1. The Civil Revision Petition was filed against the Order dated 15.04.2011 passed in E.A.No.70 of 2011 in E.P.No.44 of 2009 in O.S. No.185 of 2008 on the file of Principal Senior Civil Judge, Srikakulam, whereby the application seeking stay of proceedings was allowed.

2. The petitioner, a third party claimant, filed E.A.No. 6 of 2010 in the above said E.P., seeking to continue the E.P., proceedings subject to the mortgage in its favour and to notify the mortgage debt due to the petitioner and to sell the schedule property in the court auction subject to the mortgage debts claiming that the property was mortgaged in favour of the petitioner/Bank on 30.08.2006 by depositing title deeds. As the said loan account became non-performing asset, the petitioner/Bank issued a notice under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short ‘the SARFAESI Act) on 26.09.2008. Thereafter, under the provisions of the Section 14 of the SARFAESI Act, physical possession was taken on 01.03.2009 and sale was conducted in respect of the subject property on 07.03.2011 and sale was confirmed after payment of the money by the auction purchaser on 17.04.2011. It was also contended that the possession was delivered on 17.04.2011 duly registering the sale certificate in favour of the auction purchaser. While so, the 1st respondent/decree holder filed an application in E.A.No.70 of 2011 in the E.P., seeking to stay the proceedings initiated by the bank and to bring the property under sale pursuant to the execution proceedings. The Executing Court vide its order dated 15.04.2011 allowed the said application and granted stay of all further proceedings initiated by the bank.

3. Aggrieved by the same, the claim petitioner Bank filed the present Civil Revision Petition.

4. Heard learned counsel for the petitioner and learned counsel for the 1st respondent.

5. It was the contention of the petitioner that the civil court has no jurisdiction to entertain an application for grant of stay of sale conducted by the secured creditor under the provisions of the SARFAESI Act since jurisdiction of the Civil Court is ousted under Section 34 of the said Act. Once the jurisdiction is ousted, Civil Court cannot entertain any application much less the application to stay the SARFAESI proceedings. Any person aggrieved by any of the actions initiated under Section 13 of the SARFAESI Act for recovery of its dues by a financial institutions, the aggrieved person can approach the Jurisdictional Debts Recovery Tribunal under Section 17 of the SARFAESI Act by filing an appropriate application. Whereas, the 1st respondent/decree holder in O.S.No.185 of 2008 on the file of Principal Senior Civil Judge, Srikakulam, had obtained a decree for recovery of money based on a promissory note.

6. Learned counsel for the petitioner further contended that much prior to the obtainment of the decree in the above said suit, the subject property in the above EP, was already mortgaged in favour of the bank and admittedly, there was no attachment either before judgment or subsequent thereto in the above said EP. The learned Judge without taking into consideration, the provisions of the SARFAESI Act and without there being any evidence to show that the subject property was under prior attachment before mortgage in favour of the bank, passed the impugned order, which is wholly illegal and contrary to the provisions of the SARFAESI Act.

7. Learned counsel for the 1st respondent/ decree holder reiterating the averments of the petition filed in support of the E.A.No.70 of 2011 before the Executing Court contended that the claim petitioner having approached the Executing Court in E.A.No.6 of 2010, cannot proceed under the provisions of the SARFAESI Act to sell the property by defeating the claim of the judgment debtor in the above said EP. Therefore, the claim petitioner having filed a claim petition before the civil court and without leave of the court, cannot proceed with the sale of the subject property, as such, the Executing Court is right in staying the proceedings pending the execution petition.

8. Considering the rival contentions of the respective counsel and also considering the judgment of the Hon’ble Apex Court reported in Jagdish Singh v. Heeralal((2014) 1 SCC 479), wherein the Hon’ble Apex Court while considering section 34 of the SARFAESI Act held that the jurisdiction of civil Court is barred in respect of the matters which a Debts Recovery Tribunal or Appellate Tribunal is empowered to determine in respect of any action taken or to be taken in pursuance of the provisions of the SARFAESI Act.

9. Section 26E of the SARFAESI Act, 2002 provides for priority to secured creditors which reads as under:

                  26E. Priority to secured creditors—Notwithstanding anything contained in any other law for the time being in force, after the registration of security interest, the debts due to any secured creditor shall be paid in priority over all other debts and all revenues, taxes, cesses and other rates payable to the Central Government or State Government or local authority.

                  Explanation.—For the purposes of this section, it is hereby clarified that on or after the commencement of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), in cases where insolvency or bankruptcy proceedings are pending in respect of secured assets of the borrower, priority to secured creditors in payment of debt shall be subject to the provisions of that Code.

10. Thus, the secured creditor will have priority over all other debts.

                  Therefore, the claim of the decree holder shall be subject to the realization of claimant Banks debt and upon satisfaction of the same the residue can be adjusted to the said decree. In such circumstances, the executing court cannot interdict the proceedings under the SARFAESI Act.

11. The facts narrated above and the law as well as the judicial pronouncements of Hon’ble Apex Court regarding the jurisdiction of civil courts to entertain the proceedings covered under the provisions of the SARFAESI Act, particularly, section 34 of the SARFAESI Act which ousts jurisdiction of the civil Court, any person aggrieved by any proceedings initiated under the provisions of SARFAESI Act would be entitled to approach the Debts Recovery Tribunal by invoking Section 17 of the SARFAESI Act and therefrom the Appellate Tribunal. Once the ouster of jurisdiction is evident and explicit, the same cannot be entertained by the Civil Court in any of its forms. Mere filing of an application seeking to claim interest in the property by the petitioner/Bank in E.A.No.6 of 2010 in the above said EP will not per se create jurisdiction on the Civil Court to interdict proceedings initiated by the Bank under the provisions of the SARFAESI Act for recovery of its dues. Thus, viewed from any angle, the order dated 15.04.2011 of Executing Court, in E.A.No.70 of 2011 cannot be sustained and the same is liable to be set aside.

12. Accordingly, the Civil Revision Petition is allowed. Consequently, the Order dated 15.04.2011 passed in E.A.No.70 of 2011 in E.P.No.44 of 2009 in O.S. No.185 of 2008 on the file of Principal Senior Civil Judge, Srikakulam is set aside.

There shall be no order as to costs.

As a sequel, miscellaneous applications, pending, if any, shall stand closed.