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Issues: (i) whether the civil court had jurisdiction to entertain a suit seeking injunction against action initiated under the SARFAESI Act, 2002 at the stage of notice under section 13(2); (ii) whether a general plea of fraud in the plaint was sufficient to avoid the statutory bar.
Issue (i): whether the civil court had jurisdiction to entertain a suit seeking injunction against action initiated under the SARFAESI Act, 2002 at the stage of notice under section 13(2)
Analysis: The statutory scheme permits enforcement of security interest without intervention of the court or tribunal under section 13(1). Section 34 bars civil court jurisdiction not only in respect of matters the Debts Recovery Tribunal or appellate tribunal can determine, but also in respect of injunctions against actions taken or to be taken under the Act. The bar is wide enough to cover challenges raised immediately after a section 13(2) notice and before measures under section 13(4) are taken, because the action is one to be taken in pursuance of the power conferred by the Act and is within the statutory remedy structure.
Conclusion: The civil court had no jurisdiction to entertain the suit, and the plaint was liable to rejection.
Issue (ii): whether a general plea of fraud in the plaint was sufficient to avoid the statutory bar
Analysis: The narrow exception for fraud is confined to cases where the secured creditor's action is shown, on clear pleadings, to be fraudulent or so absurd and untenable that it falls outside the ordinary statutory forum. The allegations here were found to be vague and insufficient to create an independent civil cause for declaration or injunction. The dispute, on the plaint averments, remained one concerning the existence and enforcement of security interest, a matter that could be examined within the statutory framework under section 17. The limited observations on fraud in earlier authority were also distinguished as relating to a different context.
Conclusion: The plea of fraud did not confer civil court jurisdiction or save the suit from the statutory bar.
Final Conclusion: The revision application succeeded, the appellate order was set aside, and the trial court's dismissal of the suit was restored on the ground that the civil court could not grant the relief claimed in view of the SARFAESI statutory scheme.
Ratio Decidendi: A suit seeking to restrain action under the SARFAESI Act is barred by section 34 even at the stage of section 13(2) notice, and only a clearly pleaded and exceptional case of fraud can justify limited civil court intervention.
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