Borrower’s Widow Loses Injunction Against ICICI Bank’s SARFAESI Possession Action as Orissa HC Cites Section 34 Bar

Three borrowers obtained home and top-up loans from ICICI Bank secured by a mortgage over the suit property.

After the accounts were classified as non-performing, the Bank issued a demand notice under Section 13(2) of the SARFAESI Act and subsequently a possession notice under Section 13(4).

The Plaintiff, wife of one borrower, sued for declarations and an injunction restraining the Bank from taking possession or otherwise dealing with the property.

The Senior Civil Judge granted the injunction, and the appellate court affirmed it.

The Bank challenged both orders under Article 227, contending that Section 34 barred the injunction and that the Plaintiff’s remedy lay before the Debts Recovery Tribunal (DRT).

Section 34 of the SARFAESI Act bars civil-court jurisdiction over matters the DRT or DRAT is empowered to determine and separately prohibits any court or authority from granting an injunction in respect of action taken or to be taken under the Act.

Under Sections 17(1)–(3), an aggrieved person may challenge measures under Section 13(4), and the Tribunal may examine their legality and grant appropriate relief, including restoration of possession; Section 19 provides for compensation.

Mardia Chemicals Ltd. v. Union of India holds that the bar extends to matters in respect of which SARFAESI action may be taken in the future, subject to a narrow exception for properly pleaded fraud or an obviously untenable claim.

Jagdish Singh v. Heeralal confirms that “any person” aggrieved may seek relief under Section 17.

Under Shalini Shyam Shetty v. Rajendra Shankar Patil and Garment Craft v. Prakash Chand Goel, Article 227 permits supervisory intervention where a subordinate court assumes jurisdiction it lacks or acts in flagrant disregard of law, causing manifest injustice.

The courts below granted the injunction because they considered that withdrawal of an earlier Section 13(2) notice left the Bank without authority to take possession.

The High Court held that this reasoning did not avoid Section 34: if the later notices were valid, objections to their defects—including the alleged absence of an address, signature or loan-account number—were matters for the DRT; if no valid notice remained, the injunction still restrained action yet to be taken under the Act, which Section 34 also prohibits.

The Plaintiff had not pleaded particularised fraud sufficient to invoke the narrow Mardia Chemicals exception.

The concurrent orders therefore exceeded the civil courts’ jurisdiction, warranting Article 227 intervention; the earlier finding that the suit was maintainable did not confer jurisdiction to grant an injunction prohibited by Section 34.

It left the Plaintiff at liberty to apply to the DRT under Section 17, including for interim relief, and directed that any application made within four weeks be considered on its merits.

The trial court was left to decide the suit’s maintainability in accordance with law; the High Court expressed no opinion on that question.