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DRT Cannot Adjudicate Civil Rights Claimed Vis-a-Vis Security Interest Which Are Outside Sec 13/17 SARFAESI : Bombay High Court

A division bench of the Bombay High Court (Nagpur Bench) has delivered an elaborate judgment on the issue of the jurisdiction of the civil courts vis-a-vis the Debts Recovery Tribunal with respect to the security interest under the SARFAESI Act. A division bench comprising Justices SB Shurke and Avinash G Gharote was deciding the following question which was referred to in view of conflicting views expressed by different single bench decisions: “Whether the jurisdiction of a Civil Court to decide all the matters of civil nature, excluding those to be tried by the Debts Recovery Tribunal under Section 17 of the Securitisation Act, in relation to enforcement of security interest of a secured creditor, is barred by Section 34 of the Securitisation Act ?” The division bench held that the bar under Section 34 of the SARFAESI Act, is not absolute, but is restricted to examination by the DRT of the actions of the secured creditor under Section 13 of the SARFAESI Act and the rights available under Section 17 of the SARFAESI Act. DRT cannot embark on an adjudication of the civil rights claimed vis-a-vis the security interest, such as right of partition, specific performance, reliefs under Sections 31 and 34 of the Specific Relief Act, preemption, redemption, declaration in respect of a property.

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