Civil Courts Barred From Granting Injunctions Against Debt Recovery Actions: Gauhati HC

In a decisive reinforcement of the statutory bar on civil jurisdiction, the Gauhati High Court has ruled that civil courts are strictly prohibited from granting injunctions against actions initiated by banks for debt recovery, even when the property in question was not explicitly mortgaged. Justice Mridul Kumar Kalita presided over the appeal challenging a trial court's refusal to grant a temporary injunction. The appellant had sought to restrain the Punjab National Bank from taking possession of a personal property which he claimed was never part of the original mortgage agreement.

Civil Court Jurisdiction Ousted by SARFAESI Act

The Gauhati High Court scrutinized the interplay between the Code of Civil Procedure, 1908 and the special recovery legislations. It observed that the trial court correctly identified its own lack of jurisdiction to interfere with the bank's recovery proceedings. The bench highlighted that once a recovery process is initiated under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, the civil court’s power to grant injunctions is entirely curtailed by the mandate of Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

The Gauhati High Court stated that "On perusal of the aforesaid statutory provision, it appears that if an authority has taken any action which it is empowered to take under the SARFAESI Act, 2002 or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, no Civil Court shall grant any injunction in that matter. In the instant case, apparently, a recovery proceeding for recovery of an amount of ₹1,61,45,292.54 from the present appellant is pending before the Recovery Officer, DRT, Guwahati. As such, in the event of any secured asset mortgaged with the bank not fetching the amount required to liquidate the outstanding dues of the appellant, the Recovery Officer may be well within its power... to take possession, appoint receiver, and sell any other property of the appellant."

Background

The dispute originated when the appellant, Sudip Paitya, defaulted on a loan from Punjab National Bank, leading to his account being declared a Non-Performing Asset (NPA) in 2018. The bank initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. While the appellant had mortgaged specific land in Dag No. 113, he alleged that the bank erroneously affixed banners of ownership on a separate, non-mortgaged plot of land he had purchased via a different sale deed.

He filed a Title Suit before the Civil Judge (Senior Division) No. 1, Cachar, seeking a declaration of his rights and an injunction to protect the non-mortgaged property. The trial court rejected the injunction application under Order XXXIX Rule 1 and 2 of the Code of Civil Procedure, 1908, citing the pendency of applications before the Debt Recovery Tribunal (DRT).

In appeal, the appellant cited Mohan Bhandar Saraswathi Puram Vs. Vijaya Bank & Ors. to argue that the bank's power to seize personal property is not absolute and should only be a secondary measure. However, the Gauhati High Court noted that since recovery proceedings for over ₹1.61 Crores were active, the statutory bar on civil courts was triggered, necessitating the dismissal of the appeal while granting the appellant liberty to seek fairness from the DRT directly.

Case Details:
Case No.: FAO NO. 32 OF 2026
Neutral Citation: 2026:GAU-AS:16275
Case Title: SUDIP PAITYA V. PUNJAB NATIONAL BANK AND 3 ORS.
Appearances:
For the Petitioner(s): Mr. D. Mozumder, Senior Advocate; Mr. C Gogoi, Advocate
For the Respondent(s): Mr. A Parvez, Advocate

Source: 2026 CaseBase(GAU) 1610