Supreme Court of India
CENTRAL BANK OF INDIA & ANR.versusSMT. PRABHA JAIN & ORS.
- Citation
- 2025 INSC 95
- Decided
- 8 January 2025
- Disposal
- Disposed off
Holding
Section 34 of the SARFAESI Act bars civil court jurisdiction only for matters within the exclusive competence of the Debt Recovery Tribunal, and because the plaintiff’s claims pertain to pre‑SARFAESI title issues and possession, the civil court retains jurisdiction and the plaint cannot be partially rejected.
Summary
The plaintiff, Smt. Prabha Jain, inherited a one‑third share of a plot that was illegally partitioned and sold by her brother-in‑law; the buyer later mortgaged the plot to Central Bank of India, which took possession under the SARFAESI Act. Jain filed a civil suit seeking declaration that the sale deed and mortgage deed were null and that she be given possession. The bank moved an Order VII Rule 11 application asserting that the suit was barred by Section 34 of the SARFAESI Act, and the trial court dismissed the plaint. The High Court set aside that order, holding that the civil court retained jurisdiction over the title and possession issues. The Supreme Court held that Section 34 bars civil courts only for matters within the exclusive competence of the Debt Recovery Tribunal, and since the plaintiff’s claims relate to pre‑SARFAESI title disputes and possession, the civil court has jurisdiction and the plaint cannot be partially rejected. Consequently, the appeal was dismissed and the civil suit was allowed to proceed.
Issues considered
- Whether Section 34 of the SARFAESI Act bars a civil court from entertaining a suit seeking declaration of a sale deed and mortgage deed as illegal and possession of the property.
- Whether the Debt Recovery Tribunal has jurisdiction to decide on the validity of documents and title matters not arising from measures under Section 13(4) of the SARFAESI Act.
- Whether a plaint can be partially rejected under Order VII Rule 11 of the CPC.
- Whether the plaintiff can seek possession of the property from the DRT under Section 17/13(3) of the SARFAESI Act.
Legislation cited
- Code of Civil Procedure, 1908s. Order VII Rule 11, s. Section 9
- Court Fees Act, 1870s. 7(v)(a)
- Recovery of Debts Due to Banks and Financial Institutions Act, 1993
- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002s. 13(3), s. 13(4), s. 17, s. 34
Subjects
jurisdiction of civil courtSection 34 SARFAESI ActDebt Recovery TribunalOrder VII Rule 11declaration of sale deedmortgage deed validitypossessiontitle disputebank loan recoverytitle clearance reports
Judgment
[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. 265
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 [2025] 2 S.C.R.
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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. 267
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. 269
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.
[2025] 2 S.C.R. 271
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
[2025] 2 S.C.R. 273
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.
[2025] 2 S.C.R. 275
Central Bank of India & Anr. v. Smt. Prabha Jain & Ors.
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 sub-
section (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
[2025] 2 S.C.R. 277
Central Bank of India & Anr. v. Smt. Prabha Jain & Ors.
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
[2025] 2 S.C.R. 279
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
280 [2025] 2 S.C.R.
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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 sub-
section (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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Central Bank of India & Anr. v. Smt. Prabha Jain & Ors.
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
282 [2025] 2 S.C.R.
Digital Supreme Court Reports
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. The
mortgagor can come to the court before sale with an
injunction for staying the sale if there are materials to
show that the power of sale is being exercised in a
fraudulent or improper manner contrary to the terms
of the mortgage. But the pleadings in an action for
restraining a sale by mortgagee must clearly disclose
a fraud or irregularity on the basis of which relief is
sought: Adams v. Scott [(1859) 7 WR 213, 249]. I
need not point out that this restraint on the exercise
of the power of sale will be exercised by courts only
under the limited circumstances mentioned above
because otherwise to grant such an injunction would
be to cancel one of the clauses of the deed to which
both the parties had agreed and annul one of the
chief securities on which persons advancing moneys
on mortgages rely. (See Ghose, Rashbehary: Law
of Mortgages, Vol. II, 4th Edn., p. 784.)”
(emphasis supplied)
27. This Court, in Jagdish Singh v. Heeralal & Ors. reported in (2014)
1 SCC 479, had held in the facts of the said case that the Civil Suit
was barred by Section 34 of the SARFAESI Act. In the said case,
the Civil Suit was filed after the original borrowers purchased the
properties mortgaged with the Bank. This led to an auction and the
subsequent dismissal of the applications before the DRT. Furthermore,
the plaintiffs, who sought title, partition, and possession, did not raise
any objections at any stage. In this case, the auction was conducted
in 2005, the original borrowers lost before the DRT in 2006, and the
Civil Suit was filed in 2007. In these peculiar circumstances, the Civil
Suit was held to be barred under Section 34 of the SARFAESI Act.
At the same time, this Court reiterated that the jurisdiction of the
civil court is barred in respect of any matter that the DRT alone can
decide. Thus, the crucial question that is supposed to be asked and
[2025] 2 S.C.R. 283
Central Bank of India & Anr. v. Smt. Prabha Jain & Ors.
answered is as to whether the DRT would be able to determine the
prayers made in the Civil Suit. The relevant paragraphs are as follows:
“10. Bank of India had advanced a loan of Rs 25 lakhs to
M/s Guru Om Automobiles, Respondent 10 herein, through
its proprietor, Respondent 6 on 17-2-2000. The loan was
secured by equitable mortgage executed by Respondents
7 to 9 in respect of the land measuring one acre in Khasra
Nos. 104/3 and 105/2, Patwari Halka No. 5, Village Seagon,
Anjad Road, Barwani, M.P. Respondents 6 to 8 had also
created equitable mortgage on three houses, which were
in their respective names. Original title deeds of all the
abovementioned properties were duly deposited with the
Bank at the time of availing of the loan.
11. Since they committed default in re-paying the loan, the
Bank issued notice under Section 13(2) of the Securitisation
Act and took steps under Section 13(4) of the Securitisation
Act in respect of properties on 1-3-2004. Auction notice
was duly published in the newspapers on 30-9-2005. No
objection was raised by the plaintiffs and the suit land
was auctioned on 8-11-2005, which was settled in favour
of the highest bidder, the appellant herein. The entire
auction price was paid by the auction-purchaser and the
sale in his favour was duly confirmed. Respondents 7 to 9
challenged the sale notice, as already indicated, by filing
Application No. 19 of 2005 before the DRT, Jabalpur, which
was dismissed on 21-7-2006. No appeal was preferred
against that order and that order has attained finality.
12. We notice, at this juncture, Respondents 1 to 5 filed
Civil Suit No. 16A/07 in the Court of the District Judge,
Barwani against the appellant, as well as the Bank and
Respondents 6 to 9, alleging that the family members
Respondents 1 to 9 herein being sons/grandsons
of deceased Premji, constituted a HUF engaged in
agriculture. It was stated that the said properties were
purchased in the names of Respondents 7 to 9 out of
the funds of HUF and House Nos. 41/1, 42/3 and 42/2
were also purchased in the names of Respondents 6 to
8 respectively, out of the funds of HUF and, therefore,
284 [2025] 2 S.C.R.
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were the properties of HUF. But, the facts would clearly
indicate that the properties referred to above were
purchased by Respondents 6 to 8 in their individual
names, long after the death of Premji and that too by
registered sale deeds and no claim was ever made at
any stage by any member of the HUF that the suit land
was a HUF property and not the individual property.
Respondents 7 to 9 had purchased those lands vide
sale deed dated 14-9-1999 and Respondent 6 had also
purchased in his individual name House No. 42/1 on 31-
3-1998 vide registered sale deed. Similarly, Respondent
7 had also purchased House No. 42/3 in his individual
name. No claim, whatsoever, was made at any stage
by any member of the family that those properties and
buildings were HUF properties and not the individual
properties of Respondents 6 to 8 herein.
13. We find that the Bank had advanced loans on the
strength of the abovementioned documents which stood in
the names of Respondents 6 to 9. Due to non-repayment
of the loan amount, the Bank can always proceed against
the secured assets.
XXX XXX XXX
18. Any person aggrieved by any order made by the
DRT under Section 17 may also prefer an appeal to the
Appellate Tribunal under Section 18 of the Act.
19. The expression “any person” used in Section 17
is of wide import and takes within its fold not only the
borrower but also the guarantor or any other person who
may be affected by action taken under Section 13(4) of
the Securitisation Act. Reference may be made to the
judgment of this Court in Satyawati Tondon case [United
Bank of India v. Satyawati Tondon, (2010) 8 SCC 110 :
(2010) 3 SCC (Civ) 260] .
20. Therefore, the expression “any person” referred to in
Section 17 would take in the plaintiffs in the suit as well.
Therefore, irrespective of the question whether the civil suit
is maintainable or not, under the Securitisation Act itself,
a remedy is provided to such persons so that they can
[2025] 2 S.C.R. 285
Central Bank of India & Anr. v. Smt. Prabha Jain & Ors.
invoke the provisions of Section 17 of the Securitisation
Act, in case the Bank (secured creditor) adopt any measure
including the sale of the secured assets, on which the
plaintiffs claim interest.
XXX XXX XXX
22. The scope of Section 34 came up for consideration
before this Court in Mardia Chemicals Ltd. [Mardia
Chemicals Ltd. v. Union of India, (2004) 4 SCC 311] and
this Court held as follows: (SCC p. 349, para 50)
“50. It has also been submitted that an appeal is
entertainable before the Debts Recovery Tribunal
only 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
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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.”
23. Section 13, as already indicated, deals with the
enforcement of the security interest without the intervention
of the court or tribunal but in accordance with the provisions
of the Securitisation Act.
24. Statutory interest is being created in favour of the
secured creditor on the secured assets and when the
secured creditor proposes to proceed against the secured
assets, sub-section (4) of Section 13 envisages various
measures to secure the borrower’s debt. One of the
measures provided by the statute is to take possession
of secured assets of the borrowers, including the right
to transfer by way of lease, assignment or realising the
secured assets. Any person aggrieved by any of the
“measures” referred to in sub-section (4) of Section 13 has
got a statutory right of appeal to the DRT under Section
17. The opening portion of Section 34 clearly states that
no civil court shall have the jurisdiction to entertain any
suit or proceeding “in respect of any matter” which a DRT
or an Appellate Tribunal is empowered by or under the
Securitisation Act to determine. The expression “in respect
of any matter” referred to in Section 34 would take in the
“measures” provided under sub-section (4) of Section 13
of the Securitisation Act. Consequently, if any aggrieved
person has got any grievance against any “measures”
taken by the borrower under sub-section (4) of Section
13, the remedy open to him is to approach the DRT or the
Appellate Tribunal and not the civil court. The civil court
in such circumstances has no jurisdiction to entertain any
suit or proceedings in respect of those matters which fall
under sub-section (4) of Section 13 of the Securitisation
Act because those matters fell within the jurisdiction of
the DRT and the Appellate Tribunal. Further, Section 35
says, the Securitisation Act overrides other laws, if they
are inconsistent with the provisions of that Act, which takes
in Section 9 CPC as well.
[2025] 2 S.C.R. 287
Central Bank of India & Anr. v. Smt. Prabha Jain & Ors.
25. We are of the view that the civil court jurisdiction is
completely barred, so far as the “measures” taken by a
secured creditor under sub-section (4) of Section 13 of the
Securitisation Act, against which an aggrieved person has
a right of appeal before the DRT or the Appellate Tribunal,
to determine as to whether there has been any illegality in
the “measures” taken. The Bank, in the instant case, has
proceeded only against secured assets of the borrowers
on which no rights of Respondents 6 to 8 (sic Respondents
1 to 5) have been crystallised, before creating security
interest in respect of the secured assets.
26. In such circumstances, we are of the view that the High
Court was in error in holding that only civil court has the
jurisdiction to examine as to whether the “measures” taken
by the secured creditor under sub-section (4) of Section
13 of the Securitisation Act were legal or not. In such
circumstances, the appeal is allowed and the judgment
[Heeralal Kulmi v. Govind Kulmi, First Appeal No. 130 of
2008, order dated 5-8-2010 (MP)] of the High Court is set
aside. There shall be no order as to costs.”
(emphasis supplied)
28. Thus, in paras 18, 19 & 20 respectively referred to above, this Court
held that the words “any person” are wide enough to cover any
person affected by action taken under Section 13(4). However, it
appears that this Court overlooked the fact that while the words are
wide enough, the DRT has powers only to grant reliefs with respect
to the measures taken by the secured creditor under Section 13(4)
and not beyond that. This Court missed to take note of the word
“restore” used in Section 17(3) which means that the DRT can only
restore back the possession to the one who was in possession and
not to one who was not in possession.
29. In para 24, this Court held that DRT has jurisdiction with respect
to “measures” taken by the secured creditor under Section 13(4)
and that in respect of such matters, the civil court’s jurisdiction is
ousted. However, thereafter, there is no further discussion on the
nature of the suit and without recording any finding that DRT has
the power to decide partition suits, this Court straightaway affirmed
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the rejection of the plaint under Order VII, Rule 11. While doing so,
this Court missed to consider that under Section 17, DRT has no
power to partition properties and hence, civil court’s jurisdiction to
grant a decree of partition cannot be said to be ousted. When there
is no finding in the judgement that the DRT has the jurisdiction to
grant the relief of partition, the judgement cannot be said to be a
precedent on that point.
30. The aforesaid was looked into by a Division Bench of the Bombay
High Court in Bank of Baroda v. Gopal Shriram Panda and Another,
reported in (2021) SCC OnLine Bom 466 and the reasonings
assigned in our view are very commendable. We quote the relevant
observations made by the Bombay High Court as regards the
Jagadish (supra):
“21.3. In Jagdish v. Heeralal (supra), the appellant was
an auction purchaser, who was not put in possession,
acquired knowledge that civil suit for declaration of title,
partition and permanent injunction was pending, in which
a plea was raised, that the respondent nos. 1 to 5 therein
being the sons/grandsons of deceased Premji, constituted
a HUF engaged in agriculture and the auctioned property
was purchased in the names of the respondent nos. 7 to
9 out of the funds of the HUF and the houses were also
purchased in the names of the respondent nos. 6 to 8, out
of the same HUF funds and therefore a declaration that
the properties were HUF properties and the respondents
nos. 1 to 5 had a right and share therein was claimed. The
Bank filed an application raising a preliminary objection
under Section 9 of C.P.C. in the suit regarding the bar of
jurisdiction as contained in Section 34 of the SARFAESI
Act, which was upheld. However, in a challenge to the said
order, accepting the preliminary objection, the High Court,
in appeal, considering that the plaint raised a question
of title on the basis of joint Hindu Family property, held
that the Civil Court had jurisdiction, which in turn, came
to be challenged before the Apex Court. The Apex Court,
found that the lands in question, were purchased by the
respondent nos. 6 to 8 in their individual names, long after
the death of the common ancestor Premji and that too by
registered sale-deeds and no claim was ever made at any
[2025] 2 S.C.R. 289
Central Bank of India & Anr. v. Smt. Prabha Jain & Ors.
stage by any member of the HUF that the said properties
were HUF properties and not the individual properties.
It was further held that the respondent nos. 7 to 9 had
also purchased properties in their individual names vide
sale-deed dated 14/9/1999 and the sixth respondent had
also purchased in his individual name house no. 42/1 on
31/3/1998 by registered sale-deed. The loan was advanced
by the Bank on 17/2/2000 on the strength of the above
documents, which stood in the names of the respondent
nos. 6 to 9. It is in light of the above factual position, it was
held that the expression “any person” used in Section 17 of
the SARFAESI Act was of wide import and would include
within its hold not only the borrower but also the guarantor
or any other person, who may be affected by the action
taken under Section 13 (4) of the SARFAESI Act including
the persons/plaintiffs, who had filed the suit as mentioned
above. …”
31. This Court in State Bank of Patiala v. Mukesh Jain & Anr. reported
in (2017) 1 SCC 53 relied on Section 34 and declared that no civil
court can entertain any suit wherein the proceedings initiated under
Section 13 are challenged. Thus, this judgment highlighted that when
the measures under Section 13 are challenged before the civil court,
its jurisdiction to look into the challenge is ousted under Section 34.
The relevant paragraphs are:
“16. Upon perusal of Section 34 of the Act, it is very clear
that no civil court is having 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 the Act to determine the dispute. Further, the
civil court has no right to issue any injunction in pursuance
of any action taken under the Act or under the provisions
of the DRT Act.
17. In view of a specific bar, no civil court can entertain
any suit wherein the proceedings initiated under Section
13 of the Act are challenged. The Act had been enacted
in 2002, whereas the DRT Act had been enacted in 1993.
The legislature is presumed to be aware of the fact that
the Tribunal constituted under the DRT Act would not
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have any jurisdiction to entertain any matter, wherein the
subject-matter of the suit is less than Rs 10 lakhs.”
(emphasis supplied)
32. In Robust Hotels Private Limited & Ors. v. EIH Limited & Ors.
reported in (2017) 1 SCC 622, this Court held that Section 34 bars
the jurisdiction of civil court for (i) suits or proceedings relating to
matters that the Debts Recovery Tribunal or Appellate Tribunal
can decide under this Act, and (ii) no injunction may be granted
by any court or authorities regarding actions under this Act or the
Recovery of Debts Due to Banks and Financial Institutions Act, 1993.
Therefore, the bar of jurisdiction of civil court has to correlate to the
abovementioned conditions. This finding is central to the matter: the
bar of jurisdiction correlates with the conditions mentioned in Section
34. The relevant paragraphs are:
“31. The scope and ambit of Section 34 of the SARFAESI
Act, 2002 have been considered by this Court in several
cases. It is sufficient to refer to the judgment of this
Court in Nahar Industrial Enterprises Ltd. v. Hong Kong
& Shanghai Banking Corpn. [Nahar Industrial Enterprises
Ltd. v. Hong Kong & Shanghai Banking Corpn., (2009) 8
SCC 646 : (2009) 3 SCC (Civ) 481] This Court held that
the jurisdiction of the civil court is plenary in nature, unless
the same is ousted, expressly or by necessary implication,
it will have jurisdiction to try all types of suits.
32. Following was laid down in paras 110-111 : (Nahar
Industrial case [Nahar Industrial Enterprises Ltd. v. Hong
Kong & Shanghai Banking Corpn., (2009) 8 SCC 646 :
(2009) 3 SCC (Civ) 481] , SCC p. 697)
“110. It must be remembered that the jurisdiction of
a civil court is plenary in nature. Unless the same is
ousted, expressly or by necessary implication, it will
have jurisdiction to try all types of suits.
111. In Dhulabhai v. State of M.P. [Dhulabhai v. State
of M.P., AIR 1969 SC 78] , this Court opined : (AIR p.
89, para 32)
[2025] 2 S.C.R. 291
Central Bank of India & Anr. v. Smt. Prabha Jain & Ors.
‘32. … The result of this inquiry into the diverse views
expressed in this Court may be stated as follows:
XXX XXX XXX
(2) Where there is an express bar of the jurisdiction
of the court, an examination of the scheme of the
particular Act to find the adequacy or the sufficiency
of the remedies provided may be relevant but is not
decisive to sustain the jurisdiction of the civil court.
Where there is no express exclusion the examination
of the remedies and the scheme of the particular Act
to find out the intendment becomes necessary and the
result of the inquiry may be decisive. In the latter case
it is necessary to see if the statute creates a special
right or a liability and provides for the determination
of the right or liability and further lays down that
all questions about the said right and liability shall
be determined by the Tribunals so constituted, and
whether remedies normally associated with actions in
civil courts are prescribed by the said statute or not.’
33. A perusal of Section 34 indicates that there is express
bar of jurisdiction of the civil court to the following effect:
“(i) Any suit or proceeding in respect of any matter
in which the Debts Recovery Tribunal or Appellate
Tribunal is empowered by or under this Act to
determine.
(ii) Further, 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.”
Thus the bar of jurisdiction of civil court has to correlate to
the abovementioned conditions. For the purposes of this
case, we are of the view that this Court need not express
any opinion as to whether suits filed by EIH were barred by
Section 34 or not, since the issues are yet to be decided
on merits and the appeal by Robust Hotels has been filed
only against an interim order.”
(emphasis supplied)
292 [2025] 2 S.C.R.
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33. In Authorised Officer, SBI v. Allwyn Alloys Private Limited & Ors.
reported in (2018) 8 SCC 120, this Court, while dealing with a case
in which the unregistered memorandum of understanding (which
would not confer any right, title and interest) was subsequently
created after the equitable mortgage, held that in such facts and
circumstances, the suit was barred under Section 34. The relevant
paragraphs are as under:
“2. The Debts Recovery Tribunal (DRT) as well as the Debts
Recovery Appellate Tribunal (DRAT), after examining the
plea taken by Respondents 5 and 6, came to hold that
the document styled as memorandum of understanding
dated 13-3-2011, relied upon by Respondents 5 and 6,
was subsequently created after the equitable mortgage
and more so it was an unregistered document which would
not confer any right, title and interest in their favour in the
said flat. Further, the share certificate of the said flat has
already been transferred by the Society in the name of
the Directors of Respondent 1 Company i.e. Mrs Zahoor
K. Dhanani, Mr Karim K. Dhanani and Mrs Habika K.
Dhanani (Respondents 2, 3 and 4 herein). It is also held
that the Society has contemporaneously recorded the
factum of mortgage created by the said respondents in
respect of the subject flat in favour of the Bank; and that
the said respondents were not coming forward to deny
the stated mortgage.
XXX XXX XXX
8. After having considered the rival submissions of the
parities, we have no hesitation in acceding to the argument
urged on behalf of the Bank that the mandate of Section
13 and, in particular, Section 34 of the Securitisation and
Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 (for short “the 2002 Act”), clearly
bars filing of a civil suit. For, no civil court can exercise
jurisdiction to entertain any suit or proceeding in respect
of any matter which a DRT or DRAT is empowered by
or under this Act to determine and no injunction can be
granted by any court or authority in respect of any action
taken or to be taken in pursuance of any power conferred
by or under the Act.
[2025] 2 S.C.R. 293
Central Bank of India & Anr. v. Smt. Prabha Jain & Ors.
9. The fact that the stated flat is the subject-matter of a
registered sale deed executed by Respondents 5 and 6
(writ petitioners) in favour of Respondents 2 to 4 and which
sale deed has been deposited with the Bank along with
the share certificate and other documents for creating an
equitable mortgage and the Bank has initiated action in that
behalf under the 2002 Act, is indisputable. If so, the question
of permitting Respondents 5 and 6 (writ petitioners) to
approach any other forum for adjudication of issues raised
by them concerning the right, title and interest in relation
to the said property, cannot be countenanced. The High
Court has not analysed the efficacy of the concurrent
finding of fact recorded by DRT and DRAT but opined that
the same involved factual issues warranting production of
evidence and a full-fledged trial. The approach of the High
Court as already noted hitherto is completely fallacious
and untenable in law.
XXX XXX XXX
12. Be that as it may, since we are setting aside the
impugned judgment [Meherangiz J. Rangoonwalla v.
SBI, 2016 SCC OnLine Bom 8878] of the High Court,
we direct that Writ Petition No. 7480 of 2014 shall stand
restored to the file of the High Court to its original number
for being decided on its own merits and in accordance
with law. As the proceeding for recovery is pending since
2010, concerning the equitable mortgage created by
Respondents 2 to 4 in respect of the subject flat and having
failed to repay the loan amount, which is quite substantial,
we request the High Court to dispose of the writ petition
expeditiously, preferably by the end of July 2018.”
(emphasis supplied)
34. In Madhav Prasad Aggarwal & Anr. v. Axis Bank Limited & Anr.
reported in (2019) 7 SCC 158, this Court declared that under Order
VII Rule 11, plaint cannot be rejected in part or against one of the
defendants. The plaintiff’s claim was based on allotment letters for
agreement to specific flats, which were prior in time to the mortgage
in favour of the bank by the builder. Hence when the plaintiff became
294 [2025] 2 S.C.R.
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aware of the subsequent mortgage it filed the suit against the builder
and the bank. Bank moved an application under Order VII Rule 11.
• A Ld. Single Judge of the High Court after considering Mardia
Chemicals Ltd.(supra) & Jagdish Singh (supra)declined to reject
the plaint in part.
• A Division Bench took exception to the judgement of the Ld.
Single Judge and by relying on Section 34 declared the suit
to be barred in law.
• This Court upheld the order of the Ld. Single Judge and also
kept the question of law open regarding DRT’s and Appellate
Authority’s power to pass a decree and decide the matters
outside the scope of Section 17. The question at hand is
extremely important because, although this Court kept it open,
yet it acknowledged the limited jurisdiction of Section 17.
Therefore, it left the issue open regarding the competence of
the DRT to pass a decree and to decide matters outside the
scope of Section 17. This question requires finality and the
laying down of the law.
• The relevant paragraphs are as follows:
“2. The appellant(s) being the original plaintiff(s) in the
respective suit(s) wanted to purchase flats in a project
known as “Orbit Heaven” (for short “the project”) being
developed by Orbit Corporation Ltd. (In Liq.) (for short
“the builder”), at Nepean Sea Road in Mumbai and
in furtherance thereof parted with huge amounts of
money to the builder ranging in several crores although
the construction of the project was underway. The
appellant(s) had started paying instalments towards
the consideration of the flats concerned from 2009.
Admittedly, no registered agreement/document for
purchase of flats concerned has been executed in favour
of the respective appellant(s). The appellant(s), however,
would rely on the correspondence and including the
letter of allotment issued by the builder in respect of
the flats concerned — to assert that there was an
agreement between them and the builder in respect of
the earmarked flat(s) mentioned therein and which had
statutory protection.
[2025] 2 S.C.R. 295
Central Bank of India & Anr. v. Smt. Prabha Jain & Ors.
3. The Respondent 1 Bank gave loan facility to builder
against the project only around year 2013, aggregating
to principal sum of Rs 150 crores in respect of which a
mortgage deed is said to have been executed between
the builder and the bank. That transaction came to the
notice of the plaintiff(s) concerned only after publication
of a public notice on 13-9-2016 in Economic Times,
informing the general public that the said project
(Orbit Heaven) has been mortgaged. The sum and
substance of the assertion made by the appellant(s)
is that the appellant(s) were kept in the dark whilst
the mortgage transaction was executed between the
builder and the bank whereunder their rights have been
unilaterally jeopardised, to receive possession of the flats
concerned earmarked in the allotment letter(s) and in
respect of which the appellant(s) concerned have paid
substantial contribution and the aggregate contribution
of all the plaintiff(s) would be much more than the loan
amount given by the bank to the builder in terms of the
mortgage deed for the entire project. In this backdrop,
the appellant(s) concerned had asked for reliefs not
only against the builder but also the parties concerned
joined as the defendant(s) in the suit(s) filed by them
and including Respondent 1 Bank.
XXX XXX XXX
6. Be that as it may, the notice of motion(s) in the appeals
concerned came to be dismissed by the learned Single
Judge of the High Court by a common judgment dated
26-7-2017 [Padma Ashok Bhatt v. Orbit Corpn. Ltd., 2017
SCC OnLine Bom 7740 : (2017) 6 Mah LJ 102] , on
the finding that there was no bar from entertaining civil
suit(s) in respect of any other matter which is outside
the scope of matters required to be determined by the
Debts Recovery Tribunal (for short “DRT”) constituted
under the 2002 Act. The learned Single Judge held
that the facts of the present case clearly indicate that
the cause of action and the reliefs claimed by the
plaintiff(s) concerned fell within the excepted category
and the bar under Section 34 read with Section 17 of
296 [2025] 2 S.C.R.
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the 2002 Act would be no impediment in adjudicating the
subject-matter of the suit concerned. The learned Single
Judge referred to the decisions of this Court in Mardia
Chemicals Ltd. v. Union of India [Mardia Chemicals Ltd.
v. Union of India, (2004) 4 SCC 311] , Jagdish Singh
v. Heeralal [Jagdish Singh v. Heeralal, (2014) 1 SCC
479 : (2014) 1 SCC (Civ) 444] and of the High Courts
in SBI v. Jigishaben B. Sanghavi [SBI v. Jigishaben B.
Sanghavi, 2010 SCC OnLine Bom 1868 : (2011) 3 Bom
CR 187] and Arasa Kumar v. Nallammal [Arasa Kumar
v. Nallammal, 2004 SCC OnLine Mad 250 : (2005) 2
BC 127] . However, the learned Single Judge rejected
the argument/objection raised by the appellant(s) that
it is impermissible to reject the plaint only against one
of the defendant(s), in exercise of power under Order 7
Rule 11(d) CPC by relying on the decision of the Division
Bench of the same High Court in MV “Sea Success
I” v. Liverpool and London Steamship Protection and
Indemnity Assn. Ltd. [MV “Sea Success I” v. Liverpool
and London Steamship Protection and Indemnity Assn.
Ltd., 2001 SCC OnLine Bom 1019 : AIR 2002 Bom
151] As the notice of motion moved by Respondent 1
Bank came to be dismissed, Respondent 1 carried the
matter in appeal before the Division Bench by way of
separate five appeals in the suit concerned. All these
appeals came to be allowed by the Division Bench
vide the impugned judgment [Axis Bank Ltd. v. Madhav
Prasad Aggarwal, 2018 SCC OnLine Bom 3891 : (2018)
6 Bom CR 738] .
7. The impugned judgment has reversed the opinion
of the learned Single Judge that bar under Section
34 will not come in the way of the appellant-plaintiffs.
The Division Bench also opined that the averments
in the plaint concerned do not spell out the case of
fraud committed by the Bank and/or the builder. As a
result of which, the Court held that the suit(s) instituted
by the appellant(s) did not come within the excepted
category predicated in Mardia Chemicals Ltd. [Mardia
Chemicals Ltd. v. Union of India, (2004) 4 SCC 311]
[2025] 2 S.C.R. 297
Central Bank of India & Anr. v. Smt. Prabha Jain & Ors.
and thus the plaint against Respondent 1 Bank was
not maintainable, being barred by Section 34 of the
2002 Act.
XXX XXX XXX
10. We do not deem it necessary to elaborate on all other
arguments as we are inclined to accept the objection
of the appellant(s) that the relief of rejection of plaint in
exercise of powers under Order 7 Rule 11(d) CPC cannot
be pursued only in respect of one of the defendant(s).
In other words, the plaint has to be rejected as a whole
or not at all, in exercise of power under Order 7 Rule
11(d) CPC. Indeed, the learned Single Judge rejected
this objection raised by the appellant(s) by relying on the
decision of the Division Bench of the same High Court.
However, we find that the decision of this Court in Sejal
Glass Ltd. [Sejal Glass Ltd. v. Navilan Merchants (P)
Ltd., (2018) 11 SCC 780 : (2018) 5 SCC (Civ) 256] is
directly on the point. In that case, an application was
filed by the defendant(s) under Order 7 Rule 11(d) CPC
stating that the plaint disclosed no cause of action. The
civil court held that the plaint is to be bifurcated as it did
not disclose any cause of action against the Director’s
Defendant(s) 2 to 4 therein. On that basis, the High
Court had opined that the suit can continue against
Defendant 1 company alone. The question considered
by this Court was whether such a course is open to
the civil court in exercise of powers under Order 7 Rule
11(d) CPC. The Court answered the said question in
the negative by adverting to several decisions on the
point which had consistently held that the plaint can
either be rejected as a whole or not at all. The Court
held that it is not permissible to reject plaint qua any
particular portion of a plaint including against some of
the defendant(s) and continue the same against the
others. In no uncertain terms the Court has held that
if the plaint survives against certain defendant(s) and/
or properties, Order 7 Rule 11(d) CPC will have no
application at all, and the suit as a whole must then
proceed to trial.
298 [2025] 2 S.C.R.
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11. In view of this settled legal position we may now
turn to the nature of reliefs claimed by Respondent 1
in the notice of motion considered by the Single Judge
in the first instance and then the Division Bench of
the High Court of Bombay. The principal or singular
substantive relief is to reject the plaint only qua the
applicant, Respondent 1 herein. No more and no less.
12. Indubitably, the plaint can and must be rejected in
exercise of powers under Order 7 Rule 11(d) CPC on
account of non-compliance with mandatory requirements
or being replete with any institutional deficiency at the
time of presentation of the plaint, ascribable to clauses
(a) to (f) of Rule 11 of Order 7 CPC. In other words,
the plaint as presented must proceed as a whole or
can be rejected as a whole but not in part. In that
sense, the relief claimed by Respondent 1 in the notice
of motion(s) which commended to the High Court, is
clearly a jurisdictional error. The fact that one or some
of the reliefs claimed against Respondent 1 in the suit
concerned is barred by Section 34 of the 2002 Act or
otherwise, such objection can be raised by invoking
other remedies including under Order 6 Rule 16 CPC
at the appropriate stage. That can be considered by
the Court on its own merits and in accordance with law.
Although, the High Court has examined those matters
in the impugned judgment the same, in our opinion,
should stand effaced and we order accordingly.
13. Resultantly, we do not wish to dilate on the argument
of the appellant(s) about the inapplicability of the
judgments taken into account by the Division Bench
of the High Court or for that matter the correctness of
the dictum in the judgment concerned on the principle
underlying the exposition in Nahar Industrial Enterprises
Ltd. v. Hong Kong and Shanghai Banking Corpn. [Nahar
Industrial Enterprises Ltd. v. Hong Kong and Shanghai
Banking Corpn., (2009) 8 SCC 646 : (2009) 3 SCC
(Civ) 481] to the effect that DRT and also the appellate
authority cannot pass a decree nor is it open to it to
enter upon determination in respect of matters beyond
[2025] 2 S.C.R. 299
Central Bank of India & Anr. v. Smt. Prabha Jain & Ors.
the scope of power or jurisdiction endowed in terms of
Section 17 of the 2002 Act. We leave all questions open
to be decided afresh on its own merits in accordance
with law.
14. A fortiori, these appeals must succeed on the sole
ground that the principal relief claimed in the notice of
motion filed by Respondent 1 to reject the plaint only
qua the said respondent and which commended to
the High Court, is replete with jurisdictional error. Such
a relief “cannot be entertained” in exercise of power
under Order 7 Rule 11(d) CPC. That power is limited
to rejection of the plaint as a whole or not at all.”
(emphasis supplied)
35. This Court in Sree Anandhakumar Mills Ltd. v. Indian Overseas
Bank & Ors. reported in (2019) 14 SCC 788, has followed the case
of Jagdish Singh (supra) and declared the suit for partition as not
maintainable.
36. This Court in Electrosteel Castings Ltd. v. UV Asset Reconstruction
Co. Ltd. & Ors. (2022) 2 SCC 573 has held that mere allegations
of fraud in the plaint will not overcome the bar under Section 34.
The said case involved the assignment deed whereby Section 13(2)
notice was issued to the plaintiff. The plaintiff claimed the assignment
deed to be fraudulent and filed the suit. This Court declared that
the suit was barred under Section 34. The case is crucial because
it hinged on the fact that there were only allegations of fraud in the
plaint without anything further. The drafting was clever to overcome
Section 34. Thus, if there is something more than mere allegations
of fraud, certainly, the civil court’s jurisdiction won’t be ousted. The
relevant paragraphs are:
“9. Having considered the pleadings and averments in
the suit more particularly the use of word “fraud” even
considering the case on behalf of the plaintiff, we find that
the allegations of “fraud” are made without any particulars
and only with a view to get out of the bar under Section
34 of the SARFAESI Act and by such a clever drafting the
plaintiff intends to bring the suit maintainable despite the
bar under Section 34 of the SARFAESI Act, which is not
300 [2025] 2 S.C.R.
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permissible at all and which cannot be approved. Even
otherwise it is required to be noted that it is the case on
behalf of the plaintiff-appellant herein that in view of the
approved resolution plan under IBC and thereafter the
original corporate debtor being discharged there shall
not be any debt so far as the plaintiff-appellant herein
is concerned and therefore the assignment deed can be
said to be “fraudulent”.
10. The aforesaid cannot be accepted. By that itself the
assignment deed cannot be said to be “fraudulent”. In
any case, whether there shall be legally enforceable debt
so far as the plaintiff-appellant herein is concerned even
after the approved resolution plan against the corporate
debtor still there shall be the liability of the plaintiff and/or
the assignee can be said to be secured creditor and/or
whether any amount is due and payable by the plaintiff,
are all questions which are required to be dealt with and
considered by the DRT in the proceedings initiated under
the SARFAESI Act.
11. It is required to be noted that as such in the present
case the assignee has already initiated the proceedings
under Section 13 which can be challenged by the plaintiff-
appellant herein by way of application under Section 17
of the SARFAESI Act before the DRT on whatever the
legally available defences which may be available to it.
We are of the firm opinion that the suit filed by the plaintiff-
appellant herein was absolutely not maintainable in view of
the bar contained under Section 34 of the SARFAESI Act.
Therefore, as such the courts below have not committed
any error in rejecting the plaint/dismissing the suit in view
of the bar under Section 34 of the SARFAESI Act.”
(emphasis supplied)
PRECEDENT ON “IN RESPECT OF ANY MATTER ARISING
UNDER SARFAESI ACT
37. This Court in Bank of Baroda v. Moti Bhai & Ors. reported in (1985)
1 SCC 475, had to consider the maintainability of the recovery suit
filed by the Bank. The claim of the respondents therein was that
[2025] 2 S.C.R. 301
Central Bank of India & Anr. v. Smt. Prabha Jain & Ors.
the suit was not maintainable in light of the Rajasthan Tenancy Act,
1955. The High Court accepted the said contention. This Court
took exception to the judgement of the High Court and relied on
the expression “in respect of any matter arising under this Act” to
conclude that the State Act did not encompass the recovery suit
within it’s ambit. The relevant paragraphs are:
“3. Section 207 of the Act reads thus:
“207. Suit and applications cognizable by revenue
court only.—(1) All suits and applications of the nature
specified in the Third Schedule shall be heard and
determined by a revenue court.
(2) No court other than a revenue court shall take
cognizance of any such suit or application or of any
suit or application based on a cause of action in respect
of which any relief could be obtained by means of any
such suit or application.
Explanation.—If the cause of action is one in respect
of which relief might be granted by the revenue court,
it is immaterial that the relief asked for from the civil
court is greater than, or additional to, or is not identical
with, that which the revenue court could have granted.”
4. Section 256 of the Act, which is complementary to
Section 207, reads thus:
“256. Bar to jurisdiction of civil courts.—(1) Save as
otherwise provided specifically by or under this Act,
no suit or proceeding shall lie in any civil court with
respect to any matter arising under this Act or the Rules
made thereunder, for which a remedy by way of suit,
application, appeal or otherwise is provided therein.
(2) Save as aforesaid, no order passed by the State
Government or by any revenue court or officer in exercise
of the powers conferred by this Act or the Rules made
thereunder shall be liable to be questioned in any civil
court.”
5. A combined reading of these two sections would show
that the jurisdiction of civil courts is barred only in respect
302 [2025] 2 S.C.R.
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of suits and applications of the nature specified in the Third
Schedule to the Act and in respect of suits or applications
based on a cause of action in respect of which any relief
could be obtained by means of a suit or application of
the nature specified in the Third Schedule. The civil court
has no jurisdiction to entertain a suit or proceeding with
respect to any matter arising under the Act or the Rules
made thereunder, provided that a remedy by way of a suit,
application or appeal or otherwise is provided in the Act.
6. The legal position of the question of jurisdiction which is
stated above requires examination of the various entries
in the Third Schedule. That schedule is divided into three
parts, the first of which is called “Suits”, the second is
called “Applications”, and the third is called “Appeals”.
We are concerned in this appeal with the 35 entries which
are comprehended in the first part which deals with suits.
It is common ground, and the High Court has not held
to the contrary, that none of the specific Entries 1 to 34
is applicable to the suit filed by the appellant Bank. The
argument is that the residuary Entry 35 would govern the
suit and, therefore, by reason of Sections 207 and 256 of
the Act, the revenue court alone could entertain it. Entry
35 is described in the Third Schedule as a “General” entry,
that is to say, not relatable to any particular section of the
Act. The description of the entry as “General” is given in
column 2 of the Third Schedule which is headed “Section
of Act”. The third column of the Schedule carries the
heading “Description of suit, application or appeal”. Under
that column, the relevant description runs thus:
“Any other suit in respect of any matter arising under
this Act, not specifically provided for elsewhere in this
Schedule.”
We are unable to appreciate how the suit filed by the
Bank can fall under this “General” or residuary entry. The
suit of the Bank to recover the loan is not in respect of
any matter arising under the Act. The long title of the Act
shows that it was passed in order “to consolidate and
amend the law relating to tenancies of agricultural lands,
and to provide for certain measures of land reforms and
[2025] 2 S.C.R. 303
Central Bank of India & Anr. v. Smt. Prabha Jain & Ors.
matters connected therewith”. A loan given by a Bank to
an agriculturist, which is in the nature of a commercial
transaction, is outside the contemplation of the Act and
can, by no stretch of imagination, be said to be in respect
of any matter arising under the Act.
7. The High Court has relied on Section 43 of the Act in
order to come to the conclusion that the deed of mortgage
was executed by Respondent 1 in favour of the Bank in
accordance with that section and, therefore, the suit for the
sale of the tenancy rights of the mortgage by enforcement
of the mortgage is a suit in respect of a matter arising under
the Act. The High Court holds that such a suit would attract
the residuary entry since the matter to which it relates has
not been specifically provided for elsewhere in the Third
Schedule. With respect, we are unable to accept this line
of reasoning. Section 43(1) of the Act, which is relevant
for this purpose, reads thus:
“43 Mortgage.—(1) Khatedar tenant, or, with the general
or special permission of the State Government or any
officer authorised by it in this behalf, a Ghair Khatedar
tenant, may hypothecate or mortgage his interest in the
whole or part of his holding for the purpose of obtaining
loan from the State Government or a Land Development
Bank as defined in the Rajasthan Cooperative Societies
Act, 1965 (Act 13 of 1965) or a Cooperative Society
registered or deemed to be registered as such under the
said Act or any Scheduled Bank or any other institution
notified by the State Government in that behalf.”
The High Court is in error in saying that “it cannot be
disputed” that the mortgage was executed by Respondent 1
in pursuance of the provisions of Section 43. The business
of the Bank, insofar as lending transactions are concerned,
is not to lend moneys on mortgages but the business is
to lend moneys. In this particular case, the Bank lent a
certain sum of money to Respondent 1 in the usual course
of its commercial business and nothing could be further
removed from the contemplation of the Act than such a
transaction. It is only by way of a collateral security that
the Bank obtained a hypothecation bond and a deed of
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mortgage from Respondent 1 and a letter of guarantee
from Respondents 2 and 3. The entire judgment of the
High Court is based on the assumption that the mortgage
was executed in pursuance of Section 43 of the Act
and, therefore, residuary Entry 35 of the Third Schedule
is attracted. Once it is appreciated that the mortgage
executed by Respondent 1 is outside the scope of the
Act, the reasoning of the High Court has to be rejected.
8. On the question of jurisdiction, one must always have
regard to the substance of the matter and not to the form of
the suit. If the matter is approached from that point of view,
it would be clear that, primarily and basically, the suit filed
by the Bank is one for recovering the amount which is due
to it from the respondents on the basis of the promissory
note executed by Respondent 1 and the guarantee given
by Respondents 2 and 3. The relief sought by the Bank
is that the suit should be decreed for the repayment of
the amount due from the respondents. By the second
prayer, the Bank has asked that “in case of” non-payment
of the decretal amount”, the mortgaged property should
be brought to sale and if the proceeds of that sale are not
enough to meet the decretal liability, the other movable
and immovable properties of the respondents should be
put to sale. The suit is not one to enforce the mortgage
and, even assuming for the purpose of argument that it
is, the mortgage not having been executed under Section
43 of the Act, nor being one relatable to that section, the
residuary Entry 35 can have no application. If that entry
is out of way, there is no other provision in the Act which
would apply to the instant suit. The civil court has, therefore,
jurisdiction to entertain the suit filed by the appellant Bank.”
(emphasis supplied)
TRIBUNAL IS A CREATURE OF STATUTE AND CANNOT GO
BEYOND THE FOUR CORNERS OF THE SARFAESI ACT.
38. The Debts Recovery Tribunal is a creature of the RDB Act of 1993 and
is empowered to exercise powers under that Act and the SARFAESI
Act of 2002. The Tribunal is bound by the powers conferred to it by
[2025] 2 S.C.R. 305
Central Bank of India & Anr. v. Smt. Prabha Jain & Ors.
the Parliament. Interestingly, when this Court in Harshad Govardhan
Sondagar v. International Assets Reconstruction Co. Ltd. reported
in (2014) 6 SCC 1 held that the tenant cannot approach the DRT
because the re-possession can be only in favour of the borrower,
the Parliament stepped in and amended the SARFAESI Act. Sub-
sections (3) and (4) of Section 17 respectively are instructive to the
level of examination that the DRT can undertake, and the same
is limited to the validity of the measures under sub-section (4) of
section 13. Hence, the DRT is not permitted to examine the validity
of the earlier sale deed, whereafter the mortgage was executed in
favour of the Bank.
39. This Court in M.P. Wakf Board v. Subhan Shah (Dead) by LRs.
reported in (2006) 10 SCC 696 has held that the Tribunal in absence
of any power vested in it cannot transgress beyond the four corners
of the Act. The relevant paragraphs are:
“28. The Tribunal had been constituted for the purposes
mentioned in Section 83 of the 1995 Act. It is an
adjudicatory body. Its decision is final and binding but then
it could not usurp the jurisdiction of the Board. Our attention
has not been drawn to any provision which empowers the
Tribunal to frame a scheme. In absence of any power
vested in the Tribunal, the Tribunal ought to have left the
said function to the Board which is statutorily empowered
therefor. Where a statute creates different authorities to
exercise their respective functions thereunder, each of
such authority must exercise the functions within the four
corners of the statute.”
(emphasis supplied)
40. The Constitution Bench in Om Prakash Gupta v. Dr. Rattan Singh
& Anr. reported in 1962 SCC OnLine SC 111, has declared that the
tribunals being creatures of the statute have limited jurisdiction. The
relevant paragraphs are as under:
“4………The Controller, therefore, must be taken to have
decided that there was a relationship of landlord and tenant
between the parties, and secondly, that the tenant was
entitled to the protection under the Act. It is true that the
Act does not in terms authorise the authorities under the
306 [2025] 2 S.C.R.
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Act to determine finally the question of the relationship of
landlord and tenant. The Act proceeds on the assumption
that there is such a relationship. If the relationship is
denied, the authorities under the Act have to determine that
question also, because a simple denial of the relationship
cannot oust the jurisdiction of the tribunals under the Act.
True, they are tribunals of limited jurisdiction, the scope of
their power and authority being United by the provisions of
the Statute. But a simple denial of the relationship either
by the alleged landlord or by the alleged tenant would not
have the effect of ousting the jurisdiction of the authorities
under the Act, because the simplest thing in the world
would be for the party interested to block the proceedings
under the Act to deny the relationship of landlord and
tenant. The tribunals under the Act being creatures of the
Statute have limited jurisdiction and have to function within
the four-corners of the Statute creating them. But within
the provisions of the Act, they are tribunals of exclusive
jurisdiction and their orders are final and not liable to be
questioned in collateral proceedings like a separate suit
or application in execution proceedings. In our opinion,
therefore, there is no substance in the contention that as
soon as the appellant denied the relationship of landlord
and tenant, the jurisdiction of the authorities under the
Act was completely ousted. Nor is there any justification
in the contention that the provision of sub-section (7) of
Section 15 of the Act had been erroneously applied to the
appellant. ……”
(emphasis supplied)
MAINTAINABILITY OF THE CIVIL SUIT AGAINST THE BANK
UNDER THE RDB ACT, 1993
41. In Bank of Rajasthan Ltd. v. VCK Shares & Stock Broking Services
Ltd., reported in (2023) 1 SCC 1, due to conflicting decisions of
Benches comprising of two Judges, a reference Bench of this Court
was called upon to decide whether the jurisdiction of the civil court
is ousted as regards an independent suit against the Bank in the
context of the provisions of the RDB Act, 1993, and whether such
[2025] 2 S.C.R. 307
Central Bank of India & Anr. v. Smt. Prabha Jain & Ors.
a suit can be transferred to the DRT with or without consent. This
Court held:
(a) That civil court’s jurisdiction to entertain the suit is not
ousted.
(b) In the absence of any power, the independent suit
cannot be transferred to the DRT.
(c) As there is no power, the transfer of the suit cannot
be done with or without consent.
(d) That the barring of jurisdiction of the civil court is to be
strictly interpreted and not to be readily inferred.
(emphasis supplied)
42. The relevant paragraphs are:
“39. On a plain reading of the provisions, the conclusion
reached was that Section 17 of the RDB Act bars the
jurisdiction of the civil court only in respect of applications
filed by the Bank or financial institution. This provision did
not bar the jurisdiction of the civil court to try a suit filed by
the borrower. There was also an absence of provisions in
the Act for transfer of suits and proceedings except Section
31, which relates to pending suit proceedings by a bank
or financial institution for recovery of debt.
XXX XXX XXX
Our view
43. We must note at the threshold itself that there are no
restrictions on the power of a civil court under Section 9
of the Code unless expressly or impliedly excluded. This
was also reiterated by a Constitution Bench of this Court
in Dhulabhai v. State of M.P. [Dhulabhai v. State of M.P.,
(1968) 3 SCR 662 : AIR 1969 SC 78] Thus, it is in the
conspectus of the aforesaid proposition that we will have
to analyse the rival contentions of the parties set out
above. Our line of thinking is also influenced by a three-
Judge Bench of this Court in Dwarka Prasad Agarwal v.
Ramesh Chander Agarwal [Dwarka Prasad Agarwal v.
Ramesh Chander Agarwal, (2003) 6 SCC 220] where it
308 [2025] 2 S.C.R.
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was opined that Section 9 of the Code confers jurisdiction
upon civil courts to determine all disputes of civil nature
unless the same is barred under statute either expressly
or by necessary implication and such a bar is not to be
readily inferred. The provision seeking to bar jurisdiction
of a civil court requires strict interpretation and the Court
would normally lean in favour of construction which would
uphold the jurisdiction of the civil court.
44. Now, if we turn to the objective of the RDB Act read with
the scheme and provisions thereof; it is abundantly clear that
a summary remedy is provided in respect of claims of Banks
and financial institutions so that recovery of the same may
not be impeded by the elaborate procedure of the Code.
The defendant has a right to defend the claim and file a
counterclaim in view of sub-sections (6) and (8) of Section
19 of the RDB Act. In case of pending proceedings to be
transferred to DRT, Section 31 of the RDB Act took care of
the issue of mere transfer of the Bank’s claim, albeit without
transfer of the counterclaim. Thus, if the debtor desires to
institute a counterclaim, that can be filed before DRT and
will be tried along with the case. However, it is subject to
a caveat that the Bank may move for segregation of that
counterclaim to be relegated to a proceeding before a civil
court under Section 19(11) of the RDB Act, though such
determination is to take place along with the determination
of the claim for recovery of debt.
45. We are thus of the view that there is no provision in the
RDB Act by which the remedy of a civil suit by a defendant
in a claim by the Bank is ousted, but it is the matter of
choice of that defendant. Such a defendant may file a
counterclaim, or may be desirous of availing of the more
strenuous procedure established under the Code, and that
is a choice which he takes with the consequences thereof.
XXX XXX XXX
47. We may also refer to the judgment of this Court in
Transcore [Transcore v. Union of India (2008) 1 SCC
125 : (2008) 1 SCC (Civ) 116] opining that DRT, being
a Tribunal and a creature of the statute, does not have
[2025] 2 S.C.R. 309
Central Bank of India & Anr. v. Smt. Prabha Jain & Ors.
any inherent power which inheres in civil courts such as
Section 151 of the Code.
48. We now draw our attention to Chapter 5 of the RDB
Act, which deals with recovery of debt determined by DRT.
Section 25 of the RDB Act prescribes the mode of recovery
of debts, which takes place pursuant to a certificate issued
under sub-section (7) of Section 19 to recover the amount
of debt specified in the certificate by any of the modes
specified therein. The expanse of the reliefs the defendant
may claim in the suit proceeding can certainly go beyond
mere adjustments of the amounts of claim, for which DRT
would not have any power.
49. Now, turning to the issue of the power of the civil
court to transfer an independent proceeding instituted by
a defendant to be tried alongside a recovery proceeding
before DRT. There is gainsay that there is no specific
power to transfer a suit to DRT. A plaint can be returned
only under the provisions of Order 7 Rule 10 of the Code
for the reasons specified therein. In the absence of such
reasons, Section 151 of the Code cannot be utilised as
a residuary power to achieve the transfer, which is really
a consequence of return of the plaint when the grounds
under Order 7 Rule 10 of the Code are not satisfied. The
absence of any legislative power cannot give a power
by implication to the civil court. We believe that it would
not be appropriate to read such power to transfer a suit
to a DRT under Section 151 of the Code when DRT is
a creature of a statute and that statute does not provide
for such eventuality.
50. We must also notice an important aspect that even
where a defendant is to invoke the jurisdiction of DRT
by filing a counterclaim, the Bank has a right to seek a
relegation of that claim to the civil court and DRT has
been empowered to do so, albeit, at the final adjudication
stage. This is so in view of the summary nature of remedy
provided before DRT and thus, if certain inquiries beyond
the contours of what DRT does are envisaged, a civil court
remedy may be considered as appropriate.
XXX XXX XXX
310 [2025] 2 S.C.R.
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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
[2025] 2 S.C.R. 311
Central Bank of India & Anr. v. Smt. Prabha Jain & Ors.
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.
312 [2025] 2 S.C.R.
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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.
†
Headnotes prepared by: Nidhi Jain
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