An issue that frequently arises under the SARFAESI Act is whether a civil court can entertain a partition suit or title dispute brought to restrain enforcement action by a secured creditor or whether the dispute must be pursued before the Debts Recovery Tribunal. The answer depends on the nature of the relief claimed and on the limits of the Tribunal’s statutory power.

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) was enacted to enable secured creditors to enforce security interests without having to institute a civil suit. To support that framework, Section 34 bars the jurisdiction of civil courts in respect of matters which the Debts Recovery Tribunal or the Debts Recovery Appellate Tribunal is empowered to determine under the Act. Section 17, in turn, provides a remedy to “any person (including borrower)” aggrieved by measures taken under Section 13(4).

It is against this statutory background that the Supreme Court has considered the extent of the bar under Section 34 and the width of the remedy under Section 17. The general position was explained by the Supreme Court in Jagdish Singh v. Heeralal, (2014) 1 SCC 479 where members of the borrower’s family claimed that the secured asset was joint family property and sought partition and injunction before the civil court. The Court held that the expression “any person” in Section 17 is of wide import and that where the grievance is directed against measures taken under Section 13(4), the remedy lies before the DRT. The bar under Section 34 was therefore held to apply. That approach was reiterated in Sree Anandhakumar Mills Ltd. v. Indian Overseas Bank, (2019) 14 SCC 788.

At the same time, the exclusion of civil court jurisdiction is not without limits. In Mardia Chemicals Ltd. v. Union of India, (2004) 4 SCC 311, the Supreme Court recognised a narrow exception where the action of the secured creditor is alleged to be fraudulent or where the claim is so absurd and untenable that it does not require any serious examination. That exception, however, has been applied cautiously. In Electrosteel Castings Ltd. v. UV Asset Reconstruction Co. Ltd., (2022) 2 SCC 573, the Court made it clear that Section 34 cannot be avoided by clever drafting or by a mere use of the word “fraud” without a proper legal foundation.

A more recent decision addressing the limits of Section 34 is Central Bank of India v. Smt. Prabha Jain, (2025) 4 SCC 38. In that case, the plaintiff sought to challenge the validity of an earlier private sale deed and the consequent transaction by which the property came to be mortgaged to the bank. The Supreme Court held that where the relief sought is one which the DRT is not empowered to grant, the civil court’s jurisdiction is not necessarily excluded. The judgment proceeds on the basis that the DRT, being a statutory tribunal, cannot adjudicate every species of civil right, particularly where the dispute concerns an antecedent title issue or the validity of a private transfer.

The position that emerges from these authorities is that the jurisdictional line turns on the true nature of the dispute and the relief claimed. Where the suit is, in substance, directed against possession, sale, auction or other recovery measures taken under the SARFAESI Act, the remedy ordinarily lies before the DRT, and Section 34 will bar a parallel civil proceeding. Where, however, the suit requires adjudication of an independent title dispute, partition or the validity of a prior deed which lies outside the Tribunal’s statutory competence, the civil court’s jurisdiction may still remain available.

The question, therefore, is not answered merely by the form in which the suit is drafted, but by examining what the plaintiff is truly asking the court to decide, and whether that issue is one the Tribunal is empowered to determine under the Act.

Civil Court or DRT under SARFAESI: who has jurisdiction?

Is a partition suit maintainable when SARFAESI proceedings are pending?

Can Section 34 of the SARFAESI Act bar a title dispute in civil court?

Can the DRT adjudicate independent title disputes under SARFAESI?

What are the exceptions to the bar of civil court jurisdiction under SARFAESI?