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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 9771 OF 2013 (Arising out of Special Leave Petition (Civil) No.18 of 2011)

Jagdish Singh …….. Appellant

Versus

Heeralal and others ……. Respondents

J U D G M E N T

K.S. Radhakrishnan, J.

Leave granted.

2. The appellant herein was the auction purchaser, being  

the highest bidder for Rs.18,01,000/-, in respect of the land  

admeasuring  one  acre  in  Khasra  Nos.104/3  and  105/2,  

Patwari  Halka  No.4,  Village  Segaon,  Anjad  Road,  Barwani,  

M.P., which was brought to sale for recovery of loan amounts  

under the provisions of the Securitisation and Reconstruction

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2 of Financial Assets and Enforcement of Security Interest Act,  

2002 (for short “the Securitisation Act”).   The auction was  

confirmed  by  the  bank  on  08.11.2005  on  the  appellant’s  

depositing Rs.2,90,250/- by 09.11.2005 and remaining 75%  

within 15 days.  The appellant was not put in possession of  

the  property  in  question  even  though  the  auction  was  

confirmed.

3. The appellant – auction purchaser then came to know  

that  Respondent  Nos.1  to  5  herein  have  filed  a  Civil  Suit  

No.16A/07 in the Court of District Judge, Barwani District for a  

declaration  of  title,  partition  and  permanent  injunction  

against  Respondent  Nos.7  to  9  and  others  in  which  the  

appellant and the bank were also made parties.  Following  

are the reliefs sought for in the said civil suit:

“(A) Decree may be passed in favour of the  plaintiff  and  against  the  defendants  for  declaration of title to this effect that one acre  land in survey No.104/3 and 105/2 described in  plaint  para  4  (a)  is  undivided  joint  family  property  of  plaintiff  and  defendants  No.1  to  4  and the defendants have no right to mortgage it  or attachment and auction of the same against  any  loan  recovery  by  defendant  No.5  and  if  defendants  No.1 to  5  might  have created any

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3 charge on the said land then it is not binding on  the plaintiff.

(B) Decree  of  partition  may  be  passed  in  favour  of  the  plaintiffs  and  against  the  defendants for division of the suit land by metes  and  bounds  and  decree  may  be  passed  for  separating the land of title of the plaintiffs and  mutation effected in revenue papers.

(C) Decree of permanent injunction may be  passed  in  favour  of  the  plaintiffs  against  the  defendant that the defendants shall not, directly  or indirectly, transfer,  auction or interfere over  the suit land of the plaintiff in any manner.

(D) Costs of the suit may be awarded against  the defendants.

(E) Other relief which the Hon’ble Court may  deem  proper  may  be  granted  to  the  plaintiff  against the defendants.”

 4. Respondent Nos.7 to 9 herein, in the meanwhile, filed an  

application before the Debt Recovery Tribunal (for short “the  

DRT”),  Jabalpur  under  Section  17 of  the  Securitisation  Act  

challenging  the  sale  notice  dated  08.11.2005.   The  

application  was  opposed  by  the  bank  and  the  same  was  

dismissed by the DRT vide its order dated 21.07.2006.

5. Respondent Nos.6 and 7 (the Bank) filed a preliminary  

objection before the civil court stating that in view of Section

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4 13 read with Section 34 of the Securitisation Act,  the civil  

court  has  no  jurisdiction  to  entertain  the  suit.   The court,  

therefore, framed the following issues:

“Whether under the provisions of Section 34 & 35  of SARFAESI Act 2002 this court does not have  the jurisdiction to decide the suit as mentioned in  special  pleadings  in  para  10  of  the  written  statement  of  defendant  No.10  and  also  mentioned in para 15 of the written statement of  defendant Nos.6 & 7.”

6. The civil court upheld the preliminary objection stating  

that if the plaintiffs had any right, they ought to have filed an  

appeal under Section 17 of the DRT Act and not a suit in view  

of  the  specific  bar  contained  in  Section  34  of  the  

Securitisation Act.  Civil court, therefore, passed an order on  

18.01.2008  holding  that  the  suit  is  not  maintainable  and,  

hence, the application preferred by the bank under Order 7  

Rule 11 of the Civil Procedure Code (for short “the CPC”) was  

allowed.

7. Aggrieved  by  the  said  order,  Respondent  Nos.1  to  5  

herein filed Civil First Appeal No.130/08 before the High Court  

of  Madhya  Pradesh  at  Indore.   The  High  Court,  however,

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5 allowed the appeal.  The operative portion of the judgment  

reads as follow:  

“I have perused the contents of the plaint from  the record of the case.  A bare perusal of the  plaint  indicates  that  the  plaintiffs  have  raised  the question of title, on the basis of Joint Hindu  Family property and they being the members of  the Joint Hindu Family, it has been pleaded by  them  that  the  property  in  question  had  been  acquired through the earnings of the joint family  property.  On that basis, it has been maintained  by them that the property in question was liable  to be treated as Joint Hindu Family property, and  not the exclusive property of the defendants.  In  these circumstances, on the bare perusal of the  contents of the plaint, it cannot be suggested at  all  that  the  civil  suit,  filed  by  the  plaintiffs,  is  barred under any provisions of the Securitisation  and  Reconstruction  of  Financial  Assets  and  Enforcement  of  Security  Interest  Act,  2000,  or  that civil court has no jurisdiction in the matter.”

8. Aggrieved by the same, this appeal has been preferred.  

Shri  A.K.  Chitale,  learned senior  counsel  appearing for  the  

appellant,  submitted  that  the  High  Court  has  not  properly  

appreciated the scope of Section 34 of the Securitisation Act  

and has completely over-looked the principle laid down by  

this Court in various Judgments with regard to the scope of  

Section 9 CPC vis-à-vis Section 34 of the Securitisation Act.  

Reference  was  made  to  the  Judgments  of  this  court  in

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6 Mardia  Chemicals  and others v.   Union of  india and  

others (2004) 4 SCC 311, Central Bank of India v.  State  

of Kerala and others  (2009) 4 SCC 94,  United Bank of  

India v.  Satyavati Tondon and others (2010) 8 SCC 110  

and  Authorised  Officer,  Indian  Overseas  Bank  and  

others v.  Ashok Saw Mill   (2009)  8  SCC 366.   Learned  

senior  counsel  submitted that the appellant  is  a  bona fide  

purchaser for value and the sale was confirmed in his favour  

as early as on 08.11.2005.  Further, it was pointed out that  

the application preferred by Respondent Nos.7 to 9 before  

the DRT, challenging the sale notice dated 08.11.2005, was  

also dismissed by the DRT on 21.07.2006.  Consequently, the  

High  Court  was  not  justified  in  interfering  with  the  order  

passed by the District Judge.

9. Shri  Sanjay  Parikh,  learned counsel  appearing  for  the  

respondents,  on  the  other  hand,  submitted  that  the  High  

Court  has  rightly  interfered  with  the  order  of  the  District  

Judge  after  having  found  that  the  civil  court  has  got  the  

jurisdiction  to  deal  with  the  rights  of  the  respondents  –

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7 plaintiffs.  Learned counsel submitted that the High Court has  

correctly  appreciated  the  scope  of  Section  34  of  the  

Securitisation Act.  Reference was made to the Judgments of  

this  Court  in  Nahar  Industrial  Enterprises  Limited v.  

Hongkong Shanghai Banking Corporation (2009) 8 SCC  

646,  Indian  Bank v.  ABS  Marine  Products  Pvt.  Ltd.  

(2006) 5 SCC 72 and also to the  Mardia Chemicals Ltd.  

(supra).  Learned counsel submitted that the DRT, exercising  

powers  under  Section  17  of  the  Securitisation  Act,  cannot  

decide  the  rights  of  Respondent  Nos.1  to  5  vis-à-vis  

Respondent Nos.7 to 9 in a proceeding under Section 17 of  

the  Securitisation Act  and civil  court  is  the right  forum to  

decide  as  to  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.   

Discussion

10. The Bank of India had advanced a loan of Rs.25 lakhs to  

M/s Guru Om Automobiles, 10th respondent herein, through

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8 its proprietor,  the 6th respondent on 17.02.2000.  The loan  

was secured by equitable mortgage executed by Respondent  

Nos.7 to 9 in respect of land measuring one acre in Khasra  

No.104/3  and  105/2,  Patwari  Halka  No.5,  Village  Seagon,  

Anjad Road, Barwani, MP.  Respondent Nos.6 to 8 had also  

created equitable mortgage on three houses, which were in  

their respective names.  Original title deeds of all the above-

mentioned properties were duly deposited with the bank at  

the  time  of  availing  of  the  loan.   Since  they  committed  

default in re-paying the loan, the bank issued notice under  

Section 13(2) of the Securitisation Act and took steps under  

Section 13(4) of the Securitisation Act in respect of properties  

on  01.03.2004.   Auction  notice  was  duly  published  in  the  

newspapers on 30.09.2005.  No objection was raised by the  

plaintiffs  and  the  suit  land  was  auctioned  on  08.11.2005,  

which  was  settled  in  favour  of  the  highest  bidder  –  the  

appellant herein.  The entire auction price was paid by the  

auction  purchaser  and  the  sale  in  his  favour  was  duly  

confirmed.   Respondent  Nos.7  to  9  challenged  the  sale  

notice,  as  already  indicated,  by  filing  an  application

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9 No.19/2005 before the DRT, Jabalpur,  which was dismissed  

on 21.07.2006. No appeal was preferred against that order  

and that order has attained finality.

11. We notice, at this juncture, Respondent Nos.1 to 5 filed  

Civil  Suit  No.16A/07  in  the  Court  of  the  District  Judge,  

Barwani  against  the  appellant,  as  well  as  the  bank  and  

Respondent Nos.6 to 9, alleging that the family members of  

Respondent  Nos.1  to  9  herein  being  sons/grandsons  of  

deceased Premji, constituted a HUF engaged in agriculture.  

It was stated that the said properties were purchased in the  

names of Respondent Nos.7 to 9 out of the funds of HUF and  

house Nos.41/1, 42/3 and 42/2 were also purchased in the  

names  of  Respondent  Nos.6  to  8  respectively,  out  of  the  

funds of HUF and, therefore, the properties of HUF.  But, the  

facts  would  clearly  indicate that  the properties  referred to  

above  were  purchased  by  Respondent  Nos.6  to  8  in  their  

individual names, long after the death of Premji and that too  

by registered sale deeds and  no claim was ever made at any  

stage by any member of the HUF that the suit land was a HUF

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10 property and not the individual property.  Respondent Nos.7  

to  9  had  purchased  those  lands  vide  sale  deed  dated  

14.09.1999 and the 6th respondent had also purchased in his  

individual  name  House  No.42/1  on  31.03.1998  vide  

registered sale deed.  Similarly,  Respondent No.7 had also  

purchased House No.42/3 in his individual name.  No claim,  

whatsoever, was made at any stage by any member of the  

family  that  those  properties  and  buildings  were  HUF  

properties and not  the individual  properties  of  Respondent  

Nos.6 to 8 herein.

12. We  find  that  the  bank  had  advanced  loans  on   the  

strength of the above-mentioned documents which stood in  

the names of Respondent Nos.6 to 9.  Due to non-repayment  

of the loan amount, the Bank can always proceed against the  

secured assets.

13. Security  interest,  within  the  meaning  of  Section  2(zf)  

has  been  created  in  respect  of  the  above  mentioned  

properties which are secured assets within the meaning of  

Section 2(zc),  in  favour  of  the secured creditor  (the bank)

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11 within the meaning of Section 2(zd).  On failure to re-pay, the  

bank,  secured  creditor  can  always  enforce  its  security  

interest over the secured assets.   

14. Secured  asset  is  defined  under  Section  2(zc)  of  the  

Securitisation  Act  to  mean the  property  on which  security  

interest is created.   Section 13(1) of the Securitisation Act  

states that 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 Act.  In  

case the borrower fails to discharge his liability, the bank can  

take  the  measures  provided  in  Section  13(4)  of  the  

Securitisation  Act  for  recovery  of  the  loan  amount.   The  

“measures” available for enforcement of security interest is  

dealt with in the following provision:

13. Enforcement of security interest –  (1) to (3) xxx xxx xxx (4)  In  case the borrower fails  to  discharge his  liability in full within the period specified in sub- section  (2),  the  secured  creditor  may  take

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12 recourse  to  one  or  more  of  the  following  measures to recover his secured debt, namely:--  

(a) take possession of the secured assets of the  borrower including the right to transfer by way  of  lease,  assignment  or  sale  for  realising  the  secured asset;  

(b) take over the management of the business of  the borrower including the right to transfer by  way of lease, assignment or sale for realising the  secured asset:  

 PROVIDED that the right to transfer by way  of lease, assignment or sale shall be exercised  only where the substantial part of the business  of the borrower is held as security for the debt:  

   PROVIDED  further  that  where  the  

management of whole of the business or part of  the business is severable,  the secured creditor  shall  take  over  the  management  of  such  business  of  the  borrower  which is  relatable  to  the security or the debt;

 (c) appoint any person (hereafter referred to as  the manager), to manage the secured assets the  possession of which has been taken over by the  secured creditor;  

(d) require at any time by notice in writing, any  person  who  has  acquired  any  of  the  secured  assets from the borrower and from whom any  money  is  due  or  may  become  due  to  the  borrower, to pay the secured creditor, so much  of the money as is sufficient to pay the secured  debt.”

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13 15. Section 17 of the Securitisation Act confers a right of  

appeal to any person, including the borrower, if that person is  

aggrieved  by  any  of  the  “measures”  referred  to  in  sub-

section (4) of Section 13 taken by the Secured Creditor.  The  

operative portion of Section 17 is extracted hereinbelow for  

ready reference:

“17.  Right  to  appeal  : (1)  Any  person  (including  borrower),  aggrieved  by  any  of  the  measures  referred  to  in  sub-section  (4)  of  section 13 taken by the secured creditor or his  authorised officer under this Chapter, may make  an application along with such fee, as may be  prescribed  to  the  Debts  Recovery  Tribunal  having jurisdiction in the matter within forty-five  days from the date on which such measure had  been taken:  

PROVIDED that different fees may be prescribed  for making the application by the borrower and  the person other than the borrower.  

Explanation  :  For  the  removal  of  doubts,  it  is  hereby declared that the communication of the  reasons to the borrower by the secured creditor  for  not  having  accepted  his  representation  or  objection  or  the  likely  action  of  the  secured  creditor  at  the  stage  of  communication  of  reasons  to  the  borrower  shall  not  entitle  the  person  (including  borrower)  to  make  an  application  to  the   Debts  Recovery  Tribunal  under sub-section (1) of Section 1.

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14 (2) The Debts Recovery Tribunal shall  consider  whether any of the measures referred to in sub- section (4) of section 13 taken by the secured  creditor  for  enforcement  of  security  are  in  accordance with the provisions of this Act and  the rules made thereunder.  

(3)  If,  the  Debts  Recovery  Tribunal,  after  examining the facts and  circumstances of the  case  and  evidence  produced  by  the  parties,  comes  to  the  conclusion  that  any  of  the  measures  referred  to  in  sub-section  (4)  of  section 13, taken by the secured creditor are not  in accordance with the provisions of this Act and  the  rules  made  thereunder,  and  require  restoration of  the management of the secured  assets  to  the  borrower  or  restoration  of  possession  of  the  secured  assets  to  the  borrower, it may by order, declare the recourse  to any  one or more measures referred to in sub- section (4) of section 13  taken by the secured  assets as invalid and restore the possession of  the  secured assets  to  the  borrower  or  restore  the management  of  the secured assets to  the  borrower,  as the case may be,  and pass such  order  as  it  may  consider  appropriate  and  necessary  in  relation  to   any  of  the  recourse  taken by the secured creditor under sub-section  (4) of section 13.  

(4) If, the Debts Recovery Tribunal declares the  recourse taken by a secured creditor under sub- section (4) of section 13, is in accordance with  the  provisions  of  this  Act  and the  rules  made  thereunder,  then,  notwithstanding  anything  contained in any other law for the time being in  force,  the secured creditor  shall  be entitled to  take recourse to one or more of the measures

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15 specified under sub-section (4) of section 13 to  recover his secured debt.  

(5) Any application made under sub-section (1)  shall  be  dealt  with  by  the  Debts  Recovery  Tribunal  as  expeditiously  as  possible  and  disposed of within sixty days from the date of  such application:  

PROVIDED  that  the  Debts  Recovery  Tribunal  may, from time to time, extend the said period  for  reasons  to  be  recorded  in  writing,  so,  however,  that  the  total  period  of  pendency  of  the  application  with  the  Debts  Recovery  Tribunal, shall not exceed four months from the  date of making of such application made under  sub-section (1).  

(6) If  the application is not disposed of by the  Debts  Recovery  Tribunal  within  the  period  of  four months as specified in sub-section (5), any  party  to  the  application  may  make  an  application, in such form as may be prescribed,  to the Appellate Tribunal for directing the Debts  Recovery Tribunal for expeditious disposal of the  application pending before the Debts Recovery  Tribunal  and  the  Appellate  Tribunal  may,  on  such application, make an order for expeditious  disposal of the pending application by the Debts  Recovery Tribunal.  

(7) Save as otherwise provided in this Act, the  Debts Recovery Tribunal shall, as far as may be,  dispose  of  application  in  accordance  with  the  provisions  of  the  Recovery  of  Debts  Due  to  Banks and Financial  Institutions Act,  1993 and  the rules made thereunder.”

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16 16. Any person aggrieved by any order made by the DRT  

under Section 17 may also prefer an appeal to the Appellate  

Tribunal under Section 18 of the Act.

17. The expression  ‘any  person’  used in  Section  17 is  of  

wide import and takes within its fold not only the borrower  

but  also  the  guarantor  or  any  other  person  who  may  be  

affected  by  action  taken  under  Section  13(4)  of  the  

Securitisation Act.  Reference may be made to the Judgment  

of this Court in  Satyavati Tondon’s case (supra).

18. Therefore,  the  expression  ‘any  person’  referred  to  in  

Section 17 would take in  the plaintiffs  in  the suit  as  well.  

Therefore, irrespective of the question whether the civil suit  

is maintainable or not, under  the Securitisation Act itself, a  

remedy is provided to such persons so that they can invoke  

the provisions of Section 17 of the Securitisation Act, in case  

the bank (secured creditor) adopt any measure including the  

sale  of  the  secured  assets,  on  which  the  plaintiffs  claim  

interest.  

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17 19. Section 34 of the Securitisation Act ousts the civil court  

jurisdiction.  For easy reference, we may extract Section 34  

of the Securitisation Act, which is as follow:

“34. Civil Court not to have jurisdiction -  No civil court shall have 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  this Act to determine  and no injunction shall be  granted  by  any  court  or  other  authority  in  respect of any action taken or to be taken in  pursuance of any power conferred by or under  this Act or under the Recovery of Debts Due to  Banks and Financial Institutions Act, 1993 (51 of  1993).    

20. The  scope  of  Section  34  came  up  for  consideration  

before this Court in Mardia Chemicals Ltd. (supra) and this  

court held as follow:

“50. It has also been submitted that an appeal  is  entertainable  before  the  Debts  Recovery  Tribunal only after such measures as provided  in sub-section (4) of Section 13 are taken and  Section 34 bars to entertain any proceeding in  respect of a matter which the Debts Recovery  Tribunal or the Appellate Tribunal is empowered  to  determine.  Thus  before  any  action  or  measure  is  taken  under  sub-section  (4)  of  Section 13, it is submitted by Mr Salve, one of  the  counsel  for  the  respondents  that  there  would  be  no  bar  to  approach  the  civil  court.  Therefore, it cannot be said that no remedy is  available  to  the borrowers.  We,  however,  find

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18 that this contention as advanced by Shri Salve  is not correct. 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. It is further to be noted that the bar  of  jurisdiction  is  in  respect  of  a  proceeding  which  matter  may  be  taken  to  the  Tribunal.  Therefore,  any  matter  in  respect  of  which  an  action  may  be  taken  even  later  on,  the  civil  court shall have no jurisdiction to entertain any  proceeding thereof. 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.”

  21. Section  13,  as  already  indicated,  deals  with  the  

enforcement of the security interest without the intervention  

of the court or tribunal but in accordance with the provisions  

of the Securitisation Act.   

22. Statutory  interest  is  being  created  in  favour  of  the  

secured creditor on the secured assets and when the secured  

creditor proposes to proceed against the secured assets, sub-

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19 section  (4)  of  Section  13  envisages  various  measures  to  

secure the borrower’s debt.  One of the measures provided  

by the statute is to take possession of secured assets of the  

borrowers,  including the right  to  transfer  by way of  lease,  

assignment  or  realizing  the  secured  assets.   Any  person  

aggrieved  by  any  of  the  “measures”  referred  to  in  sub-

section (4) of Section 13 has got a statutory right of appeal to  

the DRT under Section 17.  The opening portion of Section 34  

clearly  states  that  no  civil  court  shall  have  jurisdiction  to  

entertain any suit or proceeding “in respect of any matter”  

which a DRT or an Appellate Tribunal  is  empowered by or  

under the Securitisation Act to determine.  The expression ‘in  

respect of any matter’ referred to in Section 34 would take in  

the “measures” provided under sub-section (4) of Section 13  

of  the  Securitisation  Act.   Consequently  if  any  aggrieved  

person has got any grievance against any “measures” taken  

by  the  borrower  under  sub-section  (4)  of  Section  13,  the  

remedy open to him is to approach the DRT or the Appellate  

Tribunal  and  not  the  civil  court.   Civil  Court  in  such  

circumstances  has  no  jurisdiction  to  entertain  any  suit  or

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20 proceedings in respect of those matters which fall under sub-

section (4) of Section 13 of the Securitisation Act because  

those matters fell within the jurisdiction of the DRT and the  

Appellate  Tribunal.   Further,  Section  35  says,  the  

Securitisation  Act  overrides  other  laws,  if  they  are  

inconsistent with the provisions of that Act,  which takes in  

Section 9 CPC as well.  

23. We are  of  the  view that  the  civil  court  jurisdiction  is  

completely  barred,  so  far  as  the  “measure”  taken  by  a  

secured creditor under sub-section (4) of Section 13 of the  

Securitisation Act, against which an aggrieved person has a  

right of appeal before the DRT or the Appellate Tribunal. to  

determine as to whether there has been any illegality in the  

“measures”  taken.   The  bank,  in  the  instant  case,  has  

proceeded only against secured assets of the borrowers on  

which  no  rights  of  Respondent  Nos.6  to  8  have  been  

crystalised, before creating security interest in respect of the  

secured assets.  In such circumstances, we are of the view  

that the High Court was  in error in holding that only civil

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21 court  has  jurisdiction  to  examine  as  to  whether  the  

“measures” taken by the secured creditor under sub-section  

(4) of Section 13 of the Securitisation Act were legal or not.  

In  such  circumstances,  the  appeal  is  allowed  and  the  

judgment of the High Court is set aside.   There shall be no  

order as to costs.

……..……………………..J. (K.S. Radhakrishnan)

……………………………J. (A.K. Sikri)

New Delhi, October 30, 2013.