Au Small Finance Bank Mr. Dinesh Pandey vs Ramdevi Rajpoot

Headnote:(A) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Sections 17 and 34 - Civil Court’s jurisdiction barred in respect of matters which a Debts Recovery Tribunal is empowered to determine - Any person, including a subsequent purchaser, aggrieved by measures taken under Section 13(4) can approach the Debts Recovery Tribunal under Section 17 (Paras 9, 16).

(B) Code of Civil Procedure, 1908 - Order 7 Rule 11 - Rejection of plaint where the suit appears from the statement in the plaint to be barred by any law.

(C) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Sections 2(zb) and 2(zf) - Definition of “security agreement” and “security interest” is broad and not limited to a formal mortgage deed; any agreement, instrument, or arrangement under which security interest is created in favour of a secured creditor falls within the scope of the Act (Paras 20-22).

Facts of the case:
A property was mortgaged to a bank to secure a loan. Subsequently, the property was sold to a third party. The purchaser filed a civil suit seeking a declaration of title and a permanent injunction to restrain the bank from taking possession of the property. The bank moved an application for rejection of the plaint, asserting that the suit was barred by law as the bank was acting under the measures provided by the SARFAESI Act.

Findings of Court:
The suit's primary cause of action was the bank's attempt to take possession of the property under Section 13(4) of the SARFAESI Act. Since the legal remedy for such actions is specifically provided under Section 17 of the SARFAESI Act, the civil court lacked jurisdiction to entertain the suit.

Issues: Whether a suit for declaration of title and injunction filed by a subsequent purchaser is maintainable in civil court when it challenges measures taken by a secured creditor under Section 13(4) of the SARFAESI Act, and whether a security agreement must be a formal mortgage deed to be valid under the Act.

Ratio Decidendi: Section 34 of the SARFAESI Act creates a complete bar on the jurisdiction of civil courts regarding matters the Debts Recovery Tribunal is empowered to determine. The term “any person” in Section 17 includes subsequent purchasers. Furthermore, the definitions of “security agreement” and “security interest” are wide enough to encompass various instruments beyond registered mortgage deeds, including loan agreements, provided they secure the obligation to pay.

Result: Revision petition allowed; impugned order set aside; plaint rejected.

Legal Category Hierarchy

1. Suit by subsequent purchaser of mortgaged property against bank's SARFAESI measures held barred; remedy lies before DRT. (Para 1 , 2 )

2. Bank argued suit barred under Section 34 SARFAESI Act; plaintiff argued civil court jurisdiction for declaration of title. (Para 4 , 5 )

3. Revision allowed; plaint rejected under Order 7 Rule 11 CPC as barred by Section 34; plaintiff may approach DRT. (Para 24 , 21 )

4. Is a civil suit by a subsequent purchaser of mortgaged property maintainable against the secured creditor's actions under the SARFAESI Act?

No. The suit is barred under Section 34 of the SARFAESI Act, as the remedy lies before the DRT under Section 17 for any person aggrieved by measures under Section 13(4). (Para 9 , 10 , 14 , 15 , 16 )

5. Does Section 17 of the SARFAESI Act allow a subsequent purchaser to challenge the bank's measures?

Yes. Section 17 covers 'any person' including a subsequent purchaser of the mortgaged property, who can approach the DRT. (Para 4 , 9 , 24 )

6. Does the payment of stamp duty on an agreement instead of a mortgage deed affect the creation of a security interest under the SARFAESI Act?

No. The definitions of 'security agreement' and 'security interest' are broad and include any agreement, instrument, or arrangement creating security interest, not limited to a registered mortgage deed. (Para 20 , 21 , 22 )

7. Can the DRT examine the validity of a prior sale deed in proceedings under Section 17?

No. The DRT can only examine the validity of measures under Section 13(4), not the validity of an earlier sale deed, unless the plaintiff challenges the mortgagor's title. (Para 11 , 12 )

ORDER :

Vivek Jain, J.

The present petition has been filed challenging the order dated 01.08.2025 passed by the trial court, thereby rejecting the application under Order 7 Rule 11 CPC filed by the petitioner Bank who is defendant No. 1 before the trial court.

2. The necessary facts for the purpose of disposal of the present petition are that the defendant No. 2 had mortgaged the suit property in favour of the bank on 24-07-2019 while getting the loan from the bank. However, the same property was thereafter sold to the plaintiff on 23.03.2023 and thereafter the plaintiff on the strength of sale deed has filed a suit against the bank and the dependent no. 2 who is the vendor, stating that the plaintiff be declared title holder of the suit property/house and also that the defendant No. 1 i.e. the bank should not interfere in the peaceful possession of the plaintiff in the suit property. The plaintiff is the subsequent purchaser after mortgage was created in favour of the Bank.

3. The bank has appeared in the suit and has filed an application under Order 7 Rule 11 CPC stating that in terms of section 34 of The Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 ("SARFAESI Act" for short), the suit is barred by law and therefore the trial court cannot entertain the suit. The said application has been rejected by the trial court on the ground that in the present case since the plaintiff is not the debtor but is a bona fide purchaser, therefore her civil rights to property can be declared only by the civil court and the suit is maintainable.

4. Before this court learned counsel for the petitioner had vehemently argued that the civil court has entered into domain of the Debts Recovery Tribunal ("DRT" for short) and the only remedy to the petitioner would lie before the DRT only under Section 17 of SARFAESI Act and the trial court has not cared to consider the bare language of Section 17 of SARFAESI Act which states that "any person" including borrower may approach the D.R.T. and the petitioner being subsequent purchaser after creation of mortgage in favour of the bank would come within the definition of any person and therefore the suit is not maintainable and the only option open for the plaintiff is to approach D.R.T. under Section 17 of SARFAESI Act.

5. The aforesaid assertion was countered by the learned counsel for the respondent/plaintiff by asserting that the suit is for declaration of title and the plaintiff need not approach the D.R.T. under Section 17 of SARFAESI Act. It is further argued that the civil court is always having jurisdiction for declaration of civil rights of title in property for which civil court is the only competent court. It is further argued that the document in question is not a registered mortgage by deposit of title deeds but only an agreement which does not fall within the meaning of mortgage because the stamp duty has been paid as per Article 6 of Indian Stamp Act as applicable in State of Madhya Pradesh and not as per Article 38 of Stamp Act which relates to mortgage and in case of Mortgage, the Stamp Duty has to be paid either as per Conveyance or Bond but in the present case the stamp duty has been paid as per agreement and the document is not a registered mortgage at all.

6. Heard.

7. In the present case, so far as the assertion that the plaintiff has filed the suit simplicitor for declaration of title is concerned, there are two main reliefs prayed in the plaint. As per first relief, simpliciter declaration of title is sought. As per second relief in the memorandum of plaint, it has been prayed that the Bank be restrained from taking over possession of the suit properties and interfering in peaceful enjoyment of property by the plaintiff. The memorandum of plaint further asserts that on 29.05.2025 the bank officials tried to take over possession of the property from the plaintiff and in paragraph-7 of the plaint it is pleaded that no action a

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2026 Supreme(MP) 599

IN THE HIGH COURT OF MADHYA PRADESH AT JABALPUR
Vivek Jain, J.
Au Small Finance Bank Mr. Dinesh Pandey – Petitioner
Versus
Smt Ramdevi Rajpoot And Others – Respondents
Civil Revision No. 1190 of 2025
Decided On : 05-02-2026

Civil court jurisdiction is barred under Section 34 of the SARFAESI Act for challenges to measures taken under Section 13(4). Any aggrieved person, including subsequent purchasers, must approach the DRT. A "security agreement" is broadly defined and not limited to formal registered mortgage deeds.

Legal Category Hierarchy

Table of Contents

4. Is a civil suit by a subsequent purchaser of mortgaged property maintainable against the secured creditor's actions under the SARFAESI Act?

5. Does Section 17 of the SARFAESI Act allow a subsequent purchaser to challenge the bank's measures?

6. Does the payment of stamp duty on an agreement instead of a mortgage deed affect the creation of a security interest under the SARFAESI Act?

7. Can the DRT examine the validity of a prior sale deed in proceedings under Section 17?

Judicial Analysis

2026 Supreme(MP) 599

IN THE HIGH COURT OF MADHYA PRADESH AT JABALPURVivek Jain, J.Au Small Finance Bank Mr. Dinesh Pandey – PetitionerVersusSmt Ramdevi Rajpoot And Others – RespondentsCivil Revision No. 1190 of 2025Decided On : 05-02-2026

Civil court jurisdiction is barred under Section 34 of the SARFAESI Act for challenges to measures taken under Section 13(4). Any aggrieved person, including subsequent purchasers, must approach the DRT. A "security agreement" is broadly defined and not limited to formal registered mortgage deeds.

Legal Category Hierarchy

Table of Contents

4. Is a civil suit by a subsequent purchaser of mortgaged property maintainable against the secured creditor's actions under the SARFAESI Act?

5. Does Section 17 of the SARFAESI Act allow a subsequent purchaser to challenge the bank's measures?

6. Does the payment of stamp duty on an agreement instead of a mortgage deed affect the creation of a security interest under the SARFAESI Act?

7. Can the DRT examine the validity of a prior sale deed in proceedings under Section 17?

Cases Referred (5)

Judicial Analysis

IN THE HIGH COURT OF MADHYA PRADESH AT JABALPUR
Vivek Jain, J.
Au Small Finance Bank Mr. Dinesh Pandey – Petitioner
Versus
Smt Ramdevi Rajpoot And Others – Respondents
Civil Revision No. 1190 of 2025
Decided On : 05-02-2026