Can bank be impleaded a party in the civil suit for cancellation of sale deed and declaration of title? I am an owner of agricultural land situated in district Sultanpur. For the last fifteen years I have been residing in Mumbai along with my family. Since I am not residing in my village, my neighbour has been cultivating that land for several years. Recently I came to know that he has taken loan upon my land and made a forged sale deed in his name. He mortgaged that land after obtaining declaration of land use as non-agricultural land under section 80 of The Uttar Pradesh Land Revenue Code. All the loan amount was utilized in his ice cream factory. When the fraud was revealed I immediately contacted him and inquired about the fact.
He is not giving answer of my questions. Then I go to my village and lodge FIR and filed a civil suit. In the civil suit bank is not made party. I told my lawyer to make branch manager as a party in the civil suit because he is also committed fraud. No inquiry was committed by the bank when loan was sanctioned over the land. My advocate moved application for impleading bank but court is not willing to allow my application because in the arguments court has the view that bank has not committed any fraud therefore, not a proper party. Whether bank is not a proper party? How to add him as defendant?
Asked from: Uttar Pradesh
In the present case, the defendant is alleged to have prepared a forged sale deed and, on the basis of the said document, obtained an order under Section 80 of the Uttar Pradesh Revenue Code, 2006. Thereafter, relying upon the forged sale deed, he claimed ownership over the property and mortgaged the same with the bank for obtaining a loan.
It appears that the defendant may have first changed the land use because obtaining a loan against agricultural land may not have been possible. It is also possible that the loan was obtained as a means to conceal the fraudulent transaction and that the loan amount was utilised in his ice-cream factory.
There is also a possibility that the defendant may deliberately default in repayment of the loan so that the property is declared an NPA and proceedings for recovery are initiated by the bank under the SARFAESI Act. In these circumstances, the bank is a necessary and proper party to the present civil suit.
However, it would not be advisable to allege that the bank itself has committed fraud. Such an allegation may adversely affect your application under Order I Rule 10 of the Code of Civil Procedure. Instead, the case should be presented on the basis that the defendant, possibly in connivance with the bank, may deliberately default in repayment of the loan and thereby cause the account to be declared an NPA.
Also Read: Can I file a civil suit against the bank for instituting false proceedings before the DRT?
The Supreme Court in Central Bank of India v. Prabha Jain, (2025) 4 SCC 38, has held that the jurisdiction of the civil court over a dispute relating to ownership of the property is not completely excluded merely because proceedings under the SARFAESI Act are pending or may be initiated.
Civil court can examine the dispute concerning the validity of the sale deed and the ownership of the property. If the defendant defaults in repayment of the loan, the bank would be required to take appropriate steps under the SARFAESI Act for recovery of its dues.
Therefore, in order to protect the rights of all concerned parties and to avoid multiplicity of proceedings, the bank should be impleaded as a defendant in the present suit.
It should also be brought to the notice of the court that, if the bank is not impleaded, the defendant may deliberately default in repayment of the loan and thereby cause proceedings under the SARFAESI Act to be initiated against the property. This may create a separate round of litigation between the plaintiff, the defendant and the bank, despite the fact that the ownership and validity of the sale deed are already directly in issue before the civil court.
Further, if the civil court ultimately cancels or declares the sale deed to be forged, illegal or void, such a judgment would directly affect the bank’s security interest in the property. The bank, therefore, has a direct and substantial interest in the subject matter of the suit. Its presence is necessary not only for effectively adjudicating the dispute but also for enabling the court to pass a complete and effective judgment.
Accordingly, the application under Order I Rule 10 CPC should be supported on the ground that the bank is both a necessary and proper party. Its impleadment would enable the court to effectively adjudicate the dispute, protect the plaintiff’s rights, safeguard the bank’s legitimate security interest, and avoid multiplicity of proceedings. On these grounds, there are substantial reasons for seeking impleadment of the bank in the present suit.
