Point in Issue :
Whether application of petitioner for possession of secured assets can be rejected by District Magistrate on ground of his not proceeding against guarantors.

J.B. Pardiwala, J.—By way of this petition under Articles 226 and 227 of the Constitution of India, the petitioner-Company incorporated under the Companies Act, 1956, and regulated by the guidelines framed under the National Housing Act, 1986, and engaged in providing finance for the purpose of construction of dwelling units has preferred this writ petition with the following prayers:—

“(A) Your Lordships be pleased to issue a writ of prohibition and/or a writ of mandamus or a writ in the nature of prohibition or certiorari or mandamus or any other appropriate writ, order or direction, quashing and setting aside the impugned order dated October 30, 2010, passed by the Respondent No. 1, which is at Annexure-P to the petition and declare that the Respondent No. 1 could not return the Application filed by the Petitioner under Section 14 of the SARFESI Act.

(B) Be pleased to direct the Respondent No. 1 to accept the application of the Petitioner under Section 14 of the SARFESI Act and pass fresh decision thereon.

(C) Your Lordship may grant such further and other relief’s as may be deemed fit and proper and as the facts and circumstances of the case require.”

2. The facts relevant for the purpose of deciding this petition can be summarized as under:—

2.1 The petitioner is a Company incorporated under the Companies Act, 1956. The petitioner is regulated by the guidelines framed under the National Housing Bank Act, 1986, and is engaged in providing finance for the purpose of construction of dwelling units and in development thereof. Housing being a fundamental need, the petitioner is actively pursuing financing of housing construction, which is a priority sector. The petitioner’s source of funds involves refinances from National Housing Bank and Term Loans from National Banks. The petitioner also invites funds from the public by way of deposits. The petitioner uses public funds for promotion and development of priority sector and aims at serving the social need of housing. The petitioner extended financial assistance to Respondent Nos. 2 and 3 on the terms and conditions contained in the Loan Agreement as well other documents executed in this context. The respondent Nos. 4 and 5 executed deeds of guarantee, thereby guaranteeing the payment of the financial assistance extended by the petitioner to the Respondent Nos. 2 and 3. The borrowers had, with a view to secure the aforesaid financial assistance, created an equitable portage in favour of the petitioner by way of oral deposit of title deeds with respect to their immovable property being Residential House in Block No. 4, Yash Tenaments in Mangaldham–3 of Timbavadi situated in Sr. No. 103/1, Plot No. 58 paiki & 59 paiki, Village : Timbavadi, Distt. : Junagadh.

2.2 According to the petitioner, the said mortgaged property is a “secured asset” in terms of the provision of Section 2(zc) of the SARFAESI Act. In view of the defaults committed by the borrowers, the petitioner had classified their amount as a Non Performing Asset and issued notice dated 06.06.2009 under Section 13(2) of the SARFAESI Act to the borrowers, calling upon the borrowers and the guarantors to pay to the petitioner the amount stated in the said notice within 60 days from the date of the said notice. Though more than 60 days passed since the date of receipt of the said notice, neither the borrowers nor the guarantors paid the amount stated in the notice. Therefore, the petitioner was entitled to take recourse to one or more measures referred to in Section 13(4) of the SARFAESI Act. The petitioner in exercise of the powers conferred under Section 13(4) of the SARFAESI Act, decided to take possession of the mortgaged property.

2.3 As the possession of the mortgaged property was required to be taken by the petitioner, the petitioner filed an application before Respondent No. 1 i.e. District Magistrate and Collector, Junagadh under Section 14 of the SARFAESI Act, seeking assistance of Respondent No. 1 in taking poss