[Cites 18, Cited by 0]
Madhya Pradesh High Court
Au Small Finance Bank Mr. Dinesh Pandey vs Smt Ramdevi Rajpoot on 5 February, 2026
NEUTRAL CITATION NO. 2026:MPHC-JBP:10689
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IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE VIVEK JAIN
ON THE 5 th OF FEBRUARY, 2026
CIVIL REVISION No. 1190 of 2025
AU SMALL FINANCE BANK MR. DINESH PANDEY
Versus
SMT RAMDEVI RAJPOOT AND OTHERS
Appearance:
Shri Mallikarjun Khare - Advocate for the petitioner.
Shri Saket Agrawal-Advocate for the respondent No. 1.
Shri Sushil Kumar Jha- Advocate for the respondent No. 2.
ORDER
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
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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
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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 against the
property can be taken by the bank and whatever action is to be taken, should
be taken against the defendant No. 2 and possession of the house cannot be
taken by the bank from the plaintiff. In paragraph 8 of plaint, cause of action
is stated as the attempts of the bank in taking over the possession of the
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property. It is not in dispute that after adopting the measures under Section
13(4), there is a order under Section 14 of SARFAESI Act passed by the
Chief Judicial Magistrate-Chhatarpur in favour of the petitioner-bank.
8. It is settled in law that plaint cannot be rejected in the piecemeal.
However, the substance of the suit is pointed towards the Bank only, and no
prayer is made against the vendor, who executed sale deed many years after
creating mortgage in favour of the Bank. She seeks declaration of title as
against mortgage created in favour of the Bank, and further seeks injunction
against the Bank.
9. The aforesaid assertions of the plaintiff in the plaint duly make it a
case where the plaintiff is aggrieved by the measures taken by the bank
under Section 13 (4) of SARFAESI Act because the cause of action of the
filing of the suit is measures taken by the bank under Section 13(4) and as
per Section 17 of SARFAESI Act any person can approach the DRT being
aggrieved by the measures taken under Section 13 (4) of SARFAESI Act.
Section 34 bars Civil Suit before a Civil Court. Relevant Sections 17 & 34 is
as under:-
"17 .[Application against measures to recover secured debts].--(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,1 [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.] "
"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
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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)."
10. As per section 34 the suit would be barred where the DRT is
having jurisdiction under the SARFAESI Act to entertain an application to
determine any question.
11. Learned counsel for the appellant argued that orders of learned
courts below are bad in the eye of law because in the case of Prabha Jain Vs
Central Bank of India and others 2013(1) M.P.L.J. 385 , a Division Bench of
this court held that question of validity of a sale-deed mortagage with the
bank, DRT is not empowered to decide such question. Though learned
counsel for the respondent did not point out, but it is seen that the said
judgment has been confirmed by the Hon'ble Supreme Court recently in
Central bank of India Vs. Prabha Jain, 2025 (4) SCC 38 . The Hon'ble Apex
Court has held as under :-
42. The Debts Recovery Tribunal is a creature of the RDB Act of
1993 and is empowered to exercise powers under that Act and
the Sarfaesi Act of 2002. The Tribunal is bound by the powers
conferred to it by Parliament. Interestingly, when this Court
in Harshad Govardhan Sondagar v. International Assets
Reconstruction Co. Ltd. [Harshad Govardhan
Sondagar v. International Assets Reconstruction Co. Ltd., (2014) 6
SCC 1 : (2014) 3 SCC (Civ) 1 : (2014) 184 Comp Cas 199] held
that the tenant cannot approach the DRT because the re-possession
can be only in favour of the borrower, Parliament stepped in and
amended the Sarfaesi Act. Sub-sections (3) and (4) of Section 17,
respectively, are instructive to the level of examination that the
DRT can undertake, and the same is limited to the validity of the
measures under sub- section (4) of Section 13. Hence, the DRT is
not permitted to examine the validity of the earlier sale deed,
whereafter the mortgage was executed in favour of the Bank.
12. In the present case, the plaintiff does not allege any defect in title
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of the mortgator, but merely asserts herself to be a subsequent purchaser,
having purchased many years after the vendor created mortgage in favour of
the Bank. Therefore, in the opinion of this Court, she raises no question that
the DRT cannot decide.
13. T he Apex Court in the case of Jagdish Singh vs. Heeralal and others
2014 (1) SCC 479, vide judgment dated 30.10.2013 on almost similar facts after
an elaborate consideration of different provisions of SARFAESI Act has laid
down that:-
"the jurisdiction of Civil Court is completely barred, so far as the
measures taken by a Secure Creditor under subsection (4) of Section 13
of the 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 measure taken. The Bank, in the instant case,
has proceeded only against secured assets of the borrowers on which no
rights of respondent No.6 to 8 have been crystallized, before 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 Court
has jurisdiction to examine as to whether the measure taken by the
Secured Creditor under sub-section (4) of Section 13 of the
Securitiazation 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."
14. The above principle has been followed by the Apex court in the
case of M/S. Sree Anandhakumar Mills Ltd. vs M/S. Indian Overseas Bank
And Ors., 2019 (14) SCC 788. In view of the above, learned Court below
ought to have dismissed the civil suit under the provisions of Order 7 Rule
11 (D) of the C.P.C.
15. In SBI v. Allwyn Alloys (P) Ltd., reported in (2018) 8 SCC 120 ,
the Hon'ble Supreme Court has held as under:-
"8. After having considered the rival submissions of the parities, we have no
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hesitation in acceding to the argument urged on behalf of the Bank that the
mandate of Section 13 and, in particular, Section 34 of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 (for short "the 2002 Act"), clearly bars filing of a civil suit. For, no civil
court can exercise jurisdiction to entertain any suit or proceeding in respect of
any matter which a DRT or DRAT is empowered by or under this Act to
determine and no injunction can be granted by any court or authority in respect
of any action taken or to be taken in pursuance of any power conferred by or
under the Act."
16. In view of the aforesaid judgment of Hon'ble Supreme Court and
bare language of Section 17 and 34 of SARFAESI Act the suit clearly
appears to be barred by law.
17. However counsel for the petitioner had relied on a Division
Bench judgment of the Bombay High Court to submit that the suit would be
maintainable. However in the said judgment the Division Bench of the
Bombay High Court has held that civil rights of persons other than the
borrower can be determined by the civil court only when it prima facie
appears from the record that relief claim is incapable of being decided by the
DRT. However, in the present case nothing of that sought has been placed on
the record to indicate that the DRT is not equipped to decide the questions
arising between the parties. The plaintiff is transferee after creation of
mortgage.
18. It was vehemently argued before the court that the alleged
mortgage in this case is not a mortgage at all because Stamp Duty has been
paid on agreement as per Article 6 of schedule 1-A to Indian Stamp Act
1899, as applicable in the State of Madhya Pradesh. The relevant article is as
under :-
6. Agreement or Memorandum of an agreement-
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(g) If relating to secure 0.25 percent of the amount of loan or debt,
repayment of a loan or debt subject to a maximum of five lakh rupees.
19. From the strength of the aforesaid provision, it was argued that
the alleged mortgage is a simple agreement and stamp duty has been paid as
an agreement whereas in view of Article 43 of the same schedule stamp duty
on mortgage deed has to be paid as bond or conveyance. The relevant
provision of Schedule 1-A is as under:-
43. Mortgage deed, no being an agreement relating to
the deposit of title deeds, Pawn, Pledge or
Hypothecation (No.7), Bottomry bond (No.15)
Mortgage of Crop (No. 44), Respondentia Bond (No.
55), or a Security bond (No.56)-
The same duty as a
(a) When possession of the property or any part of the conveyance (No.
property comprised in such deed is given by mortgagor 25) for the amount
or agreed to be given. secured by such
deed.
The same duty as a
Bond (No. 14) for
(b) When possession is not given or agreed to be given
the amount
as aforesaid.
secured by such
deed.
20. In the opinion of this Court, the aforesaid argument is not
relevant for the purpose of present dispute because as per Section 2(zb) of
SARFAESI Act, "security agreement" is defined and as per 2(zf), "security
interest" is defined, which are as under:-
"(zb) "security agreement" means an agreement, instrument or any other
document or arrangement under which security interest is created in favour of
the secured creditor including the creation of mortgage by deposit of title deeds
with the secured creditor;"
"[(zf) "security interest" means right, title or interest of any kind, other than
those specified in section 31, upon property created in favour of any secured
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creditor and includes--
(i) any mortgage, charge, hypothecation, assignment or any right, title or
interest of any kind, on tangible asset, retained by the secured creditor as
an owner of the property, given on hire or financial lease or conditional
sale or under any other contract which secures the obligation to pay any
unpaid portion of the purchase price of the asset or an obligation
incurred or credit provided to enable the borrower to acquire the tangible
asset; or
(ii) such right, title or interest in any intangible asset or assignment or
licence of such intangible asset which secures the obligation to pay any
unpaid portion of the purchase price of the intangible asset or the
obligation incurred or any credit provided to enable the borrower to
acquire the intangible asset or licence of intangible asset;]"
21. The aforesaid definitions do not imply that only a mortgage deed
can be a Security Agreement creating a Security Interest. On the other hand,
it can be any agreement, instrument or any other document or arrangement
under which security agreement is created in favor of the secured creditor.
Security interest can be created by mortgage , charge, hypothecation,
assignment, hire, conditional sale or under any other contract which secures
the obligation to pay any unpaid portion of the purchase price of the asset, or
an obligation incurred or any credit provided to enable the borrower to
acquire the asset.
22. The expressions "security agreement" and "security interest"
being widely worded and not limited to a mortgage deed only, therefore even
if the mortgage deed is deemed to be a agreement, it is valid and
lawful agreement for which separate Stamp Duty has been provided in the
State of Madhya Pradesh in the matter of loans extended by banks @ 0.25%
and it would fall within the definition of security agreement in terms of
Section 2(zb) of SARFAESI Act.
23. Therefore this court does not find that the suit is maintainable
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because this suit has been filed only to avoid the measures taken by the bank
under Section 13(4) and for no other real purpose. This suit is clearly barred
by Section 34 of SARFAESI Act and the remedy would lie to be plaintiff,
who is a subsequent purchaser after creation of Security Interest, before the
DRT under Section 17 of SARFAESI Act.
24. In view of the aforesaid, the impugned order is set aside. The
plaint filed by the plaintiff is rejected holding the suit to be barred by law in
terms of Section 34 of SARFAESI Act. Plaintiff is set at liberty to approach
the DRT under Section 17 of SARFAESI Act within 30 days of this order.
21. The revision petition stands allowed.
(VIVEK JAIN)
JUDGE
MISHRA
