Union Bank Of India, Stressed ... vs M/S Associates High Pressure ...
2023 Latest Caselaw 209 Guj

Citation : 2023 Latest Caselaw 209 Guj
Judgement Date : 9 January, 2023

Gujarat High Court

Union Bank Of India, Stressed ... vs M/S Associates High Pressure ... on 9 January, 2023

Bench: Ashutosh Shastri

      C/LPA/17/2023                           JUDGMENT DATED: 09/01/2023




       IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

       R/LETTERS PATENT APPEAL NO. 17 of 2023
   In R/SPECIAL CIVIL APPLICATION NO. 8550 of 2021
                         With
CIVIL APPLICATION (FOR INTERIM RELIEF) NO. 1 of 2021
      In R/LETTERS PATENT APPEAL NO. 17 of 2023
=============================================
      UNION BANK OF INDIA, STRESSED ASSET MANAGEMENT
                      BRANCH, MUMBAI
                            Versus
     M/S ASSOCIATES HIGH PRESSURE TECHNOLOGIES (P) LTD.
=============================================
Appearance:
MR RS SANJANWALA, SENIOR ADVOCATE WITH MR CZ
SANKHLA(3243) for the Appellant(s) No. 1
for the Respondent(s) No. 7
MR MEHUL SHARAD SHAH(773) for the Respondent(s) No. 1,2,3,4,5,6
=============================================

     CORAM:HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND
           KUMAR
           and
           HONOURABLE MR. JUSTICE ASHUTOSH J. SHASTRI

                        Date : 09/01/2023
                          ORAL ORDER

(PER : HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR)

1. In this intra-court appeal, the order passed by

the learned Single Judge dated 20.10.2021 in Special Civil

Application No.8550 of 2021 has been called in question.

2. We have heard Shri R.S.Sanjanwala, learned

Senior Counsel appearing for the appellant and Shri Mehul

Sharad Shah, learned counsel appearing for the writ

applicants namely respondent Nos.1 to 6. Since no orders

C/LPA/17/2023 JUDGMENT DATED: 09/01/2023

adverse to the interest of 7th respondent is being passed,

notice stands dispensed to respondent No.7.

3. In the year 2008, appellant bank sanctioned

financial assistance to respondents Nos.1 to 6 through the

branch at Mumbai. On account of the loan account having

not been properly serviced had resulted in said loan

account being classified as a Non Performing Asset (NPA).

Hence, appellant bank issued a notice under Section 13(2)

of the Securitization and Reconstruction of Financial

Assets and Enforcement of Security Interest Act, 2002, to

respondent Nos.1 to 6 demanding payment of the

outstanding loan amount which according to the appellant

bank was not repaid. Hence, appellant bank by relying

upon the Circular dated 01.07.2015 issued by the Reserve

Bank of India (RBI) initiated action for declaring the

respondent Nos.1 to 6 as a "Willful Defaulter" through

"Willful Defaulter Committee". A notice dated 23.04.2019

came to be served on the writ applicants. On receiving the

reply, the committee by impugned order declared

respondent Nos.1 to 6 as "Willful Defaulters". Said order

C/LPA/17/2023 JUDGMENT DATED: 09/01/2023

was being placed before the Review Committee resulted in

its confirmation thereof.

4. Being aggrieved by the same, writ applicants

challenged the said orders as also the RBI Circular dated

01.07.2016 before the learned Single Judge. Learned

Single Judge, who after hearing the learned advocates has

passed an interim order staying the notice dated

23.04.2019 and also declaring the account of the

petitioners fraud to be not acted upon. However, it has

been made clear that proceedings pursuant to FIR lodged

by the respondent bank to continue in view of RBI Circular

dated 01.07.2016 (paragraph 8.8). The order passed by the

learned Single Judge reads :

"5.1 The declaration of 'Willful Defaulter' status of the petitioners is stayed till the final disposal of this petition pursuant to the notice dated 23rd April, 2019.

5.2 So far as the declaration of the 'Fraud Account' of Petitioner No.1 is concerned, the Respondent-Bank shall not act upon the same till final disposal of this petition.

C/LPA/17/2023 JUDGMENT DATED: 09/01/2023

5.3 It is made clear that the proceedings pursuant to the FIR lodged by the Respondent- Bank shall continue in view RBI circular dated 1st January, 2016 (Paragraph-8.8) as delay may result into loss of documents, absconding of the borrowers etc."

5. One of the prime contentions raised before the

learned Single Judge was petitioners were not served with

the order declaring them as Willful Defaulters as also the

order of the Review Committee. Said contention came to

be accepted by learned Single Judge. We are not inclined

to interfere with the said order, since learned counsel

appearing for the writ applicants would not invite the

reasons, we are of the considered view that the ends of

justice would be met if the parties are relegated to get the

main matter disposed of before the learned Single Judge

and except observing that declaration of the fraud account

of the petitioners shall continue to operate only insofar as