Rajasthan High Court - Jodhpur
Sh. Harendra Singh Rathore vs State Bank Of India (S.B.I.) ... on 23 September, 2025
Author: Rekha Borana
Bench: Rekha Borana
[2025:RJ-JD:42589]
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
S.B. Civil Writ Petition No. 1240/2024
1. Sh. Harendra Singh Rathore S/o Late Sh. Dilip Singh
Rathore, Aged About 40 Years, R/o D-9, Pashchim Vihar,
Vaishali Nagar, Jaipur (The Then Director And Guarantor
Of M/s. Hotel Gaudavan Pvt. Ltd.)
2. Sh. Deependra Singh Rathore S/o Late Sh. Dilip Singh
Rathore, Aged About 41 Years, R/o D-9, Pashchim Vihar,
Vaishali Nagar, Jaipur (The Then Director And Guarantor
Of M/s. Hotel Gaudavan Pvt. Ltd.).
3. Sh. Hanuvant Singh Shekhawat S/o Sh. Magan Singh
Shekhawat (Wrongly Mentioned In The Order As
Rathore), Aged About 52 Years, R/o 41-A, Pashchim
Vihar, Vaishali Nagar, Jaipur.
----Petitioners
Versus
1. State Bank Of India (S.b.i.), Having Its Corporate Centre
At Madame Cama Road, State Bank Bhawan, Mumbai And
Head Office At 11, Sansad Marg, New Delhi 110001
Through Its General Manager Stressed Assets
Management Branch At 6Th Floor, Mohan Singh Place,
Baba Kharak Singh Marg, Near Rivoli Cinema, Cnnaught
Place, New Delhi- 110001.
2. Alchemist Assets Reconstruction Company Ltd., Having Its
Registered Office At D-54, Defense Colony (First Floor),
New Delhi- 110024 Through Its Vice President.
3. M/s. Hotel Gaudavan Pvt. Ltd., Having Its Registered
Office At Fort Rajwada, No 1, Hotel Complex, Jodhpur -
Barmer Link Road, Jaisalmer, Presently Represented
Through J.f.c. Finance (India) Ltd., Through Its Director,
Having Its Registered Office At 944/9 And 944/10,
Ground Floor, Laxmi Complex, Nehru Road, Arjun Nagar,
Kotla Mubarakpur, New Delhi.
4. Sh. Lokendra Singh Rathore S/o Late Sh. Dilip Singh
Rathore, Aged About 36 Years, R/o D-9, Pashchim
Vihar,vaishali Nagar, Jaipur (The Then Director And
Guarantor Of M/s. Hotel, Gaudavan Pvt. Ltd.).
5. Sh. Jitendra Singh Rathore S/o Sh. Rajendra Singh
Rathore, R/o 82, Pashchim Vihar, Vaishali Nagar, Jaipur.
6. Smt. Mohan Kanwar W/o Late Sh. Dilip Singh Rathore,
Aged About 61 Years, R/o D-9, Vaishali Nagar, Jaipur.
----Respondents
For Petitioner(s) : Mr. Anil Kumar Singh with
Mr. Abhyudai Singh
For Respondent(s) : Mr. Vikas Balia, Sr. Adv. assisted by
Mr. Ashu Kansal
Mr. Abhishek Mehta
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HON'BLE MS. JUSTICE REKHA BORANA
Order
23/09/2025
1. The present writ petition has been filed with the following
prayers:
It is, therefore, most respectfully prayed that the
writ petition of the petitioners may kindly be
allowed and by an appropriate writ or direction:
1) Decide that assignment deed dated 20.03.2014
between S.B.I. and Alchemist as illegal and void being
made contrary to R.B.I. Circulars and Guidelines as also
being vitiated by fraud and gross irregularities.
2) Direct initiation of enquiry/investigation by Special
Investigation Team of Police/C.B.I. to enquire into the sale
of financial assets of Hotel Gaudavan Pvt. Ltd. by S.B.I. to
Alchemist.
3) Direct restoration of status, position, rights and title of
the shareholders and directors of Hotel Gaudavan Pvt. Ltd.
over the company as also restoration of status, position,
rights and title of Hotel Gaudavan Pvt. Ltd. over its assets
prior to execution of assignment deed dated 20.03.2014
or as if the said assignment deed did not exist.
4) Declare that Alchemist and J.F.C. had no legal rights to
the financial assets of Hotel Gaudavan Pvt. Ltd. and
assignment of debt to Alchemist by S.B.I. is illegal,
unlawful and void.
5) To quash and set aside the order of D.R.T. dated
18.05.2022 marked as annexure 43 and notice of
recovery dated 08.01.2024 marked as annexure 45.
6) Any other order which this Hon'ble court may deem fit
in the facts and circumstances of the present case may
kindly be passed in favour of the petitioners.
7) Cost of petition may kindly be awarded in favour of the
petitioners.
2. The facts essential for adjudication of the present petition
are that the State Bank of India (SBI) granted a term loan of Rs.
24,00,00,000/- with a credit limit of Rs. 1,00,00,000/- to Hotel
Gaudavan Private Limited (HGPL) vide agreement dated
04.01.2008. The said loan was restructured vide agreement dated
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16.01.2009. However, due to non payment of the due instalments,
SBI classified the loan of HGPL as 'Non Performing Asset' (NPA)
on 28.06.2010.
3. Vide assignment agreement dated 20.03.2014, SBI
transferred the loan of HGPL to M/s Alchemist Asset
Reconstruction Company Limited (AARC). AARC served demand
notice dated 21.07.2014 under Section 13(2) and possession
notice dated 04.03.2015 under Section 13 (4) of the Securitisation
and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 (herein after referred to as the
'SARFAESI Act') on HGPL.
4. The above action of AARC was challenged by HGPL before
the Debts Recovery Tribunal, Jaipur (DRT) who, vide order dated
06.05.2015, allowed the application of applicant HGPL and
declared the classification of NPA by SBI to be illegal.
5. Appeal as filed against the said order by AARC before the
Debts Recovery Appellate Tribunal, Delhi (DRAT) also stood
dismissed vide order dated 07.12.2015.
6. A writ petition against the above orders was preferred by
AARC before the Delhi High Court. As meanwhile the possession of
the property in question had been taken over by HGPL in
pursuance to the order passed by DRT, an interim relief for
restoring the possession back was prayed for by AARC in the said
writ petition. On instructions of the Court, possession was handed
over back to AARC. Subsequently, vide order dated 19.01.2016,
the Court directed for a status quo to be maintained as of the said
date, regarding the property in question. Vide order dated
14.12.2016, a liberty was also granted by the Court to AARC to
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serve a fresh notice on the petitioners in terms of Section 13(2) of
the SARFAESI Act.
7. AARC served fresh notice in terms of Section 13(2) of the
SARFAESI Act on the borrower as well as the guarantors. AARC
also filed a petition under Section 7 of the Insolvency and
Bankruptcy Code,2016 (IBC) before the National Company Law
Tribunal, New Delhi (NCLT) wherein an Independent Resolution
Professional (IRP) was appointed by the NCLT.
8. Subsequent to the same, several petitions before Hon'ble the
Supreme Court and again before the NCLT were filed and several
orders continued to be passed. The same not being relevant for
the purposes of the present writ petition, this Court does not
deem it proper to refer to the same.
9. The present writ petition has been filed with a basic
averment that once the classification of the loan account as NPA
was declared to be illegal by DRT and upheld by the DRAT, SBI
was not even entitled to assign the loan to AARC in terms of
Section 5 of the SARFAESI Act. Therefore, assignment agreement
dated 20.03.2014 itself being bad, deserves to be quashed and all
the further proceedings subsequent thereto, also deserves to be
set aside.
10. Further, a prayer has been made that after assignment
agreement dated 20.03.2014 being declared to be void, the
possession of the property be directed to be restored to the
directors and shareholders of HGPL.
11. Further, a prayer for setting aside of order dated 18.05.2022
passed by DRT and recovery notice dated 08.01.2024, has been
made.
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12. Learned counsel for the petitioners submitted that in terms
of Section 13(2) of the SARFAESI Act, it is only after an account is
classified as NPA that a notice in terms of the said provision can
be served on the borrower. Further, it is only after a borrower
failing to discharge his liability in terms of Section 13(2), that a
secured creditor can take recourse to one or more of the
measures as provided under Section 13(4), assignment or sale of
the secured asset being one of the said measures.
13. Counsel submitted that as soon as the classification of the
account as NPA was declared illegal by a competent Court, the
subsequent act of assignment of the secured asset by the Bank,
ipso facto became illegal and redundant. He submitted that action
in terms of Section 13(4) of the SARFAESI Act could have been
undertaken only if the liability was not discharged by the borrower
within the period specified in Section 13 (2) and after the
compliance of Section 13(2) of the SARFAESI Act. Once the order
of classification as NPA itself was set aside, no further proceedings
in terms of Section 13(4) could have even undertaken. The same
having been taken, was definitely a nullity. Therefore, assignment
agreement dated 20.03.2014 deserves to be declared void and
further orders passed by the DRT deserve to be quashed.
14. Per contra learned Senior Counsel appearing for the
respondents submitted that the present petition is wholly
misconceived and nothing but a gross abuse of the process of law
as the issue regarding validity of the assignment agreement has
already been raised by HGPL more than six times before different
Courts/forums and the same stood decided against it all the times.
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Now, once again the said issue has been raised which having
already been settled, cannot be entertained by this Court.
15. To substantiate his argument, learned Senior Counsel
pointed out order dated 05.02.2019 (Annex.R/2) passed by
District Judge, Jodhpur Metropolitan; order dated 31.03.2017
(Annex.R/4) passed by the NCLT; order dated 06.04.2017 passed
by the Jaipur Bench of this Court; order dated 26.04.2017 passed
by Hon'ble the Apex Court; and several other orders passed by the
same courts/forums.
16. Learned Senior Counsel further raised a specific ground that
it is the settled position of law that a guarantor cannot challenge
the assignment agreement. Herein, the borrower having already
failed in his attempt to challenge the assignment deed, now it is
the guarantor who is before this Court challenging the same.
Learned Senior Counsel while relying upon the Hon'ble Apex Court
judgment in ICICI Bank Ltd. Vs. Official Liquidator of APS
Star Industries Ltd. & Ors.; (2010) 10 SCC 1 submitted that
the principal borrower nowhere being in picture now, the
guarantor has no locus to challenge an assignment.
17. So far as the prayer for directing enquiry/investigation by
CBI is concerned, learned Senior Counsel submitted that remedy
for the same has also already been availed by the petitioner twice
and hence, the said prayer can also not be entertained by this
Court.
18. Heard learned counsel for the petitioners and learned Senior
Counsel appearing for respondent No.2. Perused the record.
19. So far as the ground regarding the validity of assignment
deed is concerned, it is evident on record that when an application
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under Section 7 of IBC was filed by AARC before the NCLT, a
specific ground qua the validity of assignment deed was raised by
HGPL in its reply. NCLT, while dealing with the said ground
observed and held as under:
"13 A combined reading of Section 5 of the SARFAESI Act
with Section 2(1), 2(v) and 2(za) wherein "financial
asset", "reconstruction company", "securitisation
company" have been respectively defined which shows
that the Financial Creditor was/is in a position to acquire
rights or interest in a financial asset defined to include
any debt or receivables secured by, mortgage of, charge
on, Immovable property notwithstanding any thing
contained in any agreement or any other law. The
assignments of NPAs/debt has been considered
elaborately by the Hon'ble Supreme Court in the case of
ICICI Bank v. APS Star Industries reported in (2010) 10
SCC 1 and it has been held that banks have the power to
assign the debts due to it since debt is an asset in the
hands of bank as a secured creditor or mortgagee or
hypothecatee and that a Bank can always transfer its
asset and such transfer in no manner affects any right or
interest of borrower (Corporate Debtor) and the moment
bank transfers debt with underlying security, borrower(s)
ceases to be borrower(s) of assignor Bank and becomes
borrower(s) of assignee bank. In view of the above
position of law we are unable to appreciate the
contentions of the Corporate Debtor. It is also to be
noted that for invoking the provisions of Section 13(2) of
SARFAESI Act, NPA may be a criteria but in relation to
unfolding the Corporate Insolvency Resolution Process as
contemplated under the IBC, NPA classification is not a
condition precedent and proceedings pending before the
Hon'ble High Court of Delhi will not be a bar for this
Tribunal in considering the instant petition."
20. Vide the above order, NCLT, while relying upon the Hon'ble
Apex Court judgment passed in APS Star Industries Ltd.
(supra) held that a Bank who has a debt/loan as its asset, can
always transfer the same, it being a secured creditor of the said
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asset. The transfer of such asset by the Bank can in no manner
affect any right or interest of the borrower (corporate debtor).
21. Above order dated 31.03.2017 as passed by the NCLT was
challenged by HGPL in a writ petition at Jaipur Bench of this Court
whereby vide order dated 06.04.2017, the Court proceeded on to
admit the petition only with respect to the challenge to
constitutional vires of IBC and the Court declined to pass any
interim order. Order dated 06.04.2017 was further challenged
before the Hon'ble Apex Court and the said SLP was dismissed
vide order dated 26.04.2017.
22. An appeal against order dated 31.03.2017 was then filed
before the NCLT but the same was withdrawn and vide order
dated 17.07.2017, the appeal stood dismissed as such.
23. Meanwhile, the resolution plan in the IBC proceedings was
approved and while challenging the same in appeal filed before
the NCLAT, again a challenge to order dated 31.03.2017 was laid.
Vide order dated 29.10.2018, the said appeal stood dismissed.
Order dated 29.10.2018 was further put to challenge in a Civil
Appeal before the Hon'ble Apex Court which also stood dismissed
vide order dated 05.03.2019.
24. In view of the above facts, it is crystal clear that the validity
of the assignment deed had been raised by the petitioners before
all the Courts/ forums at different points of time and the same has
even been decided against them.
25. Even for the sake of arguments, if the ground as raised by
counsel for the petitioners is taken into consideration, the issue
is - whether a secured asset can be assigned without the same
being classified to be NPA? Reliance on Hon'ble Apex Court
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judgment in APS Star Industries Ltd. (supra) would be apt to
answer the said issue. Therein, the Court specifically held that the
Banks have the power to assign debts due to it and that it can
always transfer its assets and such transfer, in no manner, affects
any right or interest of the borrower (corporate debtor).
26. Further, as is the settled position of law, the act of assigning
the loan is a legal transaction separate from the Bank's internal
classification of that loan as NPA. The validity of assignment rests
on the fact whether the Bank had the right to transfer the debt
and not on the correctness of its NPA classification at the time of
transfer. Meaning thereby, the Bank has the right to transfer a
loan without even classifying the same to be NPA. When that is
the settled position of law, classification of the said loan to be NPA
or not, would be of no consequence. That is to say, even if the
loan in question would not have been classified to be NPA, the
Bank was entitled to transfer/assign the same. In that view of the
matter, this Court is of the clear opinion that the assignment
cannot be invalidated because of the classification having been
declared to be incorrect/invalid subsequently.
27. The declaration of NPA to be invalid by DRT remained of no
consequence also in view of the liberty granted by the Delhi High
Court to AARC to issue a fresh notice in terms of Section 13 (2) of
the SARFAESI Act. Furthermore, the same would also remain to
be of no consequence because of the proceedings under IBC
having been undertaken by AARC and the resolution plan having
been approved in the said proceedings.
28. Lastly, the same would also be of no consequence in terms of
the Hon'ble Apex Court judgment passed in Civil Appeal
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No.16929/2017 whereby the Court, while allowing the appeal,
directed as under:
"8) As a result, the appeal is allowed and the steps
that have to be taken under the Insolvency Code will
continue unimpeded by any order of any other
Court."
29. In view of the above overall analysis, prayer No.1 and
consequential prayer Nos.3 and 4, being not tenable, cannot be
entertained by this Court.
30. So far as prayer No. 2 is concerned, as is evident on record,
FIR No. 37/2015 was first filed by HGPL on 03.07.2015 wherein a
final closure report was filed by the investigating authority on
31.12.2015. Second FIR No.605/2017 was registered on
06.08.2017, the effect of which was stayed by NCLT vide order
dated 22.09.2017. The said FIR was finally quashed by Hon'ble
the Apex Court vide order dated 23.10.2017. A protest petition
was however filed against the closure report in the first FIR and
the Court, vide order dated 12.02.2020, while allowing the protest
petition, took cognizance and issued arrest warrants against the
accused. The said arrest warrants were stayed by the High Court
in a petition being Criminal Miscellaneous Petition No.279/2022
filed under Section 482, Cr.P.C. The said petition remains pending
till date.
31. In view of the above, it is clear that the criminal proceedings
initiated by HGPL still remain pending adjudication. In view of the
same, the present prayer for directing initiation of enquiry/
investigation is also misconceived and cannot be entertained by
this Court.
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32. So far as prayer No.5 is concerned, firstly, an alternative
remedy qua the same definitely lies. Secondly, in view of the
Hon'ble Apex Court direction to the effect that the steps that have
to be taken under the Insolvency Code will continue unimpeded by
any order of any Court, this Court definitely cannot entertain the
said prayer.
33. As a consequence, none of the reliefs as prayed for by the
petitioners can be entertained by this Court and the writ petition
being totally misconceived, does not deserve any interference and
the same is hence, dismissed.
34. Stay petition and pending applications, if any, stand
disposed of.
(REKHA BORANA),J
281-manila/-
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