ELECTROSTEEL CASTINGS LIMITEDversusUV ASSET RECONSTRUCTION COMPANY LIMITED & ORS.

532                      [2021]REPORTS
               SUPREME COURT    7 S.C.R. 532                [2021] 7 S.C.R.


A                  ELECTROSTEEL CASTINGS LIMITED
                                        v.
      UV ASSET RECONSTRUCTION COMPANY LIMITED & ORS.
                         (Civil Appeal No. 6669 of 2021)
B                            NOVEMBER 26, 2021
                [M. R. SHAH AND SANJIV KHANNA, JJ.]
             Securitisation and Reconstruction of Financial Assets and
      Enforcement of Security Interest Act, 2002: s.34 – Civil court not to
      have jurisdiction – On facts, suit filed by the appellant-Guarantor
C
      seeking declaration that the Assignee acquired no rights against
      the applicant under the Assignment Deed and that the Assignee is
      not a secured creditor vis-à-vis the applicant – Appellant’s case
      that in view of the approved resolution plan under IBC, the original
      corporate debtor being discharged, there shall not be any debt so
D     far as the appellant-guarantor is concerned and thus, the assignment
      deed assigning all the rights, title and interest in all the financial
      assistance granted by financial creditor from time to time to corporate
      debtor in favour of assignee, was ‘fraudulent’ – Maintainability of
      the suit – Held: Mere allegations of fraud without material
      particulars not sufficient to get over bar on civil suit u/s.34 – A
E
      pleading/using the word ‘fraud’/‘fraudulent’ without any material
      particulars would not tantamount to pleading of ‘fraud’ – On facts,
      allegations of ‘fraud’ made without any particulars and clever draft
      prepared to bring the suit maintainable despite the bar u/s. 34, is
      not permissible and cannot be approved – It cannot be said that the
F     assignment deed is ‘fraudulent’ – In any case, whether there shall
      be legally enforceable debt so far as the appellant is concerned
      even after the approved resolution plan against the corporate debtor,
      and/or the assignee can be said to be secured creditor, such questions
      required to be dealt with by the DRT in the proceedings initiated
      under SARFAESI Act – Assignee has already initiated the proceedings
G
      u/s.13 which can be challenged by the appellant – Thus, the High
      Court justified in rejecting plaint/dismissing the suit in view of bar
      u/s.34 of the Act.


H
                                       532
 ELECTROSTEEL CASTINGS LIMITED v. UV ASSET RECONSTRUCTION               533
                 COMPANY LIMITED & ORS.


      Dismissing the appeal, the Court                                  A
       HELD: 1.1 It is the case on behalf of the plaintiff-appellant
that the suit in which there are allegations of ‘fraud’ with respect
to the assignment deed shall be maintainable and the bar under
Section 34 of SARFAESI Act shall not be applicable. However, it
is required to be noted that except the words used ‘fraud’/             B
’fraudulent’ there are no specific particulars pleaded with respect
to the ‘fraud’. It appears that by a clever drafting and using the
words ‘fraud’/’fraudulent’ without any specific particulars with
respect to the ‘fraud’, the plaintiff-appellant intends to get out of
the bar under Section 34 of the SARFAESI Act and wants the
suit to be maintainable. As per the settled preposition of law mere     C
mentioning and using the word ‘fraud’/’fraudulent’ is not sufficient
to satisfy the test of ‘fraud’. As per the settled preposition of law
such a pleading/using the word ‘fraud’/ ‘fraudulent’ without any
material particulars would not tantamount to pleading of ‘fraud’.
[Paras 7.1 and 7.2][543-D-H]                                            D
       1.2 Having considered the pleadings and averments in the
suit more particularly the use of word ‘fraud’ even considering
the case on behalf of the plaintiff, it is found 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          E
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 that in view of the approved
resolution plan under IBC and thereafter the original corporate         F
debtor being discharged there shall not be any debt so far as the
plaintiff-appellant is concerned and therefore the assignment deed
can be said to be ‘fraudulent’. The said cannot be accepted. By
that itself the assignment deed cannot be said to be ‘fraudulent’.
In any case, whether there shall be legally enforceable debt so         G
far as the plaintiff-appellant 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
                                                                        H
534            SUPREME COURT REPORTS                      [2021] 7 S.C.R.


A     with and considered by the DRT in the proceedings initiated under
      the SARFAESI Act. As such in the instant case the assignee has
      already initiated the proceedings under Section 13 which can be
      challenged by the plaintiff-appellant 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
B
      suit filed by the plaintiff-appellant 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. However, it will be
C     open for the appellant to initiate appropriate proceedings before
      the DRT under Section 17 of the SARFAESI Act against the
      initiation of the proceedings by the assignee-respondent No.1
      under Section 13 of the SARFAESI Act. [Paras 8, 9][545-C-H;
      546-A; B-C]
D           Bishundeo Narain & Anr. v. Seogeni Rai & Jagernath
            [1951] SCR 548; Ladli Parshad Jaiswal v. The Karnal
            Distillery 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 Panchayat
E           Mehal Kalan & Ors. (1986) 4 SCC 364 : [1986] 3 SCR
            831; Union of India & Anr. v. K.C Sharma & Company
            & Ors. (2020) 15 SCC 209; Bharat Dharma Syndicate
            v. Harish Chandra 64 IA 146; T. Arivandandam v. T.V.
            Satyapal & Anr. (1977) 4 SCC 467 : [1978] 1 SCR
F           742 – referred to.
                             Case Law Reference
      [1951] SCR 548                 referred to             Para 6
      [1964] 1 SCR 270               referred to             Para 6
G     [2020] 2 SCR 944               referred to             Para 6
      (2021) 5 SCC 241               referred to             Para 6
      [1986] 3 SCR 831               referred to             Para 6
      (2020) 15 SCC 209              referred to             Para 6
H
 ELECTROSTEEL CASTINGS LIMITED v. UV ASSET RECONSTRUCTION                         535
                 COMPANY LIMITED & ORS.


64 IA 146                           referred to                Para 7.3           A
[1978] 1 SCR 742                    referred to                Para 7.4
        CIVIL APPELLATE JURISDICTION: Civil Appeal No.6669 of
2021.
      From the Judgment and Order dated 13.08.2021 of the High Court              B
of Judicature at Madras in O.S.A. No.292 of 2019.
      Dr. A. M. Singhvi, K. V. Viswanathan, Sr. Advs., Mayank Pandey,
Advs. for the Appellant.
     Shyam Divan, Huzefa Ahmadi, Sr. Advs., Mishra Saurabh, Dhruv
Dewan, Ms. Harshita Choubey, Ms. Chandni Ghatak, Advs. for the                    C
Respondents.
        The Judgment of the Court was delivered by
        M. R. SHAH, J.
       1. Feeling aggrieved and dissatisfied with the impugned judgment           D
and order dated 13.08.2021 passed by the High Court of Judicature at
Madras in O.S.A. No. 292 of 2019, by which the Division Bench of the
High Court has dismissed the said appeal preferred by the original plaintiff
rejecting the plaint/suit filed by the appellant herein – original plaintiff on
the ground that the suit is barred by Section 34 of the SARFAESI Act,
2002, the original plaintiff has preferred the present appeal.                    E

        2. The facts leading to the present appeal in nutshell are as under:-
        2.1   That original defendant No.3 - respondent No.3 herein
              (hereinafter referred to as original defendant No.3) availed
              the loan facility vide Rupee Loan Agreement dated                   F
              26.07.2011 from defendant No.2 - respondent No.2 herein
              – SREI Infrastructure Finance Limited and availed the
              financial assistance to the extent of Rs.500 crores. The
              appellant herein – original plaintiff stood as guarantor. A
              mortgage was created by the appellant herein – original
              plaintiff in favour of defendant No.2 – respondent No.2             G
              herein – financial creditor over its factory land at Evalur,
              Tamil Nadu along with plant and machinery, by way of
              deposit of title deeds in terms of the declaration to secure
              the repayment, discharge and redemption by original
              defendant No.3. That original defendant No.3 – corporate            H
536   SUPREME COURT REPORTS                            [2021] 7 S.C.R.


A       debtor could not pay the loan amount, therefore the
        proceedings under the Insolvency Bankruptcy Code, 2016
        (IBC) was initiated against the corporate debtor. An
        application under Section 7 of the IBC was filed by the
        State Bank of India against original defendant No.3 –
        corporate debtor. The default amount was INR
B
        923,75,00,000/-. The resolution process was initiated and
        an interim resolution professional was appointed under the
        provisions of IBC. A resolution plan came to be approved
        by the Committee of Creditors under Section 30(4) of the
        IBC. The learned Adjudicating Authority vide order dated
C       17.04.2018 approved the resolution plan. Under the approved
        resolution plan an amount of INR 241,71,84,839.18 was
        required to be paid and 67,23,710 equity shares of the
        corporate debtor were to be allotted. As per the case on
        behalf of the plaintiff – appellant herein on payment of
        aforesaid amount and transfer of aforesaid shares No Due
D
        Certificate was issued in favour of the corporate debtor –
        original defendant No.3 on 25.06.2018 and the corporate
        debtor came to be discharged. It appears that thereafter an
        assignment agreement was executed between defendant
        No.2 – respondent No.2 herein and defendant No.1 –
E       respondent No.1 herein on 30.06.2018, assigning all the
        rights, titles and interest in all the financial assistance
        provided by defendant No.2 – financial creditor - respondent
        No.2 herein in terms of agreement dated 26.07.2011 in favour
        of assignee - respondent No.1. As assignee - respondent
        No.1 herein pursuant to the assignment agreement dated
F
        30.06.2018 had issued letter to all the interested parties,
        namely, assignor - financial creditor, guarantor and corporate
        debtor informing that assignor – financial creditor -
        respondent No.2 herein had absolutely assigned all the
        rights, title and interest in all the financial assistance granted
G       by financial creditor - respondent No.2 herein from time to
        time to corporate debtor in favour of assignee - respondent
        No.1 herein vide assignment agreement dated 30.06.2018.
        The said letter was responded by the plaintiff – appellant
        herein stating the following :-
H
ELECTROSTEEL CASTINGS LIMITED v. UV ASSET RECONSTRUCTION                    537
         COMPANY LIMITED & ORS. [M. R. SHAH, J.]


    (i) “Respondent No.2 had duly filed its claim before the Resolution     A
    Professional in accordance with the provisions of IBC.
    (ii) This claim was crystallised and admitted at INR 577.90 Crores
    and also formed part of the approved Resolution Plan of Vedanta
    Limited.
    (iii) Pursuant to the approved Resolution Plan, the entire debt of      B
    Respondent No.2 has been discharged by way of allotment of
    shares and payment in cash on 6.06.2018 and 21.06.2018
    respectively.
    (iv) It was also highlighted that in terms of section 3.2(xi) of the
    approved Resolution Plan, upon discharge of financial creditors         C
    (including Respondent No.2), the financial creditors were required
    to redeliver and cause to be delivered to Petitioner all documents
    encumbered with the financial creditors.
    (v) Therefore, when no due was outstanding and in fact redelivery
    of encumbered assets was required, there was no basis under             D
    contract or law for assignment of loan/debts/securities.
    (vi) It was emphasised that assignment agreement dated
    30.06.2018 was null, void ab initio and without any basis.”
    2.2   That thereafter on the basis of the assignment agreement
                                                                            E
          dated 30.06.2018, the assignee – original defendant No.1 –
          respondent No.1 herein initiated the proceedings against
          the plaintiff – appellant herein, who stood as guarantor, under
          Section 13(2) of the Securitisation and Reconstruction of
          Financial Assets and Enforcement of Security Interest Act,
          2002 (SARFAESI Act) by issuing a notice dated 27.12.2018,         F
          demanding the payment of INR 587,10,08,309 due under
          the rupee term loan agreement dated 26.07.2011. Notice
          dated 27.12.2018 of the SARFAESI Act was responded by
          the plaintiff – appellant herein vide reply dated 20.02.2019
          stating that pursuant to repayment of amount in terms of
                                                                            G
          the approved resolution plan, all the claims of financial
          creditor - respondent No.2 herein stand extinguished and
          consequently, no claim can be made by the assignee -
          respondent No.1 herein for the same default and that no
          amount is due and payable to assignee - respondent No.1.
          That thereafter a possession notice dated 19.06.2019 was          H
538     SUPREME COURT REPORTS                           [2021] 7 S.C.R.


A           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 published
            in the newspaper on 22.06.2019.
      2.3   That thereafter the plaintiff – appellant herein instituted a
B           Civil Suit being C.S.(D) No.18962 of 2019 on 22.06.2019
            before the High Court of Madras and prayed for the
            following reliefs:-
            “(i). To declare that the 1st Defendant acquired no rights
            against the Applicant herein under the Assignment Deed
C           dated 30.06.2018, arid consequently, declare that the 1st
            Defendant is not a secured creditor vis-a-vis, the Applicant
            herein; and
            (ii). Consequently, to declare Possession Notice dated
            19.6.2019 issued by the 1st Defendant herein has null and
D           vend and render justice.”
      2.4   The suit was filed with an application seeking leave to file
            the suit with the aforesaid prayers. As observed hereinabove,
            the suit was filed on 22.06.2019. Immediately thereafter
            appellant herein – plaintiff also filed an application before
E           the Debt Recovery Tribunal (DRT), Chennai under Section
            17(1) of SARFAESI Act on 17.07.2019 against the
            possession notice dated 19.06.2019 praying that the assignee
            has acquired no rights under the assignment agreement dated
            30.06.2018 and consequently, assignee - respondent No.1
            is not a secured creditor vis-a-vis the appellant – plaintiff
F           and also to declare possession notice dated 19.06.2019 as
            null and void. The registry of DRT returned the application
            filed under Section 17(1) of SARFAESI Act by observing
            as under:-
            “Counsel for the Appellant has represented SA without
G           complying with the defects read out, however with an
            endorsement that he is a proper and necessary party and
            that relief prayed for vide Para VII(i) is maintainable. He
            has reiterated that relief has to be sought in relation to the
            notice under challenge.
H           May be returned.”
 ELECTROSTEEL CASTINGS LIMITED v. UV ASSET RECONSTRUCTION                        539
          COMPANY LIMITED & ORS. [M. R. SHAH, J.]


       2.5    The defendants appeared before the High Court in C.S.(D)           A
              No.18962 of 2019, affidavits and counter affidavits were
              filed by the parties to the suit. By order dated 30.09.2019,
              the learned Single Judge of the High Court dismissed
              application No.4322 of 2019 and C.S.(D) No.18962 of 2019
              on the ground of jurisdiction observing that the suit is for
                                                                                 B
              land and property situated outside the jurisdiction of the
              court and therefore the suit is not maintainable. It was also
              observed and held that the civil court’s jurisdiction is barred
              in view of Section 34 of the SARFAESI Act and only DRT
              had competence to decide the matter.
        3. Feeling aggrieved and dissatisfied with the order passed by the       C
learned Single Judge of the High Court dismissing the application as well
as the suit vide order dated 30.09.2019, appellant herein – original plaintiff
filed 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 Bench
of the High Court has dismissed the said appeal in view of the bar under         D
Section 34 of the SARFAESI Act.
       4. Feeling aggrieved and dissatisfied with the impugned judgment
and order passed by the Division Bench of the High Court confirming
the judgment and order passed by the learned Single Judge rejecting the
plaint/dismissing the suit as not maintainable in view of the bar under          E
Section 34 of the SARFAESI Act, original plaintiff – appellant herein
has preferred the present appeal.
      5. Dr. A.M. Singhvi, learned Senior Advocate has appeared on
behalf of the appellant and Shri Shyam Divan, learned Senior Advocate
has appeared with Shri Huzefa Ahmadi, learned Senior Advocate, on                F
behalf of the respondents – defendants.
       5.1    Dr. Singhvi, learned Senior Advocate appearing on behalf
              of the plaintiff - appellant herein has vehemently submitted
              that in the facts and circumstances of the case both, learned
              Single Judge as well as the Division Bench have materially         G
              erred in rejecting the plaint and dismissing the suit on the
              ground that the suit is barred in view of the bar under Section
              34 of SARFAESI Act.
       5.2    It is submitted that the High Court has not properly
              appreciated and considered the fact that in the suit plaintiff
                                                                                 H
540     SUPREME COURT REPORTS                            [2021] 7 S.C.R.


A           had pleaded the fraud and it was the case on behalf of the
            plaintiff – appellant herein that the assignment agreement
            dated 30.06.2018 is fraudulent and relief was sought to
            declare the assignment agreement dated 30.06.2018 as null
            and void by the plaintiff – appellant herein, the said relief
            cannot be granted by the DRT under the provisions of the
B
            SARFAESI Act and therefore the bar under Section 34 of
            the SARFAESI Act shall not be applicable.
      5.3   It is submitted that when the suit is filed alleging ‘fraud’ the
            bar under Section 34 of the SARFAESI Act shall not be
            applicable and the suit for the reliefs sought in the plaint
C           shall be maintainable.
      5.4   It is submitted that even otherwise considering the fact that
            subsequently and before the assignment agreement, the
            proceedings under the IBC against the corporate debtor
            with respect to the loan agreement dated 26.07.2011were
D           initiated and the resolution plan was approved and entire
            amount due and payable under the approved resolution plan
            was paid to the successful resolution applicants and even
            67,23,710 equity shares of the corporate debtor came to be
            transferred as per the approved resolution plan and the
E           original loanee – corporate debtor was discharged and NOC
            was issued, therefore, assignment deed can be said to be
            ‘fraudulent’ after the resolution plan under IBC and the
            amount paid under the resolution plan and on transfer of
            the shares as per the approved resolution plan and the
            corporate debtor was discharged. Therefore, there shall not
F           be any dues to be paid by the appellant herein as guarantor.
      5.5   It is submitted that as such not only the assignment
            agreement dated 30.06.2018 is null and void and is
            ‘fraudulent’ even the assignee cannot be said to be a secured
            creditor so far as the appellant is concerned.
G
      5.6   It is further submitted by Dr. Singhvi, learned Senior
            Advocate appearing on behalf of the appellant that there is
            no legally enforceable debt by the plaintiff – appellant herein
            for the reasons stated above and therefore the initiation of
            the proceedings under the SARFAESI Act are bad in law
H           and not maintainable.
 ELECTROSTEEL CASTINGS LIMITED v. UV ASSET RECONSTRUCTION                         541
          COMPANY LIMITED & ORS. [M. R. SHAH, J.]


      5.7   In the alternative, it is prayed by Dr. Singhvi, learned Senior       A
            Advocate appearing on behalf of the appellant that in case
            this Court is not inclined to entertain the present appeal,
            confirming the judgment and order passed by the High Court
            rejecting the plaint/dismissing the suit, in that case the original
            plaintiff – appellant may be given an opportunity to file the
                                                                                  B
            proceedings before the DRT under the SARFAESI Act and
            all the contentions including that assignment agreement is
            null and void; that assignee cannot be said to be the secured
            creditor under the assignment agreement dated 30.06.2018;
            and that there are no dues so far as the appellant – plaintiff
            is concerned may be kept open. He has stated that in that             C
            case the appellant shall file appropriate proceedings before
            the 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 Senior
Advocate, appearing on behalf of the contesting defendants – original             D
defendants – respondents herein.
      6.1   It is vehemently submitted that the suit before the learned
            Single Judge filed by the appellant is rightly held to be not
            maintainable in view of the bar under Section 34 of the
            SARFAESI Act.                                                         E
      6.2   It is vehemently submitted that as such the suit is rightly
            held to be not maintainable. It is submitted that initiation of
            the proceedings by the appellant by filing of the suit for the
            reliefs sought in the plaint is nothing but abuse of process
            of law and court.                                                     F
      6.3   It is submitted that the allegations of ‘fraud’ are nothing but
            a clever drafting only with a view to bring the suit
            maintainable before the civil court despite the bar under
            Section 34 of the SARFAESI Act.
      6.4   It is vehemently submitted by the learned senior counsel              G
            appearing on behalf of the respondents herein – original
            defendants that except using the word ‘fraud’/’fraudulent’,
            there are no other particulars pleaded in support of the
            allegations of fraud. It is submitted that pleading of ‘fraud’
            is made at two places in the plaint namely para 31 and para
                                                                                  H
542     SUPREME COURT REPORTS                            [2021] 7 S.C.R.


A           46. At both these places, the assertion is that consequent to
            the alleged discharge of the debt of the corporate debtor
            through the proceedings under the IBC, no assignment of
            such debt in favour of assignee could have been made and,
            thus, for this reason, the initiation of proceedings under the
            SARFAESI Act, is fraudulent. It is submitted that on the
B
            aforesaid ground the assignment deed cannot be said to be
            ‘fraudulent’.
      6.5   It is further submitted that the word ‘fraud’/’fraudulent’
            are used in the plaint only with a view to bring the suit
            maintainable before the civil court and to get out of the bar
C           under Section 34 of the SARFAESI Act. It is submitted
            that after a month of filing of the suit, the appellant filed an
            application under Section 17(1) of SARFAESI ACT before
            the DRT, Chennai, assailing the possession notice issued
            by the assignee under section 13(4) of the SARFAESI Act,
D           however, in the said application, no allegation of any kind of
            fraud was made against any of the respondents.
      6.6   It is submitted that in any case a bare review of the
            assertions in paras 31 and 46, it can be seen that no material
            particulars have been pleaded so as to constitute a pleading
E           of ‘fraud’ as required under Order VI Rule 4 of the Civil
            Procedure Code,1908 (CPC). It is submitted that apart from
            use of adjectives such as ‘fraudulent’ etc., qua the
            assignment deed, no actual material particulars have been
            given with regard to the ‘fraud’. It is submitted that the
            pleadings in para 31 and para 46 do not satisfy the test of
F           ‘fraud’ under Section 17 of the Indian Contract Act, 1872.
      6.7   It is vehemently submitted by the learned Senior Advocates
            appearing on behalf of the respondents herein that as per
            the settled preposition of law pleading without any material
            particulars would not tantamount to a pleading of ‘fraud’.
G           Reliance is placed on the decisions of this Court in the cases
            of 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)
H           13 SCC 143; H.S Goutham vs. Rama Murthy &
 ELECTROSTEEL CASTINGS LIMITED v. UV ASSET RECONSTRUCTION                       543
          COMPANY LIMITED & ORS. [M. R. SHAH, J.]


            Anr.,(2021) 5 SCC 241; Ram Singh vs. Gram Panchayat                 A
            Mehal Kalan & Ors.,(1986) 4 SCC 364; and Union of
            India & Anr. vs. K.C Sharma & Company &
            Ors.,(2020) 15 SCC 209.
      6.8   Making the above submissions and relying upon the decisions
            of this Court in aforesaid cases, it is prayed to dismiss the       B
            present appeal.
       7. We have heard the learned senior counsel appearing on behalf
of the respective parties at length.
      7.1   It is the case on behalf of the plaintiff – appellant herein
            that in the plaint there are allegations of the ‘fraud’ with        C
            respect to the assignment agreement dated 30.06.2018 and
            it is the case on behalf of the plaintiff – appellant herein
            that assignment agreement is ‘fraudulent’ in as much as
            after the full payment as per the approved resolution plan
            under the IBC and the original corporate debtor is                  D
            discharged, there shall not be any debt by the plaintiff –
            appellant herein as a guarantor and therefore Assignment
            deed is fraudulent. Therefore, it is the case on behalf of
            the plaintiff – appellant herein that the suit in which there
            are allegations of ‘fraud’ with respect to the assignment
            deed shall be maintainable and the bar under Section 34 of          E
            SARFAESI Act shall not be applicable.
      7.2   However, it is required to be noted that except the words
            used ‘fraud’/’fraudulent’ there are no specific particulars
            pleaded with respect to the ‘fraud’. It appears that by a
            clever drafting and using the words ‘fraud’/’fraudulent’            F
            without any specific particulars with respect to the ‘fraud’,
            the plaintiff – appellant herein intends to get out of the bar
            under Section 34 of the SARFAESI Act and wants the suit
            to be maintainable. As per the settled preposition of law
            mere mentioning and using the word ‘fraud’/’fraudulent’ is          G
            not sufficient to satisfy the test of ‘fraud’. As per the settled
            preposition of law such a pleading/using the word ‘fraud’/
            ‘fraudulent’ without any material particulars would not
            tantamount to pleading of ‘fraud’. In case of Bishundeo
            Narain and Anr. (Supra) in para 28, it is observed and
            held as under:-                                                     H
544      SUPREME COURT REPORTS                           [2021] 7 S.C.R.


A     “.... Now if there is one rule which is better established than any
      other, it is that in cases of fraud, undue influence and coercion,
      the parties pleading it must set forth full particulars and the case
      can only be decided on the particulars as laid. There can be no
      departure from them in evidence. General allegations are
      insufficient even to amount to an averment of fraud of which any
B
      court ought to take notice however strong the language in which
      they are couched may be, and the same applies to undue influence
      and coercion. See Order 6, Rule 4, Civil Procedure Code.”
      7.3   Similar view has been expressed in the case of Ladli
            Parshad Jaiswal (Supra) and after considering the decision
C           of the Privy Council in Bharat Dharma Syndicate vs.
            Harish Chandra (64 IA 146), it is held that a litigant who
            prefers allegation of fraud or other improper conduct must
            place on record precise and specific details of these charges.
            Even as per Order VI Rule 4 in all cases in which the party
D           pleading relies on any misrepresentation, fraud, breach of
            trust, wilful default, or undue influence, particulars shall be
            stated in the pleading. Similarly in the case of K.C Sharma
            & Company (Supra) it is held that ‘fraud’ has to be pleaded
            with necessary particulars. In the case of Ram Singh and
            Ors. (Supra), it is observed and held by this Court that
E           when the suit is barred by any law, the plaintiff cannot be
            allowed to circumvent that provision by means of clever
            drafting so as to avoid mention of those circumstances by
            which the suit is barred by law of limitation.
      7.4   In the case of T. Arivandandam vs. T.V. Satyapal &
F           Anr. (1977) 4 SCC 467, it is observed and held in para 5 as
            under:-
            “5. We have not the slightest hesitation in condemning the
            petitioner for the gross abuse of the process of the court
            repeatedly and unrepentently resorted to. From the
G           statement of the facts found in the judgment of the High
            Court, it is perfectly plain that the suit now pending before
            the First Munsif’s Court, Bangalore, is a flagrant misuse of
            the mercies of the law in receiving plaints. The learned
            Munsif must remember that if on a meaningful — not formal
H           — reading of the plaint it is manifestly vexatious, and
 ELECTROSTEEL CASTINGS LIMITED v. UV ASSET RECONSTRUCTION                          545
          COMPANY LIMITED & ORS. [M. R. SHAH, J.]


              meritless, in the sense of not disclosing a clear right to sue,      A
              he should exercise his power under Order 7, Rule 11 CPC
              taking care to see that the ground mentioned therein is
              fulfilled. And, if clever drafting has created the illusion of a
              cause of action, nip it in the bud at the first hearing by
              examining the party searchingly under Order 10, CPC. An
                                                                                   B
              activist Judge is the answer to irresponsible law suits.”
       7.5    A similar view has been expressed by this court in the recent
              decision in the case of P. Selathal & Ors. (Supra).
       8. Having considered the pleadings and averments in the suit more
particularly the use of word ‘fraud’ even considering the case on behalf           C
of the plaintiff, we find 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         D
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. By that itself          E
the 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 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            F
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                  G
before the DRT on whatever the legally available defences which may
be available to it. We are of the firm opinion that 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
                                                                                   H
546                SUPREME COURT REPORTS                       [2021] 7 S.C.R.


A     plaint/dismissing the suit in view of the bar under Section 34 of the
      SARFAESI Act.
              9. In view of the above and for the reasons stated above, the
      present appeal fails and the same deserves to be dismissed and is
      accordingly dismissed. However, it will be open for the appellant herein
B     to initiate appropriate proceedings before the DRT under Section 17 of
      the SARFAESI Act against the initiation of the proceedings by the
      assignee – respondent No.1 herein under Section 13 of the SARFAESI
      Act inter alia on the ground:- (1) that the assignee cannot be said to be
      secured creditor so far as the appellant is concerned; (2) that there is no
      amount due and payable by the plaintiff – appellant herein on the ground
C     that in view of the proceedings under IBC against the corporate debtor
      and the corporate debtor being discharged after the approved resolution
      plan, there shall not be any enforceable debt against the appellant. If
      such an application is filed within a period of two weeks from today the
      same be considered in accordance with law and on merits after complying
D     with all other requirements which may be required while filing the
      application under Section 17 of the SARFAESI Act. However, it is made
      clear that we have not expressed anything on merits in favour of either
      of the parties on the aforesaid two issues. Present appeal is accordingly
      dismissed, however, in the facts and circumstances of the case there
      shall be no order as to costs.
E

      Nidhi Jain                                                  Appeal dismissed.




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