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Issues: Whether a civil suit challenging SARFAESI measures was barred by Section 34 of the SARFAESI Act, 2002 notwithstanding a plea of fraud, and whether a bare allegation of fraud without material particulars could avoid the statutory bar.
Analysis: The plaint used the expressions "fraud" and "fraudulent", but no specific particulars of fraud were pleaded as required for such an allegation. Mere use of such words, without factual details, was held insufficient to displace the bar on civil court jurisdiction. The dispute raised questions as to whether the assignee was a secured creditor and whether any amount remained due after the insolvency resolution process, but those were matters falling within the jurisdiction of the DRT under the SARFAESI mechanism. The suit was treated as an attempt by clever drafting to bypass the statutory remedy available under Section 17 of the SARFAESI Act, 2002.
Conclusion: The civil suit was not maintainable and was correctly rejected as barred by Section 34 of the SARFAESI Act, 2002. The appropriate remedy lay before the DRT under Section 17 of the SARFAESI Act, 2002.
Ratio Decidendi: A civil suit cannot escape the bar under Section 34 of the SARFAESI Act, 2002 by a bare and unsupported plea of fraud; allegations of fraud must be pleaded with full particulars, and disputes as to secured creditor status or outstanding liability under SARFAESI must be pursued before the DRT.
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