Banks and the asset reconstruction companies they sell distressed loans to generally have a strong hand when a borrower tries to stop a SARFAESI auction through a writ petition, because Section 34 of the Act bars civil courts from entertaining anything the statute's own tribunals are meant to decide, and the Debts Recovery Tribunal route under Section 17 is ordinarily treated as the only door open to a borrower. Justice Jasmeet Singh's judgment of 13 October in Shashi R. Jatia's case marks out the exception that keeps that bar from becoming absolute, where what is under challenge is not the bank's conduct in enforcing a mortgage but the very existence of a mortgage she says she never created.
Jatia holds a one-third undivided share in property No. B-50, Gulmohar Park, New Delhi. Between dates not fully set out in the reported record, five separate loan facilities totalling Rs 14.96 crore were taken out from ICICI Bank against a mortgage of that property, with Jatia shown in the bank's records as a co-applicant on each facility. Her case is that she signed nothing, that the signatures attributed to her were forged, and that she learned of the loans' existence only in May 2021, well after the facilities had been drawn down.
She took the forgery allegation to the Economic Offences Wing, which registered an FIR on 28 January 2022. A status report the EOW filed on 13 December 2024 recorded that forensic examination of the disputed signatures had found them forged, a finding the High Court noted but, consistent with the limited scope of a writ petition, did not itself re-examine for evidentiary sufficiency. Meanwhile the loans had moved on: ICICI assigned them to Prudent ARC, an asset reconstruction company, in September 2024, and Prudent ARC issued an e-auction notice over the mortgaged property on 25 April 2026.
Jatia had already tried the civil court route once before taking this writ petition, and lost; a suit she filed was rejected in June 2023 under Order VII Rule 11 of the Civil Procedure Code read with Section 34 of the SARFAESI Act, on the footing that the statute's bar applied. Prudent ARC's answer to the writ petition accordingly ran through a familiar list: an efficacious alternate remedy existed under Section 17 before the Debts Recovery Tribunal, a private asset reconstruction company is not amenable to writ jurisdiction under Article 226 in the first place, the petition suffered from delay and laches and from suppression of material facts, and the power of attorney under which the petition was filed was itself defective.
The Court worked through each objection without accepting any of them as a bar on these facts. On the Article 226 point, it accepted the premise that a private ARC is not ordinarily a State instrumentality under Article 12, but held that this did not decide the case, since an assignee of a loan and its underlying security steps into the assignor bank's shoes and cannot improve its own position by assignment; if the mortgage was void at its creation for forgery, that defect travels with the debt regardless of who currently holds it. On the alternate-remedy point, the Court held that Section 34's bar does not oust a writ court's jurisdiction, or for that matter a civil court's, where the challenge goes to the genuineness of the security interest itself rather than to some procedural step in its enforcement, particularly where independent forensic material already supports the forgery claim.
Relief granted was narrow and calibrated to the share actually in dispute. The Court excluded only Jatia's one-third undivided share in the Gulmohar Park property from the scheduled e-auction, leaving the remaining two-thirds share, evidently not contested on the same forgery ground, free to be auctioned as planned. The question of whether the loan documents bearing her signature are genuine or forged is left for adjudication by a competent court, and the auction of her share waits on that outcome rather than being decided by the writ court itself.
The case gives secured creditors and ARCs a clear marker of where the SARFAESI Act's usual deference to tribunal process runs out: a credible, forensically supported allegation that a mortgage was never validly created in the first place takes a dispute outside the zone Section 34 was designed to protect, however procedurally convenient it would be for the lender to treat every borrower objection as a Section 17 matter for the DRT to sort out later.