SARFAESI enforcement and auction purchaser rights were not restrained absent specific pleadings of fraud or collusion.

A civil suit could not be used to stall SARFAESI enforcement where the plaintiffs failed to plead or prove a prima facie case of fraud or collusion with particulars. The record showed a memorandum of understanding entered into after notice under Section 13(2) and without the secured creditor's prior written consent, contrary to Section 13(13); the bank was not shown to have known of it. The court treated the allegations as vague, held that the bank's measures were taken in accordance with the Act and Rules, and noted that any grievance over the auction or the memorandum was, at most, a damages claim against private parties. The plaintiffs had also invoked Section 17 before the DRT.

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Issues: Whether the plaintiffs had made out a prima facie case of fraud or collusion so as to restrain enforcement measures under the SARFAESI regime and the auction purchaser's rights in the secured asset.

Analysis: After issuance of notice under Section 13(2), the plaintiffs entered into a memorandum of understanding for dealing with the secured asset without prior written consent of the secured creditor, notwithstanding the statutory prohibition in Section 13(13). The material on record did not show that the bank was aware of the memorandum of understanding or that the alleged collusion between the bank officers and the auction purchasers was pleaded with particulars. The allegations of fraud were vague, the bank's security measures were taken in accordance with the Act and the Rules, and any grievance arising out of the auction or alleged breach of the memorandum of understanding was, at best, a claim for damages against the private parties. The plaintiffs had also invoked the remedy under Section 17 before the Debts Recovery Tribunal.

Conclusion: No prima facie fraud or collusion was established, the civil suit could not be used to impede measures taken under the SARFAESI Act, and the request for interim restraint on the auction and related reliefs was unsustainable.

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