The Supreme Court, in an appeal filed by the Appellant challenging the Madras High Court order dated 29/10/2010, has reiterated that a civil suit filed after the initiation of proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement Of Security Interest (SARFAESI) Act, 2002 is not maintainable.

The Bench, comprising of Justice Ranjan Gogoi and Justice R Bhanumathi held in the affirmative that civil proceedings for partition shall not be maintainable after proceedings have already been initiated with reference to Section 2(zf), 2(zc), 13(1), 17, 18 and 34 of SARFAESI Act. while relying on the judgment of Jagdish Singh vs. Heeralal  and others (2014) 1 SCC 479. The Bench reiterated the relevant part of the judgment in Jagdish Singh (supra) with reference to its decision in the appeal as follows:

“24. 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-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 realising 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 the 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. The civil court in such circumstances has no jurisdiction to entertain any suit or 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.”

 

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Order: Sree Anandhakumar Mills Versus Indian Overseas Bank and Ors