SHIVPRAKASH SETH Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) In these proceedings under Article 226 of the Constitution, the Petitioners have challenged orders passed by the Debts Recovery Appellate Tribunal on 26 April 2010 and 21 March 2011 and an order passed by the Debts Recovery Tribunal on 8 October 2009.

(2.) A company by the name of Seth Woollens Private Limited obtained a loan from the Second Respondent, a body constituted under the State Financial Corporations Act, 1951. The Petitioners were guarantors in respect of the loan advanced by the Second Respondent to the Company. On 28 November 1986, the Second Respondent instituted a Summary Suit under Order XXXVII of the Code of Civil Procedure, 1908 against the Petitioners on the basis of the guarantees executed by the Petitioners. On 25 April 1996, the Second Respondent issued a notice under Section 29 of the State Financial Corporations Act, 1951 ('the Act') to the Company; and took over possession of the mortgaged assets on 25 May 1996. The Second Respondent proceeded to sell the assets of the company in order to recover its dues. The Summary Suit instituted in this Court was transferred to the Debts Recovery Tribunal upon the enactment of the Recovery of Debts Due to Banks and Financial Act, 1993.

(3.) The Petitioners filed an application before the Debts Recovery Tribunal on 29 June 2009 for dismissal of the Original Application which stood transferred to the Tribunal. The contention of the Petitioners was that in view of the decisions of the Supreme Court in A. P. State Financial Corporation v. M/s. Gar Re-Rolling Mills and another, 1994 2 SCC 647 and in Karnataka State Financial Corporation v. N. Narsimahaiah and others, 2008 5 SCC 176, the application filed by the Second Respondent before the Tribunal was liable to be dismissed since the Corporation had already espoused its remedy under Section 29 of the State Financial Corporations Act, 1951. The Tribunal dismissed the application by an order dated 8 October 2009 observing that the action initiated under Section 29 had reached its logical conclusion and outstandings were still due and payable to the Second Respondent. The Tribunal held that the Judgment of the Supreme Court in Gar Re-Rolling did not hold that the outstandings that remained after proceedings under Section 29 had been concluded would stand extinguished. Consequently, the Tribunal was of the view that the action initiated by the Corporation for the recovery of the remaining dues before the Tribunal was maintainable.