The case tests the boundary between statutory grievance redressal under the SARFAESI/DRT regime and ordinary civil remedies for title and possession. The SARFAESI Act was designed to furnish banks and financial institutions with an efficient non-court mechanism to enforce security interests without routine judicial intervention, while preserving a statutory right of appeal to the DRT against measures invoked under Section 13(4). Section 34 bars civil courts from entertaining any suit “in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine,” and further prohibits injunctive relief against actions under the Act.

This statutory framework has repeatedly engaged courts, producing a line of precedents that emphasise the limited but sometimes far reaching ousting of civil jurisdiction (notably Mardia and subsequent decisions). The present litigation emerged from domestic partition/title facts: a plaintiff (the widow) claimed inherited title to 1/3 share; a co-heir sold without partition; the buyer mortgaged to the Bank; the Bank proceeded under Section 13 after default. The civil suit sought declarations that the sale and mortgage were nullities and prayed for possession. The Bank’s preliminary defence urged rejection under Order VII r.11 CPC on the ground that Section 34 ousted the civil court’s jurisdiction in favour of remedies under Section 17 before the DRT.

That factual tapestry raised core questions:

(i) are antecedent document-validity and title questions “matters” within the DRT’s jurisdiction?

(ii) can a third party who was never in possession ask the DRT to be “handed over” possession?

(iii) what is the correct approach to a preliminary rejection of plaint where some reliefs may be barred but others survive? The Supreme Court, after examining statutory language, legislative intent, and precedent, drew careful distinctions between measures that the DRT can examine and classic civil questions of title and invalidity of deeds.

D) FACTS OF THE CASE

The suit land was purchased by the plaintiff’s father-in-law by registered sale deed dated 19.06.1967; on his death on 15.08.2005 the property devolved equally upon three heirs the plaintiff’s husband Mahendra Kumar Jain (one-third), his elder brother Sumer Chand Jain (one-third), and the mother-in-law. After Mahendra’s death his one-third devolved to the plaintiff. Without any formal partition, Sumer Chand subdivided the land and sold several plots by registered deeds. One such plot was sold to Parmeshwar Das Prajapati by a registered sale deed dated 03.07.2008 (the antecedent sale which the plaintiff challenges as illegal).

Parmeshwar mortgaged that plot to the Central Bank of India to secure a loan; after default the Bank invoked Section 13 and took possession and advertised the property for auction. The plaintiff filed Civil Suit No.25A/11 claiming (a) declaration that the sale deed and the mortgage were nullities; (b) possession of the plot (after demolition of constructions); and (c) damages/mesne profits. The Bank applied under Order VII r.11 CPC to reject the plaint on grounds that the suit was barred by Section 34 (because remedies lay under Section 17 before DRT) and that court fees were insufficient. The trial court rejected the plaint; the High Court allowed the plaintiff’s first appeal, set aside the rejection, and restored the suit observing that the DRT could not adjudicate title claims between non-borrowers and borrowers; the Bank appealed to the Supreme Court.

E) LEGAL ISSUES RAISED

i. Whether Section 34 of the SARFAESI Act completely ousts civil-court jurisdiction to entertain a suit which includes declarations of invalidity of antecedent sale and mortgage deeds.
ii. Whether the Debts Recovery Tribunal under Section 17 has jurisdiction to adjudicate title disputes or to invalidate antecedent sale/mortgage deeds.
iii. Whether an aggrieved third party who was never in possession can seek an order under Section 17(3) directing the DRT/secured creditor to hand over possession to that third party.
iv. Whether a plaint can be partially rejected under Order VII, r.11 CPC if some reliefs are barred by statute but others are maintainable.

F) PETITIONER / APPELLANT’S ARGUMENTS

The counsels for Petitioner / Appellant submitted that the plaint was barred by Section 34 because the subject matter of the suit challenge to measures taken by the secured creditor (possession and steps to realise security) fell within the DRT/DRAT regime and therefore civil courts lacked jurisdiction. They contended that the expression “any person” in Section 17 is wide enough to cover third parties affected by measures under Section 13(4) and thereby furnish an exclusive statutory remedy. The Bank urged that permitting civil suits would defeat the SARFAESI Act’s purpose of speedy, summary, statutory enforcement and would invite multiplicity of litigation. Reliance was placed upon precedents where civil suits were held barred where the dispute related to enforcement measures, and it was argued that the plaintiff should pursue remedy before the DRT rather than in a civil court. The Bank also challenged court fee valuation and pressed for rejection under Order VII r.11 CPC.

G) RESPONDENT’S ARGUMENTS

The counsels for Respondent submitted that the declarations sought (invalidity of the antecedent sale and the mortgage deed) raise pure questions of title and the validity of documents executed prior to any step taken by the secured creditor; such matters fall squarely within the civil court’s plenary jurisdiction under Section 9 CPC and cannot be finally determined by the DRT which is statutorily confined to examining the legality of measures taken under Section 13(4). It was emphasized that the plaintiff was neither a borrower nor claiming through the borrower; she held an independent adverse claim and was not in possession when the Bank took possession; therefore the DRT could not “restore” possession to her under the unamended Section 17(3) which contemplates restoration to the person who had possession at the relevant time. The respondent also asserted that partial rejection of a plaint is impermissible under Order VII r.11 CPC and therefore the plaint could not be rejected merely because one relief might be susceptible to DRT scrutiny.

H) RELATED LEGAL PROVISIONS 

i. Section 34, SARFAESI Act — civil court jurisdiction barred in respect of matters DRT/DRAT can determine.
ii. Section 17, SARFAESI Act — right to apply to DRT against measures under Section 13(4); Section 17(3) confers power to “restore” possession to borrower (unamended position).
iii. Section 13(3) & (4), SARFAESI Act — measures available to secured creditor, including taking possession and sale.
iv. Order VII, r.11 CPC — rejection of plaint on statutory bar / cause of action absent.
v. Section 9 CPC — jurisdiction of civil courts to try all civil suits unless barred.

I) JUDGMENT 

The Court analysed the statutory text, legislative purpose, and authorities. It began by emphasising that Section 34 only bars civil jurisdiction “in respect of any matter which a DRT or DRAT is empowered by or under this Act to determine.” The critical exercise is therefore to identify whether the reliefs sought are reliefs in respect of measures under Section 13(4) (amenable to DRT scrutiny) or independent civil claims antecedent to the secured creditor’s action. The Court held that declarations challenging the antecedent sale deed and the mortgage deed are not measures taken under Section 13(4) because they arise from transactions that pre-dated the Bank’s invocation of SARFAESI they are disputes of title and document validity sea-far removed from the statutory review of enforcement measures.

The DRT, the Court reiterated, is a creature of statute with powers circumscribed by Section 17 and cannot finally adjudicate broader civil questions of title or nullity of antecedent instruments. Thus, the first two reliefs fall within the civil court’s jurisdiction under Section 9 CPC and are not ousted by Section 34.

a. Ratio decidendi:

The decisive legal propositions are:

(1) the DRT’s jurisdiction under Section 17 is limited to examining whether measures under Section 13(4) were in accordance with the Act and rules; it is not a substitute forum to decide title disputes or to invalidate antecedent sale/mortgage deeds;

(2) the word “restore” in Section 17(3) (unamended) means return of possession to the person who was in possession when the secured creditor took it (typically the borrower), not to third parties who never enjoyed possession;

(3) where one or more reliefs claimed in a plaint are otherwise maintainable before a civil court, the plaint cannot be rejected in toto under Order VII r.11 merely because another relief might fall within the DRT’s domain partial rejection is not permissible and adverse dicta about the other relief should be avoided at the preliminary stage. These principles together compelled the result that the civil court’s rejection was unsustainable and the High Court was right to restore the plaint.

b. Obiter dicta:

The Court reflected on the scope of earlier precedents (notably Mardia, Jagdish Singh, State Bank of Patiala and others), clarifying that prior decisions must be read contextually: while Section 34 can bar suits that directly challenge measures under Section 13(4), it does not create a blanket ouster of civil jurisdiction over antecedent title disputes or matters outside the statutory remedial ambit of the DRT. The Court also observed that allegations of fraud cannot be used as a drafting device to escape statutory bars; particulars must support fraud allegations. Finally, the Court lamented recurrent poor title-search practices by banks, calling for regulatory collaboration to standardise title search protocols and fees to safeguard public funds a policy remark urging RBI/stakeholders to frame standards for title reports.

c. Guidelines:

1. Civil courts retain jurisdiction to adjudicate declarations of invalidity of antecedent sale and mortgage deeds which are not measures under Section 13(4).

2. The DRT’s remedial scope under Section 17 is limited to examining the legality of enforcement measures; it cannot finally decide title or partition claims between third parties and borrowers.

3. Under the unamended Section 17(3) the DRT can restore possession to the person who had it at the time of the secured creditor’s takeover; it cannot hand over possession to an adverse third party who never had possession. (Note: the 2016 amendment broadened some language but does not authorise handing over to someone who never possessed.)

4. On Order VII r.11 CPC, a plaint should not be rejected in whole if any one of the claimed reliefs is maintainable; courts must avoid making conclusive adverse observations on reliefs that raise factual issues better suited to trial.

5. Banks must adopt robust, standardised title-search practices; regulatory stakeholders should prescribe quality and fee guidelines for title reports to protect public money.

In light of these conclusions the Supreme Court dismissed the Bank’s appeal and directed that the civil suits proceed.

J) CONCLUSION & COMMENTS

(Integrated academic comments) The judgment strikes a pragmatic balance between Parliament’s design of an expeditious non-court recovery regime and the civil courts’ enduring role as final adjudicators of title and document validity. By distinguishing between measures under Section 13(4) (reviewable by DRT) and antecedent civil rights (for civil courts), the Court preserved the statutory object of SARFAESI while avoiding an overbroad reading of Section 34 that would have deprived litigants of ordinary remedies in property and succession disputes.

The insistence that DRT cannot finally decide title disputes prevents summary adjudications in a forum unsuited for contested title evidence. The Court’s procedural reminder on Order VII r.11 protects plaintiffs from premature dismissal when part of their claim plainly survives. The policy admonition to banks and regulators about title-search quality is notable: it recognises systemic causation of such litigation and calls for institutional reform. For practitioners, the decision reinforces two practical takeaways: plead with precision (avoid blanket “fraud” labels without particulars) and, when challenging mortgage enforcement, analyse whether the relief sought is truly a challenge to Section 13(4) measures or an independent claim in title — the forum choice is decisive.

K) REFERENCES

a. Important Cases Referred

1. Mardia Chemicals Ltd. v. Union of India, (2004) 4 SCC 311.

2. Jagdish Singh v. Heeralal & Ors., (2014) 1 SCC 479.

3. State Bank of Patiala v. Mukesh Jain & Anr., (2017) 1 SCC 53.

4. Bank of Baroda v. Gopal Shriram Panda & Anr., SCC OnLine Bom (2021).

5. Harshad Govardhan Sondagar v. International Assets Reconstruction Co. Ltd., (2014) 6 SCC 1.

b. Important Statutes Referred

1. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) — ss.13, 17, 34.

2. Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (DRT Act).

3. Code of Civil Procedure, 1908 — Order VII r.11; Section 9.