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

- **Citation:** 2025 INSC 95
- **Court:** Supreme Court of India
- **Decided:** 2025-01-09
- **Case number:** Civil Appeal No. 1876 of 2016
- **Bench:** J.B. Pardiwala, R. Mahadevan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/central-bank-of-india-anr-v-smt-prabha-jain-ors-38913
- **Pages:** 50

## Headnote

Whether the jurisdiction of civil court to try a suit is completely
barred by s.34 of the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002.
Headnotes†
Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002-SARFAESI Act -
ss.34, 17, 13(4) - Jurisdiction of the civil court to try a suit -
Plaintiff-wife inherited 1/3rd share of the suit land on the death
of her husband, however husband's elder brother without any
partition amongst the heirs divided the land and sold them
illegally to different persons - One such buyer mortgaged the
plot with the appellant-Bank for obtaining loan, and thereafter
defaulted in payment - Bank took possession of the plot
under the SARFAESI Act - Plaintiff then filed a suit in the
civil court seeking declaration that the sale deed executed
by husband's brother as illegal; the mortgage deed executed
in favour of the Bank as illegal; and sought possession of
the plot - Application u/Ord.VII r.11 CPC by the Bank that the
plaint be rejected as suit is barred u/s.34, and the civil court
has no jurisdiction to try the same - Civil court rejected the
plaint - However, the High Court holding that the civil court's
jurisdiction to decide the suit not ousted by s.34, and the
Debt Recovery Tribunal-DRT had no jurisdiction to decide
whether persons other than the mortgager had title in the
mortgaged property, set aside the judgment and restored
the suit - Correctness:
Held: First and second reliefs not in relation to any measures
taken by the secured creditor u/s.13(4) - They are reliefs in
relation to the actions taken prior to the secured creditor stepping
into the picture and well prior to the secured creditor invoking
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the provisions of the SARFAESI Act - Tribunal would have no
jurisdiction u/s.17 to grant the declarations sought in the first
and second reliefs - SARFAESI Act has not been enacted for
providing a mechanism for adjudicating upon the validity of
documents or to determine questions of title finally - Jurisdiction
to declare sale deed or mortgage deed being illegal, vested with
the civil court u/s. 9 CPC - Civil Court has jurisdiction to finally
adjudicate upon the first two reliefs - As regards the relief of
possession, plaintiff could not have sought the relief from DRT -
Plaintiff neither a borrower nor a person claiming under/through
the borrower - Plaintiff has a claim independent of and adverse to
the borrower - Plaintiff was not in possession, thus, the question
of DRT "restoring" possession to plaintiff did not arise - DRT
would have no jurisdiction to grant such relief to her, thus, the
plaintiff's third relief in the suit also not barred by s.34 - Even
under the expression appearing at the end of s.13(3), the plaintiff
cannot seek the relief of being handed over possession - Even
the amended s.13(3) confers no power to hand over the property
to someone who was never in possession - Plaint must survive
because there cannot be a partial rejection of the plaint u/Ord.
VII r. 11 - Hence, even if one relief survives, the plaint cannot
be rejected u/Ord. VII r. 11 - First and second reliefs regarding
illegality of the execution of sale deed and mortgage deed clearly
not barred by s. 34 and within the civil court's jurisdiction, thus,
plaint cannot be rejected u/Ord. VII r. 11 - Furthermore, if civil court
cannot reject a plaint partially, then by the same logic, it ought
not to make any adverse observations against the other relief -
Thus, no error of law committed by the High Court in passing the
impugned order - Code of Civil Procedure, 1908 - Ord.VII r.11.
[Paras 16-18, 23-25, 45]
Code of Civil Procedure, 1908 - Ord.VII r.11 - Partial rejection
of plaint under O.VII, r.11 - Effect:
Held: Even if one relief survives, the plaint cannot be rejected u/
Ord.VII, r.11 - Plaint must survive because there cannot be a partial
rejection of the plaint u/Or

## Text

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[2025] 2 S.C.R. 263 : 2025 INSC 95
Central Bank of India & Anr.
v.
Smt. Prabha Jain & Ors.
(Civil Appeal No. 1876 of 2016)
09 January 2025
[J.B. Pardiwala and R. Mahadevan, JJ.]
Issue for Consideration
Whether the jurisdiction of civil court to try a suit is completely
barred by s.34 of the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002.
Headnotes†
Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002-SARFAESI Act -
ss.34, 17, 13(4) - Jurisdiction of the civil court to try a suit -
Plaintiff-wife inherited 1/3rd share of the suit land on the death
of her husband, however husband's elder brother without any
partition amongst the heirs divided the land and sold them
illegally to different persons - One such buyer mortgaged the
plot with the appellant-Bank for obtaining loan, and thereafter
defaulted in payment - Bank took possession of the plot
under the SARFAESI Act - Plaintiff then filed a suit in the
civil court seeking declaration that the sale deed executed
by husband's brother as illegal; the mortgage deed executed
in favour of the Bank as illegal; and sought possession of
the plot - Application u/Ord.VII r.11 CPC by the Bank that the
plaint be rejected as suit is barred u/s.34, and the civil court
has no jurisdiction to try the same - Civil court rejected the
plaint - However, the High Court holding that the civil court's
jurisdiction to decide the suit not ousted by s.34, and the
Debt Recovery Tribunal-DRT had no jurisdiction to decide
whether persons other than the mortgager had title in the
mortgaged property, set aside the judgment and restored
the suit - Correctness:
Held: First and second reliefs not in relation to any measures
taken by the secured creditor u/s.13(4) - They are reliefs in
relation to the actions taken prior to the secured creditor stepping
into the picture and well prior to the secured creditor invoking
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the provisions of the SARFAESI Act - Tribunal would have no
jurisdiction u/s.17 to grant the declarations sought in the first
and second reliefs - SARFAESI Act has not been enacted for
providing a mechanism for adjudicating upon the validity of
documents or to determine questions of title finally - Jurisdiction
to declare sale deed or mortgage deed being illegal, vested with
the civil court u/s. 9 CPC - Civil Court has jurisdiction to finally
adjudicate upon the first two reliefs - As regards the relief of
possession, plaintiff could not have sought the relief from DRT -
Plaintiff neither a borrower nor a person claiming under/through
the borrower - Plaintiff has a claim independent of and adverse to
the borrower - Plaintiff was not in possession, thus, the question
of DRT "restoring" possession to plaintiff did not arise - DRT
would have no jurisdiction to grant such relief to her, thus, the
plaintiff's third relief in the suit also not barred by s.34 - Even
under the expression appearing at the end of s.13(3), the plaintiff
cannot seek the relief of being handed over possession - Even
the amended s.13(3) confers no power to hand over the property
to someone who was never in possession - Plaint must survive
because there cannot be a partial rejection of the plaint u/Ord.
VII r. 11 - Hence, even if one relief survives, the plaint cannot
be rejected u/Ord. VII r. 11 - First and second reliefs regarding
illegality of the execution of sale deed and mortgage deed clearly
not barred by s. 34 and within the civil court's jurisdiction, thus,
plaint cannot be rejected u/Ord. VII r. 11 - Furthermore, if civil court
cannot reject a plaint partially, then by the same logic, it ought
not to make any adverse observations against the other relief -
Thus, no error of law committed by the High Court in passing the
impugned order - Code of Civil Procedure, 1908 - Ord.VII r.11.
[Paras 16-18, 23-25, 45]
Code of Civil Procedure, 1908 - Ord.VII r.11 - Partial rejection
of plaint under O.VII, r.11 - Effect:
Held: Even if one relief survives, the plaint cannot be rejected u/
Ord.VII, r.11 - Plaint must survive because there cannot be a partial
rejection of the plaint u/Ord. VII, r.11 - Thus, the plaint cannot be
rejected u/Ord.VII, r.11 - If the civil court is of the view that one
relief is not barred by law but is of the view that the other relief is
barred by law, the civil court must not make any observations to
the effect that the other relief is barred by law and must leave that
issue undecided in an Ord. VII, r. 11 application - This is because
[2025] 2 S.C.R.
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Central Bank of India & Anr. v. Smt. Prabha Jain & Ors.
if the civil court cannot reject a plaint partially, then by the same
logic, it ought not to make any adverse observations against the
other relief. [Paras 24, 25]
SARFAESI Act, 2002 - s.17 - Application against measures
to recover secured debts - Relief of possession - Power of
DRT - "Restore" possession and "Handover" possession -
Difference between - Stated. [Para 23]
Debts Recovery Tribunal - Scope and power of:
Held: Debts Recovery Tribunal is a creature of the Recovery of
Debts and Bankruptcy Act, 1993 and is empowered to exercise
powers under that Act and the SARFAESI Act, 2002 - Tribunal
cannot go beyond the four corners of the SARFAESI Act - Tribunal
is bound by the powers conferred to it by the Parliament -
Sub-sections (3) and (4) of s.17 respectively instructive to the level
of examination that DRT can undertake, and the same is limited to
the validity of the measures u/s.13(4) - Thus, DRT not permitted
to examine the validity of the earlier sale deed, whereafter the
mortgage was executed in favour of Bank. [Para 38]
Banking/Banks - Sanctioning of loans - Inadequate title
clearance reports - Approach to be adopted by the Banks:
Held: Banks should remain very careful with inadequate title
clearance reports, more particularly, when such reports are obtained
cheaply and at times for external reasons - Concern is with the
protection of public money and is in the larger public interest - Thus,
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 - Also, there should be
standard guidelines for fees and costs associated with title search
reports so as to ensure that they maintain high quality. [Para 44]
Case Law Cited
Bank of Baroda v. Gopal Shriram Panda and Another (2021) SCC
OnLine Bom 466 - approved.
Madhav Prasad Aggarwal & Anr. v. Axis Bank Limited & Anr. [2019]
8 SCR 1058 : (2019) 7 SCC 158; Bank of Baroda v. Moti Bhai &
266
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Ors. [1985] 2 SCR 784 : (1985) 1 SCC 475; Bank of Rajasthan
Ltd. v. VCK Shares & Stock Broking Services Ltd. [2022] 17 SCR
567 : (2023) 1 SCC 1; Dwarka Prasad Agarwal (Dead) by LRs.
& Anr. v. Ramesh Chander Agarwal & Ors. [2003] Supp. 1 SCR
376 : (2003) 6 SCC 220; Mardia Chemicals Ltd. & Ors. v. Union of
India & Ors. [2004] 3 SCR 982 : (2004) 4 SCC 311; Jagdish Singh
v. Heeralal & Ors. [2013] 12 SCR 232 : (2014) 1 SCC 479; State
Bank of Patiala v. Mukesh Jain & Anr. [2016] 8 SCR 427 : (2017)
1 SCC 53; Robust Hotels Private Limited & Ors. v. EIH Limited &
Ors. [2016] 8 SCR 437 : (2017) 1 SCC 622; SBI v. Allwyn Alloys
Private Limited & Ors. [2018] 4 SCR 477 : (2018) 8 SCC 120; Sree
Anandhakumar Mills Ltd. v. Indian Overseas Bank & Ors. (2019)
14 SCC 788; Electrosteel Castings Ltd. v. UV Asset Reconstruction
Co. Ltd. & Ors. [2021] 7 SCR 532 : (2022) 2 SCC 573; Harshad
Govardhan Sondagar v. International Assets Reconstruction Co.
Ltd. [2014] 11 SCR 605 : (2014) 6 SCC 1; M.P. Wakf Board v.
Subhan Shah (Dead) by LRs. [2006] Supp. 8 SCR 85 : (2006)
10 SCC 696; Om Prakash Gupta v. Dr. Rattan Singh & Anr. 1962
SCC OnLine SC 111 - referred to.
Books and Periodicals Cited
Cambridge English dictionary - referred to.
List of Acts
Code of Civil Procedure, 1908; Securitisation and Reconstruction
of Financial Assets and Enforcement of Security Interest Act, 2002;
Recovery of Debts Due to Banks and Financial Institutions Act, 1993.
List of Keywords
Jurisdiction of civil court to try suit barred by s.34 of SARFAESI
Act; Civil court not to have jurisdiction; Jurisdiction of Debt
Recovery Tribunal or civil court to try suit; Rejection of plaint;
Secured creditor; Validity of documents; Determination of title;
Partial rejection of plaint u/Ord. VII r. 11 CPC; Execution of sale
deed and mortgage deed; Adverse observations against other
relief; Civil court's jurisdiction; Sanctioning of loans; Inadequate
title clearance reports; Title search reports; "Restore" possession;
"Handover" possession; Suit barred by SARFAESI Act; Measures
taken by secured creditor; Relief of possession; Jurisdiction of
Debt Recovery Tribunal; Jurisdiction of civil court.
[2025] 2 S.C.R.
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Central Bank of India & Anr. v. Smt. Prabha Jain & Ors.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1876 of 2016
From the Judgment and Order dated 30.10.2012 of the High Court
of Madhya Pradesh at Gwalior in FA No. 408 of 2012
With
Civil Appeal Nos. 1877, 1896, 1893, 1897, 1915, 1907, 1913, 1900,
1898, 1916, 1914, 1892, 1910, 1899 and 1917 of 2016
Appearances for Parties
O. P. Gaggar, Sachindra Karn, Advs. for the Appellants.
Umesh Babu Chaurasia, Ms. Prity Kumari, Ms. Manjula Chaurasia,
Maneesh Pathak, Rameshwar Prasad Goyal, Ms. Pragati Neekhra,
Aditya Bhanu Neekhra, Atul Dong, Aniket Patel, Advs. for the
Respondents.
Judgment / Order of the Supreme Court
Order
Since the issues raised in all the captioned appeals are the same,
those were taken up for hearing analogously and are being disposed
of by this common judgment and order.
2.
The Civil Appeal No.1876 of 2016 is treated as the lead matter. The
disposal of this appeal shall govern the disposal of all connected
appeals.
3.
This appeal arises from the judgment and order dated 30.10.2012
passed by the High Court of Madhya Pradesh at Jabalpur in First
Appeal No.408 of 2012 by which the High Court allowed the appeal
filed by the respondents herein-original plaintiffs and thereby, set
aside the order passed by the 5th Additional District Judge, Bhopal
in Civil Suit No.25A/2011 rejecting the plaint under Order VII Rule
11 of the Code of Civil Procedure, 1908 (for short, "the CPC").
4.
The facts giving rise to this appeal may be summarised as under:-
Respondent no.1 namely, Smt. Prabha Jain instituted Civil Suit
No.25A/11 praying for the following reliefs:-
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"a. It be declared that the disputed sale deed and the
mortgage deed described in para 6 above are a nullity and
it be declared that the defendant numbers 4 and 5 had
no right to sell the disputed plot, to the defendant number
3 and the possession taken by the defendant number 2
is against the law and the grant of loan by the defendant
number 1 on the security of the plot is against the law.
b. That the possession of the plot of land shown in slanted
red lines in the plan attached to the suit may be given to
the plaintiff after demolishing the construction.
c. That the plaintiff may be awarded damages of Rs.
7200/- for period from December 2009 to December 2010.
d. That the mesne profit from the date of institution of the
suit till possession may be granted to the plaintiff at the
rate of Rs. 600/- p.m."
5.
It is the case of the plaintiff that the suit land was purchased by
her late father-in-law vide sale deed dated 19.06.1967 and after his
death on 15.08.2005, the same was inherited in equal shares by her
late husband Mahendra Kumar Jain, husband's elder brother Sumer
Chand Jain (defendant no.4) and mother-in-law. After the death
of Mahendra Kumar, his 1/3rd share was inherited by the plaintiff.
However, Sumer Chand Jain without any partition amongst the heirs
divided the land into several plots and sold them off illegally to different
persons. One such plot was sold to defendant no.3 (Parmeshwar
Das Prajapati) vide registered sale deed dated 03.07.2008 who in
turn, mortgaged the same with the Central Bank of India (defendant
no.1) for the purpose of obtaining loan.
6.
It seems that the person who obtained loan defaulted and that is
how the Bank decided to proceed further in accordance with the
provisions of the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002 (for short,
"the SARFAESI Act").
7.
It is a case of the plaintiff that the sale deed as well as the mortgage
could be said to be a nullity. She claimed possession of the suit
land in the suit.
8.
It appears that the appellant-Bank herein preferred an application
under Order VII Rule 11 of the CPC and prayed that the plaint be
[2025] 2 S.C.R.
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Central Bank of India & Anr. v. Smt. Prabha Jain & Ors.
rejected as the civil court has no jurisdiction to try the same in view
of Section 17 of the SARFAESI Act. The trial court rejected the plaint.
The original plaintiff carried the matter in appeal before the High
Court. The High Court allowed the First Appeal holding in paras (9)
and (10) respectively, as under:-
"9. From the scheme of the SARFAESI Act narrated above,
it is apparent that the Debts Recovery Tribunal has no
jurisdiction to decide the question whether persons other
than the mortgager had title in the mortgaged property.
In that context the validity of the sale deed of a property
mortgaged with the Central Bank of India cannot be decided
by the Debts Recovery Tribunal. If the sale deed is held to
be wholly or partially invalid it will immediately affect the
validity of the mortgage of that property. The jurisdiction of
civil court is ousted in respect of matters which the Debts
Recovery Tribunal is empowered to decide. Absence of
a provision to enable the Debts Recovery Tribunal for
holding an enquiry on a particular question is indicative
that jurisdiction of civil courts on that question is not
excluded. The above question relating to the validity of
the sale deed and its consequent effect on the mortgage
are matters which the Debts Recovery Tribunal is not
empowered to decide. The provision for appeal under
section 17 of the SARFAESI Act by "any person" does not
oust the jurisdiction of civil court on matters which cannot
be decided by the Debts Recovery Tribunal. Therefore,
the jurisdiction of the civil court to decide these matters
cannot be held to be ousted under section 34 of the
SARFAESI Act.
10. We also disagree, with the finding of the trial court that
proper Court fee has not been paid by the plaintiff. The
plaintiff is not a signatory or party in the sale deed as well
as in the mortgage deed. She is, therefore, not required
to claim the consequential relief of the cancellation of
these documents. And for the relief claimed by her for the
declaration of sale deed and mortgage as illegal, she has
paid the proper Court fee. The consequential relief which
the plaintiff has claimed and which is appropriate in the
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circumstances of the case is possession of the suit land/
plot. The suit land/plot is assessed to the land revenue
at Rs.l/-. She has valued this relief at Rs.20/- and paid
Rs.lOO/- Court fee as required under section 7 (v)(a) of
the Court Fees Act, 1870. The plaintiff has thus paid the
proper Court fee."
9.
In such circumstances referred to above, the appellant-Bank is here
before this Court with the present appeal. We have heard Mr. O.
P. Gaggar, the learned counsel appearing for the appellant-Bank
and Mr. Umesh Babu Chaurasia, the learned counsel appearing
for respondent no.1 i.e. the original plaintiff. The only argument
canvassed before us on behalf of the Bank is that in view of Section
34 of the SARFAESI Act, the civil court has no jurisdiction to try
the suit.
10. Having regard to the importance of the issue raised before us, we
proposed to consider it in detail.
PLAINTIFF'S CASE IN THE PLAINT AS BORNE OUT FROM THE
IMPUGNED JUDGEMENT
19.06.1967:
Plaintiff's father-in-law purchased the suit land by
way of a sale deed.
15.8.2005
Plaintiff's father-in-law died. Thereupon, the suit land
was inherited by 3 persons in equal proportions:
1. Plaintiff's husband Mahendra Kumar Jain (1/3rd)
2. Plaintiff's husband's elder brother Sumer Chand
Jain (1/3rd)
3. Mother-in-law (1/3rd)
Upon the death of the Plaintiff's husband, the Plaintiff
inherited her husband's 1/3rd share.
Plaintiff's brother-in-law Sumer Chand Jain without
any partition divided the suit land into plots and
illegally sold off the plots.
03.7.2008
By a sale deed, Sumer Chand Jain sold one of the
plots to Parmeshwar Das Prajapati.
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Central Bank of India & Anr. v. Smt. Prabha Jain & Ors.
Parmeshwar Das Prajapati executed a mortgage
deed mortgaging the said plot ("subject plot") to the
Central Bank of India ("bank") for obtaining a loan.
From para 2 of the impugned judgement of the High
Court, it appears that some construction was also
raised on the land at some stage.
The bank took over possession of the subject plot
under Section 13 of the SARFAESI Act and published
an advertisement for the purpose of putting it to
auction.
The Plaintiff filed a suit in a civil court praying inter
alia for the following reliefs:
1. For a declaration that the sale deed executed by
Sumer Chand Jain in favour of Parmeshwar Das
Prajapati is illegal ("first relief")
2. For a declaration that the mortgage deed executed
by Parmeshwar Das Prajapati in favour of the Bank
is illegal ("second relief")
3. For being handed over the possession ("third relief")
In the suit, the bank filed an application under
Order VII, Rule 11 of the CPC raising the following
contentions:
a) Suit is barred under Section 34 of the SARFAESI
Act.
b) Plaint is written on insufficiently stamped paper.
10.2.2012
The Civil Court rejected the plaint on the following
grounds:
1. The suit is barred by Section 34 of the SARFAESI
Act.
2. The plaintiff has not paid the proper court fee.
09.04.2012
The Plaintiff filed First Appeal before the High Court
challenging the judgement dated 10.2.2012.
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30.10.2012
The High Court set aside the judgement and restored
the suit on the following grounds:
1. The Civil Court's jurisdiction to decide the suit is
not ousted by Section 34 of the SARFAESI Act.
2. The Plaintiff has paid the proper court fee.
RELEVANT PROVISIONS OF THE SARFAESI ACT
11. Section 34 of the SARFAESI Act reads thus:-
"34. Civil court not to have jurisdiction.- No civil court
shall have jurisdiction to entertain any suit or proceeding
in respect of any matter which a Debts Recovery Tribunal
or the Appellate Tribunal is empowered by or under this
Act to determine and no injunction shall be granted by
any court or other authority in respect of any action taken
or to be taken in pursuance of any power conferred by
or under this Act or under the Recovery of Debts Due to
Banks and Financial Institutions Act, 1993 (51 of 1993)."
12. Section 34 of the SARFAESI Act provides that no civil court shall
have jurisdiction to entertain any suit or proceeding "in respect of
any matter which Debts Recovery Tribunal or the Appellate Tribunal
is empowered by or under this Act to determine..." Hence, the Civil
Court's jurisdiction is only ousted in respect of those matters which
the Debts Recovery Tribunal or the Appellate Tribunal is empowered
by or under the SARFAESI Act to determine. The SARFAESI Act
confers certain powers upon the Debts Recovery Tribunal by virtue
of the following sections: Sections 5(5), 13(10), 17 and 19. Except
for Section 17, as such none of the other sections referred to above
are relevant for the purposes of this matter.
13. Section 17 of the SARFAESI Act is as follows:
Under Section 17(1) of the Act, "Any person (including
borrower), aggrieved by any of the measures referred
to in subsection (4) of section 13 taken by the secured
creditor or his authorised officer under this Chapter, may
make an application... to the Debts Recovery Tribunal..".
From Section 17(2), (3) and (4) of the SARFAESI Act,
it is clear that the Tribunal has the power to examine
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Central Bank of India & Anr. v. Smt. Prabha Jain & Ors.
whether "..any of the measures referred to in sub-section
(4) of section 13 taken by the secured creditor are in
accordance with the provisions of this Act and the rules
made thereunder." The Tribunal has the power to pass
consequential orders as provided in Section 17(3).
14. From Section 17, it is clear that it is only the Tribunal that has the
jurisdiction to determine whether "any of the measures referred to
in sub-section (4) of Section 13 taken by the secured creditor" are
in accordance with the Act or Rules thereunder.
15. The plaintiff in her suit has prayed for 3 reliefs:
a)
The first relief is in relation to a sale deed executed by Sumer
Chand Jain in favour of Parmeshwar Das Prajapati.
b)
The second relief is in relation to a mortgage deed executed
by Parmeshwar Das Prajapati in favour of the bank.
c)
The third relief is for being handed over the possession of the
suit property.
16. So far as the first and second reliefs are concerned, they are not in
relation to any measures taken by the secured creditor under Section
13(4) of the SARFAESI Act. Rather, they are reliefs in relation to the
actions taken prior to the secured creditor stepping into the picture
and well prior to the secured creditor invoking the provisions of the
SARFAESI Act.
17. Therefore, the Tribunal would have no jurisdiction under Section 17
of the SARFAESI Act to grant the declarations sought in the first
and the second reliefs.
18. Further, the SARFAESI Act is enacted essentially to provide a
speedy mechanism for recovery of debts by banks and financial
institutions. The SARFAESI Act has not been enacted for providing
a mechanism for adjudicating upon the validity of documents or
to determine questions of title finally. The DRT does not have the
jurisdiction to grant a declaration with respect to the mortgage
deed or the sale deed as sought by the Plaintiff. The jurisdiction
to declare a sale deed or a mortgage deed being illegal is vested
with the civil court under Section 9 of the Code of Civil Procedure.
Therefore, the civil Court has the jurisdiction to finally adjudicate
upon the first two reliefs.
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19. In the aforesaid context, we may give few illustrations of the kind
of disputes that can crop up. These illustrations would indicate that
DRT can never have the jurisdiction to decide such civil disputes of
title between a third person and a borrower. Two illustrations may
be considered:
Illustration 1: A and B are sons of X. On X's death, A claims that
X made a will bequeathing a particular parcel of land ("Land 1")
exclusively to A. A mortgages Land 1 to a bank and the bank initiates
proceedings under the SARFAESI Act. The other son i.e. B claims
that father X had made a will bequeathing Land 1 exclusively to B.
Hence, there are two conflicting wills propounded by each son. B
files a suit praying for a declaration that he is the exclusive owner
of the land on the basis of the will and other reliefs. The civil court
will have jurisdiction to decide which of the two wills is valid. It is
inconceivable that DRT would have the jurisdiction to decide which
will is valid.
Illustration 2: X was married to Y (wife). They did not have any
biological children. Hence, in 1985, the couple adopted Q. In 1990,
Y died and left her entire estate to X by way of a will. X died in
1995 without making a will. The adopted child Q (claiming to be
sole owner by intestate succession) mortgaged one of the lands in
favour of the bank which initiated SARFAESI proceedings. However,
X's only brother Z made a claim that the "adoption" of Q was not as
per law and that there being no adoption in law, Q was not entitled
to the estate of X. X filed a suit inter alia praying for the following
declarations:
1.
The adoption of Q was void and ineffective.
2.
Z being the only heir as per intestate succession, Z was
exclusively entitled to the land.
3.
The Mortgage by Q in favour of the bank was invalid as it was
a mortgage by Q who had no title.
20. The answer to the aforesaid would depend on whether Q's adoption
was valid or not. If the adoption is valid, Q had title and the mortgage
in favour of the bank would be valid. If the adoption was invalid, Z
would be the owner & Q's mortgage would be invalid. The civil court
will have jurisdiction to decide upon the validity of the adoption, not
the DRT.
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21. By way of third relief, the plaintiff is seeking possession.
22. The suit is of 2011. Hence, the SARFAESI Act as applicable prior
to the 2016 Amendment will have to be examined. Section 17 (as it
stood prior to the 2016 amendment) is reproduced below:
"17. Right to appeal.-(1) Any person (including borrower)
aggrieved by any of the measures referred to in subsection (4) of Section 13 taken by the secured creditor or
his authorised officer under this Chapter, may make an
application along with such fee, as may be prescribed,
to the Debts Recovery Tribunal having jurisdiction in the
matter within forty-five days from the date on which such
measure had been taken:
Provided that different fees may be prescribed for making
the application by the borrower and the person other than
the borrower.
Explanation.-For the removal of doubts, it is hereby
declared that the communication of the reasons to the
borrower by the secured creditor for not having accepted
his representation or objection or the likely action of the
secured creditor at the stage of communication of reasons
to the borrower shall not entitle the person (including
borrower) to make an application to the Debts Recovery
Tribunal under this sub-section.
(2) The Debts Recovery Tribunal shall consider whether
any of the measures referred to in sub-section (4) of
Section 13 taken by the secured creditor for enforcement
of security are in accordance with the provisions of this
Act and the rules made thereunder.
(3) If, the Debts Recovery Tribunal, after examining the
facts and circumstances of the case and evidence produced
by the parties, comes to the conclusion that any of the
measures referred to in sub-section (4) of Section 13,
taken by the secured creditor are not in accordance with
the provisions of this Act and the rules made thereunder,
and require restoration of the management of the business
to the borrower or restoration of possession of the secured
assets to the borrower, it may by order, declare the recourse
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to any one or more measures referred to in sub-section
(4) of Section 13 taken by the secured creditors as invalid
and restore the possession of the secured assets to the
borrower or restore the management of the business to
the borrower, as the case may be, and pass such order
as it may consider appropriate and necessary in relation
to any of the recourse taken by the secured creditor under
sub-section (4) of Section 13.
(4) If, the Debts Recovery Tribunal declares the recourse
taken by a secured creditor under sub-section (4) of Section
13, is in accordance with the provisions of this Act and
the rules made thereunder, then, notwithstanding anything
contained in any other law for the time being in force, the
secured creditor shall be entitled to take recourse to one
or more of the measures specified under sub-section (4)
of Section 13 to recover his secured debt.
(5) Any application made under sub-section (1) shall be
dealt with by the Debts Recovery Tribunal as expeditiously
as possible and disposed of within sixty days from the
date of such application:
Provided that the Debts Recovery Tribunal may, from time
to time, extend the said period for reasons to be recorded
in writing, so, however, that the total period of pendency
of the application with the Debts Recovery Tribunal, shall
not exceed four months from the date of making of such
application made under sub-section (1).
(6) If the application is not disposed of by the Debts
Recovery Tribunal within the period of four months as
specified in subsection (5), any part to the application may
make an application, in such form as may be prescribed,
to the Appellate Tribunal for directing the Debts Recovery
Tribunal for expeditious disposal of the application pending
before the Debts Recovery Tribunal and the Appellate
Tribunal may, on such application, make an order for
expeditious disposal of the pending application by the
Debts Recovery Tribunal.
(7) Save as otherwise provided in this Act, the Debts
Recovery Tribunal shall, as far as may be, dispose of
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the application in accordance with the provisions of the
Recovery of Debts Due to Banks and Financial Institutions
Act, 1993 (51 of 1993) and the rules made thereunder."
(emphasis supplied)
23. Unamended Section 17(3) of the SARFAESI Act as applicable to
the present case:
I.
Section 17(3) as it stood prior to the 2016 amendment, provides
that where the DRT finds that the measures taken by the secured
creditor under Section 13(4) of the SARFAESI Act are not in
accordance with the Act or Rules, it has the power to "restore
the possession of the secured assets back to the borrower".
In this context, there are two significant points that deserve to
be considered:
1. While it is true that Section 17(1) uses the words
"any person (including the borrower) aggrieved", Section
17(3) does not explicitly empower the DRT to restore the
possession to anyone other than the borrower. Yes, in
a given case, if the borrower has put someone else in
possession, then perhaps, it could be contended that under
Section 17(3), the DRT's power to restore possession to the
"borrower" would include the power to restore possession
to the person who was holding it on behalf of the borrower
or claiming through the borrower.
However, it cannot be contended that under Section 17(3),
the DRT can hand over possession to someone whose
claim is adverse to that of the borrower.
2. What is even more important is that in the unamended
Section 17(3), the word used is "restore" and not "hand
over". As per Cambridge English dictionary, word "restore"
means "to return something or someone to an earlier good
condition or position". Under Section 17(3), the DRT has
the power to "restore" possession which would mean that
it has the power to return possession to the person who
was in possession when the bank took over possession.
DRT only has power to "restore" possession; it has no
power to "hand over" possession to a person who was
never in possession when the bank took over possession.
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The word "restore" has been very rightly used by the
Parliament. It is one thing to empower the DRT to hold that
the actions of the secured creditor are not in accordance
with the Act and to empower the DRT to give directions to
the secured creditor to reverse its actions and to direct it
to restore the property back to where it was. However, it
would be quite illogical for the Parliament to empower the
DRT to direct the secured creditor to hand over possession
to some third party who was never in possession in the
first place.
II.
Now, the question that arises is this: whether the Plaintiff being
not in possession could have sought for from the DRT under
the unamended Section 17(3)? In our considered view for the
following two reasons, the plaintiff could not have sought from
DRT the relief of being given possession:
1. Plaintiff is neither a borrower nor a person claiming under/
through the borrower. Plaintiff has a claim independent of
and adverse to the borrower.
2. Plaintiff was not in possession. Hence, the question of
DRT "restoring" possession to Plaintiff did not arise.
III.
Hence, Plaintiff could not have sought from DRT, the relief
of being handed over the possession. DRT would have no
jurisdiction to grant such relief to her. Hence, the Plaintiff's
third relief in her suit is also not barred by Section 34 of the
SARFAESI ACT.
IV.
IV. The bank may contend that even if the plaintiff cannot seek
the relief of being handed over possession under the expression
"restore the possession.... to the borrower", she can still seek
that relief under the widely worded expression appearing at the
end of Section 13(3): "and pass such order as it may consider
appropriate and necessary in relation to any of the recourse
taken by the secured creditor under sub-section (4) of Section
13" appearing at the end of Section 13(3). We are of the view
that even under such expression, the Plaintiff cannot seek the
relief of being handed over possession for the following reasons:
1. Under the last phrase of Section 13(3), the civil court
has the power to pass other orders as it may consider
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Central Bank of India & Anr. v. Smt. Prabha Jain & Ors.
appropriate and necessary "in relation to any of the
measures taken by the secured creditor under sub-section
(4) of Section 13".
2. The measures taken by the secured creditor are of taking
over possession from the borrower and not from the plaintiff.
Hence, the Plaintiff's prayer to hand over possession is not
at all "in relation to any of the measures taken by..." The
passing of an order to hand over possession to Plaintiff is,
therefore, not an order "in relation to any of the measures
taken by the secured creditor".
3. Hence, even under the last phrase of Section 13(3),
DRT has no power to pass an order directing the secured
creditor to hand over possession to Plaintiff. Hence, Plaintiff
could not have sought that relief from DRT.
V.
Although Section 13(3) as amended by the the SARFAESI Act,
2016 does not arise for our consideration in this matter, yet it
is pertinent to note that even the amended Section 13(3) uses
the expression "restore the possession of secured assets". The
expression "or such other aggrieved person" have been inserted
after the word "borrower" in sub-clause (a). However, there
is no power conferred to hand over the property to someone
who was never in possession. The amended Section 13(3) is
reproduced below:
"(3) If, the Debts Recovery Tribunal, after examining
the facts and circumstances of the case and evidence
produced by the parties, comes to the conclusion
that any of the measures referred to in sub-section
(4) of section 13, taken by the secured creditor are
not in accordance with the provisions of this Act and
the rules made thereunder, and require restoration of
the management or restoration of possession, of the
secured assets to the borrower or other aggrieved
person, it may, by order,-
(a) declare the recourse to any one or more measures
referred to in sub-section (4) of section 13 taken by
the secured creditor as invalid; and
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(b) restore the possession of secured assets or
management of secured assets to the borrower or
such other aggrieved person, who has made an
application under sub-section (1), as the case may
be; and
(c) pass such other direction as it may consider
appropriate and necessary in relation to any of the
recourse taken by the secured creditor under subsection (4) of section 13."
24. Even if we would have been persuaded to take the view that the
third relief is barred by Section 17(3) of the SARFAESI Act, still the
plaint must survive because there cannot be a partial rejection of
the plaint under Order VII, Rule 11 of the CPC. Hence, even if one
relief survives, the plaint cannot be rejected under Order VII, Rule
11 of the CPC. In the case on hand, the first and second reliefs as
prayed for are clearly not barred by Section 34 of the SARFAESI
ACT and are within the civil court's jurisdiction. Hence, the plaint
cannot be rejected under Order VII Rule 11 of the CPC.
25. If the civil court is of the view that one relief (say relief A) is not
barred by law but is of the view that Relief B is barred by law, the
civil court must not make any observations to the effect that relief B
is barred by law and must leave that issue undecided in an Order
VII, Rule 11 application. This is because if the civil court cannot
reject a plaint partially, then by the same logic, it ought not to make
any adverse observations against relief B.
PRECEDENTS OF THIS COURT ON SECTION 34
26. This Court, in Mardia Chemicals Ltd. & Ors. v. Union of India & Ors.
reported in (2004) 4 SCC 311, held that a meaningful reading of
Section 34 of the SARFAESI Act indicates that the jurisdiction of the
civil court is barred in respect of matters which a Debts Recovery
Tribunal or an Appellate Tribunal is empowered to determine i.e., in
respect of any action taken or to be taken in pursuance of any power
conferred under this Act. This Court also carved out an exception
in the case where allegations of fraud are made. The relevant
observations are as under:
"50. It has also been submitted that an appeal is
entertainable before the Debts Recovery Tribunal only
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after such measures as provided in sub-section (4) of
Section 13 are taken and Section 34 bars to entertain
any proceeding in respect of a matter which the Debts
Recovery Tribunal or the Appellate Tribunal is empowered
to determine. Thus before any action or measure is taken
under sub-section (4) of Section 13, it is submitted by Mr
Salve, one of the counsel for the respondents that there
would be no bar to approach the civil court. Therefore, it
cannot be said that no remedy is available to the borrowers.
We, however, find that this contention as advanced by Shri
Salve is not correct. A full reading of Section 34 shows
that the jurisdiction of the civil court is barred in respect of
matters which a Debts Recovery Tribunal or an Appellate
Tribunal is empowered to determine in respect of any action
taken "or to be taken in pursuance of any power conferred
under this Act". That is to say, the prohibition covers even
matters which can be taken cognizance of by the Debts
Recovery Tribunal though no measure in that direction
has so far been taken under sub-section (4) of Section
13. It is further to be noted that the bar of jurisdiction is
in respect of a proceeding which matter may be taken to
the Tribunal. Therefore, any matter in respect of which an
action may be taken even later on, the civil court shall have
no jurisdiction to entertain any proceeding thereof. The bar
of civil court thus applies to all such matters which may
be taken cognizance of by the Debts Recovery Tribunal,
apart from those matters in which measures have already
been taken under sub-section (4) of Section 13.
51. However, to a very limited extent jurisdiction of the
civil court can also be invoked, where for example, the
action of the secured creditor is alleged to be fraudulent
or his claim may be so absurd and untenable which may
not require any probe whatsoever or to say precisely to
the extent the scope is permissible to bring an action in
the civil court in the cases of English mortgages. We find
such a scope having been recognized in the two decisions
of the Madras High Court which have been relied upon
heavily by the learned Attorney General as well appearing
for the Union of India, namely, V. Narasimhachariar [AIR
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1955 Mad 135] , AIR at pp. 141 and 144, a judgment of
the learned Single Judge where it is observed as follows
in para 22: (AIR p. 143)
"22. The remedies of a mortgagor against the
mortgagee who is acting in violation of the rights,
duties and obligations are twofold in character.