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RAINBOW PAPERS LIMITED AND 2 Versus IFCI LTD AND 1

2016 (12) TMI 365 - GUJARAT HIGH COURT

Entitlment to sell the properties - auctioning the secured assets in exercise of powers under Section 13(4) of the SARFAESI Act - Held that:- In the present case, as noted a clear remedy of Appeal is available under Section 17 of the Act. The dispute between the parties fall in the commercial realm where the dispute of such nature, namely commercial, are to be agitated, rule of alternative remedy has to be adhered to steadfast. As the alternative forum would be expert body equipped and competent .....

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native remedy. This Court has not gone into the merits of the case of the petitioners and this petition is not entertained on the aforesaid ground alone. - SPECIAL CIVIL APPLICATION NO. 20214 of 2016 - Dated:- 6-12-2016 - MR. N.V.ANJARIA, J. FOR THE PETITIONER : G H VIRK, ADVOCATE FOR THE RESPONDENT : MS NALINI S LODHA, CAVEATOR CAV ORDER Heard learned advocate Mr.G.H. Virk for the petitioners and learned advocate Ms.Nalini Lodha for respondent No.1. 2. It is for the following prayer and the rel .....

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luka Kadi, District Mehsana bearing Survey No.1445 paiki of Mouje Rajpur of Kadi Taluka in the registration district Mehsana and subdistrict Kadi admeasuring about 11,473 Sq. Meters and (3) piece and parcel of freehold land situate, lying and being at Rajpur, Taluka Kadi, District Mehsana bearing Survey No.1434 paiki 1/paiki 2 of Mouje Rajpur of Kadi Taluka in the registration district Mehsana and sub-district Kadi admeasuring about 15,852 Sq. Meters, in furtherance of the notice dated 28.10.201 .....

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Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). It appears that the respondents have issued a notice for auctioning the secured assets in exercise of powers under Section 13(4) of the SARFAESI Act. 4. While various grounds are raised in the memorandum of petition and they were sought to be canvassed in course of hearing, they are not required to be dealt with in merit in view that the Court is not inclined to exercise the writ jurisdiction at this stage when the .....

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he company brought funds from respondent IFCI Limited. The total funds borrowed from IOB Consortium is mentioned to be ₹ 1043.792 crores, whereas funds obtained from respondent No.1 by the petitioner group, as stated in the petition, is ₹ 100 crores. Default in repayment resulted into action in law by the respondents as above and by issuing notice under Section 13(2) of the SARFAESI Act, amount of ₹ 110,90,07,605.45 Ps. was demanded by the respondents. The stage steps have trav .....

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o the stage contemplated under Section 13(4) of the Act? On an examination of the provisions contained in Chapter III of the Act, in particular Sections 13 and 17, this Court held as under : "35. In order to prevent misuse of such wide powers and to prevent prejudice being caused to a borrower on account of an error on the part of the banks or financial institutions, certain checks and balances have been introduced in Section 17 which allow any person, including the borrower, aggrieved by a .....

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any error or wrongful use of such powers by vesting the DRT with authority after conducting an adjudication into the matter to declare any such action invalid and also to restore possession even though possession may have been made over to the transferee. 39. We are unable to agree with or accept the submissions made on behalf of the appellants that the DRT had no jurisdiction to interfere with the action taken by the secured creditor after the stage contemplated under Section 13(4) of the Act. .....

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ection 17(1) of the Act. Thus, the Act itself contemplates an efficacious remedy for the borrower or any person 1 affected by an action under Section 13(4) of the Act, by providing for an appeal before the DRT. 6. Section 17 of the Act reads as under. 17(1) Right to appeal: (1) Any person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorised officer under this Chapter, [may take an application along wit .....

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nd Miscellaneous Provisions (Amendment) Act, 2016. The petitioners herein are aggrieved and could file Appeal under the aforesaid provision. 7. Learned advocate for the petitioners submitted that rule of alternative remedy is discretionary and in the facts and circumstances of the case, this Court may entertain the petition under Article 226 of the Constitution. In order to press the submission, learned advocate relied on the following decisions-(i) Whirlpool Corporation Vs Registrar of Trade Ma .....

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se, respondent No.1 has competently invoked provisions of the SARFAESI Act, 2002 and the notices and action thereunder cannot be said to be without jurisdiction. It is different aspect, to be agitated before the alternative forum, that the petitioners have been assailing the action on various legal grounds. In Ram and Shyam Company (supra), the case was in respect of distribution of State largsee and the Court emphasised that fair play must prevail in the administrative action. The third decisio .....

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e to be agitated, rule of alternative remedy has to be adhered to steadfast. As the alternative forum would be expert body equipped and competent to dealt with the factual aspects and investigate into the matters into the special realm. Therefore, it is trite that the petitioners are relegated to the alternative remedy. 9. In United Bank of India Vs Satyawati Tondon [(2010) 8 SCC 110] the Apex Court observed, the High Court overlooked the settled law that the High Court will ordinarily not enter .....

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