Source: Supreme Court 

Why in News? 

A bench of Justice JB Pardiwala and Justice R Mahadevan held that even if one relief cannot be granted by the Civil Court by virtue of SARFAESI Act the suit will not be rejected if the Court can grant other reliefs.                       

• The Supreme Court held this in the case of Central Bank of India v. Smt. Prabha Jain & Ors. (2025). 

What was the Background of Central Bank of India v. Smt. Prabha Jain Case?   

• The case originated from a property dispute where Smt. Prabha Jain (the plaintiff) filed a Civil Suit. 
• The Property ownership timeline was as follows: 
  • 1967: The suit land was purchased by plaintiff's father-in-law 
  • 2005: Father-in-law died, and the property was inherited equally (1/3rd each) by: 
    • Plaintiff's husband (Mahendra Kumar Jain) 
    • Husband's elder brother (Sumer Chand Jain) 
    • Mother – in -law 
• After plaintiff's husband's death, she inherited his 1/3rd share in the property. 
• The dispute arose because: 
  • Sumer Chand Jain (brother-in-law) divided the land into plots without any partition. 
  • He sold one plot to Parmeshwar Das Prajapati on 3rd July 2008. 
  • Prajapati then mortgaged the plot to Central Bank of India for a loan. 
• When the loan defaulted, the bank took possession under Securitization and Reconstruction of Financial Asset and Enforcement of Security Interest Act, 2002 (SARFAESI Act) and planned to auction the property.  
• The plaintiff filed a civil suit seeking: 
  • Declaration that the sale deed to Prajapati was illegal. 
  • Declaration that the mortgage deed to the bank was illegal. 
  • Possession of the property. 
  • Damages and mesne profits. 
• Legal proceedings: 
  • The trial court initially rejected the plaint under Order VII Rule 11 of Civil Procedure Code, 1908 (CPC). 
  • The High Court reversed this decision, ruling that civil courts have jurisdiction to hear the case 
  • The matter is now being appealed to the Supreme Court by the Bank  
• The central issue is whether civil courts have jurisdiction to hear such cases under Section 34 of the SARFAESI Act. 

What were the Court’s Observations?  

• The plaintiff in her suit had asked for three reliefs: 
  • The first relief is in relation to a sale deed executed by Sumer Chand Jain in favour of Parmeshwar Das Prajapati.  
  • The second relief is in relation to a mortgage deed executed by Pramod Jain in favour of the bank.  
  • The third relief is for being handed over the possession of the suit property. 
• The Court observed that 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 Debt Recovery Tribunal (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. 
• It was observed that the jurisdiction to declare a sale deed or a mortgage deed being illegal is vested with the civil court under Section 9 of the CPC. 
• The Court observed that although 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. 
• The first and second reliefs as prayed are clearly not barred by Section 34 of SARFAESI Act. 
• Therefore, even if one relief survives the plaint cannot be rejected under Order VII Rule 11 of CPC.

What is Section 34 of SARFAESI Act? 

• As per Section 34 of SARFAESI Act the Civil Court will not have jurisdiction in certain cases. 
• Civil Courts cannot handle cases related to matters assigned to Debts Recovery Tribunals (DRTs) or Appellate Tribunals under this Act. 
• Civil Courts or other authorities cannot grant injunctions regarding actions taken or to be taken under this Act or the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

What are Landmark Cases on Section 34 of SARFAESI Act? 

• Mardia Chemicals Ltd. & Ors. v. Union of India & Ors. (2004): 
  • 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. 
  • 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 
• State Bank of Patiala v. Mukesh Jain & Anr. (2017): 
  • 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.