Fraud Allegations in SARFAESI Proceedings Cannot Be Rejected on Technical Objections: Supreme Court
- REEDLAW
- 2 hours ago
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REEDLAW Legal News Network reports: The Supreme Court has reaffirmed that writ petitions raising allegations of fraud and collusion in proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, cannot be rejected at the threshold on technical or Registry objections. Emphasising the constitutional duty of High Courts under Article 226, the Court held that procedural defects must not be allowed to defeat substantive justice where fraud is alleged.
Deciding a civil appeal arising from the rejection of a writ petition by the Telangana High Court, a Bench comprising Justice Dipankar Datta and Justice Satish Chandra Sharma set aside the impugned order and restored the writ petition for consideration on merits. The Court held that objections relating to the prayer clause, joinder of parties, or multiple reliefs in a single prayer are curable procedural irregularities. Reiterating the principles of fraus omnia corrumpit and dominus litis, the Court ruled that the Registry cannot question the array of parties and that allegations of fraud warrant judicial examination rather than summary rejection.
The Supreme Court considered the validity of an order passed by the High Court rejecting a writ petition at the threshold after sustaining office objections raised by the Registry. The appellants, being borrowers under the SARFAESI Act, had approached the High Court alleging fraudulent and collusive conduct by a court-appointed commissioner during possession proceedings initiated under Section 14 of the Act. The Registry raised objections concerning the prayer clause, the claiming of multiple reliefs in a single prayer, joinder of parties, and procedural compliance, which were accepted by the High Court, resulting in the rejection of the writ petition without consideration of the merits.
Allowing the appeal, the Supreme Court held that allegations of fraud and collusion invoke the High Court’s constitutional obligation to examine the matter judicially and cannot be brushed aside on technical or procedural grounds. Emphasising the maxim fraus omnia corrumpit, the Court ruled that a writ petition cannot be rejected merely because multiple reliefs are claimed in one prayer, as such defects are curable and amenable to amendment under procedural law. The Court further reaffirmed that the petitioner is dominus litis and that the Registry has no authority to question the array of parties, which lies exclusively within the judicial domain. Observing that the High Court had effectively abandoned its judicial role by endorsing technical objections, the Supreme Court set aside the impugned order, overruled the Registry’s objections, and directed restoration of the writ petition for consideration on merits, keeping all substantive issues open.
Ms. Gayathri, AOR, Mr. Kumar Abhishek, Mr. P. Venkat Raju and Mr. Santosh Kumar Yadav, Advocates, represented the Appellants.
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