Gujarat High Court
M/S Poshak Bio Research Pvt. Ltd vs Indian Resurgence Arc Private Limited on 5 February, 2024
Author: Sangeeta K. Vishen
Bench: Sangeeta K. Vishen
NEUTRAL CITATION
C/SCA/18000/2023 ORDER DATED: 05/02/2024
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 18000 of 2023
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M/S POSHAK BIO RESEARCH PVT. LTD.
Versus
INDIAN RESURGENCE ARC PRIVATE LIMITED
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Appearance:
MR SHAKTI S JADEJA(5491) for the Petitioner(s) No. 1,2,3
LAW OFFICER BRANCH(420) for the Respondent(s) No. 2
MR HEMANG M SHAH(5399) for the Respondent(s) No. 2
MR SURENDRAPAL BAIS(3341) for the Respondent(s) No. 1
MR. SANDIP C BHATT(6324) for the Respondent(s) No. 1
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CORAM:HONOURABLE MS. JUSTICE SANGEETA K. VISHEN
Date : 05/02/2024
ORAL ORDER
1. By this petition, the petitioners have prayed for quashing and
setting aside the order dated 07.08.2023 passed by the respondent
no.2 apropos the application under Section 14 of the Securitisation
and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 (hereinafter referred to as "the Act of 2002") filed
by the respondent no.1.
2. Apropos the notice issued by this Court, the respondent has
entered appearance. On 10.01.2024, this Court, after hearing the
parties, has passed the following order:
"Mr Shakti S. Jadeja, learned advocate for the
petitioners submitted that the petitioners, are aggrieved by the
order dated 07.08.2023 passed by the learned Chief Judicial
Magistrate, Anand under the provisions of Section 14 of the
Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 (hereinafter
referred to as the 'SARFEASI Act'), facilitating the process of
taking over of the possession. It is submitted that the order,
would be without jurisdiction considering the fact that, earlier,
NEUTRAL CITATION
C/SCA/18000/2023 ORDER DATED: 05/02/2024
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there was an order dated 02.07/08.2019 passed by the learned
District Magistrate, Anand, allowing the original lender to take
the possession. Being aggrieved, the petitioner had preferred
Securitization Application no.548 of 2019 and the Tribunal, has
passed an order dated 20.11.2019, restraining the respondent
financial institution to take the possession.
2. It is submitted that in fact, the property, which was
mortgaged, the security interest was only limited to 7228 sq.
mtrs. out of 10016 sq. mtrs.; however, the original lender bank,
had sought the possession of whole of 10016 sq. mtrs. which,
would be impermissible. Despite the stay granted by the
Tribunal, restraining the original lender to take possession, the
respondent no.1 taking advantage of the assignment deed
executed on 05.11.2019, has taken steps by filing an
application under Section 14 of the SARFAESI Act before the
Chief Judicial Magistrate, Anand who, in turn has passed an
order. The petitioners have filed detailed reply dated
28.04.2023; however, the learned Judge has noted while
passing the order that the petitioners, have not remained
present and that they have not filed any reply. The said
observation, would be incorrect and against the record, as the
petitioners had not only filed the reply, but have also remained
present during the hearing of the application. It is submitted
that the deed of assignment having been executed, Section 5
of the SARFAESI Act, would be pertinent which, provides for
acquisition of rights or interest in financial assets. By virtue of
sub-section (3) of Section 5 of the SARFAESI Act for all practical
purposes, the respondent no.1, has stepped in the shoes of the
erstwhile lender and therefore, the order passed by the
Tribunal, would apply to the respondent no.1 as well and
therefore, the second application, could not have been filed by
the respondent no.1. It is therefore, urged that the order
passed by the learned Chief Judicial Magistrate, Anand, would
be without jurisdiction and therefore, the captioned writ
petition.
3. On the other hand, Mr Sandip C. Bhatt, learned
advocate for the respondent no.1 has submitted that the
petition, would not be maintainable as, the respondent no.1, is
a private sector bank. Reliance is placed on the judgment of
the Apex Court in the cases of (i) Phoenix ARC Private Limited
vs. Vishwa Bharti Vidya Mandir reported in (2022) 5 SCC 345,
and (ii) South Indian Bank Ltd. vs. Naveen Mathew Philip
reported in MANU/SC/0400/2023. It is submitted that the
petitioners were aware about the assignment deed, despite
which, in the application before the Tribunal, the respondent
no.1, was not joined as a party respondent. It is only when the
notice in the captioned proceedings has been issued that the
respondent no.1, came to know about the proceedings before
the Tribunal.
NEUTRAL CITATION
C/SCA/18000/2023 ORDER DATED: 05/02/2024
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4. It is also submitted that as such a bare perusal of the
order suggests that there is no restriction imposed by the
Tribunal upon the respondent no.1 to file any application. It is
very much open to the respondent no.1 to seek possession of
the property. It is submitted that no steps were taken for two
years owing to COVID-19 and the application was filed in the
year 2023 and the order by the learned Chief Judicial
Magistrate.
5. Considered the submissions. Issue rule, returnable on
05.02.2024. Mr Sandip C. Bhatt, learned advocate waives
service of notice of rule on behalf of respondent no.1.
6. Till the next date of hearing, there shall be stay of the
order dated 07.08.2023 passed by the learned Chief Judicial
Magistrate, Anand."
3. Today, Mr Sandip C. Bhatt, learned advocate appearing for the
respondent no.1, at the outset, has submitted that the respondent,
would not take any steps in furtherance of the order dated
07.08.2023 and will pursue the matter before the learned Debt
Recovery Tribunal.
4. As against this, Mr Shakti S. Jadeja, learned advocate
appearing for the petitioner submitted that the action of the
respondent no.1 bank, from the beginning, was not in a right
earnest. It is submitted that the security interest was only limited to
7228 sq. mtrs. out of 10016 sq. mtrs.; however, the original lender
bank has sought possession of whole of 10016 sq. mtrs. which,
would be impermissible. An application was filed under Section 14 of
the Act of 2002, followed by the order by District Magistrate which,
is subject matter of challenge before the Tribunal and the Tribunal,
vide order dated 20.11.2019, has restrained the respondent
financial institution from taking possession as the Tribunal, was of
the prima facie opinion that there was an error in the order passed
by the District Magistrate. When the issue, is sub judice and in view
of the assignment deed executed, the respondent could not have
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C/SCA/18000/2023 ORDER DATED: 05/02/2024
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filed the subsequent application as per the provisions of Section 5 of
the Act of 2002; however, it is urged that the order being illegal and
bad, deserves to be quashed and set aside. It is submitted that
though the reply was filed and the petitioners have remained
present, the learned Chief Judicial Magistrate has observed about
the absence and non filing of the reply. Therefore, on this count as
well, the order deserves to be quashed and set aside.
5. Heard the learned advocates appearing for the respective
parties.
6. It is not in dispute that earlier, the order was passed by the
learned District Magistrate dated 02.07/08.2019 allowing the
original lender to take the possession. The said order was subject
matter of challenge before the Tribunal and the Tribunal, has
passed an order dated 20.11.2019 restraining the respondent
institution from taking the possession. In the interregnum,
assignment deed was executed on 05.11.2019 apropos which, an
application was filed under Section 14 of the Act of 2002 before the
learned Chief Judicial Magistrate. The petitioners had filed a detailed
reply dated 20.04.2023 despite which, the order records that the
petitioners have not remained present and have not filed their reply.
The said aspect, is not disputed by the learned advocate appearing
for the respondent. It is also not in dispute that the respondent,
would step in shoes of the erstwhile lender who had already filed an
application and who, is very much before the Tribunal in
Securitization Application no.548 of 2019. It is also reported that the
original lender, has filed an application seeking substitution of the
respondent herein which, is pending consideration.
7. Therefore, it would be in the interest of all the concerned, that
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C/SCA/18000/2023 ORDER DATED: 05/02/2024
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the order dated 07.08.2023 passed by the learned Chief Judicial
Magistrate is quashed and set aside and is therefore, quashed and
set aside. As declared before this Court, let respondent approach
the Tribunal and agitate the issue before the Tribunal either in the
pending Securitization Application no.548 of 2019 or as permissible
in law. Accordingly, petition stands partly allowed. No order as to
costs.
(SANGEETA K. VISHEN,J)
RAVI P. PATEL
