IN THE HIGH COURT OF MADHYA PRADESH

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AT JABALPUR

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BEFORE

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HON'BLE SHRI JUSTICE VIVEK JAIN

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ON THE 5

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th

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OF FEBRUARY, 2026

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CIVIL REVISION No. 1190 of 2025

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AU SMALL FINANCE BANK MR. DINESH PANDEY

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Versus

SMT RAMDEVI RAJPOOT AND OTHERS

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Appearance:

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Shri Mallikarjun Khare - Advocate for the petitioner.

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Shri Saket Agrawal-Advocate for the respondent No. 1.

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Shri Sushil Kumar Jha- Advocate for the respondent No. 2.

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ORDER

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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

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.[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

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Central Bank of India and others 2013(1) M.P.L.J. 385

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, 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

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. The Hon'ble Apex

Court has held as under :-

42.

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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. The Apex Court in the case of Jagdish Singh vs. Heeralal and others

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2014 (1) SCC 479

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, 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

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And Ors., 2019 (14) SCC 788

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. 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.,

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reported in (2018) 8 SCC 120

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,

the Hon'ble Supreme Court has held as under:-

"8.

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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

repayment of a loan or debt

0.25 percent of the amount of 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)-

(a) When possession of the property or any part of the

property comprised in such deed is given by mortgagor

or agreed to be given.

The same duty as a

conveyance (No.

25) for the amount

secured by such

deed.

(b) When possession is not given or agreed to be given

as aforesaid.

The same duty as a

Bond (No. 14) for

the amount

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)

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“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)

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“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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(VIVEK JAIN)

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JUDGE

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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

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MISHRA

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