ORDER :

Vaibhavi D. Nanavati, J.

1. Heard Mr. Ankur Y. Oza, the learned advocate appearing for the petitioners and Mr. A.S. Asthavadi, the learned advocate appearing for the respondents.

2. The petitioners are erstwhile Directors of M/s. Dolvan Bio-Tech Ltd., a company registered under the provisions of the Companies Act, 1956. The said company was doing business at Village : Dolvan, Taluka : Vyara, Dist. Surat. The said business was wound-up and name of the said company was struck off from the record of the Registrar of Companies.

2.1 The respondent herein provided total financial assistance of Rs.29.88 lakhs against the sanctioned of Rs.30.15 lakhs to the said company through sanctioned letter dated 10.7.1996 wherein in the said loan transactions the land and building of the Company was hypothecated and the petitioners being Directors and one Chunilal Patel being guarantor offered their residential dwelling houses as collateral security and both the residential properties were mortgaged on the same mortgaged deed. Copy of the loan agreement dated 25.10.1996 alongwith a memorandum of entry for creation of equitable mortgage of collateral security dated 25.10.1996 are duly produced at Annexure-C.

2.2 The respondent took possession of the said company under Section 29 of the State Financial Corporation Act, 1951 on 16.12.2004 which is confirmed by letter dated 9.8.2007 of the Dy. General Manager of the respondent. The respondent being secured creditor took possession of the said company on 16.12.2004. Before the respondent took possession of the assets of the said company the Mamlatdar, Vyara passed the order dated 27.11.1997 under Section 84(c) of the Bombay Tenancy and Agricultural Lands Act, 1948 to restore the possession of the land in the State Government for the breach of Section 63 of the Act.

2.3 The proceedings with respect to the aforesaid are pending before the District Court at Vyara wherein the respondent herein has preferred Civil Misc. Application No.86 of 2004 under Section 31 of the State Financial Corporation Act, 1951.

2.4 It is the case of the petitioner that the possession of the residential dwelling of the guarantor Shri Chunilal Patel was handed over by the respondent. It is stated that vide Circular No.GSFC/REC.CO.ORDI/31 dated 7.2.2009 the respondent introduced a policy to release collateral security of dwelling nature offered by third party of the borrower unit. It is also stated that the respondent herein by Circular dated 19.11.2016 is bound to release the dwelling house offered as collateral security by the petitioner.

2.5 It is the case of the petitioner that the petitioners herein are willing to pay the market value as determined under the “Eligibility” or the appraisal value whichever is lower plus 25% of the difference between the market value and the appraisal value. The petitioners accordingly made application dated 31.7.2021 and 7.8.2021 to the respondent, inter alia seeking for releasing of their residential dwelling house from the charge of the respondent as per prevalent norms of the respondents as well as on humanitarian grounds. Alongwith the said application the petitioners paid valuation fee of Rs.8,260/- to the respondent which was received and acknowleged by the respondent vide receipt No.18746 dated 7.8.2021 issued by the Dy. Manager (I/c) of the respondent. The said applications are on record at Annexure-H.

2.6 The respondent herein refused to accept the application of the petitioners, as referred above, by impugned communication dated 30.6.2022 which is duly produced at Annexure-A. The petitioners herein sent a letter on 9.9.2023 requesting to reconsider the decision by taking into consideration that the first petitioner is suffering from carcinoma of prostate and undergoing treatment since last about two years and the petitioners herein are willing to pay the amount for the residential dwelling as per the Circular dated 19.11.2016. The aforesaid request also came to be declined by the res