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NIRMAN INDUSTRIES LIMITED AND 4 Versus STATE BANK OF INDIA (SBI)

2016 (12) TMI 253 - GUJARAT HIGH COURT

Issuance of the notices under section 13(2) of the SARFAESI Act seeked to be set aside - present petition invoking writ jurisdiction of this Court under Article 226 - Held that:- It is trite that in all the area of matters involving commercial disputes, the rule of alternative remedy has to be adhered to steadfast, instead of allowing the petitioners to straightway approach the High Court in a writ jurisdiction. In this view of the matter, the petitioners are required to be relegated to the said .....

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Dated:- 30-11-2016 - MR. N.V.ANJARIA, J. FOR THE PETITIONER : MR PAVAN S GODIAWALA, ADVOCATE FOR THE RESPONDENT : MR NAGESH C SOOD, ADVOCATE CAV ORDER It is with the following prayers that the petitioners have filed the present petition invoking writ jurisdiction of this Court under Article 226 of the Constitution, (i) To set aside the action of the respondentState Bank of India of issuance of the notices under section 13(2) of the SARFAESI Act and further to set aside the action of the respond .....

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dated 01.01.2014. It was stated that because of various factors like delayed commission of the project, nonavailability of power supply etc., a request had to be made to convert the cash credit limit of ₹ 8 crores of petitioner No.1 into working capital term loan for which it was agreed to pay additional installments. The same was approved by the Bank as per communication dated 10.01.2014. It appears that thereafter, at the request of the first petitioner, the working capital limit was re .....

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3(2) dated 10.07.2015 was issued whereunder it was stated by the Bank that a sum of ₹ 59,10,30,925.64in words Rupees Fifty Nine Crores Ten Lacs Thirty Thousand Nine Hundred Twenty Five and Sixty Four Paiseincluding the penal interest as on 10.07.2015 was due and payable. It appears that the petitioners made a representation under Section 13(3)(a) of the Act. It is the case of the petitioners that the Bank remained silent and proposed to initiate action under Section 13(4) of the Act. 4. Le .....

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covery Branch. He submitted that after the account of the petitioners was restructured, the petitioners have not committed default, therefore resort to the provisions of SARFAESI Act by the Bank was not justified in law. 4.1 The case and the prayers of the petitioners was contested by the respondent Bank by filing affidavit contending mainly as under, (a) Petitioner No.1 Company on 24.03.2014 was conveyed about renewalcumrestructuring of their accounts. As per the said restructuring new FITL of .....

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for conducting stocks & receivables audits and there was complete lack of any satisfactory response from petitioner No.1 company as well as its directors. (c) Regarding the revival plan submitted by the petitioners vide letter dated 03.09.2015, the Bank had responded to petitioner No.1 company on 08.09.2015 by Registered Post. Despite restructuring of account on 24.03.2014, the petitioner company's account was running irregular. Due to LC development and non payment of interest since De .....

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ion and in lieu of that petitioner No.2 was allotted another plot in lieu of this to petitioner No.2 which he had not advised to the bank. The same was considered as breach of trust. (e) Despite frequent requests by the answering respondent to infuse fund in the business, the petitioner company remained dependent solely on the respondent Bank for further finance. Under the circumstances, the Bank was not in a position to accept addition exposure in the company. The company's working was not .....

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ing the account including upfront infusion of ₹ 0.60 crores before implementation of restructuring scheme, and that those conditions were not complied with by the petitioners. He relied on decision in Devi Ispat Limited and anr. vs. State Bank of India & Ors. [2014(5) SCC 762]. 5. Having considered the facts of the case, stage at which the case is rested, and having heard the rival submissions, ultimately it was not necessary to go into and adjudicate the merits of the case of the part .....

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dy of preferring appeal before the Tribunal is available to any person who is aggrieved by any of the measures taken as stated, under the SARFAESI Act. Section 17 has been further amended and the scope of the appeal is widened, by virtue of Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016. 5.3 In Kanaiyalal Lalchand Sachdev vs. State of Maharashtra [(2011) 2 SCC 782], the Supreme Court has stated that the measures under Section 14 con .....

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e aggrieved person and that this rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc., the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are code unto themselves inasmuch as they not o .....

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inue to ignore the availability of statutory remedies under the DRT Act and SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. It is hoped and trusted that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection. 5.5 Similar principles regarding first availing of the remedy under Section 17 of the A .....

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