The jurisdiction of Civil Courts is explicitly barred under Section 34 of the SARFAESI Act regarding actions taken by secured creditors; any aggrieved party must seek remedy through the Debts Recovery Tribunal under Section 17.

ORDER:

The Civil Revision Petition was filed against the Order dated 15.04.2011 passed in E.A.No.70 of 2011 in E.P.No.44 of 2009 in O.S. No.185 of 2008 on the file of Principal Senior Civil Judge, Srikakulam, whereby the application seeking stay of proceedings was allowed.

The petitioner, a third party claimant, filed E.A.No. 6 of 2010 in the above said E.P., seeking to continue the E.P., proceedings subject to the mortgage in its favour and to notify the mortgage debt due to the petitioner and to sell the schedule property in the court auction subject to the mortgage debts claiming that the property was mortgaged in favour of the petitioner/Bank on 30.08.2006 by depositing title deeds. As the said loan account became non-performing asset, the petitioner/Bank issued a notice under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short ‘the SARFAESI Act) on 26.09.2008. Thereafter, under the provisions of the Section 14 of the SARFAESI Act, physical possession was taken on 01.03.2009 and sale was conducted in respect of the subject property on 07.03.2011 and sale was confirmed after payment of the money by the auction purchaser on 17.04.2011. It was also contended that the possession was delivered on 17.04.2011 duly registering the sale certificate in favour of the auction purchaser. While so, the 1st respondent/decree holder filed an application in E.A.No.70 of 2011 in the E.P., seeking to stay the proceedings initiated by the bank and to bring the property under sale pursuant to the execution proceedings. The Executing Court vide its order dated 15.04.2011 allowed the said application and granted stay of all further proceedings initiated by the bank.

Aggrieved by the same, the claim petitioner Bank filed the present Civil Revision Petition.

Heard learned counsel for the petitioner and learned counsel for the 1st respondent.

It was the contention of the petitioner that the civil court has no jurisdiction to entertain an application for grant of stay of sale conducted by the secured creditor under the provisions of the SARFAESI Act since jurisdiction of the Civil Court is ousted under Section 34 of the said Act. Once the jurisdiction is ousted, Civil Court cannot entertain any application much less the application to stay the SARFAESI proceedings. Any person aggrieved by any of the actions initiated under Section 13 of the SARFAESI Act for recovery of its dues by a financial institutions, the aggrieved person can approach the Jurisdictional Debts Recovery Tribunal under Section 17 of the SARFAESI Act by filing an appropriate application. Whereas, the 1st respondent/decree holder in O.S.No.185 of 2008 on the file of Principal Senior Civil Judge, Srikakulam, had obtained a decree for recovery of money based on a promissory note.

Learned counsel for the petitioner further contended that much prior to the obtainment of the decree in the above said suit, the subject property in the above EP, was already mortgaged in favour of the bank and admittedly, there was no attachment either before judgment or subsequent thereto in the above said EP. The learned Judge without taking into consideration, the provisions of the SARFAESI Act and without there being any evidence to show that the subject property was under prior attachment before mortgage in favour of the bank, passed the impugned order, which is wholly illegal and contrary to the provisions of the SARFAESI Act.

Learned counsel for the 1st respondent/ decree holder reiterating the averments of the petition filed in support of the E.A.No.70 of 2011 before the Executing Court contended that the claim petitioner having approached the Executing Court in E.A.No.6 of 2010, cannot proceed under the provisions of the SARFAESI Act to sell the property by defeating the claim of the judgment debtor in the above said EP. Therefore, the claim petitioner having filed a claim petition before the ci