Court holds that disputed title issues under SARFAESI Act must be decided by Civil Court, grants petitioners two months' protection to file suit
In a significant ruling dated October 8, 2026, the Calcutta High Court, presided over by Justice Partha Sarathi Chatterjee, disposed of a writ petition filed by Amit Kumar Saha and another against Canara Bank. The petitioners challenged a possession notice issued by the bank under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), relating to a residential flat located at Premises No. 237, Netaji Subhas Chandra Bose Road, Kolkata.
The petitioners claimed ownership of the flat through a registered deed of conveyance dated December 4, 2021, supported by mutation records, tax receipts, and electricity bills indicating continuous possession since 2021. However, the bank disputed the authenticity and validity of this deed, contending that one owner had expired before the deed's execution and that the title was therefore questionable. The bank alleged that the flat was subject to an equitable mortgage created by a third party, Rishita Nandi, who defaulted on the loan, leading to SARFAESI proceedings and the issuance of the possession notice on October 1, 2026.
Justice Chatterjee held that since the fundamental validity of the petitioners' title was seriously disputed, the question of ownership and genuineness of the deed could not be resolved through writ jurisdiction. Instead, it required adjudication by a competent Civil Court where evidence could be properly examined. The Court emphasized that Section 34 of the SARFAESI Act bars Civil Courts only from matters within the Debt Recovery Tribunal's jurisdiction and does not preclude suits challenging foundational title disputes.
Given the peculiar facts, the Court set aside the possession notice and directed the bank to restore possession of the property to the petitioners immediately. It also restrained the bank from taking any coercive action for two months, allowing the petitioners time to initiate a civil suit and seek interim relief. Failure to do so would automatically vacate the protection granted. The Court expressly refrained from commenting on the validity or legal effect of the disputed documents, leaving all such issues open for determination by the Civil Court.
This judgment underscores the principle that disputed title disputes underlying SARFAESI possession notices must be resolved through appropriate civil proceedings and not through writ petitions, ensuring proper evidentiary scrutiny and legal process.
Bottom Line:
SARFAESI Act - Where petitioners' title to secured asset is founded on a deed whose genuineness and validity are seriously disputed by Bank, such disputed questions of title cannot be adjudicated in writ jurisdiction and must be decided by competent Civil Court - Bar under Section 34 of SARFAESI Act does not exclude Civil Court's jurisdiction to decide foundational title dispute - However, in peculiar facts, possession notice was set aside and Bank was directed to restore possession for limited period to enable petitioners to approach Civil Court.
Statutory provision(s):
Article 226 of the Constitution of India, SARFAESI Act 2002 Sections 13, 14, 34
Amit Kumar Saha v. Canara Bank, (Calcutta) : Law Finder Doc Id # 2996376
