Allegations Of Fraud Can't Be Decided Under SARFAESI Act: Himachal Pradesh High Court

The Himachal Pradesh High Court has dismissed a writ petition filed by UCO Bank, which challenged a trial court order rejecting an application under Order VII Rule 11 of the Civil Procedure Code.The Court held that the issues raised in the civil suit concerned allegations of fraud and the validity of title documents, which could not be adjudicated under Section 17 of the SARFAESI Act. Justice Ajay Mohan Goel noted that: “This Court is of the considered view that the first relief which has been prayed for by the petitioners by no stretch of imagination can be granted under Section 17 of the 2002 Act and for the grant of that relief obviously the Fora is the Civil Court.”The plaintiff, Manjana Sahni purchased property in Solan, and the sale deed was registered in 2019. The seller had purchased the property after an approval from HIMUDA. The plaintiff contended that she had verified from ICICI Bank that the property was free from all type of charges. However after she acquired the property she got to know that UCO Bank was trying to take possession of property claiming that it was mortgaged. She further contended that the documents of mortgage file were false, fictitious, and executed fraudulently by the mortgagor and bank officials. In response, the Bank filed an application seeking Order VII Rule 11 CPC contending that the Civil Court has no jurisdiction as per the provisions of Sections 17, 34, and 35 of the SARFAESI Act.The application was rejected by the trial Court on the ground that the issues raised could not be decided by the DRT as the plaintiff had made proper pleadings of fraud which required examination by a civil court.However, the High Court noted that the plaintiff was neither a borrower nor a guarantor and had no connection with the mortgaor or UCO Bank. The Court remarked that as the bank is taking coercive steps against the property which plaintiff claims to be her, there is a cause of action in her favour against the bank. Case Name: UCO Bank and another v/s Smt. Manjana Verma Sahni and anotherCase No.: CMPMO No.294 of 2022Date of Decision: 11.11.2025For the Petitioners: Mr.Jitender Pal Ranote, AdvocateFor the Respondent: Mr. Bimal Gupta, Senior Advocate, with Mr. Varun Thakur, Advocate, for respondent No.1Click Here To Read/Download Order

Allegations Of Fraud Can't Be Decided Under SARFAESI Act: Himachal Pradesh High Court

Mehak Aggarwal

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