ELECTROSTEEL CASTINGS LIMITED versus UV ASSET RECONSTRUCTION COMPANY LIMITED & ORS. on 26 November 2021

SUPREME COURT REPORTS

[2021] 7 S.C.R.

AELECTROSTEEL CASTINGS LIMITED

v.

UV ASSET RECONSTRUCTION COMPANY LIMITED & ORS.(Civil Appeal No. 6669 of 2021)

BNOVEMBER 26, 2021

[M. R. SHAH AND SANJIV KHANNA, JJ.]

Securitisation and Reconstruction of Financial Assets andEnforcement of Security Interest Act, 2002: s.34 – Civil court not tohave jurisdiction – On facts, suit filed by the appellant-GuarantorCseeking declaration that the Assignee acquired no rights againstthe applicant under the Assignment Deed and that the Assignee isnot a secured creditor vis-à-vis the applicant – Appellant’s casethat in view of the approved resolution plan under IBC, the originalcorporate debtor being discharged, there shall not be any debt soDfar as the appellant-guarantor is concerned and thus, the assignmentdeed assigning all the rights, title and interest in all the financialassistance granted by financial creditor from time to time to corporatedebtor in favour of assignee, was ‘fraudulent’ – Maintainability ofthe suit – Held: Mere allegations of fraud without materialparticulars not sufficient to get over bar on civil suit u/s.34 – AEpleading/using the word ‘fraud’/‘fraudulent’ without any materialparticulars would not tantamount to pleading of ‘fraud’ – On facts,allegations of ‘fraud’ made without any particulars and clever draftprepared to bring the suit maintainable despite the bar u/s. 34, isnot permissible and cannot be approved – It cannot be said that theFassignment deed is ‘fraudulent’ – In any case, whether there shallbe legally enforceable debt so far as the appellant is concernedeven after the approved resolution plan against the corporate debtor,and/or the assignee can be said to be secured creditor, such questionsrequired to be dealt with by the DRT in the proceedings initiatedunder SARFAESI Act – Assignee has already initiated the proceedingsGu/s.13 which can be challenged by the appellant – Thus, the HighCourt justified in rejecting plaint/dismissing the suit in view of baru/s.34 of the Act.

Dismissing the appeal, the Court

HELD: 1.1 It is the case on behalf of the plaintiff-appellantthat the suit in which there are allegations of ‘fraud’ with respectto the assignment deed shall be maintainable and the bar underSection 34 of SARFAESI Act shall not be applicable. However, itis required to be noted that except the words used ‘fraud’/’fraudulent’ there are no specific particulars pleaded with respectto the ‘fraud’. It appears that by a clever drafting and using thewords ‘fraud’/’fraudulent’ without any specific particulars withrespect to the ‘fraud’, the plaintiff-appellant intends to get out ofthe bar under Section 34 of the SARFAESI Act and wants thesuit to be maintainable. As per the settled preposition of law merementioning and using the word ‘fraud’/’fraudulent’ is not sufficientto satisfy the test of ‘fraud’. As per the settled preposition of lawsuch a pleading/using the word ‘fraud’/ ‘fraudulent’ without anymaterial particulars would not tantamount to pleading of ‘fraud’.[Paras 7.1 and 7.2][543-D-H]

1.2 Having considered the pleadings and averments in thesuit more particularly the use of word ‘fraud’ even consideringthe case on behalf of the plaintiff, it is found that the allegationsof ‘fraud’ are made without any particulars and only with a view toget out of the bar under Section 34 of the SARFAESI Act and bysuch a clever drafting the plaintiff intends to bring the suitmaintainable despite the bar under Section 34 of the SARFAESIAct, which is not permissible at all and which cannot be approved.Even otherwise it is required to be noted that it is the case onbehalf of the plaintiff-appellant that in view of the approvedresolution plan under IBC and thereafter the original corporatedebtor being discharged there shall not be any debt so far as theplaintiff-appellant is concerned and therefore the assignment deedcan be said to be ‘fraudulent’. The said cannot be accepted. Bythat itself the assignment deed cannot be said to be ‘fraudulent’.In any case, whether there shall be legally enforceable debt sofar as the plaintiff-appellant is concerned even after the approvedresolution plan against the corporate debtor still there shall bethe liability of the plaintiff and/or the assignee can be said to besecured creditor and/or whether any amount is due and payableby the plaintiff, are all questions which are required to be dealt A

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Awith and considered by the DRT in the proceedings initiated underthe SARFAESI Act. As such in the instant case the assignee hasalready initiated the proceedings under Section 13 which can bechallenged by the plaintiff-appellant by way of application underSection 17 of the SARFAESI Act before the DRT on whateverthe legally available defences which may be available to it. TheBsuit filed by the plaintiff-appellant was absolutely not maintainablein view of the bar contained under Section 34 of the SARFAESIAct. Therefore, as such the courts below have not committedany error in rejecting the plaint/dismissing the suit in view of thebar under Section 34 of the SARFAESI Act. However, it will beCopen for the appellant to initiate appropriate proceedings beforethe DRT under Section 17 of the SARFAESI Act against theinitiation of the proceedings by the assignee-respondent No.1under Section 13 of the SARFAESI Act. [Paras 8, 9][545-C-H;546-A; B-C]

DBishundeo Narain & Anr. v. Seogeni Rai & Jagernath[1951] SCR 548; Ladli Parshad Jaiswal v. The KarnalDistillery Co. Ltd. Karnal & Ors. [1964] 1 SCR 270;Canara Bank v. P. Selathal & Ors. (2020) 13 SCC 143: [2020] 2 SCR 944; H.S Goutham v. Rama Murthy &Anr. (2021) 5 SCC 241; Ram Singh v. Gram PanchayatEMehal Kalan & Ors. (1986) 4 SCC 364 : [1986] 3 SCR831; Union of India & Anr. v. K.C Sharma & Company& Ors. (2020) 15 SCC 209; Bharat Dharma Syndicatev. Harish Chandra 64 IA 146; T. Arivandandam v. T.V.Satyapal & Anr. (1977) 4 SCC 467 : [1978] 1 SCRF742 – referred to.

Case Law Reference

64 IA 146referred toPara 7.3A[1978] 1 SCR 742referred toPara 7.4

CIVIL APPELLATE JURISDICTION: Civil Appeal No.6669 of2021.

From the Judgment and Order dated 13.08.2021 of the High Courtof Judicature at Madras in O.S.A. No.292 of 2019.

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Dr. A. M. Singhvi, K. V. Viswanathan, Sr. Advs., Mayank Pandey,Advs. for the Appellant.

Shyam Divan, Huzefa Ahmadi, Sr. Advs., Mishra Saurabh, DhruvDewan, Ms. Harshita Choubey, Ms. Chandni Ghatak, Advs. for theRespondents.

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The Judgment of the Court was delivered by

M. R. SHAH, J.

1. Feeling aggrieved and dissatisfied with the impugned judgmentand order dated 13.08.2021 passed by the High Court of Judicature atMadras in O.S.A. No. 292 of 2019, by which the Division Bench of theHigh Court has dismissed the said appeal preferred by the original plaintiffrejecting the plaint/suit filed by the appellant herein – original plaintiff onthe ground that the suit is barred by Section 34 of the SARFAESI Act,2002, the original plaintiff has preferred the present appeal.

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2. The facts leading to the present appeal in nutshell are as under:-

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2. The facts leading to the present appeal in nutshell are as under:- 2.1That original defendant No.3 - respondent No.3 herein(hereinafter referred to as original defendant No.3) availedthe loan facility vide Rupee Loan Agreement dated26.07.2011 from defendant No.2 - respondent No.2 herein– SREI Infrastructure Finance Limited and availed thefinancial assistance to the extent of Rs.500 crores. Theappellant herein – original plaintiff stood as guarantor. Amortgage was created by the appellant herein – originalplaintiff in favour of defendant No.2 – respondent No.2herein – financial creditor over its factory land at Evalur,Tamil Nadu along with plant and machinery, by way ofdeposit of title deeds in terms of the declaration to securethe repayment, discharge and redemption by originaldefendant No.3. That original defendant No.3 – corporate F

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debtor could not pay the loan amount, therefore theproceedings under the Insolvency Bankruptcy Code, 2016(IBC) was initiated against the corporate debtor. Anapplication under Section 7 of the IBC was filed by theState Bank of India against original defendant No.3 –corporate debtor. The default amount was INR923,75,00,000/-. The resolution process was initiated andan interim resolution professional was appointed under theprovisions of IBC. A resolution plan came to be approvedby the Committee of Creditors under Section 30(4) of theIBC. The learned Adjudicating Authority vide order dated17.04.2018 approved the resolution plan. Under the approvedresolution plan an amount of INR 241,71,84,839.18 wasrequired to be paid and 67,23,710 equity shares of thecorporate debtor were to be allotted. As per the case onbehalf of the plaintiff – appellant herein on payment ofaforesaid amount and transfer of aforesaid shares No DueCertificate was issued in favour of the corporate debtor –original defendant No.3 on 25.06.2018 and the corporatedebtor came to be discharged. It appears that thereafter anassignment agreement was executed between defendantNo.2 – respondent No.2 herein and defendant No.1 –respondent No.1 herein on 30.06.2018, assigning all therights, titles and interest in all the financial assistanceprovided by defendant No.2 – financial creditor - respondentNo.2 herein in terms of agreement dated 26.07.2011 in favourof assignee - respondent No.1. As assignee - respondentNo.1 herein pursuant to the assignment agreement dated30.06.2018 had issued letter to all the interested parties,namely, assignor - financial creditor, guarantor and corporatedebtor informing that assignor – financial creditor -respondent No.2 herein had absolutely assigned all therights, title and interest in all the financial assistance grantedby financial creditor - respondent No.2 herein from time totime to corporate debtor in favour of assignee - respondentNo.1 herein vide assignment agreement dated 30.06.2018.The said letter was responded by the plaintiff – appellantherein stating the following :-

(i) “Respondent No.2 had duly filed its claim before the ResolutionProfessional in accordance with the provisions of IBC.

(ii) This claim was crystallised and admitted at INR 577.90 Croresand also formed part of the approved Resolution Plan of VedantaLimited.

(iii) Pursuant to the approved Resolution Plan, the entire debt ofRespondent No.2 has been discharged by way of allotment ofshares and payment in cash on 6.06.2018 and 21.06.2018respectively.

(iv) It was also highlighted that in terms of section 3.2(xi) of theapproved Resolution Plan, upon discharge of financial creditors(including Respondent No.2), the financial creditors were requiredto redeliver and cause to be delivered to Petitioner all documentsencumbered with the financial creditors.

(v) Therefore, when no due was outstanding and in fact redeliveryof encumbered assets was required, there was no basis undercontract or law for assignment of loan/debts/securities.

(vi) It was emphasised that assignment agreement dated30.06.2018 was null, void ab initio and without any basis.”

2.2That thereafter on the basis of the assignment agreementdated 30.06.2018, the assignee – original defendant No.1 –respondent No.1 herein initiated the proceedings againstthe plaintiff – appellant herein, who stood as guarantor, underSection 13(2) of the Securitisation and Reconstruction ofFinancial Assets and Enforcement of Security Interest Act,2002 (SARFAESI Act) by issuing a notice dated 27.12.2018,demanding the payment of INR 587,10,08,309 due underthe rupee term loan agreement dated 26.07.2011. Noticedated 27.12.2018 of the SARFAESI Act was responded bythe plaintiff – appellant herein vide reply dated 20.02.2019stating that pursuant to repayment of amount in terms ofthe approved resolution plan, all the claims of financialcreditor - respondent No.2 herein stand extinguished andconsequently, no claim can be made by the assignee -respondent No.1 herein for the same default and that noamount is due and payable to assignee - respondent No.1.That thereafter a possession notice dated 19.06.2019 was A

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issued under rule 8 (1) of the Security Interest(Enforcement) Rules, 2002 by the assignee to the plaintiff– appellant herein. Thus a possession notice was publishedin the newspaper on 22.06.2019.

2.3That thereafter the plaintiff – appellant herein instituted aCivil Suit being C.S.(D) No.18962 of 2019 on 22.06.2019before the High Court of Madras and prayed for thefollowing reliefs:- “(i). To declare that the 1st Defendant acquired no rightsagainst the Applicant herein under the Assignment Deeddated 30.06.2018, arid consequently, declare that the 1stDefendant is not a secured creditor vis-a-vis, the Applicantherein; and

(ii) . Consequently, to declare Possession Notice dated19.6.2019 issued by the 1st Defendant herein has null andvend and render justice.”

2.4The suit was filed with an application seeking leave to filethe suit with the aforesaid prayers. As observed hereinabove,the suit was filed on 22.06.2019. Immediately thereafterappellant herein – plaintiff also filed an application beforethe Debt Recovery Tribunal (DRT), Chennai under Section17(1) of SARFAESI Act on 17.07.2019 against thepossession notice dated 19.06.2019 praying that the assigneehas acquired no rights under the assignment agreement dated30.06.2018 and consequently, assignee - respondent No.1is not a secured creditor vis-a-vis the appellant – plaintiffand also to declare possession notice dated 19.06.2019 asnull and void. The registry of DRT returned the applicationfiled under Section 17(1) of SARFAESI Act by observingas under:- “Counsel for the Appellant has represented SA withoutcomplying with the defects read out, however with anendorsement that he is a proper and necessary party andthat relief prayed for vide Para VII(i) is maintainable. Hehas reiterated that relief has to be sought in relation to thenotice under challenge.

May be returned.”

2.5The defendants appeared before the High Court in C.S.(D)No.18962 of 2019, affidavits and counter affidavits werefiled by the parties to the suit. By order dated 30.09.2019,the learned Single Judge of the High Court dismissedapplication No.4322 of 2019 and C.S.(D) No.18962 of 2019on the ground of jurisdiction observing that the suit is forland and property situated outside the jurisdiction of thecourt and therefore the suit is not maintainable. It was alsoobserved and held that the civil court’s jurisdiction is barredin view of Section 34 of the SARFAESI Act and only DRThad competence to decide the matter.

3. Feeling aggrieved and dissatisfied with the order passed by thelearned Single Judge of the High Court dismissing the application as wellas the suit vide order dated 30.09.2019, appellant herein – original plaintifffiled an appeal before the Division Bench of the High Court being O.S.A.No.292 of 2019. By the impugned judgment and order the Division Benchof the High Court has dismissed the said appeal in view of the bar underSection 34 of the SARFAESI Act.

4. Feeling aggrieved and dissatisfied with the impugned judgmentand order passed by the Division Bench of the High Court confirmingthe judgment and order passed by the learned Single Judge rejecting theplaint/dismissing the suit as not maintainable in view of the bar underSection 34 of the SARFAESI Act, original plaintiff – appellant hereinhas preferred the present appeal.

5. Dr. A.M. Singhvi, learned Senior Advocate has appeared onbehalf of the appellant and Shri Shyam Divan, learned Senior Advocatehas appeared with Shri Huzefa Ahmadi, learned Senior Advocate, onbehalf of the respondents – defendants.

5.1Dr. Singhvi, learned Senior Advocate appearing on behalfof the plaintiff - appellant herein has vehemently submittedthat in the facts and circumstances of the case both, learnedSingle Judge as well as the Division Bench have materiallyerred in rejecting the plaint and dismissing the suit on theground that the suit is barred in view of the bar under Section34 of SARFAESI Act.

5.2It is submitted that the High Court has not properlyappreciated and considered the fact that in the suit plaintiff A

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Ahad pleaded the fraud and it was the case on behalf of theplaintiff – appellant herein that the assignment agreementdated 30.06.2018 is fraudulent and relief was sought todeclare the assignment agreement dated 30.06.2018 as nulland void by the plaintiff – appellant herein, the said reliefcannot be granted by the DRT under the provisions of theBSARFAESI Act and therefore the bar under Section 34 ofthe SARFAESI Act shall not be applicable.

5.3It is submitted that when the suit is filed alleging ‘fraud’ thebar under Section 34 of the SARFAESI Act shall not beapplicable and the suit for the reliefs sought in the plaintCshall be maintainable.

5.4It is submitted that even otherwise considering the fact thatsubsequently and before the assignment agreement, theproceedings under the IBC against the corporate debtorwith respect to the loan agreement dated 26.07.2011wereDinitiated and the resolution plan was approved and entireamount due and payable under the approved resolution planwas paid to the successful resolution applicants and even67,23,710 equity shares of the corporate debtor came to betransferred as per the approved resolution plan and theEoriginal loanee – corporate debtor was discharged and NOCwas issued, therefore, assignment deed can be said to be‘fraudulent’ after the resolution plan under IBC and theamount paid under the resolution plan and on transfer ofthe shares as per the approved resolution plan and thecorporate debtor was discharged. Therefore, there shall notFbe any dues to be paid by the appellant herein as guarantor.

5.5It is submitted that as such not only the assignmentagreement dated 30.06.2018 is null and void and is‘fraudulent’ even the assignee cannot be said to be a securedcreditor so far as the appellant is concerned.G

5.6It is further submitted by Dr. Singhvi, learned SeniorAdvocate appearing on behalf of the appellant that there isno legally enforceable debt by the plaintiff – appellant hereinfor the reasons stated above and therefore the initiation ofthe proceedings under the SARFAESI Act are bad in lawHand not maintainable.

5.7In the alternative, it is prayed by Dr. Singhvi, learned SeniorAAdvocate appearing on behalf of the appellant that in casethis Court is not inclined to entertain the present appeal,confirming the judgment and order passed by the High Courtrejecting the plaint/dismissing the suit, in that case the originalplaintiff – appellant may be given an opportunity to file theBproceedings before the DRT under the SARFAESI Act andall the contentions including that assignment agreement isnull and void; that assignee cannot be said to be the securedcreditor under the assignment agreement dated 30.06.2018;and that there are no dues so far as the appellant – plaintiffis concerned may be kept open. He has stated that in thatCcase the appellant shall file appropriate proceedings beforethe DRT within a period of two weeks from today.

6. Present appeal is vehemently opposed by Shri Shyam Divan,learned Senior Advocate and Shri Huzefa Ahmadi, learned SeniorAdvocate, appearing on behalf of the contesting defendants – originaldefendants – respondents herein.

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6.1It is vehemently submitted that the suit before the learnedSingle Judge filed by the appellant is rightly held to be notmaintainable in view of the bar under Section 34 of theSARFAESI Act.

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6.2It is vehemently submitted that as such the suit is rightlyheld to be not maintainable. It is submitted that initiation ofthe proceedings by the appellant by filing of the suit for thereliefs sought in the plaint is nothing but abuse of processof law and court.

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6.3It is submitted that the allegations of ‘fraud’ are nothing buta clever drafting only with a view to bring the suitmaintainable before the civil court despite the bar underSection 34 of the SARFAESI Act.

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6.4It is vehemently submitted by the learned senior counselappearing on behalf of the respondents herein – originaldefendants that except using the word ‘fraud’/’fraudulent’,there are no other particulars pleaded in support of theallegations of fraud. It is submitted that pleading of ‘fraud’is made at two places in the plaint namely para 31 and para H

A46. At both these places, the assertion is that consequent tothe alleged discharge of the debt of the corporate debtorthrough the proceedings under the IBC, no assignment ofsuch debt in favour of assignee could have been made and,thus, for this reason, the initiation of proceedings under theSARFAESI Act, is fraudulent. It is submitted that on theBaforesaid ground the assignment deed cannot be said to be‘fraudulent’.

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6.5It is further submitted that the word ‘fraud’/’fraudulent’are used in the plaint only with a view to bring the suitmaintainable before the civil court and to get out of the barCunder Section 34 of the SARFAESI Act. It is submittedthat after a month of filing of the suit, the appellant filed anapplication under Section 17(1) of SARFAESI ACT beforethe DRT, Chennai, assailing the possession notice issuedby the assignee under section 13(4) of the SARFAESI Act,Dhowever, in the said application, no allegation of any kind offraud was made against any of the respondents.

6.6It is submitted that in any case a bare review of theassertions in paras 31 and 46, it can be seen that no materialparticulars have been pleaded so as to constitute a pleadingEof ‘fraud’ as required under Order VI Rule 4 of the CivilProcedure Code,1908 (CPC). It is submitted that apart fromuse of adjectives such as ‘fraudulent’ etc., qua theassignment deed, no actual material particulars have beengiven with regard to the ‘fraud’. It is submitted that thepleadings in para 31 and para 46 do not satisfy the test ofF‘fraud’ under Section 17 of the Indian Contract Act, 1872.

6.7It is vehemently submitted by the learned Senior Advocatesappearing on behalf of the respondents herein that as perthe settled preposition of law pleading without any materialparticulars would not tantamount to a pleading of ‘fraud’.Reliance is placed on the decisions of this Court in the casesof Bishundeo Narain & Anr. vs. Seogeni Rai &Jagernath, (1951) SCR 548; Ladli Parshad Jaiswal vs.The Karnal Distillery Co. Ltd., Karnal &Ors., (1964)1 SCR 270; Canara Bank vs. P. Selathal & Ors.,(2020)13 SCC 143; H.S Goutham vs. Rama Murthy &

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Anr.,(2021) 5 SCC 241; Ram Singh vs. Gram PanchayatMehal Kalan & Ors.,(1986) 4 SCC 364; and Union ofIndia & Anr. vs. K.C Sharma & Company &Ors.,(2020) 15 SCC 209.

6.8Making the above submissions and relying upon the decisionsof this Court in aforesaid cases, it is prayed to dismiss thepresent appeal.

7. We have heard the learned senior counsel appearing on behalfof the respective parties at length.

7.1It is the case on behalf of the plaintiff – appellant hereinthat in the plaint there are allegations of the ‘fraud’ withrespect to the assignment agreement dated 30.06.2018 andit is the case on behalf of the plaintiff – appellant hereinthat assignment agreement is ‘fraudulent’ in as much asafter the full payment as per the approved resolution planunder the IBC and the original corporate debtor isdischarged, there shall not be any debt by the plaintiff –appellant herein as a guarantor and therefore Assignmentdeed is fraudulent. Therefore, it is the case on behalf ofthe plaintiff – appellant herein that the suit in which thereare allegations of ‘fraud’ with respect to the assignmentdeed shall be maintainable and the bar under Section 34 ofSARFAESI Act shall not be applicable.

7.2However, it is required to be noted that except the wordsused ‘fraud’/’fraudulent’ there are no specific particularspleaded with respect to the ‘fraud’. It appears that by aclever drafting and using the words ‘fraud’/’fraudulent’without any specific particulars with respect to the ‘fraud’,the plaintiff – appellant herein intends to get out of the barunder Section 34 of the SARFAESI Act and wants the suitto be maintainable. As per the settled preposition of lawmere mentioning and using the word ‘fraud’/’fraudulent’ isnot sufficient to satisfy the test of ‘fraud’. As per the settledpreposition of law such a pleading/using the word ‘fraud’/‘fraudulent’ without any material particulars would nottantamount to pleading of ‘fraud’. In case of BishundeoNarain and Anr. (Supra) in para 28, it is observed andheld as under:-

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SUPREME COURT REPORTS

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7.3Similar view has been expressed in the case of LadliParshad Jaiswal (Supra) and after considering the decisionCof the Privy Council in Bharat Dharma Syndicate vs.Harish Chandra (64 IA 146), it is held that a litigant whoprefers allegation of fraud or other improper conduct mustplace on record precise and specific details of these charges.Even as per Order VI Rule 4 in all cases in which the partyDpleading relies on any misrepresentation, fraud, breach oftrust, wilful default, or undue influence, particulars shall bestated in the pleading. Similarly in the case of K.C Sharma& Company (Supra) it is held that ‘fraud’ has to be pleadedwith necessary particulars. In the case of Ram Singh andOrs. (Supra), it is observed and held by this Court thatEwhen the suit is barred by any law, the plaintiff cannot beallowed to circumvent that provision by means of cleverdrafting so as to avoid mention of those circumstances bywhich the suit is barred by law of limitation.

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7.4In the case of T. Arivandandam vs. T.V. Satyapal &FAnr. (1977) 4 SCC 467, it is observed and held in para 5 asunder:- “5. We have not the slightest hesitation in condemning thepetitioner for the gross abuse of the process of the courtrepeatedly and unrepentently resorted to. From thestatement of the facts found in the judgment of the HighCourt, it is perfectly plain that the suit now pending beforethe First Munsif’s Court, Bangalore, is a flagrant misuse ofthe mercies of the law in receiving plaints. The learnedMunsif must remember that if on a meaningful — not formal— reading of the plaint it is manifestly vexatious, and G

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ELECTROSTEEL CASTINGS LIMITED v. UV ASSET RECONSTRUCTIONCOMPANY LIMITED & ORS. [M. R. SHAH, J.]

meritless, in the sense of not disclosing a clear right to sue,he should exercise his power under Order 7, Rule 11 CPCtaking care to see that the ground mentioned therein isfulfilled. And, if clever drafting has created the illusion of acause of action, nip it in the bud at the first hearing byexamining the party searchingly under Order 10, CPC. Anactivist Judge is the answer to irresponsible law suits.”

7.5A similar view has been expressed by this court in the recentdecision in the case of P. Selathal & Ors. (Supra).

8. Having considered the pleadings and averments in the suit moreparticularly the use of word ‘fraud’ even considering the case on behalfof the plaintiff, we find that the allegations of ‘fraud’ are made withoutany particulars and only with a view to get out of the bar under Section34 of the SARFAESI Act and by such a clever drafting the plaintiffintends to bring the suit maintainable despite the bar under Section 34 ofthe SARFAESI Act, which is not permissible at all and which cannot beapproved. Even otherwise it is required to be noted that it is the case onbehalf of the plaintiff – appellant herein that in view of the approvedresolution plan under IBC and thereafter the original corporate debtorbeing discharged there shall not be any debt so far as the plaintiff –appellant herein is concerned and therefore the assignment deed can besaid to be ‘fraudulent’. The aforesaid cannot be accepted. By that itselfthe assignment deed cannot be said to be ‘fraudulent’. In any case,whether there shall be legally enforceable debt so far as the plaintiff –appellant herein is concerned even after the approved resolution planagainst the corporate debtor still there shall be the liability of the plaintiffand/or the assignee can be said to be secured creditor and/or whetherany amount is due and payable by the plaintiff, are all questions whichare required to be dealt with and considered by the DRT in the proceedingsinitiated under the SARFAESI Act. It is required to be noted that assuch in the present case the assignee has already initiated the proceedingsunder Section 13 which can be challenged by the plaintiff – appellantherein by way of application under Section 17 of the SARFAESI Actbefore the DRT on whatever the legally available defences which maybe available to it. We are of the firm opinion that the suit filed by theplaintiff – appellant herein was absolutely not maintainable in view ofthe bar contained under Section 34 of the SARFAESI Act. Therefore,as such the courts below have not committed any error in rejecting the AB

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Aplaint/dismissing the suit in view of the bar under Section 34 of theSARFAESI Act.

9. In view of the above and for the reasons stated above, thepresent appeal fails and the same deserves to be dismissed and isaccordingly dismissed. However, it will be open for the appellant hereinBto initiate appropriate proceedings before the DRT under Section 17 ofthe SARFAESI Act against the initiation of the proceedings by theassignee – respondent No.1 herein under Section 13 of the SARFAESIAct inter alia on the ground:- (1) that the assignee cannot be said to besecured creditor so far as the appellant is concerned; (2) that there is noamount due and payable by the plaintiff – appellant herein on the groundCthat in view of the proceedings under IBC against the corporate debtorand the corporate debtor being discharged after the approved resolutionplan, there shall not be any enforceable debt against the appellant. Ifsuch an application is filed within a period of two weeks from today thesame be considered in accordance with law and on merits after complyingDwith all other requirements which may be required while filing theapplication under Section 17 of the SARFAESI Act. However, it is madeclear that we have not expressed anything on merits in favour of eitherof the parties on the aforesaid two issues. Present appeal is accordinglydismissed, however, in the facts and circumstances of the case thereshall be no order as to costs.E

Nidhi Jain

Appeal dismissed.

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