STATE BANK OF PATIALA versus MUKESH JAIN & ANR.
[2016] 8 S.C.R. 427, Supreme Court of India, 2016
Outcome: Appeal(s) allowed (Granted)
Segment: Ratio
[2016] 8 S.C.R. 427 
STATE BANK OF PATIALA 
v. 
MUKESH JAIN & ANR. 
(Civil Appeal No. 210 of2007) 
NOVEMBER 08, 2016 
[ANIL R. DAVE AND L. NAGESWARA RAO, JJ.) 
A 
B 
Securitisation and Reconstruction of Financial Assets and 
Enforcement of Security Interest Act, 2002 - ss. 13(4), 17 and 34 -
Suit against proceedings initiated uls. 13(4) - lnvolving debt less 
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than Rs. 10 lakhs - Whether the suit is not maintainable in view of 
bar u!s. 34 or is it maintainable in view of s. 1 (4) of DRT Act which 
debars the jurisdiction of the Tribunal in respect of debts below Rs. 
JO lakhs - Held: The jurisdiction of civil court is barred in respect 
of action taken under the SARFAESl Act and the remedy available 
is before the Tribunal under DRT Act - As per s. I (4) of DRT Act, 
D 
provisions of DRT Act would not apply where the amount of debt is 
less than Rs. JO /akhs - But the aggrieved debtor cannot be left 
without any remedy - Therefore the provision uls. 1 (4) of DRT Act 
can be interpreted in such a manner which would not adversely 
affect legal remedy to a debtor - Bar uls. 1( 4) can be interpreted as 
E 
limited to the original jurisdiction of the Tribunal - Tribunal will 
have the jurisdiction to entertain the case in re~pect of proceedings 
under. the Act (where the amount involved is less than Rs. JO lakhs) 
in exercise of its appellate jurisdiction u/s. 17 - Recovery of Debts 
Due to Banks and Financial institutions Act, 1993 - s. 1 (4). 
Allowing the appeal, the Court
HELD: 1 Upon perusal of Section 34 of the Securitisation 
and Reconstruction of.the Financial Assets and Enforcement of 
Security Interest Act, 2002, (SARFAESI Act), it is very clear that 
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no Civil Court is having jurisdiction to entertain any suit or G 
proceeding in respect of any matter which a Debt Recovery · 
Tribunal or the appellate Tribunal is empowered by or under the 
SARFAESI Act to determine the dispute. Further, the Civil Court 
has no right to issue any injunction in ,pursuance of any action 
taken under the SARFAESI Act or under the provisions of the 
427 
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SUPREME COURT REPORTS 
[2016] 8 S.C.R. 
A Recovery of Debts Due to Banks and financial Institutions Act, 
1993 (DRT Act). In view of a specific bar, no Civil Court can 
entertain any suit wherein the proceedings initiated under Section · 
13 of the SARF AESI Act are challenged. SARF AESI Act had been 
enacted in 2002, whereas the DRT Act had been enacted in 1993. 
8 
The legislature is presumed to be aware of the fact that the 
Tribunal constituted under the DRT Act would not have any 
jurisdiction to entertain any matter, wherein the subject matter 
of the suit is less than Rs.IO lakh. In the aforestated 
circumstances, one will have to make an effort to harmonize both 
the statutory provisions. [Paras 15, 16 and I7][433-D-G) 
c 
2.I In normal circumstances, there cannot be any action of 
any authority which cannot be challenged before a Civil Court 
unless there is a statutory bar with regard to challenging such an 
action. Section 34 specifically provides the bar of jurisdiction and 
therefore, the order passed under Section I3 of the SARFAESI 
o Act could not have been challenged by respondent No. I-debtor 
before any Civil Court. In the aforestated circumstances, the only 
remedy available to respondent No.1-debtor can be to approach 
the Tribunal under the provisions of the DRT Act read with the 
provisions of the SARFAESI Act. But, as per Section 1(4) of the 
DRT Act, provisions of the DRT Act would not apply where the 
E amount of debt is less than Rs.IO lakh.
The aggrieved debtor 
can never be without any remedy and the legislature would 
normally not leave a person without any remedy when a harsh 
action against him is initiated under the provisions of the 
SARFAESI Act. Therefore, the provision of' Section 1(4) of the 
F DRT Act must be read in a manner which would not adversely 
affect a debtor, who wants to have some remedy against an action 
initiated under the provisions of Section 13 of the Act. [Paras I8, 
19, 20 and 24)[434-A-D; 435-B-C) 
Marclia Chemicals Ltd. and Ors. v. Union of India and 
G 
Or~·. 2004 (4) SCC 311: 2004 (3) SCR 982 - relied 
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on. 
2.2 So, when the jurisdiction of the Tribunal has been 
referred to in Section I(4) of the DRT Act, which limits the 
jurisdiction of the Tribunal to Rs.10 lakh, primafacie, the intention
STATE BANK OF PATIALA v. MUKESH JAIN & ANR. 
429 
of the legislature is to limit the original jurisdiction of the Tribunal. A 
Thus, the Tribunal would be exercising its appellate jurisdiction 
u/s. 17 of the SAIU"'AESI Act when the action initiated under the 
provisions of Section 13 of the Act is challenged before the 
Tribunal. Section 17 specifically provides a right to the aggrieved 
debtor to challenge the validity of an action initiated under Section 
8 
13(4) of the SARFAESI Act before the Tribunal. Moreover, the 
SARFAESI Act was enacted in 2002 and the legislature is 
presumed to have knowledge about the provisions of Section 
1(4) of the DRT Act. So harmonious reading of both the 
aforestated Sections would not be contrary to any of the legal 
provisions. [Paras 21, 23 and 25][434-E, G; 435-A, C-D] 
C 
· 3. Application submitted by the appellant-bank under Order 
VII Rule 11 of the CPC should have been granted by the trial 
Court as according to Section 34 of the SARFAESI Act, a civil 
court has no jurisdiction to entertain any appeal arising under 
the SARFAESI Act. The Debt Recovery Tribunal constituted 
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under the DRT Act has jurisdiction to entertain ail appeal as per 
Sectfon 17 of the SARFAESI Act even if the amount involved is 
less than Rs.to lakh. But, the said appellate jurisdiction need 
not be misunderstood with the original jurisdiction of the Tribunal. 
[Paras 26 and 27][435-E-F] 
2004 (3) SCR 982 
Case Law Reference 
relied on 
Paras 10, 24 
CIVIL
APPELLATE JURISDICTION: Civil Appeal No. 210 of 
2007. 
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F 
From the Judgment and Order dated 08.04.2005 of the High Cou11 
·Of Delhi at New Delhi in Revision Petition No. 242 of2004. 
Vishnu Mehra, (For B. K. Satija), Adv. for the Appellant. 
The Judgment of the Court was delivered by 
ANILR.DAVE,J. I. Being aggrieved bythejudgmentdated 81h 
G 
April, 2005 delivered in Civil Revision Petition No.242 of2004 by the 
High Court of Delhi, this appeal has been filed by the appellant, whose 
application filed under Order VII Rule 11 of the Code of Civil Procedure, 
1908 had been rejected by the trial Court and being aggrieved by the 
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430 
SUPREME COURT REPORTS 
(2016] 8 S.C.R. 
A order of rejection dated 9rl' February, 2004, the aforestated Civil Revision 
Petition was tiled before the High Court, but the said Civil Revision 
Petition was also rejected by the impugned order and therefore, this 
appeal has been filed. 
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2. The facts giving rise to the present litigation, in a nutshell, are as 
under: 
The appellant is a nationalized bank which had lent Rs.8,00,000/-
(Rupees eight lakh) to respondent no. I by way of a term loan on ceriain 
conditions and so as to secure the said debt, respondent no. I debtor had 
mortgaged his immovable property forming part of premises bearing 
no.C-8/298, Yamuna Vihar, Delhi. As respondent no. I committed default 
in re-payment of the said loan, the appellant initiated proceedings under 
the provisions of the Securitisation and Reconstruction of Financial Assets 
and Enforcement of Security Interest Act, 2002 (hereinafter referred to 
as 'the Act'). When notice under Section 13(2) of the Act had been 
issued and further proceedings were sought to be initiated by the appellant 
against respondent no. I, the said proceedings had been challenged by 
respondent no. I by filing Civil Suit No.4 of2003 in the CourtofCivil 
Judge, Delhi. 
3. In the said suit, the appellant filed an application under Order 
VII Rule 11 of the CPC contending that the Court had no jurisdiction to 
entertain the suit in view of the provisions ofSection 34 read with Section 
13(2) of
the Act, which prohibits a Civil Court from dealing with the 
matters arising under the provisions of the Act. After considering the 
averments made in the application as well as the reply given by respondent 
no.I and upon hearing the concerned counsel, the said application had 
been rejected by the trial Comi by an order dated 91h February, 2004. 
4. Being aggrieved by the rejection of the said application, the 
appellant filed Civil Revision Petition No.242 of2004 in the High Court 
of Delhi. The said petition was also rejected by the impugned judgment 
dated 8d' April, 2005 and being aggrieved by.the said judgment, the present 
G appeal has been filed by the appellant. 
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5. The reason for which the application filed under Order VII 
Rule I I of the CPC had been rejected by the trial Court was that the suit 
was maintainable in view of the fact that the subject matter of the suit 
i.e. the amount which was sought to be recovered by the appellant from 
respondent no. I (original plaintifl) was less than Rs. I 0,00,000/- (Rupees
STATE BANK OF PATIALA v. MUKESH JAIN & ANR. 
431 
[ANIL R. DAVE, J.] 
Ten lakh) and according to the provisions of Section 1 ( 4) of the Recovery 
A 
of Debts due to Banks and Financial Institutions Act, 1993 (hereinafter 
referred to as 'the DRT Act'), the provisions of the DRT Act would not 
apply, where the amount of debt due to any bank or financial institution 
is less than Rs. 10 lakh and therefore, it was not open to the Debt 
Recovery Tribunal (hereinafter referred to as "the Tribunal") to entertain 
the matter as the amount claimed in the suit was less than Rs. I 0 lakh. 
B 
6. In the aforestated circumstances, the trial Court was of the 
view that as the ORT Act had no jurisdiction to entertain an appeal 
against the order passed under the provisions of the Act, a civil suit was 
maintainable and therefore, the application made under Order Vil Rule 
11 of the CPC had been rejected by the trial Court. The High Court 
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confirmed the said view of the trial Court. 
7. The learned counsel appearing for the appellant, challenging 
the validity of the impugned judgment, submitted thatthe view expressed 
by the High Court confirming rejection of the application under Order 
VII Rule 11 is not correct because the Civil Court has no jurisdiction to D 
entertain any proceedings under the Act as per the provisions of Section 
34 of the Act. Section 34 of the Act expressly bars the jurisdiction of the 
Civil Court from dealing with any matter which arises under the Act. 
8.
The learned counsel submitted that the trial Court as well as the 
High Court were not correct while coming to the conclusion that the 
Tribunal had no jurisdiction to entertain an appeal against the order passed 
under the Act in pursuance of the provisions of Section I ( 4) of the ORT 
Act. 
9. He also submitted that the Act was enacted in 2002, whereas 
the ORT Act was enacted in 1993. As the Act was enacted later in 
point of time, provisions of Section 34 of the Act would prevail and 
therefore, no proceedings of any type arising under the Act can be 
entertained by a Civil Court. He, therefore, submitted that the application 
filed by the appellant before the trial Court under Order VII Rule 11 
should have been granted by the trial Court. 
10. So as to substantiate his submission, the learned counsel relied 
upon a judgment delivered in the case ofMardia Chemicals Ltd. and 
others v. Union of India and others 
2004(4) SCC 311. For the 
aforestated reasons he submitted that the appeal deserved to be allowed 
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and the impugned judgment should be set aside so that the Civil Court 
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432 
SUPREME COURT REPORTS 
[2016) 8 S'.C.R. 
A can be restrained from proceeding further with the Suit on the ground of 
lack of jurisdiction. 
I I .Though served, nobody appeared for the respondents. 
12. We have heard the learned counsel at length and also 
considered the relevant provisions of law referred to and the judgment 
B cited by hini. 
13. The issue involved in the appeal is whether, in the instant case, 
the suit was maintainable against the proceedings initiated under the 
provisions of the Act. The application filed by the appellant under Order 
VII Rule 11 of the CPC was rejected. mainly for the reason that the 
C Tribunal had no jurisdiction to entertain the proceedings under the 
provisions of Section 1(4) of the DRT Act as the value of the suit was 
less than Rs. I 0 lakh and therefore, the CivilSuit was the only remedy 
available to the respondents (original plaintiffs). 
14. It would be beneficial to consider the relevant provisions of 
D · the Act referred to hereinabove: 
"17. Right to appeal (I )Any person (including borrower), 
aggrieved by any of the measures referred to in sub-section 
(4) of Section 13 taken by the secured creditor or his 
authorized officer under this Chapter, [may make an 
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application along with such fee, as may be prescribed) to 
the Debts Recovery Tribunal havingjurisdiction in the matter 
within forty-five days from the date on which such 
measures had been taken: 
Provided that different fees may be prescribed for making
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the application by the borrower and the person other than 
the borrower. 
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............................................... 
. 
x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x 
" 
"34. Civil Court not to have jurisdiction.- No civil Court 
shall have jurisdiction to entertain any suit or proceeding in 
respect of any matter which a Debts Recovery Tribunal or 
the Appellate Tribunalis empowered by or underthis Act 
to detennine and no injunction shall be granted by any Court 
or other authority. in respect of any action taken or to be
.. 
STATE BANK OF PATIALA v. MUKESH JAIN & ANR. 
433 
[ANIL R. DAVE, J.] 
taken in pursuance of any power conferred by or under 
this Act or under the Recovery of Debts Due to Banks and 
Financial Institutions Act, 1993 (51 of 1993)." 
Section 1(4) of the DRT Act reads as under: 
"l. Short title, extent, commencement and 
application. -
(1) 
(2) 
(3) 
(4) The provisions of this Act shall not apply where the' 
amount of debt due to any bank or financial institution or to 
a consortium of banks or financial institutions is less than 
ten lakh rupees or such other amount, being not less than 
one lakh rupees, as the Central Government may, by 
notification, specify." 
15. Upon perusal of Section 34 of the Act, it is very clear that no 
Civil Court is havingjurisdiction to entertain any suit or proceeding in 
respect of any matter which a Debt Recovery Tribunal or the appellate 
Tribunal is empowered by or under the Act to determine the dispute. 
Further, the Civil Court has no right to issue any injunction in pursuance 
of any action taken under the Act or under the provisions of the DRT 
Act. 
16. In view of a specific bar, no Civil Court can ente1tain any suit 
wherein the proceedings initiated under Section 13 of the Act are 
challenged. The Act had been enacted in 2002, whereas the DRT Act 
had been enacted in 1993. The legislature is presumed to be aware of 
the fact that the Tribunal constituted under the DRT Act would not have 
any jurisdiction to entertain any matter,
wherein the subject matter of 
the suit is less than Rs. I 0 lakh. 
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B 
c. 
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17. In the aforestated circumstances, one will have to make an 
G 
effort to harmonize both the statutory provisions. According to Section 
17 of the Act, any person who is aggrieved by any of the actions taken 
under Section 13 of the Act can approach the Tribunal under the provisions 
of the DRT Act. 
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434 
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SUPREME COURT REPORTS 
(2016] 8 S.C.R. 
18. In normal circumstances, there cannot be any action of any 
authority which cannot be challenged before a Civil Court unless there 
is a statutory bar with regard to challenging such an action. Section 34 
specifically provides the bar of jurisdiction and therefore, the order passed 
under Section 13 of the Act could not have been challenged by respondent 
no. I debtor before any Civil Court. 
19. In the aforestated circumstances, the only remedy available to 
respondent no. I debtor can be to approach the Tribunal under the 
provisions of the DRT Act read with the provisions of the Act. But, one 
would feel that as per Section 1(4) of the ORT Act, provisions of the 
ORT Act would not apply where the amount of debt is less than Rs. J 0 
lakh. 
20. The aforestated provision of Section 1(4) of the DRT Act 
must be read in a manner which would not adversely affect a debtor, 
who wants to have some remedy against an action initiated under the 
provisions of Section 13 of the Act. 
21. The ORT Act mainly pertains to institution of proceedings by 
a bank for recovery of its debt when the debt is not less than Rs. I 0 lakh. 
If the debt is less than Rs. I 0 lakh, no suit can be filed by the creditor 
bank in the Tribunal under the provisions of the ORT Act. So, when the 
jurisdiction of the Tribunal has been referred to in Section 1(4) of the 
E DRT Act, which limits the jurisdiction of the Tribunal to Rs. IO lakh, 
prima
facie, the intention of the legislature is to limit the original 
jurisdiction of the Tribunal. If any claim is to be made before the Tribunal, 
the amount must be more than Rs. I 0 lakh and if the amount is less than 
Rs. I 0 lakh, the creditor bank will have to file a suit in a Civil Court. So, 
F one can safely interpret the provisions of Section I (4) of the ORT Act to 
the effect that it deals with original jurisdiction of the Tribunal under the 
provisions of the ORT Act. 
22. In the instant case, we are concerned with the challenge to 
the proceedings initiated under Section 13 of the Act. There is a specific 
G provision in the Act to the effect that the proceedings initiated under the 
Act cannot be challenged before a Civil Court because the Civil Court 
has no jurisdiction to entertain any matter arising under the Act and in 
that event, the concerned debtor has to approach the Tribunal under the 
provisions of Section 17 of the Act. 
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23. Thus, the Tribunal would be exercising its appellate jurisdiction
STATE BANK OF PATIALA v. MUKESH JAIN & ANR. 
435 
[ANIL R. DAVE, J.] 
when the action initiated under the provisions of Section 13 of the Act is 
A 
challenged before the Tribunal. There is a difference between the 
Tribunal's original jurisdiction under the provisions of the DRT Act and 
the appellate jurisdiction under the Act. 
24. The issue with regard to availability of a forum for challenging 
the action under the provisions of the Act had been dealt with by this 
Court in the case ofMardia Chemicals Ltd. (supra). This Court, in 
the said case, unequivocally held that the aggrieved debtor can never be 
without any remedy and we firmly believe that the legislature would 
normally not leave a person without any remedy when a harsh action 
against him is initiated under the provisions of the Act. 
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25. So as to know the appellate jurisdiction of the Tribunal, one 
has to look atthe provisions of the Act as Section 17 of the Act specifically 
provides a right to the aggrieved debtor to challenge the validity of an 
action initiated under Section 13( 4) of the Act before the Tribunal. . 
Moreover, the Act was enacted iti 2002 and the legislature is presumed 
to have knowledge about the provisions of Section 1(4) of the ORT Act. · D 
So harmonious reading of both the aforestated Sections would not be 
contrary to any of the legal provisions. 
26. For the aforestated reasons, we are of the view that the 
application submitted by the appellant bank under Order VII Rule 11
of 
the CPC should have been granted by the trial Court as, according to 
E 
Section 34 of the Act, a Civil Court has no jurisdiction to entertain any 
appeal arising under the Act. 
27. Thus, we hold that the Debt Recovery Tribunal constituted 
under the DRT Act has jurisdiction to ente11ain an appeal as per Section 
17 of the Act even if the amount involved is less than Rs. I 0 lakh. But, 
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the said appellate jurisdiction need not be misunderstood with the original 
jurisdiction of the Tribunal. 
28. For the aforestated reasons, the impugned judgment as well 
as the order rejecting the application filed under Order VII Rule 11 are 
set aside. The appeal is allowed with no order as to costs. 
G 
Kalpana K. Tripathy 
Appeal allowed. 
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