RADHA ISPAT Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) Heard Shri Gulia, learned Counsel for the petitioners, and Shri Deshpande, learned Additional Government Pleader, who appears by waiving notice for respondent nos.1 to 4.

(2.) It is the contention of Shri Gulia, learned Counsel for the petitioners, that though the so called security interest created in favour of respondent nos.5 and 6 is in the nature of Nazul land, which is not subject to any attachment under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act , 2002 (for short "the SARFAESI Act "), an order to that effect has already been passed and such an order is without any jurisdiction. Reliance has been placed upon the observations made in paragraph 75 of the judgment delivered by the learned Single Judge of Delhi High Court in the case of Vishal Builders (P) Ltd. vs. Delhi Development Authority - Suit No .409/1973 decided on 23/3/1977 and the case of Narain Prasad Aggrawal vs. State of Madhya Pradesh (AIR 2007 SC 2349). It is also the contention of the learned Counsel for the petitioners that notice served upon the petitioners under Section 13(2) of the SARFAESI Act by respondent no.6 Bank is void ab initio because the provisions of the SARFAESI Act and the Rules made thereunder do not apply to the loan transactions of the petitioners with the respondent no.6 Bank. It is submitted by the learned Counsel for the petitioners that all the loan agreements, guarantees, continuing guarantees, hypothecation agreement, etc. between petitioner nos.1 to 5 on one hand and respondent no.6 on the other having been executed under the provisions of Sections 126 , 127 , 128 and 172 of the Indian Contract Act, 1872, bar of Section 31 of the SARFAESI Act applies. It is the contention of the petitioners that these agreements being in the nature of security given under the Indian Contract Act , 1872, all the loan transactions in the present case would be out of sweep of the SARFAESI Act .

(3.) So far as concerned the second contention relating to applicability of bar under Section 31 of the SARFAESI Act to the loan transactions in question, we have our own doubts. But, as regards the first contention about the non- saleability of Nazul land, we find that the proposition needs to be examined at length by this Court, specially in the light of the observations in the afore-stated cases of Vishal Builders (P) Ltd. and Narain Prasad Aggarwal.