- (1.) The Subject of Reference The present writ petition came up before the Division Bench of this Court on 2.11.2011. The challenge in the writ petition is to action taken by the State Financial Corporation against the petitioner under Section 29 of the State Financial Corporation Act, 1951 (for short 'the Act') being guarantor. The learned counsel for respondent No.1 relied upon a Division Bench judgment of this Court M/s Aggarwal Overseas Limited Vs. State of Haryana, 2008 152 PunLR 772and also the Full Bench judgment of this Court Paramjit Singh Ahuja Vs. Punjab State Financial Industrial Development Corporation Limited & others,2006 2 PunLJ 480to contend that the State Financial Corporation can proceed against the guarantor under Section 29 of the Act. The question of law in respect of the scope of Section 29 of the Act in view of the judgment of the Supreme Court in Karnataka State Financial Corporation Vs. N. Narasimahaiah & others, 2008 5 SCC 176reads as under: "Whether a clause in the deed of guarantee, entitle a financial corporation to proceed against the Guarantors including mortgagors to realize its dues in exercise of powers conferred under Section 29 of the Act?" After hearing the arguments of the learned counsel for the parties, we find that the question of law as framed by the Division Bench requires to be reframed. The reframed question of law is as follows: "Whether the parties can agree to confer jurisdiction to the financial Institution to proceed against the guarantor in exercise of the powers conferred under Section 29 of the Act?" II. The Facts
(2.) The brief facts, of the present case, which are relevant to decide the point of reference, are that the petitioner is owner and in possession of agricultural land situated in Village Jassat, Tehsil Pataudi, District Gurgaon. Respondent No.2 i.e. M/s Panwar Steels Limited, a company registered under the provisions of Companies Act, 1956 availed financial assistance from respondent No.1. - Haryana State Industrial & Infrastructure Development Corporation Limited (for short 'the Corporation') incorporated under the Act. The petitioner stood as guarantor in respect of the financial assistance granted by respondent No.1 to respondent No.2 and executed a mortgage deed dated 22.06.2001 offering the property contained in the document as collateral security. It is pointed out that the Corporation has recovered an amount of Rs.5.5 crores from the assets of respondent No.2, but the property of the petitioner is sought to be auctioned in exercise of the powers conferred under Section 29 of the Act. It is the said action, which is challenged by the petitioner in the present writ petition.
(3.) It is contended that under Section 29 of the Act, the property of the guarantor cannot be put to sale. Such right of sale can be exercised either under the rights available to the creditor under the Transfer of Property Act, 1882 or in terms of Section 31 of the Act. It is contended that under Section 29 of the Act, the assets of an industrial concern alone can be taken over and put to sale and not the assets of the guarantor. Reliance is placed upon the judgment of Hon'ble Supreme Court in Karnataka State Financial Corporation .;