Facts: The Petitioner, Tourism Finance Corporation of India Limited, sanctioned financial facilities to a firm whose partners (Respondents 2 and 3) secured the loan using the suit property. Following a default, the Petitioner initiated recovery measures under the SARFAESI Act and took symbolic possession. Respondent No. 1 (Plaintiff), the daughter of the borrowers, filed a civil suit for partition and separate possession, claiming a 1/5th undivided interest in the suit property as a coparcener. The trial court initially rejected her application for a temporary injunction to restrain the sale. However, the District Court reversed this on appeal, restraining the Petitioner from creating third-party interests in the Plaintiff's share without due process of law. Despite this injunction, the Petitioner proceeded with an e-auction and sold the property to Respondent No. 8.
Procedural Posture: The Petitioner approached the Bombay High Court under writ jurisdiction challenging the District Court's order dated 24 January 2025, which had granted the temporary injunction in favor of the Plaintiff.
Issue: 1) Whether Section 34 of the SARFAESI Act ousts the jurisdiction of a Civil Court to entertain a partition suit filed by a person who is not a borrower or guarantor. 2) Whether a transfer of property executed in willful disobedience of a court's injunction order is valid.
Holding: 1) No, the Civil Court has jurisdiction where the relief of partition cannot be granted by the DRT. 2) No, a transfer made in defiance of an injunction is illegal and non-est in the eyes of law.
Reasoning: The Court reasoned that while Section 34 bars Civil Courts from matters the DRT is empowered to decide, the DRT has no power to adjudicate partition suits or determine the share of a coparcener who is not a party to the loan. Relying on "Bank of Baroda vs. Gopal Shriram Panda", the Court held that the civil rights of third parties (non-borrowers) fall within the Civil Court's jurisdiction. Regarding the sale, the Court observed that the Petitioner completed the transaction despite knowledge of the injunction. It emphasized that any alienation of property in disobedience of a court order must be treated as "non-est" to maintain the sanctity of judicial proceedings, regardless of whether the transferee was a party to the suit or whether the transfer was for valuable consideration.