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Delhi Finance Corporation Vs. Ram Pershad and anr. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtDelhi High Court
Decided On
Case NumberCivil Miscellaneous Appeal No. 1198 of 1975 and Civil Appeal No. 2 of 1973
Judge
Reported inILR1976Delhi479
ActsCode of Civil Procedure (CPC), 1908 - Sections 113 and 151; State Financial Corporation Act, 1951 - Sections 32(12)
AppellantDelhi Finance Corporation
RespondentRam Pershad and anr.
Advocates: P.D. Ahuja,; M.C. Bhandare,; Kapil Sibal,;
Cases ReferredPolisetty Narayana Rao v. Commissioner of Income
Excerpt:
.....court--application under section 32(12) of the state finance corporation act, 1951 and section 151 civil procedure code for appointment of receiver made in high court in the pending reference--maintainability of.; in the instant case, delhi finance corporation filed a suit against the respondents for recovery of loan raised by the latter from the said corporation. the said suit was dismissed by the district judge on the ground that the state financial corporation act, 1951 is ultra virus of the constitution of india. the corporation challenged the aforesaid order in appeal. the appeal was accepted and the case was remanded to the district judge for making a reference to this court on the question of ultra virus of the act. accordingly, the district judge made a reference under..........result dismissed the suit. the corporation challenged the aforesaid order in appeal in this court (civil appeal no. 84 of 1971). the appeal was accepted and the case was remanded to the district judge for making a reference to this court on the question of ultra virus of the act. accordingly, the district judge made a reference under section 113 of the c.p.c. and the same has been numbered as reference no. 2 of 1973. (3) the respondent feeling aggrieved by the order of the learned single judge filed l.p.a. no. 152 of 1972 under action 10 of the 'letters patent. during the pendency of the appeal the corporation filed an application (cm. no. 1082 of 1975) under section 32(12) of the act read with section 151 civil procedure code turn appointment of a receiver of the mortgaged properties.....
Judgment:

Prithvi Raj, J.

(1) Ram Pershad respondent (herein called 'the respondent') raised loans from the Delhi Finance Corporation (herein called 'the Corporation') on the basis of two mortgage deeds by mortgaging the imovable properties, plant and machinery belonging to him. He. however, failed to re-pay the loans in accordance with the terms of the mortgage deeds. The Corporation filed to suit against the respondent for the recovery of the said loans.

(2) On the pleadings of the parties 11 issues were framed. Issues No. 1 to 10 were found by the learned District Judge in favor of the Corporation. In respect of issue No. 11 to the effect 'Whether the State Financial Corporation Act. 1951, is ultra virus of the Constitution of India as alleged by the respondent' the District Judge recorded the finding that the State Financial Corporation Act is ultra virus of the Constitution of India and in the result dismissed the suit. The Corporation challenged the aforesaid order in appeal in this Court (Civil Appeal No. 84 of 1971). The appeal was accepted and the case was remanded to the District Judge for making a reference to this Court on the question of ultra virus of the Act. Accordingly, the District Judge made a reference under section 113 of the C.P.C. and the same has been numbered as Reference No. 2 of 1973.

(3) The respondent feeling aggrieved by the order of the learned Single Judge filed L.P.A. No. 152 of 1972 under action 10 of the 'Letters Patent. During the pendency of the appeal the Corporation filed an application (CM. No. 1082 of 1975) under section 32(12) of the Act read with section 151 Civil Procedure Code turn appointment of a receiver of the mortgaged properties and direct him to seize the mortgaged properties and to manage the same.

(4) The respondent thereafter by an application (C.M. 1183 of 1975) prayed that he be permitted to withdraw the Letters Patent Appeal. This Court by its order dated 13th November. 1975, allowed the respondent to do so and the appeal was dismissed as withdrawn with the result tha' C.M. 1082 of 1975 was rendered infruetuous.

(5) The Corporation has filed the present application (No. 1198 of 1975) under section 32(12) of the Act read with section 151 C.P.C. in Civil Reference No. 2 of 1973 praying for appointment of a Receiver of the mortgaged properties with a direction to seize the mortgaged properties and manage the same.

(6) The respondent filed a counter resisting the application. In his counter he raised a preliminary objection that such an application could only be moved before the District Judge who has exciusive jurisdiction to entertain the application as the District Judge is seized of the suit and as such the application is not entertainable by this Court in reference.

(7) There appears to be merit in this preliminary objection. Section 113 of the Civil Procedure Code envisages that subject to such conditions and limitations as may be prescribed, any Court may state a case and refer the same for the opinion of the High Court, and High Court may make such order thereon as it thinks tit. The question accordingly is as to what is the ambit of the power which the High Court exercises in a reference made to it by a subordinate Court. A bare perusal of the section 113 shows that under that section a Court can state a case and refer the same for the opinion of the High Court. The power under this section has to he exercised subject to the conditions and limitations envisaged under Order 46 Civil Procedure Code .

(8) From a perusal of the provisions of section 113 and Order 46 of the Civil Procedure Code it is evident that the High Court has to decide the point referred to it specifically on which the court referring the point entertains reasonable doubt. In other words, the reference is restricted to the specific point referred for opinion of the High Court and the High Court is not seized of the entire subject matter which remains pending before the Court making the reference.

(9) In its advisory jurisdiction, the High Court does not exercise either original or appellate jurisdiction but only consultative jurisdiction. That being so, the relief sought for in the present application seeking appointment of a receiver is a matter to be decided by the District Judge.

(10) In State of Uttar Pradesh through the Collector Naiaital v. Sri Abdul Karim, : AIR1963All556 (1), a Full Bench of the Court held that a specific question having been referred to it by the Bench seized with the first appeal it was not open to them to 20 into the other questions arising in the appeal.

(11) In Seth Premehand Satramdas v. The State of Bihar : [1951]19ITR108(SC) , the petitioner made an application to the High Court for requiring the Board of Revenue Bihar to state a case under section 21(3) of the Bihar Sales Tax Act, 1944, on the refusal of the Board to state the case and refer it to the High Court. The High Court rejected the application summarily. The petitioner applied to the High Court for leave to appeal which the High Court granted. Rejecting the appeal the Supreme Court observed that the order passed by the High Court in that case was not in the exercise of original or appellate jurisdiction because the proceedings did not commence in the High Court as all original suits and proceedings should commence. The High Court acquired jurisdiction fo deal with the case by virtue of an express provision of the Bihar Sales Tax Act. In the premises, it was held that the jurisdiction of the High Court was only consultative and was neither original or appellate.

(12) In Commissioner of Income-tax Rajasthan v. His Highness Maharaja Shri Sawai Man Singh of Jaipur, 1973 I.T.R. 123, a question arose whether a pending reference under section 66(1) of the Indian Income-tax Act, 1922, abates on the death of an assessed or not. It was held that the reference docs not abate on the death of the assessed as an application under section 66(2) asking the Court to direct the Tribunal to state the case and refer questions of law to it is an application invoking the Court to exercise its advisory jurisdiction, that the application under section 66(2) of the Income- tax Act was not civil proceeding within the meaning of section 141 of the Civil Procedure Code ., and that the provisions of Order 22 of the Code were not applicable.

(13) On behalf of the applicant, it was strongly contended that the High Court is at the apex of a State's judicial system, and that being so, in the exercise of its inherent powers the prayer of the applicant may be granted in the ends of justice. Strong reliance was placed on Manohar Lal Chopra v. Rai Bahadur Rao Raja Seth Hiralal, : AIR1962SC527 , to contend that inherent power is not conferred on the Court by section 151 Civil Procedure Code but is a power inherent in the Court by virtue of its duty to do justice between the parties before it. It was accordingly submitted in the instant case that on a conspectuo of all the circumstances of the case it is a Pit case in which this court should exercise its inherent power in granting the application and appoint a receiver to safeguard the interests of the applicant.

(14) It has to be remembered that the inherent powers arc to be exercised by Courts in very exceptional circumstances for which the Court lays down no procedure as was observed by the Supreme Court in Manohar Lal Chopra's case (4) (supra). In the instant case, the applicant has a remedy before the District Judge. We do not consider that it is one of those cases in which the exercise of inherent powers is called for.

(15) Reliance was next placed by the learned counsel for the applicant on Polisetty Narayana Rao v. Commissioner of Income-tax, Hyderabad, A.I.R. 1957 A. P. 672. In that case, a petition was filed to direct stay of collection of income-tax arrears pending the disposal of a reference under section 66(2) of the Income-tax Act, 1922. It was contended that the power of the Court under section 66(2) was merely consultative and advisory, that the High Court had no power to pass a decree or order under the Income-tax Act, and that clause 7 of section 66 of the said Act debars the passing of any order directing a stay. In that connection, it was observed that in a proper case the powers of High Court under section 151 Civil Procedure Code . could be invoked to seek an order such as was sought by the petitioner. However, on facts the Court declined to interfere. This authority is of no assistance to the applicant. In the instant case, as already noted above, we do not consider that exercise of inherent power under section 151 Civil Procedure Code is called for to grant the relief sought for which the proper forum is the District Judge, the suit being still pending in the said Court. The prayer asking for appointment of a receiver cannot be said to arise by way of an interim relief in the reference which is before us, as this Court is only to give its opinion on the question referred. It is a prayer which could be sought for in the suit.

(16) For the reasons stated above, the application fails and is hereby dismissed on the view taken by us on the preliminary objection. In the circumstances, we make no order as to costs.


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