Telangana High Court
Yadav Venkatesh vs Modukuru Kiran on 7 July, 2025
HON'BLE SRI JUSTICE LAXMI NARAYANA ALISHETTY
CIVIL REVISION PETITION No.780 of 2024
ORDER:
This Civil Revision Petition, under Article 227 of the Constitution of India, is filed against the order dated 29.12.2023 in I.A.No.276 of 2022 in O.S.No.929 of 2022, passed by the III Additional Junior Civil Judge, Ranga Reddy District at L.B. Nagar.
2. Heard Sri CH. Ravinder, learned counsel for the petitioners, and Smt N. Arthi, learned counsel for respondent No.1.
3. Petitioner Nos.1 and 2 herein are defendant Nos.5 and 6, respectively, respondent No.1 is the plaintiff and respondent Nos.2 to 5 are defendant Nos.1 to 4, respectively, in the suit. For convenience, the parties will be hereinafter referred to as they are arrayed in the suit.
4. In concise, the facts of the case required for adjudication of the present Civil Revision Petition are that the plaintiff filed the suit- OS.No.929 of 2022 seeking the relief of partition of the suit schedule property and to allot 1/3rd share to the plaintiff and also to declare the sale deed bearing document No.1991/2016, dated 07.04.2016, Certificate of Sale bearing document No.2840/2021, dated 28.04.2021, LNA,J C.R.P No.780 of 2024 2 and Mortgage Deed bearing document No.3693/2016, dated 21.06.2016, as null and void.
5. Defendant No.3 alleged to have purchased the suit schedule property from the plaintiff and defendants No.1 and 2 through a registered sale deed bearing document No.1991/2016, dated 07.04.2016, by availing a house loan from Defendant No.4-Bank; that due to default committed by him in repayment of loan, the said loan was classified as 'NPA' and proceedings under the Securitization And Reconstruction of Financial Assets And Enforcement of Security Interest Act, 2022 (for brevity 'SARFAESI Act') were initiated against defendant No.3; and that defendant No.4-Bank conducted a public auction, in which defendant No.5 and 6 emerged as successful bidders and purchased the suit schedule property.
6. Meanwhile, defendant No.3 filed S.A.No.175 of 2020 before the Debt Recovery Tribunal-II, Hyderabad, (hereinafter referred to as 'DRT') challenging the sale and the same is pending. Defendant No.4 Bank has initiated measures under the SARFAESI Act, took possession of the suit schedule property, pursuant to order passed in Crl.M.P.No.102 of 2020 by the Chief Metropolitan Magistrate, Cyberabad at L.B. Nagar, and delivered the same to defendant Nos.5 LNA,J C.R.P No.780 of 2024 3 and 6; that a sale certificate was issued in their favour, which was registered as Document bearing No.2840/2021, dated 28.04.2021, in the Sub-Registrar's Office.
7. Defendant No.3 averred that since the sale is under challenge before the DRT, as per Section 34 of SARFAESI Act, the civil Court shall not have jurisdiction to entertain any suit or proceeding in respect of the matter which the DRT is empowered by or under the said Act and accordingly, he prayed to reject the plaint.
8. The trial Court, vide order dated 29.12.2023 dismissed the said application on the ground that in the plaint, since the status of the property is questioned and there is allegation against the secured creditor, in the light of the judgment of the erstwhile High Court of Andhra Pradesh in D.Ram Reddy Vs. Asset Reconstruction Company (India) Private Limited and others 1, the bar under Section 34 of SARFAESI Act would not at all apply and the civil Court is having jurisdiction to entertain the suit. Questioning the legality and validity of the said order, the present Revision Petition is filed.
9. Learned counsel appearing for the revision petitioners submitted that the impugned order passed by the trial Court is ex-facie illegal and 1 2016(6) ALT 533 (DB) LNA,J C.R.P No.780 of 2024 4 the jurisdiction to deal with the instant case lies with the DRT as defendant No.3 has mortgaged the property with defendant No.4-bank and as he committed default in repayment of loan amount, defendant No.4-bank has invoked the provisions of the SARFAESI Act. He further submitted that Section 34 of the SARFAESI Act debars the civil Court from entertaining any suit or proceedings in respect of any matter in which the DRT or the Appellate Tribunal is empowered by or under the said Act, and hence, no injunction can be granted by any civil Court. He further submitted that the suit schedule property was sold in public auction in the year 2016 and thereafter, physical possession was taken under Section 34 of the SARFAESI Act in the year 2020 itself, however, the plaintiff-respondent No.1 herein filed the suit alleging fraud, obviously, only to overcome the bar under Section 34 of the SARFAESI Act. Learned counsel further submitted that the plaintiff was also one of the signatories of the sale deed, therefore, his plea of fraud is only invented for the purpose of filing the suit. By contending thus, learned counsel prayed to set aside the impugned order as the trial Court has erroneously held that the civil Court is having jurisdiction to entertain the suit.
10. Per contra, learned counsel for respondent No.1 herein-plaintiff submitted that the Civil Revision Petition is not maintainable and the LNA,J C.R.P No.780 of 2024 5 impugned order was passed by the trial Court after due consideration of facts and the law. He further submitted that the plaintiff never executed any document in favour of defendant No.3 and the subject sale deed has come into existence by way of impersonating him and as such, it is a forged and fabricated document and hence, the plaintiff filed the suit to declare the said sale deed as null and void and not binding on the plaintiff. Learned counsel, therefore, submitted that in the above facts and circumstances of the case, the trial Court has rightly held that bar under Section 34 of the SARFAESI Act does not apply and the civil Court has jurisdiction to entertain the suit and finally, prayed to dismiss the Revision as the same is devoid of merit.
11. Learned counsel for respondent No.1 in support of his aforesaid contentions and further, to demonstrate the scope and ambit of Order VII Rule 11CPC, has relied upon the following judgments of the Hon'ble Apex Court:-
(1) Madanuri Sri Rama Chandra Murthy v. Syed Jalal 2 (2) G. Nagaraj and Another Versus B.P. Mruthunjayanna and Others 3 (3) Srihari Hanumandas Totala vs Hemant Vithal Kamat & 2 (2017) 13 SCC 174 3 2023 SCCONLINE SC 1270 LNA,J C.R.P No.780 of 2024 6 Ors 4
12. The categorical observations made by the Hon'ble Apex Court in Madanuri Sri Rama Chandra Murthy's (cited supra) are extracted as hereunder:-
"The averments of the plaint have to be read as a whole to find out whether the averments disclose a cause of action or whether the suit is barred by any law. It is needless to observe that the question as to whether the suit is barred by any law would always depend upon the facts and circumstances of each case."
13. Further, the Hon'ble Apex Court in Srihari Hanumandas Totala vs Hemant Vithal Kamat & Ors 5 took a similar view that suit is barred by any law must be determined from the statements in the plaint and it is not open to decide the issue on the basis of any other material including in the written statement"
14. The Hon'ble Apex Court in G. Nagaraj and Another Versus B.P. Mruthunjayanna and Others 6 observed that when the ground pleaded for rejection of the plaint is the absence of cause of action, 4 (2021) 9 SCC 99 5 (2021) 9 SCC 99 6 2023 SCCONLINE SC 1270 LNA,J C.R.P No.780 of 2024 7 the Court has to examine the plaint and see whether any cause of action has been disclosed in the plaint.
15. In the aforesaid judgments of the Hon'ble Apex Court, the law is well settled that for dealing with an application under Order VII Rule 11 of CPC, only the averments made in the plaint and the documents produced along with the plaint are required to be seen.
16. The High Court of Bombay in Shashikant Gangar Versus Aditya Birla Finance Limited and Others 7 observed as follows:-
" The above averments as well as documents would clearly show that there are specific pleadings with regard to fraud and collusion between the bank as well as Defendants 3 and 4 and thus for that limited purpose of claim declaring loan facility agreement dated 29-11-2020 and consequently creating of mortgage i.e. secured assets is a fraud, certainly comes within Section 9 CPC and to that effect bar under Section 34 of the SARFAESI Act as discussed in Mardia Chemicals Ltd Vs. (... ) would not be absolute.
Having concluded that the plaint cannot be rejected and bar created under Section 34 of the Sarfaesi Act cannot be applied to the averments in the plaint, option available to this Court is to quash and set aside both the orders of the trial court 7 2024 SCCONLINE Bom 3329 LNA,J C.R.P No.780 of 2024 8 thereby restoring the plaint to the file of Commercial Court to be decided in accordance with law.
CONSIDERATION:
17. Apropos the submissions advanced by learned counsel for both the parties and the above factual matrix of the case and the material placed on record, the only point that arises for consideration in this Revision is whether the trial Court was right in holding that Section 34 of the SARFAESI Act has no application and the civil Court has jurisdiction to try the case.
18. The Hon'ble Supreme Court in Central Bank of India and another vs. Smt. Prabha Jain and Others 8, took a view that the jurisdiction of the civil Court is ousted only in the matters which the DRT or DRAT is empowered by or under the SARFAESI Act to determine and that the suits claiming relief beyond the jurisdiction of the DRT or DRAT can be dealt with by the Civil courts. For better appreciation, the relevant para i.e., para 18 of the judgment is extracted as hereunder:
"18. Further, the SARFAESI Act is enacted essentially to provide a speedy mechanism for recovery of debts by banks and financial 8 (2025) 45 SCC 38 LNA,J C.R.P No.780 of 2024 9 institutions. 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 DRT does not have the jurisdiction to grant a declaration with respect to the mortgage deed or the sale deed as sought by the plaintiff.
The jurisdiction to declare a sale deed or a mortgage deed being illegal is vested with the civil court under Section 9 of the Code of Civil Procedure. Therefore, the civil court has the jurisdiction to finally adjudicate upon the first two reliefs."
19. The above principle laid down by the Hon'ble Supreme Court squarely applies to the instant case. In the present case, the relief sought for in the suit is to declare the sale deed alleged to have been executed by defendant Nos.1 and 2 and plaintiff in favour of defendant No.3 and further, the mortgage deed executed by defendant No.3 in favour of defendant No.4-Bank are null and void, which explicitly does not fall under the purview of the SARFAESI Act, thereby, imposing a bar on the jurisdiction of the civil Courts to entertain, adjudicate and decide the dispute. Section 34 of SARFAESI Act clearly expresses that the jurisdiction of the civil Courts is barred only in relation to matters which the DRT or DRAT are empowered to decide under the Act.
LNA,J C.R.P No.780 of 2024 10
20. Section 9 of the Code of Civil Procedure (CPC) mandates that civil Courts have the power to try all suits of a civil nature, unless their cognizance is expressly or impliedly barred by law.
21. A conjoint reading of Section 9 of CPC and Section 34 of SARFAESI Act, in the light of the ratio laid down by the Hon'ble Supreme Court in Shashikant Gangar's case (cited supra) and the judgment of the High Court of Madras in D.Ram Reddy's case (cited supra), makes it clear that the DRT does not have jurisdiction to adjudicate upon the validity of the documents or to determine the questions of title finally, and in such matters, only the civil Courts will have jurisdiction and further, only "in respect of any matter"
or suit or proceeding which a DRT or DRAT are empowered by or under the SARFAESI Act to decide, the jurisdiction of the civil Courts is barred.
22. In this regard, it is trite to refer to the judgment of the Hon'ble Supreme Court in Robust Hotels Private Limited's case (cited supra), wherein it is explicitly observed that the expression "in respect of any matter" would take in the "measures" provided under sub-section (4) of Section 13 of the SARFAESI Act. The LNA,J C.R.P No.780 of 2024 11 relief of declaration of sale deed and Certificate of sale as null and void as sought for by plaintiff/respondent No.1 herein in the suit does not fall under sub-section (4) of Section 13 of the SARFAESI Act, thereby, conferring exclusive jurisdiction on the DRT or DRAT under the said Act.
23. Furthermore, as observed by the Hon'ble Supreme Court in Robust Hotels Private Limited's case (cited supra), if the jurisdiction overlaps in deciding the question of specific performance, the civil Court may be compelled to decide the validity of certain encumbrances created by the agreement vendor.
24. Applying the above-said principle of the Hon'ble Supreme Court to the instant case, it is evident that the civil Court has got jurisdiction to adjudicate the present dispute as the plaintiff has sought to declare the sale deed and Certificate of as null and void and consequently, for partition of the suit schedule property and for allotment of 1/3rd share to him, on the ground of fraud and fabrication by defendant Nos.1 and 2. Therefore, even if the charge created by defendant No.3 over the schedule property as security to the loan obtained by him from defendant No.4-bank overlaps with LNA,J C.R.P No.780 of 2024 12 the jurisdiction of the civil Court in deciding the question of validity of sale deed, Certificate of sale, etc., documents, the civil Court will have jurisdiction to try and decide the same as the same cannot be said to be barred by the provisions of the Recovery of Debts Due to Financial Institutions Act, 1993 and SARFAESI Act 2002. Therefore, the trial Court has rightly held that bar under Section 34 of the SARFAESI Act would not apply to the present case and the same falls under the jurisdiction of the civil court.
25. In the light of the judgments of the Hon'ble Apex Court in Madanuri Sri Rama Chandra Murthy's (cited supra), Srihari Hanumandas Totala's case (cited supra), G. Nagaraj's case (cited supra), the law is well settled that for dealing with an application under Order VII Rule 11 of CPC, only the averments made in the plaint and the documents produced along with the plaint are required to be seen.
26. In the instant case, a reading of averments of the plaint clearly disclose a cause of action for filing the suit, as the plaintiff sought to declare the documents mentioned therein as null and void alleging the same as false and fabricated documents. Hence, in the LNA,J C.R.P No.780 of 2024 13 light of the aforesaid judgments of the Hon'ble Apex Court, the plaintiff has made out a cause of action for filing the suit.
27. Perusal of the impugned order passed by the trial Court reveals that it had occasion to consider in detail the scope and applicability of Section 34 of the SARFAESI Act, in the context of the ground raised by the petitioner therein that the civil Court does not have jurisdiction to entertain the suit as per Section 34 of the SARFAESI Act and as such, plaint is liable to be rejected. The trial Court, after meticulous analysis of the legal provisions governing the aspect of jurisdiction has rightly concluded that the grounds raised in the said application does not fit into any of the grounds as provided under Order VII Rule 11 CPC for rejection of the plaint.
28. In the light of the foregoing discussion and reasons and also the settled legal position, this Court is of the considered opinion that the trial Court has rightly held that the DRT does not have jurisdiction to adjudicate upon the subject dispute the same falls under the jurisdiction of the civil Court and rightly dismissed the application. The revision petitioners failed to point out any LNA,J C.R.P No.780 of 2024 14 illegality or irregularity in the impugned order passed by the trial Court warranting interference by this Court.
29. Hence, this Civil Revision Petition fails and is accordingly dismissed. No costs.
30. As a sequel, the miscellaneous applications pending, if any, shall stand closed.
___________________________________ LAXMI NARAYANA ALISHETTY, J Dated: 07.07.2025 dr