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Gujarat State Financial Corporation Vs. Rechan Rivets and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtGujarat High Court
Decided On
Judge
Reported in(1978)19GLR294
AppellantGujarat State Financial Corporation
RespondentRechan Rivets and ors.
Cases ReferredIndustrial Finance Corporation of India and Anr. v. Thakur Paper Mills Ltd. and Anr.
Excerpt:
.....stated that these civil revision applications arise out of claim applications made by the gujarat state financial corporation in different district courts of this state as well as in the city civil court at ahmedabad. shah, in these claim applications under sections 31 and 32 of the state financial corporation act, 1951, is in effect and like one in application in execution of a decree having regard for the provisions contained in sub-section (a) of section 32 of the said act which provides a fiction that the financial corporation is the decree bolder and an order of attachment of sale of property under section 32(7) is to be carried into effect as far as practicable in the manner provided in civil procedure code, 1908 for the attachment or sale of the property in execution of a decree...........article of the said act applicable to the facts of these applications made by the gujarat state financial corporation under sections 31 and 32 of the state financial corporations act (act lx1ii of 1951) for summary enforcement of their claims, i intend to dispose them by this common judgment. it should be stated that these civil revision applications arise out of claim applications made by the gujarat state financial corporation in different district courts of this state as well as in the city civil court at ahmedabad. of course, except the district court of broach, all the courts have opined that the claim applications of the gujarat state financial corporation for enforcement of their claims under sections 31 and 32 of the aforesaid act should bear ad valorem court-fees on the.....
Judgment:

B.K. Mehta, J.

1. Since in this group of 32 civil revision applications a common question of law under the Bombay Court Fees Act, 1959 arises as to what would be the appropriate Article of the said Act applicable to the facts of these applications made by the Gujarat State Financial Corporation under Sections 31 and 32 of the State Financial Corporations Act (Act LX1II of 1951) for summary enforcement of their claims, I intend to dispose them by this common judgment. It should be stated that these Civil Revision Applications arise out of claim Applications made by the Gujarat State Financial Corporation in different District Courts of this State as well as in the City Civil Court at Ahmedabad. Of course, except the District Court of Broach, all the Courts have opined that the claim applications of the Gujarat State Financial Corporation for enforcement of their claims under Sections 31 and 32 of the aforesaid Act should bear ad valorem court-fees on the amounts outstanding as claimed in the respective applications under Article 7, Schedule I of the Bombay Court Fees Act, 1959. The District Court, Broach, however, took the view that applications under Sections 31 and 32 of the aforesaid Act were in the nature of execution of the decree and, therefore, they would bear a fixed court-fees of Rs. 0-65 paise under Article 1(c) of Schedule II of the said Act. The Gujarat State Financial Corporation has, therefore, preferred these revision applications, except revision applications Nos. 681 to 683 of 1976 which have been preferred by the State Government, being aggrieved by the respective orders in favour of the rival parties.

2. On behalf of the Gujarat State Financial Corporation, it has been urged by Mr. G.N. Shah, learned Advocate, who advanced the principal arguments on behalf of the Corporation and which arguments were adopted by Messrs A.C. Gandhi and A.P. Ravani appearing on behalf of the Corporation in their respective matters that the decision to subject the Corporation to ad valorem court-fees on its claim applications is not warranted under the provisions contained in Article 7 of Schedule I of the Bombay Court Fees Act, inasmuch as no substantive relief has been claimed nor is it capable of being valued in terms of money. The relief, according to Mr. Shah, in these claim applications under Sections 31 and 32 of the State Financial Corporation Act, 1951, is in effect and like one in application in execution of a decree having regard for the provisions contained in Sub-section (a) of Section 32 of the said Act which provides a fiction that the Financial Corporation is the decree bolder and an order of attachment of sale of property under Section 32(7) is to be carried into effect as far as practicable in the manner provided in Civil Procedure Code, 1908 for the attachment or sale of the property in execution of a decree. Mr. Shah, therefore, supported the view of the learned District Judge, Broach that the nature of the claim applications is more or less that of the execution of a decree and, therefore, ex-facie it would not be within the purview of Article 7 of Schedule I of the Bombay Court Fees' Act. Mr. Shah emphasised that the limited reliefs which are prescribed under Section 31 for which an application can be made by the Corporation for enforcement of its claim is a special provision and, therefore, the relief of sale of property pledged, mortgaged or hypothecated is a statutory relief and cannot, therefore, be said to be substantive relief as required under Article 7 of the Schedule 1. He, there-fore, urged on the above premises that the proper Article which would be applicable to the reliefs claimed in the applications made under Sections 31 and 32 of the Financial Corporation Act would be Article 1(c) of Schedule II which provides a fixed court fees for an application presented to a Civil Court of 65 paise. In the alternative, Mr. Shah urged that inasmuch as the State Financial Corporation can enforce its claims by making application under Sections 31 and 32 of the State Financial Corporation Act, it would not be tentamount to a plaint in a suit and being merely an application, appropriate Article which would be attracted would be Article 23(f) of Schedule II of the Bombay Court Fees Act, which provides a fixed Court-fees of Rs. 30/- on a plaint, petition or application, which is capable of being treated as a suit in or to any Civil Court not otherwise provided for and the subject matter of which is not capable of being estimated in value. In submission of Mr. Shah, the relief of sale or for that matter relief for the transfer of management under Clauses (a) and (b) of Section 31(1) of the State Financial Corporation Act is not capable of being estimated in money value since no decree for the stated amount is claimed in the application and what is prayed for is merely a sale which is the sale of the mortgaged property under Section 32 by making application for the enforcement of the claims under Section 31 of the State Financial Corporation Act. In other words, Mr. Shah contended that the scheme contained in Sections 31 and 32 of the State Financial Corporation Act is that the Financial Corporation is treated as a decree holder of the amount due to it and Sections 31 and 32 merely prescribe the procedure for enforcement of such claims, and therefore, the State Financial Corporation cannot be subjected to payment of ad valorem court-fees as if its applications are for an ascertained sum of money under Article I of Schedule I of the Bombay Court-Fees Act.

3. The aforesaid contentions of Mr. Shah have been sought to be repelled by Mr. G.N. Desai learned Government Pleader, appearing on behalf of the State by contending that the relief of sale claimed in the claim applications under Section 31 and granted under Section 32 of the said Corporation Act is in effect and substance relief for recovery of the outstanding dues. In other words, they are the applications for the enforcement of the mortgage by sale of the mortgaged property and, therefore, they would fall in the categories of money suits under Article 7, as in the alternative under Article 7, as they are meant to obtain substitutive relief's which are capable of being valued in terms of monetary kind.

4. It is in context of these rival contentions that I have to answer the question as to whether the applications for enforcement of the claims of the State Financial Corporation under Sections 31 and 32 of the State Financial Corporation Act would be covered by Article 1 of Schedule 1 or in the alternative Article 7 thereof as contended by the State Government, or would be governed by Article I(c), or in the alternative Article 23(f) of Schedule II of the Bombay Court - Fees Act. In other words, whether such applications should bear advalorem court - fees or fixed court fees. The view taken by the District Courts and the Civil Courts In which these applications are pending, except that of District Court. Broach, is that these applications should bear ad valorem court-fees under Article 7 of Schedule I of the Court Fees Act since they are in effect and substance money suits, but as the claims are enforced by applications, they would fall within Article 7; while the District Court, Broach, held that the enforcement of claims is in the nature of execution of a decree and, therefore the applications must bear fixed court-fees under Article I(c) of Schedule II of the Court-Fees Act.

5. I am of the opinion that the view that these applications should bear ad valorem court-fees is correct obviously for the following reasons. It is an established position of law, so far as this Court is concerned, that the plaint in a suit brought by a mortgagee to recover the amount of principal and interest by sate of mortgaged property only and not from the defendant personally or from his other property must bear the Court fees stamp sufficient to cover the whole amount of claim inclusive of interest and not principal amount alone and such a suit would not fall within the provisions of Section 7, Clause (9) of the Court-Fees Act, 1877 which prescribes court fees in a suit by a mortgagee for foreclosure of the mortgage or for sale when the mortgage is made by conditional sale (Vide Nama v. Hari Bin Bahirji (1905) VII Bom. L.R 194 and Kishinath Balial v. Ganpatray. I.L.R 18, Bom. 696).

6. A similar view is taken by the Calcutta High Court as well as Madras High Court in Sailendra Kumar Palit and Ors. v. Hari Charon Sadhukhan and Anr. A.I.R. 1931 Clause 159 and R. Kailasa Ayyar v. Payyalur Gramarn Vanchi Pattar's son Sundaram Pattarand Ors. A.I.R. 1942 Madras 205. The Bombay High Court has, therefore, taken the view as back as 1879 that a suit by a mortgagee to enforce his mortgage debt by sale of the mortgaged property is a money suit falling within the purview of Article I of Schedule I of the Court Fees Act, 1877. Both the decisions of the Bombay High Court are of Division Bench and therefore they are binding to this Court. In my opinion, it cannot be gainsaid that the applications by the Gujarat State Financial Corporation under Section 31 for obtaining relief of sale of the mortgaged property is for the enforcement of its claims and it cannot be urged successfully without violence to the language that it is not a substantive relief nor is it incapable of being estimated in terms of money since it is for the sale of the mortgaged property. The relief of sale is not claimed in vaquoo as rightly contended by the learned Government Pleader. The relief for sale of the mortgaged property is a Substantive relief for recovery of the outstanding amount of the mortgaged debts secured under the deed of mortgage. In other words, the claim application under Section 31 of the State Financial Corporation Act is in the nature of suit. A Division Bench of Patna High Court held in Industrial Finance Corporation of India and Anr. v. Thakur Paper Mills Ltd. and Anr. : AIR1972Pat83 that Claim Proceedings under Section 30 of the Industrial Finance Corporation Act, 1948 are in the nature of suits contemplated by Section 141 of the Civil Procedure Code. Section 30 of the Industrial Finance Corporation Act, 1948 is part materia with Section 31 of the State Financial Corporation Act, 1951. It is no doubt true that under the State Financial Corporation Act 1951, and for that matter the Industrial Finance Corporation Act, 1948, the Corporation seeks to enforce its claims by making applications to the competent District Judge, if there is a default on the part of the Industrial concern to whom the loan has bean advanced by praying for an order of the sale of the property mortgaged or for transferring the management of the industrial concern to the Financial Corporation or for an ad-interim injunction restraining the defaulting industrial concern from transferring or removing any machinery or plant where such removal is apprehended. It is no doubt true that these claims are sought to be enforced by making application and not filing a regular suit in a civil court. Section 141 of the Civil Procedure Code provides that the procedure provided in the Code in regard to suits shall be followed, as far as it can be made applicable, in all proceedings in any court of civil jurisdiction. Sub-section (6) of Section 32 of the State Financial Corporation Act also provides that if the industrial concern to which the notice is issued by the District Judge under Sub-section (5) of Section 32 to show cause why an ad-interim order for attachment should not be made absolute, and if cause is shown, the District Judge would proceed to investigate the claim of the Financial Corporation in accordance with the provisions contained in the Code of the Civil Procedure, 1908 in so far as such provisions may be applicable there to. Mr. Shah, however, made a strenuous attempt impress upon me that Article 1 of Schedule I would not apply as the application made under Section 31 would not amount to plaint. Even if it is so, I am of the opinion that it would fall, as rightly claimed by the learned Government Pleader, within the purview of Article 7 of Schedule I which provides an ad valorem court-fees on an application made for obtaining substantive relief which is capable of being valued in terms of monetary gain or prevention of monetary loss, for the simple reason that for all intents and purposes the application for obtaining the relief of sale of the mortgaged property is for the enforcement of the claim. Sub-section (2) of Section 31 of the State Financial Corporation Act provides that an application under Sub-section (1) of Section 31 would state the nature and extent of the liability of the industrial concern to the Financial Corporation, the ground on which this made and such other particulars as maybe prescribed. Sub-section (1) of Section 32 provides that on such an application being made to the District Judge, he shall pass an ad interim order attaching the security, or so much of the property of the industrial concern as would on being sold realise in his estimate an amount equivalent in value to the outstanding liability of the industrial concern to the Financial Corporation, together with the costs of the proceedings taken under Section 31 with or without an ad interim injunction restraining the industrial concern from transferring or removing its machinery, plant or equipment. This lends support to the contention of the learned Government Pleader that the application for sale of the mortgaged property is in effect and substance an application for recovery of the outstanding claim. In that view of the matter, therefore, I am of the opinion that the applications of the State Financial Corporation under Section 31 of the State Financial Corporation Act, 1951 would be liable to pay ad valorem court-fees on the outstanding amount of claim under Article 7 of Schedule I of the Bombay Court-Fees Act, 1959. The view of the learned District Judge, Broach that these claim applications are in the nature of execution proceedings is not warranted at all. The learned District Judge, Broach, with respect, has read more than what is warranted in Sub-section (8) of Section 32 of the State Financial Corporation Act which reads as under.

(8) An order of attachment or sale of property under this section shall be carried into effect as far as practicable in the manner provided in the Code of Civil Procedure 1908 for the attachment or sale of property in execution of a decree as if the Financial Corporation were the decree-holder.

It is no doubt true that for purposes of enforcement the order of attachment or sale of property under Section 32 it is provided that the manner shall be the same as if it is an attachment or sale in execution of a decree and the Financial Corporation is the decree holder. The question of enforcement of the order of sale or attachment arises only if the District Judge concerned makes the final-order under Sub-section (7) of Section 32 after considering and ascertaining the claim of the Gujarat State-Financial Corporation in case of cause being shown by the industrial concern in reply to the notice issued under Sub-section (5) of Section 32. In my opinion, therefore, the learned District Judge, Broach was in error in holding that the claim applications are in the nature of execution proceedings.

8. The contention of Mr. Shah that the reliefs which have been claimed in these claim applications are statutory reliefs and, therefore, not substantive reliefs is merely to be stated for being rejected. The relief of sale under Section 69 of the Transfer of Property Act is also a statutory relief, but, therefore, it cannot be said that it is not a substantive relief. Similarly, the relief of sale for speedy and effective enforcement of the claim under Sections 31 and 32 of the State Financial Corporation Act, 1951 is no doubt a statutory relief, but, therefore, I do not think that it would cease to be a substantive relief. It is in the ultimate analysis for purposes of enforcing the mortgaged debt that these district courts are invested with the power to grant relief of the sale or attachment in the circumstances prescribed under Sections 31 and 32 of the State Financial Corporation Act. It cannot be said that such reliefs are not capable of being estimated in terms of money. As a matter of fact in all these applications the Corporation has claimed that the sale proceeds realised by the sale of the mortgaged property should be attached for purposes of satisfying the outstanding claims of the State Financial Corporation. It would clearly be a relief which is capable of being estimated in terms of money. Mr. Shah wanted to draw my attention to the relief of transfer of management under Clause (b) of Section 31 of the State Financial Corporation Act to impress upon me that the first relief under Clause (a) for sale of the mortgaged property is incapable of being estimated in terms of money. I have not been able to appreciate what is exactly the contention. The ad interim injunction is not a substantive relief. The question, whether the relief of transfer of management to State Financial Corporation is or is not capable of being valued in terms of money does not arise presently and, therefore, need not be answered in these petitions. The short question is, whether the party has to pay court fees on the reliefs which he claims and there may be different court fees on different reliefs. In that view of the matter, therefore, this aspect of the argument is to be rejected.

8.1 The result is that all these applications preferred by the State Financial Corporation should fail and the revision applications by the State Government should succeed. The applications of the Corporation, therefore, are dismissed and that of the State is allowed. Rule is made absolute in the revision application preferred by the State Government and rule is discharged in the revision applications made by the State Financial Corporation. There should, however, be no order as to costs in the entire group of these revision applications. It is further clarified that the order of the Courts in favour of the State Government directing the State Financial Corporation to pay ad valorem Court-fees on its amounts of the claims is stayed upto 31st July, 1977.


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