w w w . L a w y e r S e r v i c e s . i n



Maharaja Electrobright Engg., rep. by its Proprietor George Verghese & Another v/s Pondicherry Industrial Promotion Development and Investment Corporation Ltd., rep. by its G.M. Development Thiru. V. Ramakrishnan


Company & Directors' Information:- INDUSTRIAL DEVELOPMENT AND INVESTMENT CO PVT LTD [Active] CIN = U65990MH1941PTC003300

Company & Directors' Information:- K V DEVELOPMENT AND INVESTMENT CO PVT LTD [Active] CIN = U65922MH1979PTC021155

Company & Directors' Information:- R N B J INVESTMENT AND DEVELOPMENT PVT LTD [Strike Off] CIN = U65990MH1982PTC028451

Company & Directors' Information:- S P INVESTMENT AND DEVELOPMENT COMPANY PVT LTD [Strike Off] CIN = U67121ML1988PTC003133

Company & Directors' Information:- INDUSTRIAL ENGG CORPORATION PRIVATE LIMITED [Dissolved] CIN = U74200KL1952PTC000473

    C.R.P. No. 3141 of 1996 & C.M.P. No. 17123 of 1996

    Decided On, 06 May 1997

    At, High Court of Judicature at Madras

    By, THE HONOURABLE MR. JUSTICE E. PADMANABHAN

    For the Petitioner: G. Rajagopalan, Advocate. For the Respondent: T.P. Manoharan, Advocate.



Judgment Text

(Prayer: Petition under Sec. 115 of act V of 1908 praying the High Court to revise the Order of the Court of the principal District Judge, Pondicherry dated 22.11.1996 and made in E.P. No. 13 of 1996 in C.P. No. 75 of 1993.)

1. The present Revision has been preferred by the Revision Petitioners against the fair and decreetal order dated 22.11.1996, made in B.P. No. 13/96 in O.P. No. 75/93, on the file of the Principal District Judge, Pondicherry.

2. In E.P. No. 13/96, the Principal District Judge, Pondicherry by order dated 22.11.1996 allowed the Execution Petition and ordered attachment of movables described in the schedule to the order and further directed the attachment warrant to be issued to the respondent returnable by 20.12.1996. The property which was ordered to be attached were only machineries and the order of attachment has been passed under Sec. 32 of the State Financial Corporation Act, 1951. In the said Execution Petition, which was filed on the basis of decree granted in O.P. No. 75/1993, the present Revision Petitioners who are the judgment debtors raised an objection contending that in the absence of any amount of loan to be recovered being specified in O.P. No. 75/1993, the Execution Petition is illegal and cannot be proceeded.

3. It was also contended that the decree passed in O.P. No. 75/1993 is defective and inexecutable. According to the revision petitioners, the amount that could be recovered from the revision petitioners has not been specified in the decree passed in O.P. No. 75 of 1993.

4. The Principal District Judge, Pondicherry, had overruled the objection on the view that when the Objector/Judgment Debtor-1, had failed to challenge the decree passed in O.P. No. 75/1993 and having allowed it to become final, has now raised the objection only with a view to frustrate the attempt of the decree holder to realise the amount due. It was also held that the judgment debtor has no real intention to pay the decree amount as he had offered to pay Rs. 2000/- only per month, which offer to pay in instalments cannot be acceptable at all. The District Judge overruled the objection and allowed the Execution Petition by fair and decreetal order dated 22.11.1996. Being aggrieved by the said order the present Revision Petition has been preferred by the judgment debtors 1 & 2.

5. In this Revision also, Mr. G. Rajagopalan, appearing for the petitioners raised the solitary contention that the decree in O.P. No. 75/93 is inexecutable as the decree is silent about the quantum of money that could be realised by the decree holder in O.P. No. 75/93 and hence the Execution Petition cannot at all be proceeded.

6. On the other hand, Mr. T.P. Manoharan, appearing for the respondents contended that the revision petitioners, who are the judgment debtors in O.P. No. 75/1993 are liable to pay a sum of Rs. 5,71,319.25 ps. as on 1.1.1997 and only object of the petitioners is not to pay the amount availed by way of loan from the respondent, State Financial Corporation and every, attempt is made by the petitioners to defeat the decree and the action taken by the Pondicherry Industrial Promotion Development and Industrial Corporation.

7. Mr. Manoharan also contended that action taken under the State Financial Corporations Act, 1951, being a special procedure, the decree and the execution are in order and no interference is called for. As according to the learned counsel, the proceeding is a special procedure, it cannot be said that the proceeding is in pari materia with the Civil Suit and decree, where the decree amount has to be specified. Further the learned counsel contended that this Court sitting in Revision under S. 115, will not interfere as there is no illegality or impropriety or material irregularity in the order passed by the Court below and it is a case where justice has been rendered and hence no interference is called for.

8. The learned counsel for the respondents relied upon the judgment of this Court reported in 1988 TNLJ 1 1970 (1) MLJ 274 & AIR 1978 SC (2) 1765.

9. It is admitted by both sides, the present Revision Petitioners have availed loan from the respondent, State Financial Corporation, for setting up a small scale industrial unit. It is admitted that the petitioners have availed the loan and they have failed to repay the loan as per the sanctioned proceedings and schedule of repayment prescribed. The respondent, State Financial Corporation, ordered foreclosure of the loan issued a notice calling upon to repay a sum of Rs. 3,53,670/- as on 30.8.1993. As the petitioners have failed to discharge the loan, the respondent Corporation approached the District Court under Sec. 31 and 32 of the State Financial Corporation Act, 1951, for attachment of the Schedule mentioned mortgaged movable properties and for an order of public auction sale of the same to realise the amount due to the respondent, State Financial Corporation. The respondent also prays for temporary injunction restraining the petitioner from in any manner transferring or removing the machinery or stock etc., from the petitioner's premises without the prior permission of the Court. A counter was filed by the present petitioners herein where the petitioners had admitted that due to financial constraint, they have not repaid the loan, that the rate of interest demanded by the respondent is not enforceable. In the said O.P. No. 75/93 by an order dated 31.8.1994 the District Judge answered the following two points for determination:

1) Whether the petitioner in entitled to recover Rs. 3,53,670/- as on 30.8.93?

2) Whether the petitioner is entitled to an order of attachment and public auction sale for the schedule mentioned property?

10. After overruling the objection and also the objection of the judgment debtors with respect to the repayment of Rs. 2,51,000/- the District Judge allowed the petition. The decree passed in O.P. No. 75/93 on 31.8.1994 reads thus:-

1) That the petition be and the same is hereby allowed.

2. That the schedule mentioned properties that were mortgaged by the first respondent in favour of the petitioner Corporation be and the same are hereby ordered to be attached.

3. That it is hereby ordered and decreed that the mortgaged and attached properties be sold by public auction and the proceeds of such sale the petitioner Corporation shall produce before the Court or such officer as it appoints along with documents in its possession or power relating to the mortgaged property.

4. And it is hereby further ordered and decreed that the money realised by such sale shall be paid into the Court and shall be duly applied (after deduction therefrom the expenses of the sale) in payment of the amount payable to the petitioner Corporation and in payment of any amount with interest, if any, which the Court may have adjudged, due to the petitioner Corporation in respect of such costs, charges and expenses as may be payable under rules and that the balance, if any, shall be paid to the respondents 1 and 2 or other persons entitled to receive the same.

5. And it is hereby further ordered and decreed that if the money realised by such sale shall not be sufficient for payment in full of the amount payable to the petitioner Corporation as aforesaid, the balance if legally recoverable from the respondents 1 and 2 otherwise than out of the property, sold, be paid by the respondents 1 and 2 personally.

6. That the respondents one and two, their agents, servants, workmen be temporarily restrained from in any manner transferring or removing the machineries stock, etc. from the premises of the first respondent's industrial concern without the prior permission of this Hon'ble Court.

7. That the respondents to pay to the petitioner Corporation a sum of Rs. 160/- towards costs of this petition.

11. On the basis of the said decree, the execution petition has been filed by the respondent, Financial Corporation in E.P. No. 13/96. The execution petition has been filed under Sec. 31(1)(a) and Sec. 32(1)(a) of the State Financial Corporations Act, 1951 read with Order 21, Rules 43, 66, 67 and 151 of the Code of Civil Procedure. In the execution petition, the respondent/decree holder claimed that they are entitled to recover a sum of Rs. 3,11,954.95 ps. on the basis of the decree passed in O.P. No. 75/1993.

12. In essence, Mr. G. Rajagopalan, the learned Counsel appearing for the petitioner contend that in absence of liabilities being specified in the decree passed in O.P. No. 75/93 there could be no valid execution at all. In the absence of quantification of the liability in the decree in terms of Rupees and paise, the decree is inexecutable.

13. Mr. Manoharan, learned counsel for the respondent on the other hand contended that being a special proceeding under Sec. 31 and 32 of the State Financial Corporations Act, 1951, it is not required to mention or quantify the amount due and payable by the petitioners/judgment debtors to the respondent Corporation/Decree Holder. It is to be pointed out that the liability, though not quantified in terms of Rupees and Paise, the Judgment Debtor/Petitioners herein have not disputed their liability to repay the loan. In fact the total quantum of liability, has also not been disputed. The objection that has been raised by the judgment debtors being that the decree is silent about the amount to be realised, hence it is inexecutable.

14. In AIR 1978 SC 1765, the Apex Court had occasion to consider the scope of Sec. 31 and 32 of the State Financial Corporation Act, 1951 and held that only a limited enquiry is contemplated under Sub-Sec.(6) of Sec. 32 and the nature of relief that can be granted and the manner of execution clearly show that the application under Sec. 31(1) is neither a plaint as contemplated under Article 1 of Schedule I nor an application in the nature of complaint as contemplated by Article 7 of Schedule I of Court Fee s Act. While discussing the purport and scope of the said provision, the Apex Court had held thus:-

'What then is the nature of proceedings contemplated by S. 31(1) if it is not a suit by the mortgagee for recovery of mortgage money by sale of mortgaged property. Sec. 31 would to some extent provide a clue to this question. On an application under S. 31(1) being made it is obligatory upon the Court to make an interim order attaching the security with or without interim injunction restraining the industrial concern from transferring or removing its plant, machinery or equipment without the permission o f the Board of the Corporation. If the relief claimed in the application is transfer of the management of the industrial concern to the Corporation it is obligatory upon the Dist. Judge to grant an ad-interim injunction restraining the industrial concern from transferring or or removing its machinery, plant or equipment. In either event a notice notifying the industrial concern to show cause why the order should not be made absolute is required to be served upon the industrial concern.

xxxxxx.. The claim of the Corporation is not the monetary claim to be investigated though it may become necessary to specify the figure for the purpose of determining how much of the security should be sold .: . (Emphasis supplied:) But the investigation of the claim does not involve all the contentions that can be raised in a suit. The claim of the Corporation is that there is a breach of agreement or default in making repayment of loan or advance or instalment thereof and, therefore, the mortgaged property should be sold. It is not a money claim. The contest can be that the jurisdictional fact which enables the Corporation to seek the relief of sale of property is not available to it or no case is made out for transfer of management of the industrial concern. Sub-Sec. (7) of S. 32 prescribes what reliefs can be given after investigation under sub-sec. (6) is made'

15. Thus it is required for the respondent Corporation not only to set out the quantum of amount as outstanding as well as interest, but also the same has to be incorporated in the order that may be passed under Sec. 31 and 32 of the. Acts. Without arriving at the quantum of amount it cannot be ordered so much of the property to be sold as indicated by the Supreme Court.

16. In terms of Sub-Sec. (8) and 8(A) of Sec. 32, the order of attachment or sale of property under Sec. 32 shall be carried into effect as far as may be practicable in the manner provided in the Code of Civil Procedure, 1908. The application under Sec. 31 of the State Financial Corporation Act, 1951, as has been already laid down, is not a money-claim and the substantive relief in an application under Sec. 31(1) is something akin to an application for attachment of property in execution of decree and a stage posterior to the passing of a decree. The proceedings under Sec. 31 are in the nature of execution proceedings and the investigation of the claim under Sec. 32 does not involve of contentions that can be raised in a suit.

17. It has also been emphasised that the District Judge is not exercising his normal powers and he is exercising a special power under a special statute in a somewhat summary manner. In the light of the said pronouncement, the question that has to be decided in this Revision is as to whether the District Court should have quantified the amount in the decree passed by it in O.P. No. 75/1993?. In this respect, the Supreme Court had held that it may be necessary to specify the figure for the purpose of determining how much of the security is to be sold. In this case in the O.P. filed by the respondent Corporation, the amount that has to be paid by the revision petitioners have been set out and the District Judge had also framed the issue as to whether the State Financial Corporation is entitled to realise Rs. 3,53,670/- as on 30.8.93?

18. This issue had been answered by the District Court in favour of the respondent Corporation. But in the decree, that has been drafted in the said O.P. following the judgment, it is silent as to the sum which the judgment debtors are liable to pay or the sum for which the mortgaged property to be sold. The decree has already been extracted above. The clauses 2, 3, 4 and 5 of the decree are silent and it has been merely provided that the properties to be attached and sold for realisation of the amount and on sale, amount payable to the respondent Corporation be adjusted. It is pointed out by the learned counsel for the petitioner that the amount payable on the date of decree or in the date of the petition as claimed by the Financial Corporation could have been incorporated in the decree, less there shall be a subsequent dispute or controversy, though the liability to repay the loan may not be in dispute but the quantum may be in dispute.

19. The attention of this Court is drawn to sub Sec. (2) and Sec. 31, which requires that an application under Sub Sec. (1) shall state the nature and extent of the liability of the industrial concern to the Financial Corporation. It is needless to point out that Order 21 is applicable and available for the disposal of an application made by a financial institution under Sec. 32(1) of the Act and the provisions of Code of Civil Procedure, regulate the disposal of that application at different stages.

20. Although an order of attachment or sale under Sec. 32 of the Act cannot be said to be a decree as defined under Sec. 2(2) of the Code of Civil Procedure, in stricto sensu, it nonetheless simulates a decree for sale of mortgaged property and it requires that the amount to be realised in terms of decree to be quantified and incorporated in the decree. It is not only essential to state the amount to be realised by the Corporation but also the subsequent interest as well. If the claim of the Corporation is not quantified and set out in the decree or if the interest payable for the subsequent period is not incorporated in the decree, it will not be possible for the execution of the said decree, even in terms of Sec. 31 and 32 of the State Financial Corporations Act, 1951.

21. It has been finally concluded by the pronouncement of the Supreme Court that the scope of enquiry under Sec. 31 and 32 is very limited and it is in the nature of application of property in execution of a decree after judgment. Even in case of attachment before judgment or sale of the property, it is essential to set out the quantum of the amount due and total or the quantum which the Financial Corporation is entitled to recover by the sale of the property attached and directed to be sold. There is force in the contention raised by the learned Counsel for the petitioner and it deserves to be accepted.

22. The learned Counsel for the respondent contended that being a Revision and the Court below not having acted illegally or exceeded its jurisdiction this Court will not interfere under Sec. 115 of Code of Civil Procedure as justice has been rendered.

23. The learned Counsel for the respondent relied upon the judgment of this Court in 1988 TNLJ page (1) S.N. Kuba v. Vaithyanathan and contended that when the District Court had rendered justice, there is no scope for interference. Admittedly, the petitioner did not challenge the liability at all and in fact in the O.P. No. 75/93, issue that has been framed with respect to the question claimed has been answered in favour of the respondent Corporation and it has been held that the respondent Corporation is entitled to recover Rs. 3,53,670/- as on 30.8.1993 with subsequent interest. Thus having allowed the judgment in O.P. No. 75/1993 to become final, the judgment debtors now seek to resist the execution on the only point that the decree is silent as to the amount payable by the judgment debtors to the respondent/decree holder/Financial Corporation.

24. The learned counsel for the respondent further contended that the petitioners are only interested in delaying the proceedings, as seen from their conduct and even in the present Revision Petition, the petitioners had been adopting delaying tactics by offering to pay a small amount and also failed to comply with the condition imposed by this Court. However, the only technical objection that has been raised by the judgment debtors deserves to be accepted but on that score, in my view, there is no requirement to set aside the order or remit back the same to the Court b

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elow for fresh consideration. This Court is inclined to take such a view as right through, the judgment debtors have accepted the liability and not challenged the quantum of liability to be repaid to discharge the loan amount, as well as interest to the respondent Corporation. 25. In the circumstances, with the consent of either parties this Court orders amendment of clause (4) of the decree in O.P. No. 75/93 by incorporating the quantum of amount and interest payable therein and the existing clause (4) of the decree in O.P. No. 75/1993 is ordered to be deleted and be substituted by the following clauses: 'And it is hereby further ordered and decreed that the money realised by such sale shall be paid into the Court and shall be duly applied (after deduction therefrom of the expenses of the sale) in payment of a sum of Rs. 3,53,670/- with interest at 14.5% per annum, on the said Rs. 3,53,670/- from 6.9.93 till date of payment due to the petitioner Corporation, besides such costs, charges and expenses as may be payable under rules and that the balance if any, shall be paid to the respondents 1 and 2 or other persons entitled to receive the same.' 26. As this Court, in exercise of its inherent powers had ordered amendment of the decree to which Counsels for both sides have no objection, the Court below shall now proceed further with the execution in terms of amended clause (4) of the decree as ordered by this Court. However, the Court below, in the proclamation of sale shall indicate the total amount, which the respondent Corporation is entitled to recover and which the judgment debtors are liable to pay, namely the principal amount, subsequent interest together with the cost of the proceedings as well as cost of the Execution Petition. 27. There will be an order in the above terms in this Revision and the Court below shall proceed with the execution while incorporating the amount for which the execution petition is being levied and for realisation of the same. Consequently the C.M.P. No. 17123/96 is dismissed.
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