📚 LEGAL LEARNING | SHRI GANPATI JURISTS
Case: Taalala Naga Venkata Dhana Lakshmi v. Cholamandalam Investment & Finance Co. Ltd.
Court: Andhra Pradesh High Court (Division Bench)
🔑 Key Legal Principles under the SARFAESI Act, 2002
A. Bar of Civil Court Jurisdiction (Section 34)
✔️ Civil courts have no jurisdiction to entertain suits or grant injunctions in matters which fall within the powers of the Debts Recovery Tribunal (DRT) or Appellate Tribunal (DRAT) under the
SARFAESI Act.
✔️ Injunction orders passed by civil courts in SARFAESI matters are not binding on proceedings or actions taken under the Act.
B. Priority of Registered Mortgage over Unregistered Sale Agreement
✔️ A registered mortgage deed enjoys legal supremacy over an unregistered sale agreement.
✔️ Even rights arising from a registered sale deed remain subject to prior mortgages lawfully created by the property owner.
C. Remedy Lies Before the Tribunal
✔️ When the aggrieved party has already approached the DRT by filing a Securitization Application, the dispute must be adjudicated only by the Tribunal, and civil courts cannot be invoked.
⚖️ Legal Takeaway
Section 34 of the SARFAESI Act creates a complete bar on civil court interference. All challenges to SARFAESI actions must be pursued before the DRT/DRAT, not through civil suits or injunctions.
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