M/S Srijan Hospital vs Bank Of Baroda

A.F.R.
HIGH COURT OF JUDICATURE AT ALLAHABAD
FIRST APPEAL FROM ORDER No. - 994 of 2026
M/S Srijan Hospital
.....Appellant(s)
Versus
Bank Of Baroda
.....Respondent(s)
Counsel for Appellant(s) : Anil Kumar Rai, Rishi Kant Rai
Counsel for Respondent(s) :
Court No. - 39
HON'BLE ABDUL SHAHID, J.
1. Heard learned counsel for the appellant/plaintiff.
2. Learned counsel for the appellant has submitted that the entire loan
amount was not disbursed and that, even prior to the disbursement of the
entire loan amount, recovery proceedings were initiated against the
appellant. Hence, he filed the original civil suit before the learned trial court.
3. He has submitted that the sanctioned loan amount was Rs. 2,84,50,000/-
(Rupees Two Crores Eighty-Four Lakhs Fifty Thousand only), whereas the
disbursed amount was Rs. 1,95,00,000/- (Rupees One Crore Ninety-Five
Lakhs only). However, as per Annexure No. 4, being the true photocopy of
the terms and conditions relied upon by the appellant, it is mentioned as
“Facility – Term Loan (Fresh) under LGSCAS” with a limit of Rs. 259.50
lakhs (Rupees Two Crores Fifty-Nine Lakhs and Fifty Thousand only) for
the purpose of construction of a building, furnishing, and purchase of
equipment. Whereas, in the said agreement, which is a memorandum of
entry, the nature of the facility has been mentioned as: (i) Cash Credit
(Hypothecation of Stocks and Book Debts) – Rs. 25.00 lakhs; and (ii) Term
Loan (Fresh) under LGSCAS – Rs. 259.50 lakhs. Hence, it appears that there
was a cash credit limit of Rs. 25 lakhs and a term loan of Rs. 259.50 lakhs.
4. Section 34 of the Securitisation and Reconstruction of Financial Assets
and Enforcement of Security Interest Act, 2002 (SARFAESI Act, 2002) is
quoted hereinbelow:

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" 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
Tribunal is empowered by or under this Act to determine and no
injunction shall be granted by any court or other authority in
respect of any action taken or to be 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)."
5. It is also mentioned in Section 35 of the SARFAESI Act, 2002, which is
quoted hereinbelow:
.-The
"35. The provisions of this Act to override other laws
provisions of this Act shall have effect, nothwithstanding anything
inconsistent therewith contained in any other law for the time
being in force or any instrument having effect by virtue of any
such law."
6. The learned trial court rejected Application No. 6-C and disposed of
Objection No. 35-C. The application for temporary injunction filed by the
appellant/plaintiff under Order XXXIX Rules 1 and 2 C.P.C. was rejected by
a detailed order dated 21.02.2026, which is under challenge before this Court
in the present appeal.
7. The learned trial court specifically held that the purpose and utilization of
the loan are required to be considered. The defendant submitted Paper No.
19-C. As per the said document, the bank had sanctioned the LGSCAS loan
guarantee scheme for the Covid-affected healthcare sector for construction
of the building, furnishing, and purchase of equipment.
8. The loan amount and cash credit limit were accordingly provided. The
contention of the appellant/plaintiff is that he received verbal assurance and,
therefore, converted the project from a hospital to a hotel. Such conduct
amounts to a fundamental breach, as the loan amount and the cash credit
limit were sanctioned specifically for construction of a building for the
Covid-affected healthcare sector, including furnishing and purchase of
equipment. However, without obtaining any prior approval for change of
purpose, the appellant himself converted the hospital project into a hotel
project. The plaintiff/appellant has already constructed a G+5 storeyed hotel

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in place of the aforesaid hospital building.
9. The learned trial court has relied upon the law laid down by the Supreme
Court in M/S Gujarat Bottling Co. Ltd. & Ors. vs. The Coca Cola Co. & Ors.
, wherein it has been held that a person approaching a court of law for grant
of injunction must act bona fide and must approach the Court with clean
hands.
10. The bank placed before the learned trial court a copy of the order passed
by the learned Additional District Magistrate (Finance and Revenue),
Varanasi Zone, District Varanasi in Case No. 7873 of 2025 dated
24.12.2025, whereby an order for taking possession of the mortgaged
property in question was passed.
11. Learned counsel for the bank has also relied upon Section 34 of the
SARFAESI Act, 2002, contending that the civil court has no jurisdiction in
the matter. An appropriate order under Section 14 of the Act has already
been passed by the competent authority with regard to the property in
question.
12. The defendant has also brought on record Memo of Appeal No. 33 of
2026 (M/s Srijan Hospital Versus Bank of Baroda). The learned trial court
has further held that the plaintiff had concealed the fact of filing the said
appeal in the pleadings before the trial court.
13. In view of the aforesaid facts, circumstances, and provisions of law, it
clearly appears that the original suit filed by the appellant is barred by
Section 34 of the SARFAESI Act, 2002. The civil court has no jurisdiction
to entertain the suit. The property in dispute has already been mortgaged,
proceedings under the SARFAESI Act, 2002 have already been initiated,
and possession of the mortgaged property has already been transferred vide
order dated 24.12.2025.
14. The competent authority has already passed an order under Section 14 of
the SARFAESI Act, 2002. The original suit has been filed with concealment
of material facts. The appellant/plaintiff has materially changed the purpose
of the aforesaid loan. He had entered into an agreement with the respondent-
bank under the LGSCAS Loan Guarantee Scheme for construction of a
building, furnishing, and purchase of equipment for the Covid-affected
healthcare sector.

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15. The appellant did not approach the learned trial court with clean hands
and filed the original suit while concealing material facts.
16. There is neither any illegality nor perversity in the impugned order dated
21.02.2026 passed by the learned Civil Judge (Senior Division), Varanasi in
Original Suit No. 1758 of 2025 (M/s Srijan Hospital Versus Bank of
Baroda). Accordingly, the impugned order dated 21.02.2026 is hereby
affirmed.
17. The present appeal lacks merit and is liable to be dismissed. It is
dismissed accordingly.
May 11, 2026
K.K. Maurya
(Abdul Shahid,J.)
Digitally signed by :-
KAMLESH KUMAR MAURYA
High Court of Judicature at Allahabad