A bank cannot take possession of a flat under the SARFAESI Act and then point to Section 34 to keep the borrower out of civil court when the real dispute is whether the title deed behind the mortgage is genuine at all, the Calcutta High Court has held, setting aside a possession notice Canara Bank had issued over precisely that kind of disputed deed.
Canara Bank had issued a possession notice dated October 1, 2026, moving against a flat on the strength of security created under a conveyance deed. The bank's own case created the problem it now had to answer for: it contended that one of the persons named as an owner in that conveyance deed had in fact died before the deed was executed, a fact that, if true, would cast real doubt on whether the document validly conferred the title it claimed to transfer. The petitioners approached the High Court under Article 226, seeking to have the possession notice set aside and the underlying title question tested in a proper forum.
Canara Bank's resistance to that relief rested on Section 34 of the SARFAESI Act, which bars civil courts from entertaining any suit or proceeding in respect of matters that a Debts Recovery Tribunal or the Debts Recovery Appellate Tribunal is empowered to determine. Banks routinely invoke that bar to keep SARFAESI enforcement measures, possession notices, sale notices and auctions, insulated from parallel civil litigation, and courts have generally been receptive to that argument where the borrower's real complaint is about the enforcement procedure itself.
Justice Chatterjee drew a sharper line between that kind of procedural challenge and what the petitioners were actually raising. Section 34, on this reading, bars civil court jurisdiction only over matters the DRT and DRAT are themselves empowered to decide. A DRT exercising jurisdiction under the SARFAESI Act is equipped to examine whether the statutory procedure for enforcement was followed, whether notices were properly issued, and similar questions going to the validity of the measures taken under the Act. It is not equipped, on this view, to adjudicate a substantive dispute over whether a title deed is genuine in the first place, particularly where that genuineness is foundational to the very ownership claim the secured asset depends on. Where the dispute is of that second kind, Section 34 simply has no field to occupy, since the matter is not one the Tribunal could determine even if the suit were brought before it.
Applying that distinction to the facts, the Court set aside Canara Bank's October 1, 2026 possession notice and directed that possession of the flat be restored to the petitioners. It went further and restrained the bank and other respondents from taking any coercive steps in respect of the property for two months, a window intended to let the petitioners actually approach the civil court to have the title deed's validity tested on the merits, rather than leaving them to fight that battle after the bank had already taken physical possession.
The ruling sits within a broader, and not entirely settled, line of authority on where exactly the Section 34 bar stops. Calcutta High Court decisions in other recent matters have gone the other way on related facts, holding that a civil suit challenging a tenancy created after a SARFAESI notice was issued remained barred, and that the statute's restriction on civil court injunctions reaches even future enforcement steps the bank has not yet taken. What distinguishes this case is the specific nature of the underlying dispute: a question about whether a conveyance deed is genuine, bound up with an allegation that one named party had already died before execution, is not the kind of enforcement-procedure question the DRT's SARFAESI jurisdiction was built to answer, however broadly that jurisdiction otherwise reaches.
For borrowers and guarantors facing SARFAESI possession or sale notices founded on title documents whose authenticity is genuinely in question, the case offers a route around the usual Section 34 roadblock, provided the challenge is framed as a dispute over the deed's validity rather than as a complaint about how the bank went about enforcement. Lenders, for their part, now have a sharper reason to satisfy themselves about a security document's provenance before relying on it to take possession, since a title defect serious enough to put the deed's genuineness itself in question may take the dispute outside the DRT's reach altogether.