JUDGMENT :

1. Heard learned advocate Ms. Sangeeta Pahwa for the petitioners and learned Senior Advocate Mr. R.S. Sanjanwala with learned advocate Mr. Nikunt Raval for the respondent No. 1. Though served no one appears for respondent No. 2 – Mr. Divyen Vasantrai Raithatha.

2. Having regard to the controversy involved which is in narrow compass and with the consent of learned advocates for the respective parties the matter is taken up for final hearing.

3. Rule returnable forwith. Learned advocate Mr. Nikunt Raval waives service of notice of rule on behalf of the respondent No. 1 – Bank. As the respondent No. 2 has chosen not to appear before the Court pursuant to the notice issued by this Court, there is no need to issue Rule to the said respondent.

4. By this petition under Article 227 of the Constitution of India, the petitioners have challenged the order dated 03.05.2021 passed by the Debt Recovery Appellate Tribunal (for short ‘DRAT’) in Appeal No. 74 of 2019 as well as the order dated 08.05.2019 passed by the Debt Recovery Tribunal – II, Ahmedabad (for short ‘DRT’) in Securitisation Application No. 226 of 2018.

4.1 The petitioners have filed Securitisation Application No. 226 of 2018 challenging the securitisation action of the respondent – Bank under the provisions of the Securitisation and Reconstruction of Financial Assests and Enforcement of Security Interest Act, 2002 (for short the ‘SARFAESI Act’).

4.2 It is the case of the petitioners that the petitioner No. 2 is a partnership firm having two partners i.e. petitioner No. 1 holding 55% of the shares and respondent No. 2 holding 45% of the shares. The respondent – Bank sanctioned an overdraft facility of Rs. 2.7 crores to the petitioner No. 2 in the year 2011.

4.3 According to the petitioners, there were various disputes between the partners of the petitioner No. 2 firm. It appears that the respondent No. 2 addressed letter dated 16.09.2016 to the respondent – Bank for taking action on account of the mismanagement found in the account of the firm with the respondent – Bank. Thereafter, the petitioners also addressed a letter dated 19.09.2016 stating that the petitioners wish to repay the outstanding dues of the respondent – Bank. By another letter dated 18.10.2016, the petitioner No. 2 firm requested the bank that about 70 lakhs have been repaid and they were in the process of repayment of the remainder amount.

4.4 In response to the letter dated 18.10.2016, the respondent – Bank freezed the account of petitioner No. 2 on 10.11.2016 followed by a letter dated 11.11.2016 stating that it would release the property papers in favour of the owner of the property and handover the property documents to the owner of the property.

4.5 The petitioners thereafter filed a Civil Suit before the Civil Court, Rajkot against the respondent – Bank being aggrieved by the freezing of the account. The respondent – bank thereafter defreezed the account on 27.12.2016. As the account of the petitioner No. 2 firm became Non-Performing Asset (NPA), on 31.01.2017, the respondent – Bank issued a notice under section 13(2)(1) of SARFAESI Act on 17.04.2017. The petitioners thereafter filed a reply on 13.06.2017 raising the objections which was rejected by letter dated 01.07.2017 by the respondent – Bank. The petitioners thereafter preferred Securitisation Application before the Debt Recovery Tribunal – II, Ahmedabad being SA No. 226 of 2018. The DRT heard the matter from time to time and by order dated 08.05.2019 dismissed the Securitisation Application on the ground of material suppression by the petitioners.

4.6 Being aggrieved, the petitioners challenged the order of the DRT before the DRAT by preferring the Appeal No. 74 of 2019. The DRAT also by order dated 03.05.2021 dismissed the appeal filed by the petitioners confirming the order passed by the Tribunal. Feeling aggrieved, the petitioners have preferred this petition.

5. Learned advocate Ms. Sangeeta Pahwa for the petitioners submitted that the Tri