SCA/12709/2008 1/5 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 12709 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 ? ========================================================= ASHOKBHAI SAVJIBHAI VEKARIYA - Petitioner(s) Versus GUJARAT STATE FINANCIAL CORPORATION & 4 - Respondent(s) ========================================================= Appearance : MR TUSHAR L SHETH for Petitioner(s) : 1, None for Respondent(s) : 1,3 - 5. MR VINAY S PANDYA, AGP for Respondent(s) : 2, ========================================================= CORAM : HONOURABLE MR.JUSTICE JAYANT PATEL Date : 17/10/2008 ORAL JUDGMENT 1. Rule. Mr. Vinay S Pandya learned AGP waives service of notice of rule for the respondent SCA/12709/2008 2/5 JUDGMENT No.2, Mr. Asthawadi learned Counsel appearing by Caveat and waives service of notice of rule. In view of the order passed hereinafter, presence of the other parties to the proceedings may not be required. 2. The only question to be considered in the present petition is that whether Corporation can proceed for taking action under Section 29 of the State Financial Corporation Act (hereinafter referred to as the 'Act') against the residential property of the surety/guarantor or not. 3. Upon hearing learned Counsel appearing for the respective parties, it appears that the issue is covered by the decision of this Court in case of Khatabhai Samatbhai Cauhan & others V. Gujarat State Financial Corporation & others in Special Civil Application No. 15898 of 2007 and allied matters decided on 11.9.2008. In the said decision it was inter alia observed by this Court at paragraph 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 SCA/12709/2008 3/5 JUDGMENT 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: 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 SCA/12709/2008 4/5 JUDGMENT 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 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. 4. Same will be the situation in the present case, hence the impugned action, so far as it relates action under Section 29 of the Act against the property of the surety/guarantor is quashed and set aside, with the further observations 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. At that stage in such proceedings, the SCA/12709/2008 5/5 JUDGMENT rights and contentions of both the sides shall remain open. 5. The petition is party allowed to the aforesaid extent. Rule made absolute accordingly. No order as to costs. (JAYANT PATEL, J.) Suresh*