JUDGMENT - LODHA R.M., J.:---M/s. Shivam Rolling Mills Pvt. Ltd. is a company incorporated under the Companies Act, 1956. The said company took loan from Maharashtra State Financial Corporation (for short MSFC). The company executed diverse documents for repayment of the said loan. For the purposes of securing the loan granted in favour of said company, the petitioners who are wife and husband respectively, gave collateral security of their (i) residential bungalow, admeasuring 800 sq. ft. at 4/26, Artistic Village, Sector VIII, New Mumbai and (ii) residential flat at Tarun Bharat Society, Chakala, Andheri (East). It appears that the said company found itself in tremendous financial difficulty and ultimately a reference was made under section 15(1) of Sick Industrial Companies (Special Provisions) Act, 1985 (for short SICA) to the Board for Industrial and Financial Reconstruction (BIFR) On 29-12-1998 which was registered as Case No. 361 of 1998. By order dated 26-5-99, the BIFR declared the said company as a sick company and appointed the State Bank of India as operating agency and directed the operating agency to formulate the rehabilitation scheme with certain directions. The said company submitted rehabilitation proposal to operating agency on 31-8-99 which was not accepted and later on revised rehabilitation scheme was submitted by the said company on 18-2-2000. In the meanwhile, by notice dated 21-1-2000, the respondent MSFC called upon the first petitioner to pay the due amount outstanding against the said company for which collateral security was furnished by her by way of mortgaging residential house at 4/26, Artistic Village, Sector VIII, New Mumbai. The first petitioner was informed that failing which MSFC shall take possession of the said residential house and dispose of the same pursuant to the power vested in it under section 29 of the State Financial Corporations Act, 1951 (for short Act of 1951). The petitioners apprehended that MSFC may also take action in respect of their residential flat at Andheri in Tarun Bharat Society which was also mortgaged by way of collateral security to MSFC for due payment of the loan extended to the said company. By means of this writ petition, the petitioners seek to challenge the notice dated 21-1-2000 under section 29 of the Act of 1951. They have also prayed that MSFC be restrained from adopting any proceeding under section 29 of the Act of 1951 in respect of the residential bungalow situated at 4/26, Artistic Village, Sector-VIII, New Mumbai and residential flat at Tarun Bharat Society, Chakala, Andheri (East).

2. To complete the narration of facts, we may note here the events that took place subsequent to the filing of writ petition. BIFR by order dated 7th August, 2002 recommended winding up of the said company and aggrieved by the said order, the said company has preferred appeal on 13th September, 2002 and the appeal under section 25 of the SICA is pending before Appellate Authority (AAIFR).

3. Mr. Prafulla Shah, the learned Counsel for the petitioners made two-fold submission; (i) under section 29 of Act of 1951, the power of MSFC is restricted to taking possession of the industrial unit only and that power does not extend to any other property mortgaged or given as and by way of collateral security by the guarantor, and (ii) under section 22 of SICA once the industrial company is declared as a sick company, there is Bar of adopting any proceeding for enforcement of any security not only against the industrial company but also against the guarantors without consent of the BIFR.

4. Mr. K.A. Setalwad, learned Counsel appearing for the MSFC stoutly refuted the contentions of the learned Counsel for the petitioners. He submitted that under section 29 of the Act of 1951, the property secured and not belonging to industrial concern but belonging to third party, surety of guarantor could always be proceeded. In support of this submission, the learned Counsel sought benefit from the

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