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Issues: Whether the civil suit was barred by Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 in view of the availability of a remedy before the Debts Recovery Tribunal under Section 17, and whether the pleaded allegations of fraud brought the case within the limited exception to that bar.
Analysis: The plaint challenged the measures taken by the secured creditor in relation to the loan account and the mortgaged property, while admitting the loan application, creation of security and part repayment. The governing scheme confers a remedy under Section 17 against measures taken under Section 13(4) and bars civil court jurisdiction under Section 34 in respect of matters the Debts Recovery Tribunal is empowered to determine. The limited exception recognised for fraudulent action by the secured creditor does not extend to every dispute dressed as fraud. On the pleaded facts, the controversy turned substantially on whether a disputed communication authorising disbursal to third parties was executed, which raised seriously disputed questions of fact. Such a dispute did not justify civil court jurisdiction when the statutory forum was available.
Conclusion: The suit was barred by Section 34 of the Act and the fraud exception was not attracted. The application for rejection of the plaint was allowed.
Final Conclusion: The plaintiffs were relegated to the statutory remedy before the Debts Recovery Tribunal, and the civil action could not be maintained.
Ratio Decidendi: Where the grievance concerns enforcement of security interest under the SARFAESI framework and is founded on disputed factual assertions rather than a clear case of fraudulent action by the secured creditor, the civil court's jurisdiction remains barred and the remedy lies before the Debts Recovery Tribunal.
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