The Supreme court on 26th November 2021 observed that bar under Section 34 SARFAESI Act on filing a civil suit is attracted if allegations of 'fraud' are made without any particulars.
The High Court had rejected a plaint and dismissed a suit on the ground that the suit is barred in view of the bar under Section 34 of the SARFAESI Act. Challenging this, the appellant-plaintiff's contention was that in the suit plaintiff had pleaded the fraud. That the relief was sought to declare the assignment agreement null and void which cannot be granted by the DRT under the provisions of the SARFAESI Act.
The other side contended that the allegations of 'fraud' are nothing but clever drafting only with a view to bringing the suit maintainable before the
civil court despite the bar under Section 34 of the SARFAESI Act.
The bench comprising Justices noted that except for the words used 'fraud'/'fraudulent' there are no specific particulars pleaded with respect to the 'fraud’. The court said that as per Order VI Rule 4 in all cases in which the party pleading relies on any misrepresentation, fraud, breach of trust, wilful default, or undue influence, particulars shall be stated in the pleading.
The court also observed that the allegations of 'fraud' are made without any particulars and only with a view to getting 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.
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