Central Bank of India & Anr. vs. Smt. Prabha Jain & Ors., Civil Appeal No. 1876 of 2016

The Supreme Court of India, in Central Bank of India & Anr. vs. Smt. Prabha Jain & Ors. [Civil Appeal No. 1876 of 2016, decided January 9, 2025; 2025 INSC 95], clarified the jurisdictional boundaries between civil courts and the Debt Recovery Tribunal (DRT) under the SARFAESI Act, 2002, and the interpretation of Order VII Rule 11 of the Civil Procedure Code (CPC).

Facts and Background
The dispute arose over a property originally purchased by the plaintiff’s father-in-law in 1967 and inherited equally by his heirs, including the plaintiff’s late husband. After the husband’s death, the plaintiff inherited his share. The husband’s elder brother, without legal partition, sold a portion of the property in 2008 to Parmeshwar Das Prajapati, who mortgaged it to the Central Bank of India as loan security. Upon default, the bank took possession under Section 13(4) of the SARFAESI Act and initiated auction proceedings.

The plaintiff filed a civil suit seeking:

Declaration that the sale deed and mortgage deed were illegal,

Restoration of possession, and

Damages for wrongful occupation.

The bank argued that the suit was barred as possession and recovery matters fall exclusively within the DRT’s jurisdiction under Section 34 of the SARFAESI Act.

Legal Issues
Whether a plaint can be rejected entirely under Order VII Rule 11 CPC if one relief is barred by law but others are maintainable.

Whether civil courts have jurisdiction over disputes involving title and validity of sale deeds when possession enforcement is under SARFAESI.

The scope of the DRT’s jurisdiction vis-à-vis civil courts.

Supreme Court’s Findings
The Supreme Court held that a plaint containing multiple reliefs cannot be rejected in its entirety merely because one relief is barred by law, provided other reliefs are maintainable by the civil court. It clarified that disputes concerning title and validity of transactions fall within civil courts’ jurisdiction, as the DRT cannot adjudicate on the legitimacy of sale deeds involving parties other than the mortgagor.

The Court emphasized the critical importance of banks conducting thorough title searches before sanctioning loans to avoid legal disputes and protect public funds. It urged regulatory bodies to establish standardized guidelines and accountability mechanisms for title clearance.

The Court upheld the Madhya Pradesh High Court’s ruling allowing the civil suit to proceed and dismissed the bank’s appeal.

Conclusion
This judgment:

Affirms civil courts' jurisdiction over title and transaction validity disputes despite SARFAESI proceedings.

Limits the exclusive jurisdiction of the DRT to possession and recovery matters under the SARFAESI Act.

Stresses the need for banks to ensure proper title verification before loan sanction.

Clarifies that a plaint with multiple reliefs should not be dismissed entirely if some claims are maintainable.