Central Bank of India & Anr. v. Smt. Prabha Jain & Ors.(2025 INSC 95)
AURTHOR ADV. BIJAL GOGRI (PRINCIPAL ASSOCIATE, GNP LEGAL)
I. Introduction
The interaction between special recovery statutes and the jurisdiction of civil courts has consistently occupied a central place in Indian judicial discourse. With the enactment of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”), Parliament sought to facilitate expeditious recovery of secured debts by financial institutions, while simultaneously restricting the scope of civil court intervention. However, the precise contours of this exclusion, particularly in cases involving disputes over title, the validity of conveyances, and the rights of third parties, have remained a subject of continued judicial interpretation.
In Central Bank of India & Anr. v. Smt. Prabha Jain & Ors. (2025 INSC 95), the Supreme Court was called upon to examine critical questions relating to the scope of civil court jurisdiction under Section 9 of the Code of Civil Procedure, 1908 (“CPC”), the statutory bar contained in Section 34 of the SARFAESI Act, and the principles governing rejection of plaints under Order VII Rule 11 CPC. The decision is particularly significant for clarifying that the SARFAESI Act does not impose an absolute bar on civil suits involving disputes of title or challenges to the legality of sale and mortgage deeds. The Court further reaffirmed that a plaint containing multiple reliefs cannot be rejected in its entirety merely because one of the reliefs may be barred by law. The judgment thus holds considerable importance for banking litigation and civil procedural jurisprudence.
II. Factual Background
The dispute concerned an immovable property purchased by the plaintiff’s father-in-law through a registered sale deed dated 19 June 1967. After his death on 15 August 2005, the property devolved by succession upon his three legal heirs, each acquiring an undivided one-third share. Following the subsequent death of the plaintiff’s husband, his one-third share devolved upon the plaintiff, Smt. Prabha Jain, thereby making her a co-owner of the property.
The plaintiff alleged that one of the co-heirs, Sumer Chand Jain, without effecting a lawful partition and without obtaining the consent of the other co-owners, unilaterally divided the property and executed a registered sale deed dated 3 July 2008 in favour of Parmeshwar Das Prajapati. The transferee thereafter created a mortgage over the property in favour of the Central Bank of India to secure financial facilities availed from the Bank. Upon default by the borrower, the Bank initiated recovery proceedings under Section 13(4) of the SARFAESI Act and proceeded to take possession of the secured asset.
Contending that the sale deed and the consequent mortgage were illegal and void, the plaintiff instituted a civil suit seeking declaratory reliefs and restoration of possession. The Bank challenged the maintainability of the suit by filing an application under Order VII Rule 11 CPC, asserting that the civil court’s jurisdiction was barred under Section 34 of the SARFAESI Act. While the trial court accepted this objection and rejected the plaint, the first appellate court restored the suit, a decision that was later affirmed by the High Court, leading the Bank to approach the Supreme Court.
III. Issues for Consideration
The Supreme Court was required to determine whether the civil court’s jurisdiction was barred under Section 34 of the SARFAESI Act. In this context, the Court examined whether disputes relating to title and the validity of sale or mortgage deeds could be adjudicated by the Debt Recovery Tribunal, whether a plaint containing multiple reliefs could be rejected in its entirety under Order VII Rule 11 CPC if one relief was barred by law, and whether the High Court was justified in restoring the suit despite objections concerning jurisdiction and court fees.
IV. Submissions of the Parties
On behalf of the Bank, it was contended that once proceedings under the SARFAESI Act were initiated, all matters relating to possession and enforcement of security interests fell exclusively within the jurisdiction of the Debt Recovery Tribunal. Relying on Section 34 of the Act, the Bank argued that the civil court lacked jurisdiction to entertain the suit. It was further submitted that since the relief of possession was barred, the plaint was liable to be rejected under Order VII Rule 11 CPC, as a suit could not proceed on partially maintainable reliefs.
In response, the plaintiff contended that the suit primarily involved disputes of title and challenges to the legality of conveyances, which the Debt Recovery Tribunal was neither competent nor empowered to adjudicate. It was argued that the SARFAESI Act does not contemplate the adjudication of complex title disputes and that civil courts continue to retain jurisdiction over such matters under Section 9 CPC. The plaintiff further submitted that rejection of the plaint in its entirety was impermissible where substantial and independent reliefs were otherwise maintainable in law.
V. Analysis and Reasoning of the Supreme Court
The Supreme Court commenced its analysis by reiterating the settled principle that exclusion of civil court jurisdiction is not to be readily inferred and must be strictly construed. The Court emphasized that unless a statutory bar is explicit or clearly implied, the jurisdiction of civil courts under Section 9 CPC remains intact.
While acknowledging that Section 34 of the SARFAESI Act bars civil court jurisdiction in respect of matters which the Debt Recovery Tribunal or the Debt Recovery Appellate Tribunal is empowered to determine, the Court clarified that this exclusion is limited and confined to matters falling strictly within the statutory framework of the Act. Upon examining the nature of the dispute, the Court held that questions relating to title, ownership, and the validity of sale or mortgage deeds are inherently civil in character and lie outside the adjudicatory competence of the Debt Recovery Tribunal. The Tribunal’s jurisdiction, the Court observed, is limited to examining the legality of measures taken by secured creditors and does not extend to granting declarations of title or invalidating conveyances.
On the issue of rejection of the plaint under Order VII Rule 11 CPC, the Supreme Court reaffirmed that a plaint must be rejected as a whole and not in part. The Court held that where a plaint discloses multiple reliefs and some of them are maintainable in law, the plaint cannot be rejected in its entirety merely because one relief may be barred. In such cases, the suit must be permitted to proceed with respect to the maintainable reliefs, leaving it open to the trial court to mold the reliefs at the appropriate stage.
The Court further held that objections relating to valuation and court fees did not justify rejection of the plaint at the threshold, as such issues could be addressed during trial. Consequently, the Supreme Court dismissed the Bank’s appeals and upheld the orders restoring the civil suit, holding that the trial court had erred in rejecting the plaint.
VI. Conclusion
The decision in Central Bank of India & Anr. v. Smt. Prabha Jain & Ors. represents a significant reaffirmation of the limits of statutory exclusion of civil court jurisdiction under the SARFAESI Act. By clearly distinguishing between enforcement of security interests and adjudication of title disputes, the Supreme Court has ensured that civil remedies and third-party rights are not extinguished by the operation of special recovery statutes.