Gujarat High Court
Jyotsnaben Ashokbhai Dodia vs Raj Radhe Finance Ltd on 8 November, 2023
Bench: Aniruddha P. Mayee
NEUTRAL CITATION
C/LPA/1366/2023 ORDER DATED: 08/11/2023
undefined
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/LETTERS PATENT APPEAL NO. 1366 of 2023
In R/SPECIAL CIVIL APPLICATION NO. 16433 of 2023
With
CIVIL APPLICATION (FOR STAY) NO. 1 of 2023
In R/LETTERS PATENT APPEAL NO. 1366 of 2023
==========================================================
JYOTSNABEN ASHOKBHAI DODIA
Versus
RAJ RADHE FINANCE LTD.
==========================================================
Appearance:
MR MITUL SHELAT FOR MR NILESH P UDERNANI(9050) for Appellant
No.1
MR SAUMITRA CHATURVEDI(8369) for the Appellant(s) No. 1
for the Respondent(s) No. 1,2
==========================================================
CORAM:HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE SUNITA
AGARWAL
and
HONOURABLE MR. JUSTICE ANIRUDDHA P. MAYEE
Date : 08/11/2023
ORAL ORDER
(PER : HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE SUNITA AGARWAL)
1. Heard Mr.Mitul Shelat, learned counsel appearing
for the appellant and perused the record.
2. The present appeal is directed against the
judgment and order dated 06.10.2023 passed by the
learned Single Judge whereunder the writ petition
filed by the petitioner herein who is the personal
guarantor of respondent No.2 (the borrower) has been
dismissed with the cost of Rs.5,00,000/- noticing
that the writ petition was a result of concealment of
NEUTRAL CITATION
C/LPA/1366/2023 ORDER DATED: 08/11/2023
undefined
correct facts. It is noted by the learned Single
Judge that the writ petition suffers from the
suppression of material facts such as filing of O.A.
No.396 of 2017 by the original lender, namely the
State Bank of India before DRT-I, Ahmedabad and
pendency of the said proceeding. It is noted that
there is an alternative remedy available to the
petitioner and a private entity who is arrayed as
respondent in the writ petition, against whom relief
is sought does not fall within the meaning of State
under Article 12 of the Constitution of India and as
such, the writ petition was not maintainable. We may
note that the original lender, namely the State Bank
of India is not party to the writ proceedings nor it
has been impleaded herein. There is no dispute about
the fact of pendency of original application filed by
the original lender. It seems that during pendency of
the said proceedings, the loan/secured asset has been
assigned to the respondent No.1 as Asset
Reconstruction Company within the meaning of Section
3 read with Section 5 of the Securitization and
Reconstruction of Financial Assets and Enforcement of
NEUTRAL CITATION
C/LPA/1366/2023 ORDER DATED: 08/11/2023
undefined
Security Interest Act, 2002 (in short 'the SARFAESI
Act, 2002'). In the instant appeal, an issue has been
raised with regard to the jurisdiction of Asset
Reconstruction Company, namely respondent No.1 to
proceed under the SARFAESI Act, 2002, with the
contentions that the respondent No.1 is not
registered and does not possess necessary certificate
under Section 3 of the SARFAESI Act, 2002. It, thus,
cannot be termed as Asset Reconstruction Company and
cannot acquire the finance facilities under Section
5(1)(b) of the Act, 2002 and thereby claim the status
of Secured Creditor.
3. Shri Mitul Shelat, learned counsel appearing for
the appellant argues that a pertinent question with
regard to the jurisdiction of the respondent No.1 to
take measures under the SARFAESI Act, 2002 was raised
before the Debt Recovery Tribunal. The Debt Recovery
Tribunal instead of dealing with the said issue has
simply proceeded on the premise that the respondent
No.1 is a financial institution within the meaning of
SARFAESI Act, 2002, and therefore the measures taken
by it under the SARFAESI Act, 2002 cannot be said to
NEUTRAL CITATION
C/LPA/1366/2023 ORDER DATED: 08/11/2023
undefined
be without jurisdiction.
4. The submission is that the learned Single Judge
has also failed to appreciate the said issue though
raised in the writ petition and proceed on the
premise of the respondent No.1 being an Asset
Reconstruction Company. The submission, thus, is that
the findings returned by the learned Single Judge to
dismiss the writ petition that too with cost are
liable to be set aside.
5. Testing this submission of the learned counsel
for the appellant when we have gone through the
original application filed by the appellant under
Section 17 of the SARFAESI Act, 2002, before the Debt
Recovery Tribunal, relevant is to note that there is
no objection in the said application with respect to
the registration of the respondent No.1 under Section
3(1) or its jurisdiction to initiate SARFAESI
proceedings. The only objection raised by the
appellant before the Debt Recovery Tribunal was with
regard to assignment by the original lender to the
respondent No.1 as an Asset Reconstruction Company by
NEUTRAL CITATION
C/LPA/1366/2023 ORDER DATED: 08/11/2023
undefined
way of the agreement. It seems that in view of the
said objections raised by the appellant with regard
to the validity of the agreement, the Debt Recovery
Tribunal has framed a question for determination
"Whether the Assignment Agreement dated 28.01.2022
executed between the original lender, i.e. State Bank
of India and M/s.Raj Radhe Finance Ltd. is legal and
valid?". The objections taken by the appellant with
regard to assignment of the loan to the respondent
No.1 as against the provisions of Section 5(1)(b) of
the SARFAESI Act, 2002 was, thus, answered in
paragraph 12 as under :-
"12. Ld. Counsel for the Applicant submitted
that the Respondent -FI is a Non-Banking
Financial Company (NBFC). As per Section 5(1)
(b) of the SARFAESI Act, only the Asset
Reconstruction Company may acquired the
financial assets of any Bank or Financial
Institutions who could be deemed to be the
lenders. Therefore, the Assignment Agreement
dated 28.01.2022 executed between the
original lender i.e. State Bank of India and
Respondent NO.1-FI assigning the account of
the Applicant is in violation of Section 5(1)
(b). He further referred to the definition of
"secured creditor" contained in Section 2(1)
(zd) of the SARFAESI Act and submitted that
there is no mention about NBFC in the said
provision and as such NBFC cannot be treated
as "secured creditor" under the provisions of
the SARFAESI Act. Therefore, the Respondent-
FI, being not a secured creditor on the basis
of the alleged assignment of debt, is not
NEUTRAL CITATION
C/LPA/1366/2023 ORDER DATED: 08/11/2023
undefined
competent to exercise powers under the
provisions of the SARFAESI Act and hence, the
entire action of the Respondent-FI is invalid
and illegal."
6. Taking note of the above decision, it is more
than evident that the issue with regard to the
registration of the respondent No.1 under Section 3
to have a legal status of an Asset Reconstruction
Company within the meaning of the SARFAESI Act, 2002
has been raised for the first time before the Writ
Court. According to us, the said issue was required
to be raised at the very first movement in the
application under Section 17 filed by the appellant
as it would require a factual inquiry into the matter
of registration and the status of respondent No.1 as
Asset Reconstruction Company within the meaning of
SARFAESI Act, 2002.
7. In support of his submissions, the learned
counsel for the appellant has placed reliance on the
judgment of the Apex Court in M/s.Godrej Sara Lee Ltd.
vs. The Excise and Taxation Officer-cum-Assessing
Authority and others, being Civil Appeal No.5393 of
2010 dated 01.02.2023, more particularly paragraph 8
NEUTRAL CITATION
C/LPA/1366/2023 ORDER DATED: 08/11/2023
undefined
thereof, wherein it has been held that when the issue
raised by the appellant is purely legal then the same
was required to be determined instead of dismissing
the writ petition on the ground of alternative remedy
being available. In the said judgment the Apex Court
has held thus as it had come across certain orders
passed by the High Courts holding the writ petitions
as not maintainable merely because the alternative
remedy provided by the relevant statute has not been
pursued by the parties desirous of invoking the writ
jurisdiction. The said judgment is not at all
applicable in the facts and circumstances of the
present case since the present writ petition has not
been dismissed only as not maintainable.
8. He has further relied upon the judgment of the
Bombay High Court in Shivabassappa I. Kankanwadi and
another vs. Mapusa Urban Cooperative Bank of Goa Ltd.
Through its Branch Manager and others - 2016 SCC
Online Bom. 2574, paragraph 11 thereof, wherein it
has been held that where a citizen has been harassed
and was dispossessed from his lawful property at an
instance of a financial institution who had acquired
NEUTRAL CITATION
C/LPA/1366/2023 ORDER DATED: 08/11/2023
undefined
no interest over the property in question, then such
a citizen is not required to go to the alternative
remedy provided under Section 17 of the SARFAESI Act,
2002. The said case is also not applicable in the
facts and circumstances since in the said case the
property in question was never secured in favour of
the financial institution which is not so in the
present case.
9. He has further relied upon the judgment in
Virender Nath Gautam vs. Satpal Singh and others -
(2007) 3 SCC 617, whereunder it has been held that it
is settled law that the pleadings must contain only
facta probanda and not facta probantia. The material
facts on which the party relies for his claim are
called facta probanda and they must be stated in the
pleadings. The facts which are in the nature of
facta probantia need not be set out in the pleadings
as they are not facts in issue. The said observations
have been made in an election dispute and therefore
also the said ratio will not be applicable in the
facts and circumstances of the present case.
NEUTRAL CITATION
C/LPA/1366/2023 ORDER DATED: 08/11/2023
undefined
10. For the aforesaid, we do not find any good
ground to sustain the challenge to the order passed
by the learned Single Judge which primarily proceeded
on the ground that the appellant herein has an
alternative remedy to challenge the order passed by
the Debt Recovery Tribunal in dismissing the
application under Section 17 by filing an appeal
under Section 18 of the SARFAESI Act, 2002.
11. We may further record that for the concealment
about the proceedings initiated by the original
lender and the fact that the original lender has not
been impleaded before the Writ Court, we do not find
any good ground to sustain the challenge to the
decision of the learned Single Judge in imposing cost
upon the petitioner. The findings returned by the
learned Single Judge that the present petition is a
frivolous petition though the remedy before the
petitioner lies else and it is an effort made on the
part of the appellant to stall the proceedings of
recovery of loan under the SARFAESI Act, 2002 is
found to be justified in the facts and circumstances
of the instant case. For the aforesaid, we dismiss
NEUTRAL CITATION
C/LPA/1366/2023 ORDER DATED: 08/11/2023
undefined
the present appeal as being devoid of merits.
Consequently, connected Civil Application also stands
dismissed.
12. However, liberty is with the appellant to
approach the Debt Recovery Appellate Tribunal by
invoking the provisions of Section 18 of the SARFAESI
Act, 2002. It is clarified that in case the appellant
approaches the appellate tribunal, the findings
returned by the learned Single Judge in the order
impugned or the observations made hereinabove will
not come in the way of the appellant. The appellate
tribunal shall be under obligation to deal with the
issues raised by the appellant independently.
13. Lastly, the observations made by the learned
Single Judge casting aspersions on the conduct of the
learned counsel appearing for the petitioner are
expunged. Time period for deposit of cost is extended
till 31.12.2023.
(SUNITA AGARWAL, CJ )
(ANIRUDDHA P. MAYEE, J.)
GAURAV J THAKER
