TaxTMI 
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2025 (11) TMI 1328
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....suit seeking cancellation of a registered Sale Deed is maintainable before a Civil Court, despite the express bar to the jurisdiction of Civil Courts created under Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 [hereinafter referred to as 'SARFAESI Act']. FACTUAL MATRIX 3. In order to comprehend the issues involved in the present Appeal, the relevant facts in brief are required to be noticed. 4. The Appellant and his father purchased property bearing No. 43, First Floor, Sainik Vihar, Pitampura, New Delhi [hereinafter referred to as the 'suit property'] on 06.02.2006. Subsequently, the Appellant applied for a loan from the United Bank of India [hereinafter referred to as 'UBI'], however, there was a delay in the disbursal of the sanctioned amount. The Appellant and Respondent No.2/Mr. Pankaj Sharma [Defendant No.2 before the learned Single Judge] were on friendly terms. Being aware of the Appellant's proposed business venture, Respondent No.2 agreed, upon request, to extend a friendly loan of Rs.65,00,000/- (Rupees Sixty-Five Lakhs only) repayable with interest @ 2.25% per month. On 31.07.2017, a Memorandum....
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....ent Nos.1 and 2, after depositing the original title documents of the suit property, had availed a loan facility from Respondent No.3, which was later declared as a Non-Performing Asset ('NPA'), leading to initiation of proceedings under the SARFAESI Act. Meanwhile, the Appellant's loan from UBI was sanctioned, but Respondent No.2 had become untraceable. 8. On 05.11.2020, Respondent No.3 issued a fresh e-auction sale notice in respect of the suit property. Shocked by these developments, the Appellant suffered a heart attack on 22.11.2020, resulting in his hospitalisation. Consequently, the Appellant instituted the civil suit seeking the following reliefs: "(a) A decree for declaration in favour of the Plaintiff and against the Defendant no.l & 2, thereby cancelling the sale deed and declaring the alleged Sale Deed dated 3/04/2018 document registered as REGISTERED AS DOCUMENT NO. 461.9 IN BOOK N0.1, VOLUME NO. 7461 AT PAGES 193 - 198 DATED 3/04/2018, REGISTERED WITH SUB REGISTRAR(SR-VI/A), AMBEDKAR BHAWAN, SECTOR-16, ROHINI, DELHI with respect to the property bearing no. No. 43, Measuring 250.84 sq. yards as per lay out plan of the Delhi Sainik Vihar Cooperative House Building So....
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....CONTENTIONS OF THE PARTIES 11. On behalf of the Appellant, learned counsel submits that the learned Single Judge erred in holding the suit to be barred under Section 34 of the SARFAESI Act. Placing reliance on the judgment of the Supreme Court in Central Bank of India & Anr. v. Smt. Prabha Jain & Ors.- (2025) 4 SCC 38, it is urged that the DRT-III has no jurisdiction to entertain or adjudicate upon a claim for cancellation of a registered Sale Deed. Accordingly, it is contended that since such a relief falls outside the scope of the SARFAESI Act, the civil suit instituted by the Appellant was maintainable before the Civil Court. 12. Per contra, learned counsel for the Respondent No.3 supports the Impugned Judgment and submits that the jurisdiction of the Civil Court stands expressly barred under Section 34 of the SARFAESI Act. It is submitted that the reliefs sought by the Appellant are directly connected with the measures taken by the secured creditor in exercise of powers conferred under the said enactment. Accordingly, it is contended that the learned Single Judge has rightly rejected the plaint as being barred by law. ANALYSIS & FINDINGS 13. This Court has heard learned c....
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....ion of the sale deed in favour of the Respondent No.1 was not voluntary but was induced by coercion, threats, and misrepresentation. It is alleged that the Respondent No.2 had represented to the Appellant that the document would serve only as a temporary security for a friendly loan, and had assured that it would either be cancelled or re-executed in the Appellant's favour upon repayment of the said loan. 18. The Appellant has further pleaded that he was subjected to threats, including threats to kidnap his minor children, in order to compel execution of the sale deed. Such assertions, if true, would strike at the very root of "free consent," which is a sine qua non for a valid contract under Section 10 read with Section 14 of the Indian Contract Act, 1872. It is therefore wholly erroneous to presume that the absence of an FIR or criminal proceedings negates the plea of coercion or misrepresentation. These are questions of fact which can only be examined on the basis of evidence at trial, not at the threshold stage of rejecting the plaint. 19. The next ground taken by the learned Single Judge pertains to alleged absence of specific particulars of fraud as required under Order VI ....