Central Bank Of India vs Prabha Jain 2025 INSC 95 - Ss 17,34 SARFAESI Act -

SARFAESI Act - Section 17, 34 - In this case, the plaintiff in her suit has prayed for 3 reliefs: For a declaration that the sale deed executed by one Sumer Chand Jain in favour of Parmeshwar Das Prajapati is illegal (“first relief”) 2. For a declaration that the mortgage deed executed by Parmeshwar Das Prajapati in favour of the Bank is illegal (“second relief”) 3. For being handed over the possession (“third relief”) - Civil Court Rejected the plaint holding that its jurisdiction is excluded by Section 34 SARFAESI Act - HC set aside Civil Court's order - Dismissing Appeal, SC observed:When reliefs sought in civil suit are in relation to the actions taken prior to the secured creditor stepping into the picture and well prior to the secured creditor invoking the provisions of the SARFAESI Act, the Tribunal would have no jurisdiction under Section 17 of the SARFAESI Act to grant the declarations sought in the first and the second reliefs. (Para 16) The SARFAESI Act has not been enacted for providing a mechanism for adjudicating upon the validity of documents or to determine questions of title finally- The jurisdiction to declare a sale deed or a mortgage deed being illegal is vested with the civil court under Section 9 CPC - DRT can never have the jurisdiction to decide such civil disputes of title between a third person and a borrower. (Para 18-19)

SARFAESI Act - Section 17(3) - There is no power conferred on DRT to hand over the property to someone who was never in possession. (Para 23)

SARFAESI Act - Section 17 (unamended) -While it is true that Section 17(1) uses the words “any person (including the borrower) aggrieved”, Section 17(3) does not explicitly empower the DRT to restore the possession to anyone other than the borrower. Yes, in a given case, if the borrower has put someone else in possession, then perhaps, it could be contended that under Section 17(3), the DRT’s power to restore possession to the “borrower” would include the power to restore possession to the person who was holding it on behalf of the borrower or claiming through the borrower. However, it cannot be contended that under Section 17(3), the DRT can hand over possession to someone whose claim is adverse to that of the borrower- Under Section 17(3), the DRT has the power to “restore” possession which would mean that it has the power to return possession to the person who was in possession when the bank took over possession. DRT only has power to “restore” possession; it has no power to “hand over” possession to a person who was never in possession when the bank took over possession. (Para 23)

Code of Civil Procedure 1908 - Order VII, Rule 11 - There cannot be a partial rejection of the plaint -Even if one relief survives, the plaint cannot be rejected- If the civil court is of the view that one relief (say relief A) is not barred by law but is of the view that Relief B is barred by law, the civil court must not make any observations to the effect that relief B is barred by law and must leave that issue undecided in an Order VII, Rule 11 application. This is because if the civil court cannot reject a plaint partially, then by the same logic, it ought not to make any adverse observations against relief B. (Para 24-25)

Code of Civil Procedure 1908 - Section 9- The bar of jurisdiction of the civil court is not to be readily inferred. Such a provision requires strict interpretation - Court would lean in favour of construction which would uphold the retention of the civil court's jurisdiction. (Para 43)

Banks - Banks should remain very careful with inadequate title clearance reports, more particularly, when such reports are obtained cheaply and at times for external reasons. This concerns the protection of public money and is in the larger public interest. Therefore, it is essential for the Reserve Bank of India and other stakeholders to collaborate in developing a standardized and practical approach for preparing title search report before sanctioning loans and also for the purpose of determining liability (including potential criminal action) of the Officer who approves loan. Additionally, there should be standard guidelines for fees and costs associated with title search reports so as to ensure that they maintain high quality. (Para 44)