SCA/15898/2007 1/4 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 15898 of 2007 To SPECIAL CIVIL APPLICATION No. 15902 of 2007 With SPECIAL CIVIL APPLICATION No. 5003 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 ? ========================================================= KHATABHAI SAMATBHAI CHAUHAN & 4 - Petitioner(s) Versus GUJARAT STATE FINANCIAL CORPORATION & 1 - Respondent(s) ========================================================= Appearance : MS AVANI S MEHTA for Petitioner(s) : 1 - 5. MR HS MUNSHAW for Respondent(s) : 1, MR HH PARIKH, AGP In Special Civil Application Nos. 15898 of 2007 to 15899 of 2007, Mr. Umang Oza, AGP in Special Civil Application Nos. 15900 and 15901 of 2007, Mr. KL Pandya, AGP in Special Civil Application Nos. 15902 of 2007 and 5003 of 2008 for Respondent(s) : 2, ========================================================= CORAM : HONOURABLE MR.JUSTICE JAYANT PATEL Date : 11/09/2008 SCA/15898/2007 2/4 JUDGMENT ORAL JUDGMENT 1. Rule. Mr. Munshaw learned Counsel waives service of notice of rule for the respondent No. 1, Mr. Parikh learned AGP waives service of notice of rule for the State Authority. 2. With the consent of the learned Counsel appearing for both the sides, the matter is finally heard. 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 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: SCA/15898/2007 3/4 JUDGMENT 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 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 SCA/15898/2007 4/4 JUDGMENT 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. 9. Hence, impugned notice so far as it relates to intimation for taking action under Section 29 of the Act, deserves to be quashed and set aside with the further observation that if otherwise permissible in law, the proceedings may be initiated by the respondent-Corporation under Section 31 of the Act for recovery of the amount. 10.The petitions are party allowed to the aforesaid extent. Rule made absolute accordingly. No order as to cost. (JAYANT PATEL, J.) Suresh*