Civil Court's Jurisdiction in Partition Suit Not Barred, But Injunction Against SARFAESI Action Prohibited
In a significant ruling, the Kerala High Court on July 8, 2026, upheld the decision of the third Additional Sub Court, Ernakulam, to dismiss an interim injunction application in a suit involving partition, declaration, and injunction against proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). The appeal, filed by Deepa George, sought to prevent the third respondent bank from taking possession of the disputed property, which was claimed to be part of her father's estate.
The case, Deepa George v. S. Valsa, centered around a property mortgage allegedly created by the appellant's mother without proper authorization, and the appellant's claim to a share of the property. The appellant argued that the civil court had jurisdiction over partition suits, and thus, an injunction should be granted to preserve the property status quo.
Justice S. Manu, however, clarified the dual aspects of Section 34 of the SARFAESI Act. The first limb restricts civil courts from adjudicating suits that fall within the Debt Recovery Tribunal's purview. The second limb distinctly prohibits courts from issuing injunctions against SARFAESI proceedings, even if the suit itself is not barred under the first limb. This interpretation aligns with legislative intent to protect SARFAESI actions from judicial interference, ensuring swift recovery processes for secured creditors.
The court emphasized the importance of reading the two limbs of Section 34 independently, noting the overriding effect of Section 35 of the SARFAESI Act. While the suit for partition might be maintainable, the civil court's ability to grant injunctions in such cases is curtailed to prevent disruptions to SARFAESI proceedings.
The judgment referenced several Supreme Court decisions, including Central Bank of India v. Prabha Jain, which distinguished cases like Jagdish Singh v. Heeralal, highlighting that the Debt Recovery Tribunal lacks jurisdiction over partition matters. Despite this distinction, the prohibition against injunctions remains firm, reinforcing the SARFAESI Act's supremacy in recovery actions.
The court also addressed precedents from various High Courts, supporting the interpretation that while civil suits might proceed in certain contexts, injunctions against SARFAESI proceedings are universally barred.
Ultimately, the Kerala High Court dismissed the appeal, affirming that no interim relief through injunction could be granted against the bank's actions under the SARFAESI Act. The decision underscores the judiciary's role in balancing individual rights with statutory mechanisms designed to expedite financial recoveries.
Bottom line:-
Section 34 of the SARFAESI Act, 2002 has two distinct limbs - one relating to the bar on the jurisdiction of civil courts to entertain suits in matters that fall within the jurisdiction of the Debt Recovery Tribunal (DRT) or Appellate Tribunal, and the other prohibiting civil courts from granting injunctions against proceedings under the SARFAESI Act. Even if a suit is not barred under the first limb, the second limb prevents the issuance of any interim injunction against SARFAESI proceedings.
Statutory provision(s): Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Section 34, Section 35
Deepa George v. S. Valsa, (Kerala) : Law Finder Doc id # 2937625
