Gujarat High Court
M/S Naitik Gems vs Authorised Officer, Religare Finvest ... on 23 December, 2020
Author: J.B.Pardiwala
Bench: J.B.Pardiwala, Ilesh J. Vora
C/LPA/876/2020 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/LETTERS PATENT APPEAL NO. 876 of 2020
In
R/SPECIAL CIVIL APPLICATION NO. 9326 of 2020
With
CIVIL APPLICATION (FOR STAY) NO. 1 of 2020
In R/LETTERS PATENT APPEAL NO. 876 of 2020
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M/S NAITIK GEMS
Versus
AUTHORISED OFFICER, RELIGARE FINVEST LTD.
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Appearance:
for the Appellant(s) No. 2,3,4
DHRUVKUMAR S CHAUHAN(8138) for the Appellant(s) No. 1
MR VISHWAS K SHAH(5364) for the Respondent(s) No. 1
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CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALA
and
HONOURABLE MR. JUSTICE ILESH J. VORA
Date : 23/12/2020
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA)
1. This appeal under Clause 15 of the Letters Patent is at the instance of unsuccessful writ applicants of a writ application and is directed against the order passed by a learned Single Judge of this Court dated 17.09.2020 in the Special Civil Application No.9326 of 2020, by which the learned Single Judge declined to interfere with the interim order passed by the Debts Recovery Tribunal-II, Ahmedabad (for short ''DRT'') and thereby, rejected the writ application.
2. We have heard Mr. S.S.Panesar, the learned counsel assisted by Mr. Dhruvkumar S. Chauhan, the learned counsel appearing for the appellants (original writ applicants) and Mr. Vishwas Shah, the learned counsel appearing for the respondent (financial Page 1 of 8 Downloaded on : Fri Dec 25 06:52:28 IST 2020 C/LPA/876/2020 ORDER institution).
3. It appears from the materials on record that, the writ applicants have availed finance from the respondent under the various accounts. The details are as under:
Sr Account No. Amount Rate of Date of Amount secured No (RS.) interest mortgage under mortgage p.a. 1 XMORRJK 78,02,000/- 16.50% 04/01/16 78,02,000/-
0068673 2 XMORRJK 2,22,62,000/- 16.50% 04/01/16 2,22,62,000/-
00068671 3 XMORRJK 3,05,71,000/- 15.00% 21/01/16 3,05,71,000/-
00068613 4 XMORRJK 3,25,86,000/- 16.00% 04/01/16 3,25,86,000/-
00068729
4. We may clarify that the respondent is a Non-Banking Finance Company (for short ''NBFC''). As the appellants herein defaulted in repayment of the loan amounts, the respondent initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short ''SARFAESI act, 2002). The action initiated by the respondent has been made the subject matter of challenge by the appellants before the DRT by filing the Securitization Application No.200 of 2020. The matter as on date is pending before the DRT, Ahmedabad. The challenge before the DRT, Ahmedabad includes the order passed by the District Magistrate, Botad, dated 20.02.2020 allowing the application filed by the respondent under Section 14 of the SARFAESI Act, 2002.
5. The appellants prayed before the DRT for stay of the operation, implementation and execution of the order passed by the District Magistrate, Botad, under Section 14 of the SARFAESI Act, 2002.
Page 2 of 8 Downloaded on : Fri Dec 25 06:52:28 IST 2020 C/LPA/876/2020 ORDERThe DRT, Ahmedabad declined to grant such relief.
6. Being dissatisfied with the interim order passed by the DRT, Ahmedabad, declining to grant the relief, the appellants came before this Court by filing the Special Civil Application No.9326 of 2020. The learned Single Judge declined to entertain the writ application and rejected the same essentially on the ground that the appellants have an alternative efficacious remedy of filing an appeal before the Appellate Tribunal. The learned Single Judge while rejecting the writ application observed in paras 8, 9 and 10 respectively as under:
"8. After considering the rival submissions by both sides and considering the fact that out of 5 agreements with the bank, there is an outstanding amount of more than Rs. 1.00 Crore, the contention raised by the petitioners that outstanding amount is less than Rs. 1.00 Crore and therefore DRT has no jurisdiction, does not find impressive.
9. I am in total agreement with the contention raised by learned advocate for the respondent that there is alternative remedy available to the petitioners and without preferring appeal as provided under the Act, the petitioners cannot directly rush to the High Court. This question is squarely covered in the above referred judgment of Authorized Officer, State Bank of Travancore (supra) of Apex Court.
10. Under the circumstances, I am of the view that this petition is not maintainable and is required to be dismissed."
7. Being dissatisfied with the impugned order passed by the learned Single Judge, the appellants (original writ applicants) Page 3 of 8 Downloaded on : Fri Dec 25 06:52:28 IST 2020 C/LPA/876/2020 ORDER have come up with the present appeal.
8. Mr.S.S.Panesar, the learned counsel appearing for the appellants would submit that, the DRT-II, Ahmedabad committed an error in passing the impugned order, inasmuch as the DRT has failed to take into consideration the Notification dated 05.08.2016 issued by the Ministry of Finance (Department of Financial Services), which provides that a Non-Banking Financial Company" covered under Clause (f) of Section 45-I of the Reserve Bank of India Act, 1934 can avail the provisions of the SARFAESI Act, 2002 with the only exception that the provisions of Sections 13 to 19 of the Act shall apply only to such security interest, which is obtained for securing repayment of secured debt with the principal amount of rupees one crore and above. Mr. Panesar invited the attention of this Court to the fact that, the respondent has clubbed all the accounts for the purpose of taking over the possession of all the secured assets. According to him, the respondent cannot do so because each accounts are independent accounts and the properties mortgaged are also independent with each of those accounts. The dispute in the present case relates to the Account No. 68673 and the security interest created with respect to this particular Account. According to Mr. Panesar, the principal amount involved in the Account No.68673 is Rs.68,10,852/-. According to Mr. Panesar, the financial institution now proposes to get the order passed by the District Magistrate executed and thereby, take over the possession of even those secured assets covered under the Account No.68673. This is the only argument available with Mr. Panesar and canvassed before us.
9. In such circumstances referred to above, Mr. Panesar prays that this Court may clarify that the respondent cannot attach or take Page 4 of 8 Downloaded on : Fri Dec 25 06:52:28 IST 2020 C/LPA/876/2020 ORDER over the possession of immovable properties mortgaged with respect to the Account No.68673 as the principal amount does not exceed Rs.1 Crore.
10. On the other hand, Mr. Vishwas Shah, the learned counsel appearing for the respondent has vehemently opposed this appeal. Mr. Shah has raised a preliminary objection with regard to the maintainability of this appeal itself. Mr. Shah would submit that the argument sought to be canvassed before this Court on behalf of the appellant was never raised before the learned Single Judge nor before the DRT, Ahmedabad. The argument with respect to the Notification dated 05.08.2016 is being canvassed for the first time before this Court in this appeal. Mr. Shah would further submit that no error not to speak any error of law could be said to have been committed by the learned Single Judge in passing the impugned order as the learned Single Judge could be said to have rightly relegated the appellants to prefer an appeal before the Appellate Tribunal. In the last, Mr. Shah submitted that, the interpretation put forward by the learned counsel appearing for the appellants with respect to the Notification dated 05.08.2016 is also not correct. According to Mr. Shah, it is always open for the secured creditor to club all the properties (secured assets) for the purpose of Section 13 of the SARFAESI Act, 2002. Mr. Vishwas Shah prays that there being no merit in this appeal, the same may be dismissed.
11. On 09.12.2020, this Court passed the following order:
"We have heard Mr. S.S. Panesar, the learned counsel appearing with Mr. Dhruv Chauhan, the learned advocate for the appellant. Let notice be issued to the respondent, returnable on 16th December, 2020. Till the next date of hearing, the respondent shall not take over the possession of the secured assets so far as the Account No.68673 is Page 5 of 8 Downloaded on : Fri Dec 25 06:52:28 IST 2020 C/LPA/876/2020 ORDER concerned.
On the returnable date, notify the matter in the first ten matters. It shall be open for the learned counsel appearing for the appellant to serve the respondent directly by E-mail."
12. It appears from the materials on record and as fairly conceded by Mr.S.S.Panesar that the contention with respect to the applicability of the Notification dated 05.08.2016, which is at Annexure-B, page 27, was not raised before the DRT. It further appears that this point was not even argued before the learned Single Judge. Although Mr.Panesar would submit that this point was raised, but has not been dealt with by the learned Single Judge or rather has been very casually dealt with.
13. It is pointed out by Mr. Panesar that the Securitization Application No.200 of 2020 filed by his clients is to be heard finally by the DRT, Ahmedabad on 23.02.2020. If that be so, then, we are of the view that what is sought to be argued before us by Mr. Panesar can be argued before the DRT in the course of the final hearing of Securitization Application No.200 of 2020. We may only say that it shall be open for the respondent to proceed further in accordance with law, with respect to all other secured assets pursuant to the order passed by the District Magistrate, Botad, under Section 14 of the SARFAESI Act, 2002, except the security interest created with respect to the Account No.68673. The details with respect to the security interest relating to the Account No.68673 is as under:
(i) Shops Nos.201, 226, 235, 236, 237, 238, 239, 2nd floor, New Ratnadeep Complex, Situated at Botad City, Survey No.3636, Botad City, Taluka & Dist.
Botad.
Page 6 of 8 Downloaded on : Fri Dec 25 06:52:28 IST 2020 C/LPA/876/2020 ORDER(ii) Shop No.1, Underground, 2nd Floor, New Ratnadeep Complex, Situated at Botad City, Survey No.3702/A and 3703/A, Botad City, Taluka & Dist. Botad.
14. It shall be open for the respondent to proceed with respect to the Account No.68673 after appropriate decision is taken by the DRT on the Securitization Application No.200 of 2020.
15. We are of the view that, it will not be in the interest of both the sides to wait upto 23.02.2020. In such circumstances, we request the DRT, Ahmedabad to take up the Securitization Application No.200 of 2020 for final hearing in the first week of January, 2021 and after giving due opportunity of hearing to both the sides shall proceed to decide the same finally. We clarify that we are not expressing any opinion on the principal argument canvassed by Mr. S.S.Panesar, the learned counsel appearing for the appellants as regard the applicability and the correct interpretation of the Notification. We leave it for the DRT to apply its mind and take appropriate decision on the same. It is understood that till the Securitization Application No.200 of 2020 is not decided, the respondent shall lay off their hands with respect to the Account No.68673. With respect to the other accounts, it would be open for the respondent to proceed further in accordance with law. We expect both the sides to cooperate so as to enable the DRT to take up the hearing of Securitization Application No.200 of 2020 at the earliest. The DRT, Ahmedabad, shall decide the Securitization Application No.200 of 2020 on its own merits, without being influenced in any manner by any of the observations made by this Court in this particular order.
Page 7 of 8 Downloaded on : Fri Dec 25 06:52:28 IST 2020 C/LPA/876/2020 ORDER16. In view of the above, this appeal stands disposed of. The connected civil application also stands disposed of accordingly.
(J. B. PARDIWALA, J) (ILESH J. VORA,J) A. B. VAGHELA/SUCHIT Page 8 of 8 Downloaded on : Fri Dec 25 06:52:28 IST 2020