Jurisdiction of Civil Court vis-à-vis Scope of Section 34 of the SARFESI

A Civil Court has no jurisdiction to entertain any suit or proceedings in respect of matters falling under Section 13(4) of the Securitisation Act as such matters comes under the jurisdiction of the DRT and the Appellate Tribunal In the instant matter the Bank had advanced loans to the borrower and due to non-repayment of the loan, Bank proceeded against the secured assets. Auction purchaser despite depositing the amount in question could not be put into possession as a civil suit seeking declaration of title, partition and permanent injunction was filed in which both the auction purchaser as well the bank were also made parties. It was contended that the asset since was an undivided joint family property cannot be subjected to mortgage or attachment and auction against any loan recovery by any other member of the family. A decree of partition was also sought apart from other consequential reliefs. DRT earlier had already turned down the plea challenging the sale notice and the same was not further challenged. In the civil suit also preliminary objection was raised in terms of jurisdiction of the civil court and the same was decided in favour of the bank. However, High Court in appeal affirmed the jurisdiction of Civil Court. The question that arose for consideration was whether the Debt Recovery Tribunal in exercise of powers under Section 17 of the Securitisation Act can decide whether the secured assets are ancestral properties of a Hindu Undivided Family (HUF) and they were acquired through the earnings out of the joint family properties? It was held that as per Section 13(1) of the Securitisation Act, notwithstanding anything contained in Section 69 or 69A of the Transfer of Property Act, 1882, any security interest created in favour of any secured creditor may be enforced, without the intervention of the court or tribunal by such creditor, in accordance with the provisions of the Securitisation Act. In the event of borrower failing to discharge his liability, the bank can take the measures provided in Section 13(4) of the Securitisation Act. The aggrieved party under Section 17 of the Securitisation Act has a right of appeal against taken by the Secured Creditor and order passed by DRT is further appealable before the Appellate Tribunal. The aggrieved party here means ‘any person’, which includes not only the borrower but also the guarantor or any other person affected by action taken under Section 13(4) of the Securitisation Act. Thus, in the instant case as well, the Securitisation Act itself provides a remedy. Section 34 of the Securitisation Act bars the jurisdiction of a civil court. Civil Court accordingly has no jurisdiction to entertain any suit or proceedings in respect of matters falling under Section 13(4) of the Securitisation Act. Further, as per Section 35 also, the Securitisation Act overrides other laws, if they are inconsistent with its provisions including Section 9 of the Code of Civil Procedure. Jagdish Singh vs. Heeralal and Ors. [SC, 30.10.2013]