SCA/1067/2008 1/6 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 1067 of 2008 For Approval and Signature: HONOURABLE MR.JUSTICE JAYANT PATEL ===================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ===================================================== MAITRY TRADING PRIVATE LTD & 1 - Petitioner(s) Versus GUJARAT STATE FINANCIAL CORPORATION - Respondent(s) ===================================================== Appearance : MR KUNAL P VAISHNAV for Petitioner(s) : 1 - 2. MR SANJAY A MEHTA for Respondent(s) : 1, ===================================================== CORAM : HONOURABLE MR.JUSTICE JAYANT PATEL Date : 29/09/2008 SCA/1067/2008 2/6 JUDGMENT ORAL JUDGMENT 1. RULE. Mr. Mehta, learned counsel waives notice of Rule on behalf of the respondent Corporation. 2. The petitioners by this petition, have prayed to declare that the respondents have no rights or powers to take possession of shops No.52,53 and 56 as the petitioner No.1 is lawful tenant and there is no power with the respondent Corporation under Section 29 of the Act to take over the possession. 3. Heard Mr. Soparkar with Mr. Vainshav, learned counsels of the petitioners and Mr. P.M. Thakkar with Mr. Mehta, learned counsel for the respondent Corporation. 4. Upon hearing the learned counsels appearing for both the sides, it appears that the owner of the property in question stood as a guarantor with the respondent Corporation and the property in question thereafter, has been rented by the owner to the petitioners. The respondent Corporation, were not to exercise the power under Section 29 of the State SCA/1067/2008 3/6 JUDGMENT Financial Corporation Act (hereinafter referred to as the Act) and at that stage, the present petition is preferred. 5. It may be recorded that this Court, in a case where the guarantor's property was threatened to be dispossessed under Section 29 of the Act by the State Financial Corporation, had an occasion to consider the matter in proceedings of Special Civil Application No.15898 of 2007 and it was inter alia observed at para Nos. 3 to 8 as under: “3. The only question to be considered in the present petitions is as to whether it is open to the respondent No. 1 Corporation to invoke power under Section 29 of the State Financial Corporation Act against the property of the guarantor or not. 4.Heard Ms. Mehta learned Counsel for the petitioner and Mr. Munshaw learned Counsel for the respondent. 5. As such the issue is covered by the decision of the Apex Court in case of SCA/1067/2008 4/6 JUDGMENT Karnataka State Financial Corporation v. N. Narasimahaiah and others reported at 2008(5)SCC 176. Wherein the conclusion inter alia recorded at paragraph No. 37 as under: 37. The legislative intent, in our opinion, is manifest. The intentions of Parliament in enacting Section 29 and 31 of the Act was not similar. Whereas Section 29 of the Act consists of the property of the industrial concern, Section 31 takes within its sweep both the property of the industrial concern and as that of the surety. None of the provisions control each other. Parliament intended to provide an additional remedy for recovery of the amount in favour of the Corporation by proceeding against a surety only in terms of Section 31 of the Act and not under Section 29 thereof” 6. The aforesaid shows that the highest Court of land has observed that power under Section 29 of the Act is not available to the State Financial Corporation against the property of the guarantor, and if it is desirous to take possession of the property SCA/1067/2008 5/6 JUDGMENT of the guarantor, it has to resort proceedings under Section 31 of the Act and only by intervention of the Court, the possession can be taken. 7. In view of the aforesaid, answer to the question has to be negatived, and the powers under Section 29 of the Act are not available to the respondent Corporation against the property of the petitioner, who are admittedly guarantor. 8. As in the impugned notice the respondent Corporation has also threatened for action under Section 29 of the Act, such would not be available to the respondent.” 6. Same consequence would arise in the present case inasmuch as property is owned by the guarantor and powers are invoked by the respondent Corporation under Section 29 of the Act. Though the petitioner is tenant of the guarantor's property, the same situation would remain for the exercise of the rights by the respondent Corporation under Section 29 of the Act for taking over the possession of the property owned by the guarantor may be in his possession or SCA/1067/2008 6/6 JUDGMENT may be in possession of the tenant of the owner, who stood as guarantor. As a consequence thereof, the respondent Corporation cannot take action under Section 29 of the Act for dispossessing the petitioners. 7. Hence, action of the respondent Corporation under Section 29 of the Act, cannot be maintained, but with the observation that if permissible in law, the proceedings may be moved by the respondent Corporation under Section 31 of the Act for recovery of the possession. At that stage, the petitioners, who are claiming rights as the tenant, may also be heard by the concerned Court. It is further observed that the rights and contention of both the sides shall remain open, in such proceedings under Section 31 of the Act. 8. The petition is allowed to the aforesaid extent. Rule is made absolute to the aforesaid extent. (JAYANT PATEL, J.) ynvyas