Friday, February 9, 2007

SARFAESI Act - Section 34 - Jurisdiction of Civil Court

The Branch Manager, State Bank of India, Commercial Branch, Ongole and anr Vs. Chinigepalli Lathangi, D/o. Umamaheswara Rao and 3 others
Civil Miscellaneous Appeal No.340 OF 2005
Date of Decision 25-11-2005
(For full text of Judgment click on the above hyperlink)
Section 34 of SARFAESI - No injunction can be granted by Civil Court
Reported in 2006 (1) ALT 20 (DB)
  • From a conjoint reading of the provisions of the Act and the observations of the apex Court in Mardia Chemicals' case (supra), it is obvious that having taken away the jurisdiction of the civil court, the Legislature did not fail in their duty to accord necessary safeguards to the aggrieved parties/persons, such as the plaintiffs in this case, by way of approaching the Debt Recovery Tribunal, in which event, the Tribunal is couched with the duty under sub-section (3) of Section 17 of the Act whereby the Tribunal is authorized to pass any interim orders as deemed fit and proper.
  • Therefore, when a notification had been issued by the Bank, exercising their jurisdiction under Section 13 (4) of the Act, the only course open to the aggrieved persons, including the borrowers, the guarantors or any person/persons aggrieved thereof, is to proceed under Section 17 of the Act.
  • Furthermore, notwithstanding the nature of the suit, the Act expressly prohibited the civil court from granting any order of injunction against the secured creditors when such secured creditors exercised the jurisdiction under the Act.

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