Read Time: 07 minutes

Pointing out elements of forum shopping in a matter that challenged Section 14 of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), the Gujarat High Court has refused to entertain the petition, calling it a "classic case of forum shopping", saying that such conduct needs to be deprecated and the court was refusing to entertain the petition on that ground alone.

However, noting that for its challenge to the vires of the Section, the petition would have been placed before a learned Single Judge, the court deemed it fit to send the matter back to the learned Single Judge for consideration afresh on merits.  Division Bench comprising of Chief Justice Vikram Nath and Justice Biren Vaishnav remarked that the it was evident from the facts that the petition was a classic case of a litigant indulging in forum shopping.

Facts

Having failed to repay the dues of a bank, Pinakin Plastoforming Limited (Petitioner) was issued a demand notice by the creditor bank. Aggrieved by the proceedings initiated under the SARFAESI Act, the petitioner approached the DRT praying for quashing the demand notice as well as the notice for taking over symbolic possession.

However, proceedings under Section 14 of the SARFAESI Act [Chief Metropolitan Magistrate - (CMM) or District Magistrate (DM) to assist secured creditor in taking possession of the property of the borrower] anyway followed.

The petitioner company challenged this order among other prayers in the plea.

The petitioner even challenged the provisions of Section 14 of the SARFAESI Act arguing that it is in violation of Articles 14, 19 and 21 of the Constitution of India and void inasmuch as under this section the CMM/DM passes orders to dispossess a person, whatsoever be his right, on a mere application at the hands of the creditor, often a simple mortgage, without notice and without hearing him.

Observations of the Court

Court noticed that in December 2019, the petitioner approached the Bombay High Court filing a mirror image of the present petition with the same reliefs. Before the Bombay High Court, the petitioner recorded that he would not press for the interim relief for the time being as he was yet to reply to the Section 13(2) notice.

A civil suit had also been filed in the City Civil Court of Bombay.

Court also noted that the order passed by the DM under S. 14 of the SARFAESI Act was in compliance with the High Court order which directed the Collector to expedite the hearing of the application.  However, the petitioner moved an application under the Contempt of Courts Act on the same date of filing the instant petition before the Contempt Bench that the order under section 14 was also challenged by the instant petition.

Having considered the facts of the matter court held that it was "evident that the petitioner had indulged in multifarious proceedings with regard to the same cause of action. Even, on comparison of the present petition to the pleadings before the Bombay High Court, both appear to be a complete mirror image, including the prayers which are identically worded."

Observing that this conduct by the petitioner eloquently speaks of forum shopping, the Court opined "such conduct needed to be deprecated and the petition deserves to be dismissed only on this ground."

Therefore, having considered the chequered history of the litigation, Court held that the prayer of the petitioner with regard to the challenge to the vires of Section 14 need not be entertained.

Edited by Shreya Agarwal