Summary
The Supreme Court set aside a High Court order allowing third-party claimants to seek adjudication elsewhere of rights in a flat under SARFAESI enforcement. Matters within DRT/DRAT competence cannot be diverted to a civil suit. Because the High Court had not examined the merits of the tribunal findings, the writ petition was restored with questions open. The direction requiring the bank to deposit Rs.25 lakh was also held unwarranted.
Issues
- Whether disputed rights over the secured flat justified directing the claimants to another forum despite DRT and DRAT adjudication.
- Whether the Supreme Court should decide the underlying merits or restore the writ petition.
Provisions considered
- Section 34, Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002Civil-court jurisdiction is barred over matters the DRT or DRAT is empowered to determine. The disputed rights in this secured flat had to be addressed within the statutory adjudicatory framework and the pending writ challenge. (¶¶ 6, 7, 9)
Held
- The claim concerned a flat covered by a registered sale deed deposited with the bank for an equitable mortgage and subjected to statutory enforcement. Permitting recourse to a civil forum for matters the DRT or DRAT could determine was untenable under Section 34. (¶ 6)
- The High Court could not avoid examination of the concurrent tribunal findings merely by observing that disputed facts required evidence and a full trial elsewhere. (¶ 6)
- Because the High Court had not analysed the merits and the claimants asserted material matters had been overlooked, the proper course was restoration of the writ petition, leaving all questions open for decision on merits in accordance with law. (¶¶ 7, 9)
- The direction that the bank place Rs.25 lakh in an interest-bearing deposit for the eventual successful party was wholly uncalled for. (¶ 8)
Result
Appeal allowed without costs. High Court judgment set aside and writ petition restored with all questions open. Expeditious disposal requested, preferably by the end of July 2018.