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2025 Supreme(MP) 1041
IN THE HIGH COURT OF MADHYA PRADESH AT INDORE
PREM NARAYAN SINGH, J.
Bharat Singh Patel And Others – Petitioners
Versus
Antar Singh Gour And Others – Respondents
MISC. Petition No. 4019 of 2022
Decided On : 11-03-2025
For the Petitioners: Shri Ajay Mishra, learned counsel.
For the Respondents:Shri Tarun Pagare, learned Govt. Advocate, Shri Ramesh Kumar Chandrawade, learned counsel, Shri Gaurav Chhabra, learned counsel.
Civil courts lack jurisdiction over matters under the SARFESI Act unless fraud is established; the suit was deemed not maintainable.
Headnote:(A) Constitution of India - Article 227 - Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Section 34 - Petitioners challenged the order allowing application under Order VII Rule 11 of CPC, asserting that their suit for declaration and injunction was maintainable despite allegations of fraud regarding property mortgaged without their knowledge - Court held that jurisdiction of civil court is barred under Section 34 of the SARFESI Act when a matter is within the purview of a Debts Recovery Tribunal - The trial Court's findings regarding the maintainability of the suit were affirmed. (Paras 3, 10, 18)
(B) Jurisdiction of Civil Courts - The court reiterated that civil courts cannot entertain suits regarding matters determined by the Debts Recovery Tribunal under the SARFESI Act, except in cases of fraud or absurd claims - The petitioners failed to establish fraud in the mortgage transaction. (Paras 12, 13, 17)
Facts of the case:
Petitioners, original plaintiffs, purchased property from respondent No. 2, who had obtained it from respondent No. 1. Allegations arose when the property was sold to respondent No. 5 despite the petitioners' claim of ownership.
Findings of Court:
The trial Court's decision to allow the application under Order VII Rule 11 was upheld, confirming that the suit was not maintainable due to the SARFESI Act's provisions.
Issues: The principal issue was whether the trial Court erred in allowing the application under Order VII Rule 11 regarding the maintainability of the suit in light of the SARFESI Act.
Ratio Decidendi: The court reasoned that the suit could not proceed in civil court due to the specific provisions of the SARFESI Act, which bars civil suits concerning matters under its jurisdiction unless fraud is established.
Result: Petition dismissed.
ORDER :
PREM NARAYAN SINGH, J.
1. The petitioners have preferred this petition under Article 227 of the Constitution of India being crestfallen by the order dated 16.08.2022 passed in RCS A No. 900/2022 passed by learned 22nd District Judge, District Indore.
2. In short, the case of the appellants is that the petitioners are the original plaintiff Nos. 1 & 2 in the suit. The respondent Nos. 1 to 10 are the original defendants before the learned trial Court. The petitioners have filed the suit bearing RCS A No. 900/2022 for declaration and injunction. Respondent No. 1 was the registered owner of lands bearing No. survey No. 61/1 admeasuring area 0.203 hectare, survey No. 64/1 admeasuring area 1.132 hectare situated at Platwari Halka No. 20, New No. 41, Depalpur District Indore. Respondent No. 1 has executed registered sale deed dated 06.11.2015 in favour of respondent No. 2. Thereafter, the petitioner have purchased the suit property from respondent No. 2 through registered sale deed dated 30.03.2019. The names of petitioners were mutated in revenue records.
3. It is further submitted that on 27.02.2021, first time 4-5 people came to the land of the petitioners and have conveyed that the respondent No. 6 and 7 are selling the said property. When the petitioners have visited the bank, it was told to the petitioners that respondent No. 1 had mortgaged the said property with bank. When the petitioner has made the representation wherein it was mentioned that the fraud has been committed by the respondents, the respondent/bank on 27.03.2021 sold the property and have executed the registered sale deed in favour of respondent No. 5. Mentioning all the facts and circumstances, petitioners have filed a Civil Suit No. RCS A 900/2022. During pendency of the suit, respondent No. 5 has further sold the property to respondent No. 9 & 10. Respondent No. 6 & 7 have filed an application under Order VII Rule 11 of CPC. Learned trial Court vide impugned order dated 16.08.2022, has wrongly allowed the application partly and directed the petitioners to delete the relief and averment which relates to cancellation of sale deed on the ground that the said avernments barred in view of provision of Section 34 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (In short "the SARFESI Act, 2002").
4. Learned counsel for the petitioners has submitted that the trial Court has passed the order against the facts, circumstances and settled principles of law. He has stated that respondent No. 1 is the registered owner of the suit property and he executed registered sale deed dated 06.11.2015 in favour of respondent No. 2, wherein it has been clearly mentioned that the said property is free from all the encumbrances. Thereafter, petitioners have purchased the suit property from respondent No. 2 through registered sale deed dated 30.03.2019. The trial Court has also not appreciated the facts while deciding the application under Order VII Rule 11 of CPC. Since where the property was mortgaged on forged and fake documents (certified copies of the sale deeds) with the bank, the trial Court cannot allow the application filed under 7 Rule 11 of CPC filed by the respondents read with provision of Section 34 of the SARFESI Act, 2002. He also submitted that in spite of having name of the petitioners in revenue records, the bank sold the suit property. Even after knowing the fact that sale deed was executed in favour of petitioners. When the fraud has been alleged, then suit is maintainable and the provision under Section 34 of the SARFESI Act, 2002 is not attracted. Further, it is pleaded that under fraudulent transaction and abnormal circumstances, a civil suit can be filed.
5. On these grounds, it is prayed that the petition be allowed with cost and impugned order dated 16.08.2022 passed in RCSA No. 900/2022 be quashed and also dismissed the application under VII Rule 11 filed by the respondent Bank.
6. In support of his
