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2021 (11) TMI 941 - SC - Indian LawsMaintainability of suit - suit is barred by Section 34 of the SARFAESI Act, 2002 or not - acquisition of rights under Assignment deed - fraud with respect to the assignment deed - HELD THAT - The allegations of fraud are made without any particulars and only with a view to get out of the bar under Section 34 of the SARFAESI Act and by such a clever drafting the plaintiff intends to bring the suit maintainable despite the bar under Section 34 of the SARFAESI Act, which is not permissible at all and which cannot be approved. Even otherwise it is required to be noted that it is the case on behalf of the plaintiff appellant herein that in view of the approved resolution plan under IBC and thereafter the original corporate debtor being discharged there shall not be any debt so far as the plaintiff appellant herein is concerned and therefore the assignment deed can be said to be fraudulent . The aforesaid cannot be accepted. In any case, whether there shall be legally enforceable debt so far as the plaintiff appellant herein is concerned even after the approved resolution plan against the corporate debtor still there shall be the liability of the plaintiff and/or the assignee can be said to be secured creditor and/or whether any amount is due and payable by the plaintiff, are all questions which are required to be dealt with and considered by the DRT in the proceedings initiated under the SARFAESI Act. It is required to be noted that as such in the present case the assignee has already initiated the proceedings under Section 13 which can be challenged by the plaintiff appellant herein by way of application under Section 17 of the SARFAESI Act before the DRT on whatever the legally available defences which may be available to it. The suit filed by the plaintiff appellant herein was absolutely not maintainable in view of the bar contained under Section 34 of the SARFAESI Act. Therefore, as such the courts below have not committed any error in rejecting the plaint/dismissing the suit in view of the bar under Section 34 of the SARFAESI Act - Appeal dismissed.
Issues Involved:
1. Jurisdiction of Civil Courts under Section 34 of the SARFAESI Act. 2. Allegations of fraud in the assignment agreement. 3. Maintainability of the civil suit. 4. Availability of remedies under the SARFAESI Act. Detailed Analysis: 1. Jurisdiction of Civil Courts under Section 34 of the SARFAESI Act: The primary issue was whether the civil court had jurisdiction to entertain the suit filed by the appellant in light of Section 34 of the SARFAESI Act, which bars civil courts from adjudicating matters that fall under the purview of the SARFAESI Act. The High Court, both at the Single Judge and Division Bench levels, dismissed the suit on the grounds that it was barred by Section 34 of the SARFAESI Act, asserting that only the Debt Recovery Tribunal (DRT) had the competence to decide the matter. 2. Allegations of Fraud in the Assignment Agreement: The appellant contended that the assignment agreement dated 30.06.2018 was fraudulent, as it was executed after the corporate debtor had been discharged following the approval of the resolution plan under the Insolvency and Bankruptcy Code (IBC). The appellant argued that since the debt was discharged, the assignment deed was null and void. However, the court noted that the allegations of fraud were not supported by specific particulars, which is a requirement under Order VI Rule 4 of the Civil Procedure Code (CPC). The court emphasized that mere use of the words "fraud" or "fraudulent" without detailed particulars does not constitute a valid pleading of fraud. 3. Maintainability of the Civil Suit: The court observed that the appellant's suit was an attempt to circumvent the bar under Section 34 of the SARFAESI Act by alleging fraud without substantial evidence. The court referred to established legal principles that general allegations are insufficient to amount to an averment of fraud. The court cited several precedents, including Bishundeo Narain vs. Seogeni Rai and Ladli Parshad Jaiswal vs. The Karnal Distillery Co. Ltd., to support its stance that allegations of fraud must be specific and detailed. 4. Availability of Remedies under the SARFAESI Act: The court concluded that the appellant should seek remedies under the SARFAESI Act by filing an application before the DRT. The court noted that the appellant could challenge the initiation of proceedings under Section 13 of the SARFAESI Act by the assignee on the grounds that the assignee was not a secured creditor and that there was no enforceable debt against the appellant following the resolution plan under the IBC. The court provided the appellant with a two-week window to file appropriate proceedings before the DRT, clarifying that it had not expressed any opinion on the merits of the appellant's claims. Conclusion: The Supreme Court dismissed the appeal, affirming the decisions of the High Court that the civil suit was not maintainable due to the bar under Section 34 of the SARFAESI Act. The court allowed the appellant to pursue remedies before the DRT, emphasizing that any allegations of fraud must be substantiated with specific particulars to be considered valid. The court reiterated the importance of adhering to procedural requirements and established legal principles when pleading fraud.
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