9911796707
TMI Blog2011 (5) TMI 1158X X X X Extracts X X X X X X X X Extracts X X X X ..... alled the loan and called upon the petitioner to pay the amount of Rs. 3,41,67,167/- then claimed to be due; it is also not in dispute that the respondent SIDBI vide its notice dated 24th May, 2010 impugned in this petition invoked the provisions of Section 38 of the SIDBI Act. The said Section 38 of the SIDBI Act empowers SIDBI to take over the management or possession or both of an industrial concern in the small- scale sector which is in default of a liability to SIDBI under an agreement of repayment of loan or advance; the same also authorizes SIDBI to transfer by way of lease or sale and realise the property pledged / mortgaged to SIDBI. This writ petition was filed seeking to restrain the respondent SIDBI from forcibly taking over possession of the assets of the petitioner under the said provision. 3. The writ petition came up before this Court first on 3rd June, 2010 when after some arguments, the matter was adjourned to 7th June, 2010. Even though the writ petition was accompanied with an application for interim relief to restrain the respondent SIDBI from taking over possession of the assets of the petitioner but no interim relief was granted to the petitioner. On 7th June ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... force of the SARFAESI Act, SIDBI is to proceed for enforcement of its security interest under the SARFAESI Act only and not under Section 38 of the SIDBI Act. (vi) that SIDBI in other cases has been resorting to SARFAESI Act to enforce its security interest and is discriminating against the petitioner by resorting to a more onerous Section 38 of the SIDBI Act against the petitioner. Reliance in this regard is placed on notices issued by SIDBI to its other debtors and the notice published by SIDBI of sale of assets under the SARFAESI Act and also on the K.K. Organics Pvt. Ltd. Vs. Small Industries Development Bank of India MANU/DE/0597/ 2010 where SIDBI had successfully opposed the claim that the provisions of SARFAESI Act were not available to it. (vii) it is contended that the draconian powers under the SARFAESI Act of taking over possession were not allowed to be implemented when not providing for a notice and hearing and which led to the amendment of the SARFAESI Act. 5. The senior counsel for SIDBI has contended that: (i) that the petition does not challenge the vires / validity of Section 38 of the SIDBI Act. (ii) that the SARFAESI Act was enacted inter alia to regulate enforc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aled facts and is not entitled to any discretionary relief on this ground. It is pleaded / contended that the petitioner has concealed that it had committed defaults with effect from July, 2009 but respondent SIDBI on the assurance of the petitioner that it intended to settle including by sale of its assets, deferred action against the petitioner but the petitioner failed to give any concrete proposal; that the respondent SIDBI on the request of the petitioner had also granted re-schedulement of principal installment of the loan vide its letter dated 4th May, 2009 and granted extension of one year to the petitioner for making the payment; that the petitioner despite re-schedulement failed to make any payment and owing whereto the provisions of Section 38 of the SIDBI Act were resorted to. (x) that the petitioner as a defaulting borrower has no right to direct the respondent Bank to exercise its rights in a particular manner. 6. The senior counsel for the petitioner in rejoinder sought to distinguish the judgments relied upon by the respondent SIDBI. 7. The SIDBI Act was enacted to establish a Financial Institution for promotion and development in the small scale sector. It cannot p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the authorities / officials concerned of SIDBI as to which remedy to invoke against which defaulting debtor. The judgment in GAR Re-Rolling Mills cited by the respondent is not found to answer the said doubt in as much as the same was concerned with the State Financial Corporations Act, 1951 wherein the legislature under the same statute has conferred a choice on the Financial Corporation as to the remedy to be availed of. Though the said judgment in para 15 records that the doctrine of election would not apply to cases where mode and scope of the two remedies is essentially different and held that it may otherwise lead to injustice and inconsistent results but proceeded to only hold that both remedies could not simultaneously be availed of. 10. Prior to the said two Judge judgment in GAR Re-Rolling Mills, a five Judge Bench of the Supreme Court in Northern India Caterers Private Ltd. Vs. State of Punjab AIR 1967 SC 1581, dealing with the Public Premises (Eviction of Unauthorized Occupants) Act, 1958, by a majority of 3:2 had held that the provisions leaving unguided discretion in the officials to resort to one or the other remedy by applying the more drastic procedure against so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SIDBI Act. The defaulting creditor would thus certainly be at a disadvantage if proceeded against under the SIDBI Act rather than under the SARFAESI Act. Such unguided discretion cannot be vested in authorities and the authorities / officials cannot be allowed to at their whims and fancy decide as to which remedy is to be invoked against which debtor. Moreover, there is nothing to show that the legislature while enacting the SARFAESI Act intended to leave such discretion in the authorities / officials. Both Maganlal Chhaganlal (supra) GAR Re-Rolling Mills were concerned with the discretion being vested under the same statute. In the present case, the occasion for exercising discretion arises owing to the applicability of two statutes. Thus, it cannot even be said that there is intentional vesting of such discretion. The Supreme Court in Nagpur Improvement Trust Vs. Vithal Rao (1973) 1 SCC 500 also held that if the existence of two statues enables the State to give different treatment to similarly situated persons, the person who is discriminated against can claim the protection of Article 14. Similarly, in Ram Dial Vs. State of Punjab AIR 1965 SC 1518 there were two provisions in a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
