Mr Shashikant Gangar versus Aditya Birla Fin Ltd. and Ors.

SA 135 of 2023

18/08/2023	Ex. No.	Before Presiding Officer Dr. Rekha G. Dhakar, DRT-1, Mumbai. *Roznama in SA 135 of 2023* *Mr Shashikant Gangar Vs Aditya Birla Fin* *Ltd and Ors Aditya Birla Fin Ltd and Ors*	Next date
D	R	T1 MUMBA Advocate Mr. Rushabh Shah i/b Adv Dhaval Ved appeared for the Applicant. Advocate Mr. Lalit Katariya a/w Counsel Mr. Rohit Gupta and Advocate Manali Solanki appeared for the Respondent. Today, the matter is listed for order 1. By way of the present Interim Application (IA) the Applicant is praying that the Applicant may be allowed to carry out the amendments in the SA and also the till the hearing and disposal of the SA, the operation and effect of the Order dated 26/06/2023 passed by District Magistrate to take the possession of the Plot No. 112, admeasuring 4000 mtr. Sq. and adjacent area to plot no. 112 admeasuring 1360 mtr. Sq. at Kundaim Industrial Estate,	I
		Kundaim, North Goa, Marcella, Goa

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SA 135 of 2023

¶5

403115 (hereinafter referred as “Property in question”). 2. Ld. Counsel for the Applicant contended that Applicant is the one of the shareholders of the company and there was mis-management and fraud committed by the directors of the company while obtaining the impugned loan and also created the mortgage of the property in question. Thus, since the mortgage in the present matter was created on the basis of the fraud therefore, the Respondent may be restrained from taking any action under the SARFAESI Act, 2002. He also stated that the Applicant herein has already filed a petition before the NCLT and the NCLT after considering the statement of the Applicant regarding the fraud and mis-appropriation of the account of the company, appointed an administrator vide order dated 24.02.2022 for the company and the said administrator is also having possession of the mortgage property thus, the Respondent may be directed not to take any action in the

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SA 135 of 2023

¶8

present matter as NCLT is already seized of the present matter.
3. He also stated that the present SA is maintainable, in view of the judgement of the Hon’ble Supreme Court in the
matter of Union Bank of India vs
A Satyavati Tandon and Ors., (2010) 8 SCC 110.
4. In rebuttal, the Ld. Counsel for the
Respondent strongly objected to the
U maintainability of the present SA and contended that the Applicant being a shareholder is not entitled to challenge
the SARFAESI measures with this
T1 Tribunal. In support of the contention, Ld. Counsel for the Respondent relied upon judgement of Hon’ble High Court
of Madras in Mrs. S. Shalini v. Debt
Recovery Tribunal and ors..
5. Ld. Counsel for the Respondent also stated that the facility was granted in the
year 2020, whereas the account was declared as NPA in the month April of 2022, till such long period the Applicant never objected to the loan and security, it
is only one month prior to the NPA the

3

SA 135 of 2023

Applicant started objection on the loan and the mortgage. He also contended that the mortgage was duly created after obtaining a no-objection certificate of Goa Industrial Development Corporation. 6. He also submitted that the appointment of the Administrator for Respondent No.2 by the NCLT does not disentitle the Respondent No.1 from pursuing action under the SARFAESI Act, 2002. He stated that the NCLT vide order dated 07/02/2023 clarified that any order passed by the NCLT in CP No.384 of 2021 will not come in the way of the Respondent No.1 from enforcing its rights under the SARFAESI Act, 2002. 7. He also submitted that after considering all the facts and circumstances of the present case, the court of Additional Collector vide order dated 26.06.2023 directed the Mamlatdar to take the physical possession of the subject property and hand it over to the Respondent No.1.

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4

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SA 135 of 2023

¶15

8. Thus, he stated that the present IA as well as SA may be dismissed with cost.
9. Heard the rival submissions of the parties and perused the record.
T1 MUMBAI 10.Since Ld. Counsel for the Respondent No. 1 has raised an issue on the maintainability of the present SA, therefore, the said issue I am deciding first. 11.The Applicant herein claims himself a shareholder of the Company thus, it is stated by Ld. Counsel for the Applicant that the Applicant is entitled to file the present SA under Section 17 of the SARFAESI Act, 2002, being aggrieved person. He also stated that the Hon'ble
R Supreme Court in Satyawati Tandon (supra) has categorically held that the
D “The expression “any person” used in Section 17 is of wide import and takes within its fold not only the borrower but also the guarantor or any other person who may be affected by action taken under Section 13(4) of the Securitisation Act.”

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5

¶17

SA 135 of 2023

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12.He also placed reliance on Agarwal
Tracom Private Limited v. Punjab
National Bank and others. (2018) 1 SCC 626
I 13.On the other hand, according to the Ld. Counsel for the Respondent No.1, the
MUMBA property in question belongs to the company i.e. Respondent No.2 and measures have been taken against the Respondent No.2. The Applicant is only shareholder of Respondent No.2. Thus, the Applicant does not fall within the category of the aggrieved person.
DRT1 14.Before adverting the rival contentions, Section 17 of the SARFAESI Act, 2002, which provides the provisions about the parties who may approach the Tribunal under the SARFAESI Act, 2002 is inter alia_extracted hereunder: “17. Right to appeal.— (1) Any_ person (including borrower), aggrieved by any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor or his authorised officer under this Chapter, 1[may make an application along with such

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SA 135 of 2023

¶21

RT1 MUMBAI fee, as may be prescribed] to the Debts Recovery Tribunal having jurisdiction in the matter within forty-five days from the date on which such measures had been taken:— Provided that different fees may be prescribed for making the application by the borrower and the person other than the borrower. Explanation.—For the removal of doubts it is hereby declared that the communication of the reasons to the borrower by the secured creditor for not having accepted his representation or objection or the likely action of the secured creditor at the stage of communication of reasons to the borrower shall not entitle the person (including borrower) to make an application to the Debts Recovery Tribunal under sub-section (1) of section 17.]
D (2) The Debts Recovery Tribunal shall consider whether any of the measures referred to in sub-section (4) of section 13 taken by the secured creditor for enforcement of security are in accordance with the provisions of this Act and the rules made thereunder.

RT1 MUMBAI
fee, as may be prescribed] to
the Debts Recovery Tribunal
having
jurisdiction
in
the
matter within forty-five days
from the date on which such
measures had been taken:—
Provided that different fees
may be prescribed for making
the
application
by
the
borrower and the person other
than the borrower.
Explanation.—For
the
removal of doubts it is hereby
declared
that
the
communication of the reasons
to the borrower by the secured
creditor
for
not
having
accepted his representation or
objection or the likely action of
the secured creditor at the
stage
of
communication
of
reasons to the borrower shall
not
entitle
the
person
(including borrower) to make
an application to the Debts
Recovery
Tribunal
under
sub-section (1) of section 17.]

D
(2) The Debts Recovery
Tribunal
shall
consider
whether any of the measures
referred to in sub-section (4)
of section 13 taken by the
secured
creditor
for
enforcement of security are in
accordance
with
the
provisions of this Act and the
rules made thereunder.

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SA 135 of 2023

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DRT1 MUMBAI (3) If, the Debts Recovery Tribunal, after examining the facts and circumstances of the case and evidence produced by the parties, comes to the conclusion that any of the measures referred to in sub-section (4) of section 13, taken by the secured creditor are not in accordance with the provisions of this Act and the rules made thereunder, and require restoration of the management of the secured assets to the borrower or restoration of possession of the secured assets to the borrower, it may by order, declare the recourse to any one or more measures referred to in sub-section (4) of section 13 taken by the secured assets as invalid and restore the possession of the secured assets to the borrower or restore the management of the secured assets to the borrower, as the case may be, and pass such order as it may consider appropriate and necessary in relation to any of the recourse taken by the secured creditor under sub-section (4) of section 13.
(4) If, the Debts Recovery Tribunal declares the recourse taken by a secured creditor under sub-section (4) of section 13, is in accordance with the provisions of this Act

DRT1 MUMBAI
(3) If, the Debts Recovery
Tribunal, after examining the
facts and circumstances of the
case and evidence produced by
the
parties,
comes
to
the
conclusion that any of the
measures
referred
to
in
sub-section (4) of section 13,
taken by the secured creditor
are not in accordance with the
provisions of this Act and the
rules made thereunder, and
require
restoration
of
the
management of the secured
assets
to
the
borrower
or
restoration of possession of the
secured assets to the borrower,
it may by order, declare the
recourse to any one or more
measures
referred
to
in
sub-section (4) of section 13
taken by the secured assets as
invalid
and
restore
the
possession
of
the
secured
assets
to
the
borrower
or
restore the management of the
secured assets to the borrower,
as the case may be, and pass
such order as it may consider
appropriate and necessary in
relation to any of the recourse
taken by the secured creditor
under
sub-section
(4)
of
section 13.

(4) If, the Debts Recovery
Tribunal declares the recourse
taken by a secured creditor
under
sub-section
(4)
of
section 13, is in accordance
with the provisions of this Act

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SA 135 of 2023

¶27

and the rules made
DRT1 MUMBAI thereunder, then, notwithstanding anything contained in any other law for the time being in force, the secured creditor shall be entitled to take recourse to one or more of the measures specified under sub-section (4) of section l3 to recover his secured debt. (5) Any application made under sub-section (1) shall be dealt with by the Debts Recovery Tribunal as expeditiously as possible and disposed of within sixty days from the date of such application: Provided that the Debts Recovery Tribunal may, from time to time, extend the said period for reasons to be recorded in writing, so, however, that the total period of pendency of the application with the Debts Recovery Tribunal, shall not exceed four months from the date of making of such application made under sub-section (1).
(6) If the application is not disposed of by the Debts Recovery Tribunal within the period of four months as specified in sub-section (5), any party to the application

and
the
rules
made

DRT1 MUMBAI
thereunder,
then,
notwithstanding
anything
contained in any other law for
the time being in force, the
secured
creditor
shall
be
entitled to take recourse to one
or
more
of
the
measures
specified under sub-section (4)
of section l3 to recover his
secured debt.
(5) Any application made
under sub-section (1) shall be
dealt
with
by
the
Debts
Recovery
Tribunal
as
expeditiously as possible and
disposed of within sixty days
from
the
date
of
such
application:
Provided that the Debts
Recovery Tribunal may, from
time to time, extend the said
period
for
reasons
to
be
recorded
in
writing,
so,
however, that the total period
of pendency of the application
with
the
Debts
Recovery
Tribunal, shall not exceed four
months
from
the
date
of
making of such application
made under sub-section (1).

(6) If the application is not
disposed
of
by
the
Debts
Recovery Tribunal within the
period
of
four
months
as
specified in sub-section (5),
any party to the application

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SA 135 of 2023

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RT1 MUMBAI may make an application, in such form as may be prescribed, to the Appellate Tribunal for directing the Debts Recovery Tribunal for expeditious disposal of the application pending before the Debts Recovery Tribunal and the Appellate Tribunal may, on such application, make an order for expeditious disposal of the pending application by the Debts Recovery Tribunal. (7) Save as otherwise provided in this Act, the Debts Recovery Tribunal shall, as far as may be, dispose of application in accordance with the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) and the rules made thereunder. (emphasis provided) Thus, Section 17 (1) provides that “any
D person” aggrieved from the measures taken by the secured creditor may approach this Tribunal. Now, the issue is whether the shareholder falls within the category of “any person” or not and for the said purpose it is to be seen what are the rights and power of the shareholders.

RT1 MUMBAI
may make an application, in
such
form
as
may
be
prescribed, to the Appellate
Tribunal
for
directing
the
Debts Recovery Tribunal for
expeditious
disposal
of
the
application pending before the
Debts Recovery Tribunal and
the Appellate Tribunal may,
on such application, make an
order for expeditious disposal
of the pending application by
the Debts Recovery Tribunal.
(7) Save
as
otherwise
provided
in
this
Act,
the
Debts
Recovery
Tribunal
shall, as far as may be, dispose
of application in accordance
with the provisions of the
Recovery of Debts Due to
Banks
and
Financial
Institutions Act, 1993 (51 of
1993) and the rules made
thereunder.
(emphasis provided)
Thus, Section 17 (1) provides that “any

D
person” aggrieved from the measures taken
by the secured creditor may approach this
Tribunal.
Now,
the
issue
is whether the
shareholder falls within the category of “any
person” or not and for the said purpose it is to
be seen what are the rights and power of the
shareholders.

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SA 135 of 2023

¶33

DRT1 MUMBAI
15. In the matter of Bacha F. Guzdar v/s
Commissioner of Income Tax, Bombay [AIR
1955 SC 74]¹the Hon’ble Apex Court
while discussing the rights and power of
the shareholders has held that:
“the shareholder by purchase
of the share does not acquire
any interest in the assets 'of
the
company
till after the
company is wound up. The
position of a shareholder of a
company is altogether different
from that of a partner of a
firm. A company is a juristic
entity
distinct
from
the
shareholders but the firm is a
collective name or an alias for
all the partners.”
The Hon’ble Apex court further held in
the said judgment that:
“….. (At para 8) It is true that
the
shareholders
of
the
company
have
the
sole
determining
voice
in
administering the affairs of the
company and are entitled, as
provided by the Articles of
Association
to
declare
that
dividends should be distributed
out
of
the
profits
of
the
company to the shareholders
but
the
interest
of
the
shareholder either individually
or collectively does not amount
to
more
than
a
right
to

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SA 135 of 2023

¶36

participate in the profits of the company. The company is a juristic person and is distinct from the shareholders. It is the
UMBAI company which owns the property and not the shareholders. The dividend is a share of the profits declared by the company as liable to be distributed among the shareholders.” 16.Similarly the rights of a shareholder in the assets of a company, were also dealt with by the Hon’ble Supreme Court in Charanjit Lal Chowdhury v. Union of India (AIR 1951 SC 41)². Wherein it was _inter alia_held that:
DRT1 M "It was argued by Mr. Kolah on the strength of an observation made by Lord Anderson in (1924) 8 Tax Cas 704 at p. 710, that an investor buys in the first place a share of the assets of the industrial concern proportionate to the number of shares he has purchased and also buys the right to participate in any profits which the company may make in the future. That a shareholder acquires a right to participate in the profits of the company may be readily conceded but it is not possible to accept the contention that the shareholder acquires any

participate in the profits of the
company. The company is a
juristic person and is distinct
from the shareholders. It is the

UMBAI
company
which
owns
the
property
and
not
the
shareholders. The dividend is a
share of the profits declared by
the company as liable to be
distributed
among
the
shareholders.”
16.Similarly the rights of a shareholder in
the assets of a company, were also dealt
with by the Hon’ble Supreme Court in
Charanjit Lal Chowdhury v. Union of
India (AIR 1951 SC 41)². Wherein it was
_inter alia_held that:

DRT1 M
"It was argued by Mr. Kolah
on
the
strength
of
an
observation
made
by
Lord
Anderson in (1924) 8 Tax Cas
704 at p. 710, that an investor
buys in the first place a share
of the assets of the industrial
concern proportionate to the
number
of
shares
he
has
purchased and also buys the
right to participate in any
profits which the company may
make in the future. That a
shareholder acquires a right to
participate in the profits of the
company
may
be
readily
conceded but it is not possible
to accept the contention that
the shareholder acquires any

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SA 135 of 2023

¶39

RT1 MUMBAI interest in the assets of the company. The use of the words 'assets' in the passage quoted above cannot be exploited to warrant the inference that a shareholder, on investing money in the purchase of shares, becomes entitled to the assets of the company and has any share in the property of the company. A shareholder has got no interest in the property of the company though he has undoubtedly a right to participate in the profits if and when the company decides to divide them. The Interest of a shareholder 'vis-a-vis 'the company, was explained in the 'Sholapur Mills case', . That judgment negatives the position taken up on behalf of the appellant that a shareholder has got a right in the property of the company. It is true that the shareholders of the company have the sole
D determining voice in administering the affairs of the company and are entitled, as provided by the Articles of Association, to declare that dividends should be distributed out of the profits of the company to the shareholders, but the interest of the shareholder either individually or collectively does not amount to more than a right to

RT1 MUMBAI
interest in the assets of the
company. The use of the words
'assets' in the passage quoted
above cannot be exploited to
warrant the inference that a
shareholder,
on
investing
money
in
the
purchase
of
shares, becomes entitled to the
assets of the company and has
any share in the property of the
company.
A shareholder has got no
interest in the property of the
company
though
he
has
undoubtedly
a
right
to
participate in the profits if and
when the company decides to
divide them. The Interest of a
shareholder
'vis-a-vis
'the
company, was explained in the
'Sholapur Mills case', . That
judgment
negatives
the
position taken up on behalf of
the appellant that a shareholder
has got a right in the property
of the company. It is true that
the
shareholders
of
the
company
have
the
sole

D
determining
voice
in
administering the affairs of the
company and are entitled, as
provided by the Articles of
Association,
to
declare that
dividends should be distributed
out
of
the
profits
of
the
company to the shareholders,
but
the
interest
of
the
shareholder either individually
or collectively does not amount
to
more
than
a
right
to

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¶41

SA 135 of 2023

¶42

participate in the profits of the company.
DRT1 MUMBAI The company is a Juristic person and is distinct from the shareholders. It is the company which owns the property and not the shareholders.” (emphasis provided) 17.The Hon’ble High Court of Madras in the matter of Vaidyanatha Vs. Bank of India Ltd³also_inter alia_held that: “We are of the opinion that there is no substance in the contention. However, wide may be the meaning of the expression "any person whose interests are affected by the sale" such a person must have an existing or present interest, which is affected by the sale of the property. The existing or the present interest must be in the property which is sold. A corporator is not the corporation, which is a distinct legal person. In the assets of a corporation, its share-holders have no legal or equitable interest.” It is further held that: “There is nothing in the Indian law to warrant the assumption that a shareholder who buys shares buys any interest in the property of the company which

participate in the profits of the
company.

DRT1 MUMBAI
The
company
is
a
Juristic
person and is distinct from the
shareholders. It is the company
which owns the property and
not the shareholders.”
(emphasis provided)
17.The Hon’ble High Court of Madras in
the matter of Vaidyanatha Vs. Bank of
India Ltd³also_inter alia_held that:
“We are of the opinion that
there is no substance in the
contention.
However,
wide
may be the meaning of the
expression "any person whose
interests are affected by the
sale" such a person must have
an existing or present interest,
which is affected by the sale of
the property. The existing or
the present interest must be in
the property which is sold. A
corporator
is
not
the
corporation, which is a distinct
legal person. In the assets of a
corporation, its share-holders
have
no
legal
or
equitable
interest.”
It is further held that:
“There is nothing in the Indian
law to warrant the assumption
that a shareholder who buys
shares buys any interest in the
property of the company which

¶43

14

¶44

SA 135 of 2023

¶45

MUMBAI is a juristic person entirely distinct from the shareholders. The true position of a shareholder is that on buying shares an Investor becomes entitled to participate in the profits of the company in which he holds the shares. If and when the company declares, subject to the Articles of Association, that the profits or any portion thereof should be distributed by way of dividends among the shareholders. He undoubtedly has a further right to participate in the assets of the company which would be left over after winding up but not in the assets as a whole as Lord Anderson puts it.” (emphasis provided)
18.On the basis of the above said
RT1 pronouncements of the Hon'ble Apex Court as well as Hon’ble High Court of Madras it is clear that the shareholders
D as such are having no rights on the properties of the company, therefore,
since in the present matter the
shareholder has approached this
Tribunal for the measure taken by the
Respondent No.1 against the Property of
the company thus, I am of considered

¶46

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¶47

SA 135 of 2023

¶48

	view that the Applicant being the
	BAI shareholder of Respondent No.2 company is separate & distinct entity in law and have no_locus standi_to approach this Tribunal to challenge the action of the Respondent No.1, as he does not fall within the purview of the expression ‘any aggrieved person’ as contained in 17(1) of the SARFAESI Act 2002. 19.I have gone through the judgments
	MUM referred by the learned counsel of the Applicant of SA. In the matter of Satwati Tandon {supra} Hon’ble Apex Court was
	basically considering the power of the
	Hon’ble High Court under the
	T SARFAESI Act 2002, therefore, in the said case the rights of the shareholder
D	has not been discussed. 20.The judgment of Agarwal Tracom Private Limited (supra) is basically on right of an successful bidder / auction
	purchaser, thus, this Judgement also

¶49

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¶50

SA 135 of 2023

¶51

MUMBAI does not support the case of the Applicant herein. 21.Even otherwise, the Respondent No.2 is currently under the control of an Administrator appointed by the NCLT, Mumbai. According to Respondent No.1 (as stated in para 16.11 of the Reply to SA of the Respondent No.1), the NCLT vide order dated 07/02/2023 clarified that any order passed by the NCLT in CP No.384 of 2021 will not come in the way of the Respondent No.1 from enforcing its rights under the SARFAESI Act, 2002, therefore, also the
T1 Respondent No.1 is free to take measures under SARFAESI Act, 2002. 22.Since the property is mortgaged with the
R Respondent No.1 by the Respondent No.2 therefore, the Respondent No.1 is
entitled to invoke the provisions of the
D SARFAESI Act, 2002, to enforce the security interest. 23.In view of the above discussions, there is no merit in the present IA, hence the same is rejected.

¶52

17

¶53

SA 135 of 2023

¶54

DRT1 MUMBAI 24.Since this tribunal is of the view that the Applicant is not entitled to approach this Tribunal under the SARFAESI Act, 2002, therefore, the present SA is not maintainable thus, the present SA is also hereby dismissed accordingly. File be closed and consigned to record. P.O. DRT-I

¶55

SP/-

¶56

18

Mr Shashikant Gangar v. Aditya Birla Fin Ltd. and Ors.

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Mr Shashikant Gangar v. Aditya Birla Fin Ltd. and Ors.

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