Kiran Raj

The Calcutta High Court has granted an ad interim injunction in a dispute concerning an alleged loan agreement and mortgage claim involving Yes Bank Limited. The Division Bench, comprising Justice Sabyasachi Bhattacharyya and Justice Uday Kumar, set aside the trial court’s refusal to grant interim relief, restraining the bank from dispossessing the appellant from the suit property or creating third-party rights over it until the injunction application is decided.

The appellant sought relief in a civil suit asserting a 50% ownership claim in the disputed property. The suit also challenged Yes Bank's assertion that a loan and credit facility had been extended to the appellant and his now-deceased brother, Hari Ram Goenka, under an equitable mortgage. The plaintiff contended that the loan agreement and related documents, including a memorandum of entry and a letter allegedly acknowledging the mortgage, were fabricated and lacked his signature.

The appellant filed the suit on November 5, 2024, and subsequently received a notice under Section 13(2) of the SARFAESI Act, 2002, on November 6, 2024. A second notice under the same provision was issued on December 24, 2024. The appellant contended that since no measures under Section 13(4) of the Act had been taken, the jurisdiction of the Debts Recovery Tribunal (DRT) was not yet triggered, making the civil court competent to grant interim relief.

Yes Bank opposed the suit, asserting that the appellant had executed documents, including a continuing guarantee letter, net-worth certificate, and a declaration-cum-indemnity, confirming his role as a guarantor for the loan. The bank argued that the DRT had exclusive jurisdiction under Section 17 of the SARFAESI Act and that the civil court was barred from intervening under Section 34 of the Act.

The High Court found that the trial court’s refusal to grant an ad interim injunction was devoid of reasoning. The judgment noted: “The impugned order of refusal of ad interim injunction is absolutely devoid of reasons… it is well-settled that reason is the soul of any judgment and any judicial order without cogent reasons is, on the face of it, bad in law.”

Assessing the prima facie case, the High Court observed inconsistencies in the bank’s submissions. The letter dated September 3, 2024, alleged that the appellant jointly applied for the loan, while arguments before the court claimed he was a guarantor. The court noted that the loan agreement and memorandum of entry lacked the appellant’s signature, casting doubt on the bank’s claims. Additionally, the bank had referenced a magisterial declaration purportedly executed by the property owners, but failed to produce it in court, leading to an adverse inference against the bank.

Regarding jurisdiction, the court ruled that since no measures under Section 13(4) of the SARFAESI Act had been taken, the appellant’s statutory remedy under Section 17 was not yet available. The High Court reiterated:

“The remedy of a borrower and/or any person aggrieved by the actions of the Bank under Section 17 of the SARFAESI Act is available only upon measures being taken under Section 13(4) of the said Act. In the present case, there is nothing on record to show that any such measure has been taken by the Bank till date.”

The court further clarified that the civil suit sought reliefs beyond the DRT’s jurisdiction, including a declaration of the appellant’s 50% title in the property, which only a civil court could adjudicate. Citing the Supreme Court’s ruling in Central Bank of India v. Prabha Jain, the bench affirmed that the jurisdiction of civil courts is not ousted in matters involving title and the validity of financial documents.

The High Court noted that the appellant had raised sufficient doubts regarding the authenticity of the documents relied upon by Yes Bank. The loan agreement, which the bank claimed to be binding on the appellant, lacked his signature. The memorandum of entry also did not bear the signatures of either the appellant or his deceased brother. The bank had also claimed that a magisterial declaration had been executed by the property owners, but the court observed that no such document had been produced as evidence, further strengthening the appellant’s case.

The appellant contended that the bank’s recurring issuance of notices under Section 13(2) of the SARFAESI Act indicated an urgent need for interim protection. The court noted that any coercive measure under Section 13(4) could lead to irreparable harm to the appellant, whereas a delay in enforcing the loan agreement would not impose significant prejudice on the bank.

The High Court allowed the appeal and granted an ad interim injunction, ordering:

• Yes Bank and its agents to refrain from dispossessing the appellant from the disputed property.

• The bank is restrained from transferring or creating third-party interests in the appellant’s 50% share until the trial court decides the injunction application.

• The trial court is directed to dispose of the pending injunction application expeditiously.

• The findings in the order are to be treated as interim observations and should not influence the final adjudication of the case.

The court also directed that Yes Bank file its written objection to the injunction application, if not already filed, within three weeks. The trial court was instructed to hear both parties and dispose of the injunction application at the earliest possible date.

The High Court stated that its findings were only for the purpose of considering the appellant’s interim relief application and would not prejudice the final determination of the case. The trial court was directed to make an independent assessment of the injunction application without being influenced by the High Court’s observations.

Case Title: Sandeep Goenka v. Yes Bank Limited & Others
Case Number: F.M.A. No.196 of 2025 with CAN 1 of 2024
Bench: Justice Sabyasachi Bhattacharyya and Justice Uday Kumar

[Read/Download order]