Delhi High Court Overturns Rejection of Suit Seeking Cancellation of Sale Deed

Judgment clarifies the jurisdictional scope of Civil Courts under the SARFAESI Act  

In a significant judgment, the Division Bench of the Delhi High Court has overturned the decision of a Single Judge, reinstating a suit filed by Rajiv Sareen seeking the cancellation of a registered sale deed. The judgment, delivered by Justices Anil Kshetarpal and Harish Vaidyanathan Shankar on November 13, 2025, clarifies that Civil Courts maintain jurisdiction in cases seeking the cancellation of registered sale deeds, despite the provisions of Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).  

The case stems from Sareen's allegations that the execution of the sale deed was induced through coercion, threats, and misrepresentation. Sareen contended that Respondent No.2 coerced him into executing the sale deed under duress, including threats to his children. Furthermore, Sareen claimed the sale deed was intended as temporary security for a friendly loan, which was not honoured.  

The Single Judge had previously rejected the plaint under Order VII Rule 11 of the Civil Procedure Code, citing the absence of specific fraud particulars and statutory bars under the SARFAESI Act. However, the Division Bench found that the learned Single Judge erred in these conclusions. The Bench emphasized that the lack of free consent vitiates the execution of a sale deed, as outlined under Sections 10 and 14 of the Indian Contract Act, 1872. The Court noted that allegations such as coercion and misrepresentation require adjudication based on evidence, which cannot be presumed at the threshold stage.  

Additionally, the Court held that the Debts Recovery Tribunal (DRT) lacks jurisdiction to entertain claims for the cancellation of registered sale deeds. This jurisdictional clarity was supported by the Supreme Court's judgment in Central Bank of India v. Smt. Prabha Jain, which underscores that such reliefs fall outside the scope of the SARFAESI Act.  

The judgment reinstates the suit to its original number, directing the parties to appear before the Single Judge (Roster Bench) on November 19, 2025, for further proceedings. The Court has instructed that the suit be adjudicated uninfluenced by any observations made in this judgment.  

This ruling is a pivotal clarification on the jurisdictional boundaries under the SARFAESI Act and reinforces the role of Civil Courts in adjudicating matters concerning registered sale deeds.  

Bottom Line:

Civil suit for cancellation of a registered Sale Deed is maintainable before a Civil Court despite the express bar under Section 34 of the SARFAESI Act, as cancellation of such deeds falls outside the jurisdiction of DRT.

Statutory provision(s): Section 34 of the SARFAESI Act, Order VII Rule 11 of the Civil Procedure Code, Sections 10 and 14 of the Indian Contract Act, 1872, Sections 91 and 92 of the Indian Evidence Act, 1872.

Rajiv Sareen v. M/s Divyanshu Enterprises, (Delhi)(DB) : Law Finder Doc Id # 2807433