IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No.10565 of 2008 ***** Hari Narayan Sinha, son of late Madan Singh, resident of 447, Nehru Nagar, P.S. Patliputra, Patna. …. …. Petitioner Versus 1. The State of Bihar through Principal Secretary-cum-Industrial Development Commissioner, Department of Industries, Government of Bihar, Patna. 2. The Bihar State Financial Corporation, Fraser Road, Patna through its Managing Director. 3. The Managing Director, Bihar State Financial Corporation-cum-Specified Authority U/s 32G of the SFCs Act, Fraser Road, Patna. 4. Sri S.S.Sharraf, son of name not known to the petitioner, Authorised Officer, U/s 32G of the SFCs Act, Fraser Road, Patna. 5. Sri S.K. Srivastava, Dy. Manager (L), son of name not known to the petitioner, Dy. Manager (Legal), Bihar State Financial Corporation, Fraser Road, Patna. 6. Branch Manager, Patna Branch, Bihar State Financial Corporation, Indira Bhawan, Ram Charitrapath, Patna. 7. Bihar State Credit and Investment Corporation, Indira Bhawan, Ram Charitrapath, Patna through its Managing Director. 8. M/s Patna Rolling Mills Ltd., B/31, Khetan Super Market, Birla Mandir Road, Patna through its Director. …. …. Respondents ----------- For the Petitioner : Mr. Manik Vedsen, Advocate Mr. Subhas Chandra Bose, Advocate For the State : Mr. Krishna Murari Prasad, Assistant Counsel to Government Advocate-X For BICICO : Mr. Nirmal Kumar, Advocate For BSFC : Mr. K.D. Chatterji, Senior Advocate Mr. Vinay Krishna Tripathi, Advocate Mr. A.K.Verma, Advocate ----------- 6. 2.12.2009. Heard counsel for the parties. An order passed by the Specified Authority under Section 32G of the State Financial Corporation Act dated 28.9.2007, Annexure-8 to the writ application, is subject matter of challenge in the present writ application. By virtue of the order the Managing Director of the Bihar State Financial Corporation (Hereinafter to be referred to as the BSFC) has rejected the objections raised on behalf of the petitioner in the exercise which was being carried out by the Specified Authority under - 2 - Section 32G of the SFC Act. Some basic facts are noted based on the pleadings of the parties. Bihar State Credit and Investment Corporation (hereinafter to be referred to as the BICICO) and BSFC in consortium had provided term loan of Rs.46 and 26 lacs respectively to one M/s Bala Paper Mills (P) Ltd. The unit was to manufacture craft paper. Against the loan amount a joint equitable mortgage and other required legal documents were executed by the Company in favour of the two financial institutions. The charges of these institutions ran pari-passu over the mortgaged assets of the Company. As a collateral security the petitioner had also executed a guarantee bond in favour of the two institutions for the repayment of their loans on failure to do so by the principal debtor. The unit came to be set up in the year 1985 but ran into some difficulty resulting in its closure, compelling the two financial institutions to recall the loan. They also took possession of the unit on 26.8.1996. A proceeding under Section 29 of the SFC Act was initiated and a notice for sale was issued in the year 1996. Various sale offers were rejected on the ground that they were not commensurate with the value of the property starting at the level of about 70 lacs but somehow BICICO in its wisdom unilaterally sold the unit for Rs.54 lacs to one M/s Patna Rolling Mills (P) Ltd. The entire assets of M/s Bala Paper Mills (P) Ltd. were handed over. It is stated that the BSFC was left in the lurch despite the so-called consortium loan financed by both the institutions. M/s Bala Paper Mills (P) Ltd. assailed the action of the BICICO by filing a writ application. The Company failed before the - 3 - learned Single Judge as well as before the Letters Patent Bench. The litigation thereafter traveled before the Hon’ble Supreme Court. The Hon’ble Supreme Court after hearing the parties gave an offer to the Company to redeem the property by paying Rs.30 lacs within a time frame. That amount of Rs. 30 lacs could not paid leading to dismissal of the S.L.P., which is borne out from Annexure-D to the counter affidavit filed on behalf of respondent no.7 i.e. BICICO. Obviously the sale of the property of the Company by the BICICO did not satisfy the loan amount of BSFC. They in turn thereafter decided to take action against the present petitioner, who happens to be the guarantor. Other details are not very relevant except the fact that the present writ application has arisen out of a proceeding which was initiated under Section 32G of the SFC Act. When the proceeding started, objections came to be filed by the present petitioner and many grounds were urged both on facts as well as in law. The Court must fairly record that some of the objections raised on behalf of the petitioner and filed before the Specified Authority does merit consideration. But the question which arises in the present writ application is whether that is the correct forum to raise objections. Submission of learned counsel for the petitioner is that a proceeding before the Specified Authority has implications for the present and serious civil consequences will flow thereafter. Therefore, every aspect raised by the petitioner ought to have been heard and decided by the Specified Authority. The stand of the respondents, however, is that there is no - 4 - requirement under law thrust upon the Specified Authority under Section 32G of the SFC Act to go into all those aspects and questions which have been raised by way of objection by the petitioner. Reliance in this regard is placed in the case of Delhi Financial Corpn. V. Rajiv Anand, (2004) 11 SCC 625. Emphasis is on paragraph 21 of the said decision. Paragraph 21 is quoted hereinbelow, which in the opinion of this Court lays down the ratio on the ambit and scope of Section 32G of the Act: - “21. In our view, far from helping the respondents, this authority is against them. It shows where an amount can be ascertained by simple arithmetical calculations or by simple verification then only inquiry as contemplated by sub-section (1) of Section 33-C is required. In cases of amounts due to financial corporations all that is required is a simple arithmetical calculation or a simple verification. It is for that reason that in Section 32-G only a provision identical to Section 33-C(1) has been incorporated. The legislature has knowingly omitted to incorporate a provision like Section 33-C(2). It must be presumed that the legislature intentionally omitted such a provision. The reason of such omission being that the legislature wanted the recovery of dues to the financial corporation in a summary manner on a simple arithmetical calculation or a simple verification. A plain reading of Section 32-G shows that there is no lis or adjudication contemplated under Section 32-G. The Punjab and Haryana High Court is right in holding that all that is contemplated is a mere mathematical calculation after looking into the papers. (emphasis mine) The borrower and the surety or the guarantor know what the amounts due are, they know what amounts have been repaid, they know when the amounts were to be repaid, what has not been repaid or how belatedly amounts have been repaid. They know what the rate of interest is. Thus a mere calculation has to be made to ascertain the amount due. If on such calculations it is found that an amount due is due to the financial corporation then a certificate of recovery can be issued. Undoubtedly, the provision is in the nature of an execution proceeding but it is not a recovery proceeding pursuant to a decree of a court. It is a recovery proceeding on the amount being found to be due by a simple verification by the State Government or the authority appointed by it. Further, to accept the interpretation suggested by counsel would be to - 5 - go against the very purpose and object of the Act which is to ensure speedy recovery. It is with the object in view that Sections 29, 31 and 32 have been enacted. These have been found to be inadequate. Thus, by Section 32-G one more remedy of recovery is given to a financial corporation. Merely for execution of a decree of a court no such provision is required. Once a decree is passed it can be executed in the normal manner. That Section 32-G is not for execution of a decree of a court is also clear from the fact that it does not use the word “decree”. All that Section 32-G contemplates is that where an amount is due an officer will make an application to the State Government, the State Government or an authority appointed by them would, after following procedure as may be prescribed, issue a certificate for that amount to the Collector and the Collector shall proceed to recover that amount as arrears of land revenue.” Taking into consideration the judicial pronouncement of the Apex Court the scope for this Court to entertain the writ application on all such questions raised by the petitioner before the Specified Authority cannot be entertained because the Specified Authority was also not required or obliged to embark on an adjudication of the kind demanded by the petitioner. The law being what it is and with the declaration of the Hon’ble Supreme Court the Specified Authority in exercise of power under Section 32G is for a simple verification of the accounts based on a mathematical calculation. The Specified Authority has done no wrong in rejecting the objections filed on behalf of the petitioner in this background. No case for interference with the impugned order contained in Annexure-8 is therefore made out but it is not to certify that the rejection of the writ application on this score will come in the way of the petitioner to raise all such questions of fact and law which can be pressed into service by him before the competent authority, if a certificate - 6 - proceeding is initiated based on an exercise of power by the Specified Authority under Section 32G of the SFC Act. The writ application is dismissed but with liberty as above. Pawan/- (Ajay Kumar Tripathi, J.)