Skip to content


Gujarat State Financial Corporation Vs. Jayshree Industries - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtGujarat High Court
Decided On
Case NumberAppeal From Order No. 275 of 1982
Judge
Reported inAIR1986Guj29; (1985)1GLR445
ActsState Financial Corporations Act, 1951 - Sections 31 and 46-B; Code of Civil Procedure (CPC), 1908 - Sections 151 - Order 20, Rule 11 - Order 34, Rule 1
AppellantGujarat State Financial Corporation
RespondentJayshree Industries
Appellant Advocate V.B. Patel, Adv. and D.G. Chauhan, Adv. for; V.V. Patel, Adv.
Respondent Advocate D.D. Vyas, Adv.
Cases ReferredChimanlal Chhaldas Patel v. Lilachand
Excerpt:
.....this court who decided this matter has pointed out that the act of the court, in exercise of the inherent powers, must be such as does no injury to any of the suitors. the question posed above will have to be considered in the light of these well settled principles. ' 11. the observations made by the division bench in the above case clearly go to show that exercise of inherent powers for granting instalments in proceedings under the act would be, on the face of it, in conflict with what has been expressly provided in the act as also against the intention of the legislature which has laid down a specific procedure not making any provision for grant of instalments and at the same time, making a specific provision by s. vyas drew my attention to the statement of objects and reasons for..........the said application, the respondent gave an application, ex. 42, requesting the district judge to grant instalments. another application, ex. 49, was also submitted to the learned district judge raising a contention that the sale proclamation which was issued was illegal and may be cancelled and a fresh sale proclamation may be issued. the applications were resisted by the corporation. so far as the grant of instalments is concerned, it was contended that there is no provision for grant of instalments in such proceedings and, therefore, the respondent was not entitled to claim any instalments. it was also contended that the provisions of o. 20, r. 11, c.p.c. do not apply to these proceedings and, therefore, the respondent cannot claim any relief under the said provisions of the civil.....
Judgment:

1. The respondent M/s. Jayshree Industries took a loan from the appellant-Gujarat State Financial Corporation and pledged and hypothecated machinery and other properties with the Corporation as a security for the said loan. The amount was payable by instalments. As the respondent failed to pay the instalments as agreed, the appellant-Corporation filed Miscellaneous Civil Application No. 113 of 1977 in the District Court at Rajkot under S. 31 of the State Financial Corporations Act, 1951 (hereinafter to be referred to as 'the Act') for enforcement of its claim by attachment and sale of the pledged and hypothecated properties of the opponent Jayshree Industries. The application was resisted by the respondent. Pending the hearing of the said application, the respondent gave an application, Ex. 42, requesting the District Judge to grant instalments. Another application, Ex. 49, was also submitted to the learned District Judge raising a contention that the sale proclamation which was issued was illegal and may be cancelled and a fresh sale proclamation may be issued. The applications were resisted by the Corporation. So far as the grant of instalments is concerned, it was contended that there is no provision for grant of instalments in such proceedings and, therefore, the respondent was not entitled to claim any instalments. It was also contended that the provisions of O. 20, R. 11, C.P.C. do not apply to these proceedings and, therefore, the respondent cannot claim any relief under the said provisions of the Civil Procedure Code. As regards legality of the sale proclamation, it was contended that it was quite legal. The learned District Judge who heard these applications held that the provisions of the Civil Procedure Code which are not inconsistent with the provisions of the Act can be availed of and instalments can be granted and accordingly he allowed that application and granted instalments. He held that the sale proclamation was not shown to be illegal, but as instalments were being granted to the opponent, the application was allowed and the proclamation of sale was set aside and the sale was postponed. Being dissatisfied with the order of the learned District Judge, the Gujarat State Financial Corporation has come in appeal before this Court.

2. The learned advocate Mr. V. B. Patel who, appears on behalf of the appellant Corporation drew my attention to S. 46B of the Act, which reads as follows: -

'The provisions of this Act and of any rules or orders made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in the memorandum or articles of association of an industrial concern or in any other instrument having effect by virtue of any law other than this Act, but save as aforesaid, the provisions of this Act shall be in addition to, and not in derogation of, any other law for the time being applicable to an industrial concern.'

Relying upon the above provisions in the Act, he urged that the provisions of the Civil Procedure Code cannot have any application except where specifically provided in the Act. He drew my attention to sub-section (6) of S. 32 which provides that the District Judge shall proceed to investigate the claim of the Corporation in accordance with the provisions contained in the Civil Procedure Code, 1908, in so far as such provisions may be applied thereto. He also drew my attention to some other provisions in the Act which provide for following the provisions of the Civil Procedure Code. He took me through the whole of the Act and submitted that there was no provision in the Act enabling the learned District Judge to grant instalments and hence looking to the provisions of S. 46-B of the Act, instalments cannot be granted by having recourse to O. 20, R. 11, C.P.C. as done by the learned District Judge. In view of the above provisions of S. 46V of the Act and other provisions of the Act which do not provide for grant of instalments or application of O. 20, R. 11 C.P.C. to these proceedings, the learned advocate Mr. D. D. Vyas who appeared on behalf of the i respondent was not able to support the order, of the learned District Judge because the order proceeded on the assumption that O. 20, R. 11 C.P.C. can be pressed into service in such proceedings. I may also mention here that even if the provisions of the Code of Civil Procedure are applicable to such proceedings, then also instalments could not be granted because the properties of the opponent-respondent are pledged/hypethecated with the Corporation and the application is filed for attachment and sale of those properties which factual position is not disputed by Mr. Vyas.

3. A decision of this Court reported in J. P. Steel Industries v. State Bank of Saurashtra, (1978) 19 Guj LIZ 998 shows that in a suit to recover the mortgage amount, no instalments can be granted under O. 20, R. 11, C.P.C. The provisions of O. 34 of the Code of Civil Procedure which pertain to suits relating to mortgage also apply to a suit in case the properties are pledged or hypothecated. In view of this, instalments could not have been granted in these proceedings under O. 20, R. 11 C.P.C. even if the provisions of the Code of Civil Procedure were applicable. Mr. Patel also drew my attention to a decision of this Court reported in Patel Narharilal Kubordas v. Firm Bhogilal AniratIal, AIR 1963 Guj 253, wherein it is laid down that in a suit to recover amount by sale of property charged, instalments cannot be granted. The learned advocate Mr. Vyas was also unable to satisfy me as to how provisions of O. 20, R. 11, C.P.C. could have been pressed into service in these proceedings in the above circumstances. Mr. Vyas, of course, relied upon a decision of the Supreme Court in the case of Gujarat State Financial Corporation v. Natson ., AIR 1978 SC 1765 and submitted that an application under S. 31 of the Act was neither a plaint nor an application for execution but it was something akin to an application for attachment of property in execution of a decree at a stage prior to the final decree and, therefore, the above two decisions of this Court may not be of any assistance in deciding whether instalments could be granted under O. 20, R. 11, C.P.C. or not. It is difficult to accept this submission of Mr. Vyas because such an application would be more in the nature of an application to pass a final decree by attachment and sale of the properties. The application cannot, in the strict sense of the term, be said to be an application for execution because before execution a final decree must follow the preliminary decree. But any way, it is not necessary to dilate upon this question any further because the provisions of the Code of Civil Procedure and particularly, O. 20, R. 11 are not applicable in the present case. I may observe here that if we treat the application under S. 31(l) either as an application for execution or as an application for passing a final decree, then also instalments cannot be granted without the consent of, the Corporation, looking to the provisions of O. 20, R. 11 C.P.C. These provisions clearly show that if instalments are already granted by a decree, instalments cannot again be granted in execution proceedings unless the judgment-creditor consents. In the present case, the agreement between the Corporation and the respondent provided for instalments and that agreement has to be treated as, at any rate, a decree between the parties if we treat an application under S. 31(l) as an application for execution or an application for passing a final decree.

4. The learned advocate Mr. Vyas urged that even though there is no provision in the Act empowering the Court to grant instalments, the Court can certainly do so in exercise of inherent powers. The learned advocate Mr. V. B. Patel, on the other hand, urged that the Act is a self-contained Code which lays down the whole procedure and no inherent powers could be invoked. He also, in the alternative, urged that inherent powers could be invoked, if at all they could be invoked, only for advancing the purpose of the Act and not for defeating the purpose of the Act so far as enforcement is concerned. He submitted that where a statute takes over and occupies the field previously not regulated by a legislation, the rights and power conferred and the obligations imposed by the statute must be worked out within the statutory frame-work and if a statute confers a particular right and prescribes a particular mode for its enforcement, the enforcement of the right must be sought in that mode. He urged that the Act confers a particular right on the Corporation and prescribe a particular mode made for its enforcement and hence the enforcement of the right must be sought in that mode alone. It is true that the provisions of the Code of Civil Procedure do not apply to these proceedings and, therefore, we cannot also look into S. 151 C.P.C., but it cannot be gainsaid that inherent powers which are saved by S. 151 C.P.C. are inherent in the Code and they are not conferred by the Code of Civil Procedure or any other statute. Hence it cannot be disputed that a Court has inherent powers even if no specific provision having such inherent powers is contained in the Act.

5. The learned advocate Mr. D. D. Vyas drew my attention to the decision of, the Supreme Court in the case of J. H. D. Syndicate v. Commr. of Income-tax, New Delhi, AIR 1977 SC 1348 in support of his contention that the District Judge exercising powers under S. 31 of the Act would have inherent powers even if the Code of Civil Procedure does not apply. It appears from the facts of the case before the Supreme Court that the High Court declined to answer a reference made to it under the Income-tax Act on account of paper-book being not supplied But party then applied to the High Court to rehear the reference because the party could not supply the paper-book within time because the notice of the High Court was misplaced by the party's clerk. The High Court rejected that application after observing that it had become functus officio to entertain the application because of its earlier order declining to answer the reference. The matter was carried before the Supreme Court and it was contended that the High Court had inherent powers to recall its earlier order and dispose of the reference on merits. The Supreme Court accepted that contention and held that the High Court had inherent powers to recall the order made in the absence of the party and to dispose of the reference on merits because there was nothing in any of the provisions of the Income-tax Act, either expressly or by necessary implication, which would stand in the way of the High Court from passing an order for disposal of the reference on merits.

6. Mr. Vyas also drew my attention to another decision of the Supreme Court reported in Newabganj Sugar Mills Co. Ltd. v. Union of India, AIR 1976 SC 1152 wherein also the Supreme Court has observed that though there are limitations on the powers of the Court, it cannot abandon its- inherent powers. The Supreme Court observed that the inherent power has its roots in necessity and its breadth is co-extensive with the necessity.

7. My attention was also drawn to another decision of the Supreme Court in the case of Income-tax Officer v. M. K. Mohammad Kunhi, AIR 1969 SC 430 wherein the Supreme Court held that an express grant of statutory power carries with it by necessary implication the authority to use all reasonable means to make such grant effective. The Supreme Court held in I hat case that the powers which have been conferred by S. 254 on the Appellate Tribunal with widest possible amplitude must carry with them by necessary implication all powers and duties incidental and necessary to make the exercise of those powers fully effective. It appears that there is no provision in the Income-tax Act with regard to stay of proceedings pending appeal before the Appellate Tribunal. But the Supreme Court held that the Appellate Tribunal must be held to have the power to grant stay as incidental or ancillary to its appellate jurisdiction.

8. The learned advocate Mr. Vyas also drew my attention to a decision of this Court reported in Soni Vrajla1 v. Soni Jadavji Govindji, AIR 1972 Guj 148. In this decision of this Court, it has been observed that the inherent power has not been conferred upon the Court by S. 151 of the Code of Civil Procedure, but it is a power inherent in the Court by virtue of its duty to do justice between the parties before it and that where there is no express bar of any express provision of the Civil Procedure Code fettering the Court's power or precluding the Court from doing some thing, the Court, to advance substantial justice, can and must interfere so as to set aside the procedural irregularity to achieve the desired primary object for which the Court exists, viz. to do justice between the parties. It is also observed in this decision that one of the first and highest duties of all Courts is to take care that the act of the Court does no injury to any of the suitors, and when the expression 'the act of the Court' is used, it does not mean merely the act of the primary Court, or of any intermediate Court of appeal but the act of the Court as whole, from the lowest Court which entertains jurisdiction over the matter up to the highest Court which finally disposes of the case. It is further observed that it is the duty of the aggregate of these Tribunals to take Care that no act of the Court in the course of the whole of the proceedings does an injury to the suitors in the Court. This decision reiterates what is settled position that the inherent power has not been conferred upon the Court by any statute but it is a power inherent in the Court by virtue of its duty to do A justice between the parties before it. I would, however, like to point out here at this stage that while making the above observations, the learned single Judge of this Court who decided this matter has pointed out that the act of the Court, in exercise of the inherent powers, must be such as does no injury to any of the suitors.

9. In view of these decisions of the Supreme Court, we can say that the District Judge exercising power under S. 31 and other provisions of the Act can exercise inherent powers which are inherent in th6 Court itself. It does not make any difference that the District Judge exercises those powers by virtue of the provisions of the Act.

10. The learned advocate Mr. V. B. Patel, on the other hand, drew my attention to a decision of this Court reported in Chimanlal Chhaldas Patel v. Lilachand, AIR 1972 Guj 26 wherein the scope of the inherent powers had been discussed at para. 18 of the judgment. P. D. Desai, J. (as he then was) speaking for th6 Division Bench, has observed with regard to the scope of the inherent powers at para 18 as follows: -

'A question, however, may be legitimately posed: could1the Court in the exercise of its inherent power under S. 151 of the Code have not passed the order in question? The answer to the question must depend upon the true application of the scope, nature and object of the inherent powers of the Court. It must be remembered that the inherent power has not been conferred on the Court by S. 151; the section merely saves a power which is inherent in the Court by virtue of its duty to do justice between the parties before it. The section does not invest the Court with a power or jurisdiction in effect to avoid the application of the procedure prescribed in an appropriate provision of the Code or to adopt a special procedure not sanctioned by the Code. In other words, the inherent powers of the Court are in addition to the special powers specifically conferred on the Court by the Code. They are complimentary to those powers and the Court would be free to exercise them when the exercise of these powers is not in any way in conflict with what has been expressly provided in the Code or against the intention of the Legislature. The inherent power cannot be exercised in a manner which would be contrary or different from the procedure expressly provided in the Code. It is equally important to note that these powers cannot be exercised over the substantive rights which any litigant possesses and such right could only be affected by specific powers conferred on the Courts. The powers to affect substantive right which a litigant possesses cannot come within the scope of inherent powers of the Court. The question posed above will have to be considered in the light of these well settled principles.'

11. The observations made by the Division Bench in the above case clearly go to show that exercise of inherent powers for granting instalments in proceedings under the Act would be, on the face of it, in conflict with what has been expressly provided in the Act as also against the intention of the Legislature which has laid down a specific procedure not making any provision for grant of instalments and at the same time, making a specific provision by S. 46-B that the provisions of the Act and of any rules or orders made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. If instalments are granted in exercise of inherent powers in proceedings under the Act, then it would be exercise of the same in a manner which would be contrary to and different from the procedure expressly provided in the Act itself. The exercise of inherent powers for grant of instalments in proceedings under die Act would be affecting the substantive right of the Corporation because by virtue of the provisions of the Act, the Corporation is entitle to get the property attached and sold and the question of grant of instalments in investigation of the claim and attachment and sale of the property would not arise. Even if inherent powers of the Court can be and may be invoked for some purpose in aid of the procedure laid down by the Act, they can certainly not be exercised for grant of instalments which would be against the specific procedure laid down by the Act. It cannot be said with any stretch of imagination that exercise of inherent powers for grant of instalments would be complementary to the powers conferred on the Court by the Act itself. The grant of instalments in exercise of inherent powers would have the effect of avoiding the application of the procedure prescribed by the Act itself, which, on the face of it, is not permissible.

12. In the case of Income-tax Officer V.M. K. Mohammed Kunhi, (AIR 1969 SC 430) (supra), the question was whether the Income-tax Appellate Tribunal can grant stay of proceedings even in absence of any specific provisions empowering the Appellate Tribunal to grant such stay. S. 220(6) of the said Act deals with a situation when an appeal is pending before the Appellate Assistant Commissioner but the Act is silent in that behalf when an appeal is pending before the Appellate Tribunal. It has been held in that case when S. 254 of the Act confers appellate jurisdiction, it impliedly grants the power of doing all such acts, or employing such means, as are essentially necessary to its execution and that the statutory power carries with it the duty in proper cases to make such orders for staying proceedings as will prevent the appeal, if successful, from being rendered 6ugatory. It is obvious that grant of stay of proceedings in exercise of inherent powers will be something supplemental to the powers of appeal and does not affect any substantive rights of the parties. In Newabganj Sugar Mills'case, (AIR 1976 SC 1152) (supra), A appears that the price of levy sugar was pegged down by the State and the millowners, after obtaining stay of the Government order, were charging excessive price and the order of the Government was upheld by the High Court and the question was whether the consumers were entitled to repayment of the said excess and it was in this connection that the Supreme Court took the view that inherent powers can be exercised in favour of the consumers in such a situation. These decisions of the Supreme Court thus do not support the contention of Mr. Vyas that inherent powers can be invoked in proceedings under the Act for grant of instalments.

13. The learned advocate Mr. Vyas drew my attention to the Statement of Objects and Reasons for bringing the statute on the statute-book and urged that the object was to provide medium and long term credit to industrial under takings which fall outside the normal activities of commercial banks and that way, to nurse, the industries and that object would be defeated if it is held that instalments cannot be granted while dealing with an application under S. 31 of the Act. Now, it is true that the object of the Act is as stated in the Statement of Objects and Reasons, but at the same time the Act itself provides a special procedure for enforcing the claim of the Corporation by attachment and sale of the properties of the industry concerned. The Legislature, while enacting this Act did not think it necessary or proper to make a provision for grant of instalments in proceedings under Act. The Legislature, on the other hand, thought it proper to enact S. 46B making a specific provisions that the provisions of the Act and of the rules made thereunder were to prevail notwithstanding anything inconsistent contained in any other law for the time being in force. The Legislature thus clearly expressed its intention that the procedure laid down by the Act was to be followed in enforcing the claim of the Corporation for recovery of the dues. It may also be mentioned here that the facility of instalments is already granted while sanctioning the loan arid, therefore, also it appears that the Legislature did not think it proper to empower the Court to give the facility of instalments again. In view of this, I am not inclined to accept this contention of Mr. Vyas.

14. The discussion made above will go to show that the learned District Judge committed an error in granting instalments in the present case. The learned District Judge clearly erred in taking the view that the instalments could be granted under O. 20, R. 11 C.P.C. in these proceedings. The order passed by him granting instalments is thus required to be set aside.

15. Now, so far as the order setting aside the proclamation is concerned, the learned Joint District Judge held that the proclamation was quite legal, but he set aside the same only because he was inclined to grant instalments. He would not have set aside the sale proclamation if he had not granted instalments to the opponent of that application. The said order assed by the learned Joint District Judge is also, therefore, required to be set aside. It may, however, be mentioned here that if on account of lapse of time or for any other reason, a fresh proclamation is required to be issued, the Court shall have to issue a fresh proclamation of sale.

16. As a result of the aforesaid discussion, the appeal is allowed, the order passed by the learned Joint District Judge below Ex. 42 granting instalments and also the order passed below Ex. 49 setting as de the sale proclamation are both s et aside. The respondent to bear the costs of this petition and pay those of the appeal to the appellant.

17. Appeal allowed.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //