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Swaya Mal Sant Ram and anr. Vs. the Punjab Financial Corporation and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtPunjab and Haryana High Court
Decided On
Case NumberCivil Revn. No. 711 of 1962
Judge
Reported inAIR1963P& H555
ActsState Financial Corporation Act, 1951 - Sections 31, 32 and 46B; Code of Civil Procedure (CPC) , 1908 - Order 34, Rule 4
AppellantSwaya Mal Sant Ram and anr.
RespondentThe Punjab Financial Corporation and ors.
Appellant Advocate D.N. Aggarwal, Adv.
Respondent Advocate K.L. Kapur, Adv.
DispositionPetition dismissed
Excerpt:
.....for filing appeal to a division bench against the judgment or decree or order of a single judge. no letters patent appeal shall lie against a judgment/order passed by a single judge in an appeal arising out of a proceeding under a special act. sections 100-a [as inserted by act 22 of 2002] & 104:[dr. b.s. chauhan, cj, l. mohapatra & a.s. naidu, jj] writ appeal held, a writ appeal shall lie against judgment/orders passed by single judge in a writ petition filed under article 226 of the constitution of india. in a writ application filed under articles 226 and 227 of constitution, if any order/judgment/decree is passed in exercise of jurisdiction under article 226, a writ appeal will lie. but, no writ appeal will lie against a judgment/order/decree passed by a single judge in..........is a revision directed against the order of the district judge, ambala, passed under the state financial corporation act, 1951.2. the first respondent, the punjab financial corporation, had been advancing sums of money from time to time to the petitioner, swaya mal sant ram, roller flour mills, chandigarh. the debtor having made defaults, the corporation made an application to the district judge under section 31 of the act which is to this effect:'where an industrial concern, in breach of any agreement, makes any default in repayment of any loan or advance or any instalment thereof or otherwise fails to comply with, the terms of its agreement with the financial corporation.... any officer of the financial corporation generally of specially authorized by the board in this behalf, may.....
Judgment:
ORDER

1. This is a revision directed against the order of the District Judge, Ambala, passed under the State Financial Corporation Act, 1951.

2. The first respondent, the Punjab Financial Corporation, had been advancing sums of money from time to time to the petitioner, Swaya Mal Sant Ram, Roller Flour Mills, Chandigarh. The debtor having made defaults, the Corporation made an application to the District Judge under Section 31 of the Act which is to this effect:

'Where an industrial concern, in breach of any agreement, makes any default in repayment of any loan or advance or any instalment thereof or otherwise fails to comply with, the terms of its agreement with the Financial Corporation.... any officer of the Financial Corporation generally of specially authorized by the Board in this behalf, may apply to the District Judge within the limits of whose jurisdiction the industrial concern carries, on the whole or a substantial part of its business for one or more of the following reliefs, namely:

(a) for an order for the sale of the property pledged, mortgaged, hypothecated of assigned to the Financial Corporation as security for the loan or advance; or

(b) for transferring the management of the industrial concern to the Financial Corporation; or

(c) for an ad interim injunction restraining the industrial concern from transferring or re-moving its machinery or plant or equipment from the premises of the industrial concern without the permission of the Board, where such removal is apprehended.'

Concededly, the assets of the debtor concern were mortgaged with the Corporation. It is not disputed that defaults had been made. The Corporation asked for reliefs (a) and (c) provided under Section 31.

The debtor concern while resisting the petition made an application that the Punjab National Bank and some others should be impleaded as parties. It is stated at the Bar that the firm of Swaya Mal Sant Ram suspended business about one year ago. It appears that the New Bank of India, United Commercial Bank of India and Kharar Co-operative Society had filed applications for adjudication of Messrs. Swaya Mal Sant Ram as insolvent in the Court of the Insolvency Judge, Ambala and some receivers had been appointed of the milts which is the property of the debtor-firm.

The learned District Judge on the objection raised by the debtor concern framed the followingissue :

'Whether the Punjab National Bank, Chandigarh and the four receivers, namely Shri Dilbagh Rai, Shri Mohan Lal Jhanji, Shri Ved Parkash andShri Tirath Ram manager of the New Bank of India, arc necessary parties?'

The learned District Judge came to the conclusion that the Punjab National Bank and the receivers were not necessary parties and directed further proceedings to continue in the petition under Section 31.

3. It is contended by Mr. D. N. Aggarwal, the learned counsel for the petitioner, that the learned District Judge did not take into account Rule 4 of Order 34 of the Code of Civil Procedure under which :

'Where, in a suit for sale or a suit for foreclosure in which sale is ordered subsequent mortgagees or persons deriving title from, or surrogated to the rights' of, any such mortgagees are joined as parties, the preliminary decree referred to in Sub-rule (1) shall provide for the adjudication of the respective rights and liabilities of the parties to the suit in the manner and form set forth in form No. 9.'

There seems to be no force in this contention. Section 32 of the Act lays down the procedure which a District Judge has to adopt in respect of applications under Section 31. If a cause is shown by a person against whom an application is made, Sub-section (6) provides that 'the district Judge shall proceed to investigate the claim of the Financial Corporation in accordance with the provisions contained in the Code of Civil Procedure, in so far as such provisions may be applied thereto.' It cannot be inferred therefrom that the Code of Civil Procedure is generally to apply to any application which is made by a party against whom an application is made under Section 31. It is specifically stated in Sub-section (6) that when cause is shown the claim is to proceed in accordance with the Code of Civil Procedure. In other words, the provisions of the Code will apply to the claim made by the industrial concern. The present application to have other parties impleaded cannot be said to form a claim of the industrial concern and therefore, the provisions of Order 34, Rule 4 can-Dot be invoked to support the contention of Mr. Aggarwal. If the provisions of the Code of Civil Procedure were to apply generally to all proceedings under Section 31, it would not have been necessary to make frequent reference to the provisions of the Code of Civil Procedure as has been done in Sub-section (8) and Sub-section (8-A) of Section 32. The present is a dispute between the industrial concern and the Financial Corporation simpliciter and there is no reason for other creditors of the concern to be impleaded so that their respective claims may also be adjudicated, The Corporation is concerned primarily with its own claim and it is empowered to bring an application for summary remedy under Section 31 of the Act. It has to be borne in mind that a Stale Financial Corporation is designed to promote the finance of an industrial concern which has been defined in Clause (c) of Section 2 of the Act as one 'engaged or to be engaged in the manufacture, preservation or processing of goods or in mining or in the generation or distribution of electricity or any other form of power'. A defunct concern which has suspended its business cannot he regarded as an industrial concern and the Corporation would naturally be anxious to recover the loans as speedily as possible. There is no merit in the contention of Mr. D. N. Aggarwal that if the other creditors are also impleaded the sale of the mortgaged property would fetch a better price in auction.

4. It is also worthy of note that Section 46Bof the Act makes it clear that the provisions of the State Financial Corporation Act 'shall have effect notwithstanding anything inconsistent therewith contained in any other law.......'. Assumingthat it would be desirable to implead the Punjab National Bank and other creditors as parties under Order 34, Rule 4 of the Code of Civil Procedure, the provisions of the Slate Financial Corporations Act are not to be made subservient to other laws including the Code of Civil Procedure. It has not been shown that the State Financial Corporation Act requires or makes it necessary that the Punjab National Bank should be impleaded a party.

5. There is no force in this petition which fails and is dismissed with costs.


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