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Attempt To Take Possession Of Unsecured Asset Can Be Called In Question In Civil Court

In Mrs.Elsamma vs THE KADUTHURUTHY URBAN CO OPERATIVE BANK LTD., an application for permanent injunction as originally filed by the appellants restraining the defendants from trespassing or otherwise taking possession of the unsecured Schedule A property which according to the appellants were adjacent to the secured property Schedule B.

The defendants objected to maintainability of the suit on the ground that the suit is barred under Section 34 of the SARFAESI Act which was allowed by the trial court and  the lower appellate court.

The appellants argued in favour of maintainability citing KHDFC Bank Ltd. and others v. Prestige Educational Trust while as per the respondents the afore- cited decision is no longer good law in view of Jagdish Singh v. Heeralal.

The Kerala High Court while approving the judgment in the KHDFC Bank Ltd.case decided that the said judgment does not clash with the judgment in the Jagdish Singh and said in summing up:-

(i) The jurisdiction of the civil court is not barred if the plea is that the plaint schedule property is not the secured asset in respect of which a security interest is created.
(ii) The civil court shall decline jurisdiction if it is found in the midst of adjudication that the disputed property is in fact the secured asset over which security interest is created.
(iii) Any person aggrieved can also move the Debts Recovery Tribunal under Section 17 seeking clarification about the measures taken under Section 13(4) of the SARFAESI Act .

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