Gujarat High Court
Rohit Shyam Sharma vs Debt Recovery Tribunal Ii, Ahmedabad on 10 July, 2025
NEUTRAL CITATION
C/SCA/8716/2025 ORDER DATED: 10/07/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 8716 of 2025
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ROHIT SHYAM SHARMA & ANR.
Versus
DEBT RECOVERY TRIBUNAL II, AHMEDABAD & ORS.
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Appearance:
MR ADITYA A GUPTA(7875) for the Petitioner(s) No. 1,2
MR ARJUN R SHETH(7589) for the Respondent(s) No. 2
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CORAM:HONOURABLE MR. JUSTICE NIRAL R. MEHTA
Date : 10/07/2025
ORAL ORDER
1. By way of this petition under Article 226 of the Constitution of India, the petitioners have approached this Court by calling in question the legality and validity of order dated 14th May, 2025 passed by DRT-II, Ahmedabad in S.A. No.70 of 2021, by which the learned DRT has dismissed the S.A. preferred by the petitioners against the action undertaken by the respondent No.2 under the SARFAESI Act, 2002.
2. Since the issue before this Court is very narrow in compass and the facts are more or less matter of record, this Court would not discuss the facts in detail. However, briefly stating, the petitioners are debtors and facing some bankruptcy proceedings in the NCLT by the creditor. The respondent No.2 herein is also one of the creditors who has opted not to participate Page 1 of 7 Uploaded by ANUP V PARIKH(HC00956) on Thu Jul 10 2025 Downloaded on : Thu Jul 10 22:26:31 IST 2025 NEUTRAL CITATION C/SCA/8716/2025 ORDER DATED: 10/07/2025 undefined in the bankruptcy proceedings and to avail remedy of SARFAESI Act against the present petitioners independently.
2.1 Apropos to the aforesaid, respondent No.2 financial institution herein has contemplated SARFAESI proceedings against the petitioners which, in turn, came to be challenged by the petitioners under Section 17 of the Act, 2002 before the DRT-II, Ahmedabad.
2.2 DRT-II, Ahmedabad, vide its order dated 14th May, 2025 dismissed the S.A. preferred by the petitioners on the ground that previous sanction of the adjudicating authority i.e. NCLT has not been obtained so as to continue the proceedings of S.A.
3. Being aggrieved and dissatisfied with the aforesaid, the petitioners have approached this Court by way of present petition for seeking quashment of the order under challenge.
4. Since the issue involved in the present petition is very narrow in compass, at the request of learned advocates appearing for the parties, the petition is taken up for hearing at the admission stage.
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5. I have heard learned advocate Mr.Aditya Gupta for the petitioners and learned advocate Mr.Arjun Sheth for respondent No.2.
6. Learned advocate for the petitioners, while assailing the impugned order, has mainly made following submission.
6.1 Learned advocate for the petitioners submitted that the order passed by the DRT-II, Ahmedabad is not legal and is against the provisions of the statute. Learned advocate submitted that DRT has misconstrued the provisions of Section 141 of the Insolvency and Bankruptcy Code, 2016 read with Section 128(2) of the Code, 2016. According to learned advocate, as per Section 128(2), legal fiction is created that once the creditor exercises the option to remain outside the bankruptcy proceedings and if wants to enforces the security under the provisions of the Act, 2002, then the creditor can proceed as if there is no bankruptcy order has been passed. Thus, learned advocate submitted that if the said legal fiction is available in favour of the creditor, then consequently, the DRT could not have held that the debtor, while challenging the proceedings under the Act, 2002 initiated by the creditor, is required to take previous permission Page 3 of 7 Uploaded by ANUP V PARIKH(HC00956) on Thu Jul 10 2025 Downloaded on : Thu Jul 10 22:26:31 IST 2025 NEUTRAL CITATION C/SCA/8716/2025 ORDER DATED: 10/07/2025 undefined as envisaged under Section 141(e) of the Code, 2016.
6.2 By making above submission, learned advocate for the petitioners request this Court to allow the petition as prayed for.
7. Per contra, learned advocate for the respondent No.2, while supporting the impugned order, has made the following submission.
7.1 Learned advocate has raised preliminary objection against the maintainability of the present petition in view of alternative efficacious remedy available under Section 18 of the Act, 2002. Learned advocate submitted that the order passed by the DRT-II, Ahmedabad in rejecting the S.A. under Section 17 is thereby appealable before DRAT, Mumbai in view of provisions of Section 18 and therefore, this Court may not entertain the present petition.
7.2 To buttress the said contention, learned advocate for the respondent No.2 has placed reliance on the decision of the Apex Court in the case of K. Sreedhar v Raus Constructions Private Limited [(2023) 11 SCC 169].
7.3 By making above submissions, learned Page 4 of 7 Uploaded by ANUP V PARIKH(HC00956) on Thu Jul 10 2025 Downloaded on : Thu Jul 10 22:26:31 IST 2025 NEUTRAL CITATION C/SCA/8716/2025 ORDER DATED: 10/07/2025 undefined advocate for respondent No.2 has requested this Court to dismiss the petition.
8. I have heard learned advocates for the respective parties and have also gone through the materials produced on record. No other and/or further submissions have been canvassed by learned advocates for the respective parties.
9. Considering the submissions advanced by learned advocates for the respective parties and having perused the materials on record, the short question that falls for consideration of this Court is whether the petition is maintainable in view of availability of alternative efficacious remedy under Section 18 of the Act, 2002?
10. The aforesaid question is no more res integra. The Apex Court in case of K. Sreedhar (supra), in no uncertain terms, has observed as under.
"26. At the outset, it is required to be noted that what was challenged before the High Court by the borrower in a writ petition under Article 226 of the Constitution of India was the judgment and order passed by the DRT-I. Against the judgment and order passed by the DRT-I dismissing the application, the borrower had a statutory remedy available by way of appeal before the DRAT. If the borrower would have preferred an appeal before the DRAT, he would have been required to deposit 25% of the debt due. To circumvent the provision of appeal Page 5 of 7 Uploaded by ANUP V PARIKH(HC00956) on Thu Jul 10 2025 Downloaded on : Thu Jul 10 22:26:31 IST 2025 NEUTRAL CITATION C/SCA/8716/2025 ORDER DATED: 10/07/2025 undefined before the DRAT and the pre-deposit, the borrower straightway preferred the writ petition before the High Court under Article 226/227 of the Constitution. Therefore, in view of alternative statutory remedy available by way of appeal before the DRAT, the High Court ought not to have entertained the writ petition under Article 226/227 of the Constitution of India challenging the judgment and order passed by the DRT- I. By entertaining the writ petition straightway under Article 226/227 of the Constitution of India challenging the order passed by the DRT-I, the High Court has allowed / permitted the borrower to circumvent the provision of appeal before the DRAT under the provisions of the SARFAESI Act."
10.1 Keeping in mind the aforesaid ratio, if the facts of the present case is perused, the order passed by the DRT-II, Ahmedabad in rejecting the S.A. that was filed under Section 17 of the Act, 2002 is an appealable order under Section 18 of the Act.
10.2 In view of the aforesaid, in absence of any distinguishing facts, it would not be possible for this Court to take a different view than that of taken by the Apex Court in the case of K. Sreedhar (supra).
I answer the question accordingly.
11. Accordingly, the present petition is not entertained only on the ground of availability of alternative remedy. The petition is, therefore, dismissed with no order as to cost.
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12. Needless to clarify that this Court has otherwise not gone into the merits of the case.
(NIRAL R. MEHTA,J) ANUP Page 7 of 7 Uploaded by ANUP V PARIKH(HC00956) on Thu Jul 10 2025 Downloaded on : Thu Jul 10 22:26:31 IST 2025