Case: Karnataka State Industrial Investment And Development Corporation Ltd Vs. S.K.K Kulkarni

of whose jurisdiction the industrial concern carries on its business. Section 31 is one mode of recovery. Therefore, the power under Section 31 and Section 32 are in addition to the power of realization of money under the Transfer of Property Act or any other law. It is within the discretion of SFC to choose the forum under a particular Act. Once there is a default in the payment of loan, it is for the Corporation to decide as to whether it shall proceed under Section 29 for sale of the property mortgaged or whether it shall take any recourse under Section 31 of the 1951 Act. Section 31 of the Act had been enacted to enable the corporation to obtain quicker remedies from the highest Court of Original Civil Jurisdiction in the locality. Where the SFC takes recourse to the provisions of Section 31 of the Act and obtains an order from the Court, it shall ordinarily seek its enforcement in the manner provided for by Section 32 of the 1951 Act, which section is aimed to act in aid of the orders passed under Section 31 of the Act. Where the SFC takes recourse to Section 31 and obtains an order from the Court, it shall seek its enforcement in the manner provided for by Section 32 of the Act, therefore, Section 31 makes a provision for enforcement of claims. It is primarily procedural in nature. The remedy provided for under Section 31 is not in derogation of any other mode of recovery which is available to the SFC under any other law for the enforcement of its claims. The remedy under Section 31 is not the sole or exclusive remedy available to the SFC. It is only an additional remedy which is conferred upon the SFC. The substantive relief in an application under Section 31(1) is not a plaint. This is clear from the form of the application, the nature of the relief, the compulsion to make interim order, the limited enquiry contemplated by Section 32(6), the nature of the relief that can be granted and the method of execution. The proceedings under Section 32 of the 1951 Act are, therefore, nothing but execution proceedings. A combined reading of Section 31 and Section 32 of the 1951 Act indicates that an investigation has to be made to find out the terms and conditions on which loan was given by SFC to the industrial concern and whether SFC was entitled to the relief under Section 31(1) on account of the breech of the terms of agreement. Having discussed the nature of the proceedings under Section 31(1) of the 1951 Act we are of the view that Section 31 read with Section 32 constitutes a Code by itself. It is a special provision. It is a mode of recovery. It does not prevent or exclude the SFC from invoking any other remedy open to it in law. However, once the SFC invokes Section 31(1), it has to proceed in accordance with the procedure prescribed in Section 32. Under Section 31(1), which is invoked by the SFC in this case, an application to obtain quicker remedy has to be made to the District Judge within whose jurisdiction the industrial concern is located. This is the mandate of Section 31(1). It is so mandated because wide powers are given to the District Judge under Sections 31 and 32 to attach, sell and recover outstanding dues of SFCs in the shortest possible time. In fact, sub-section (aa) stood inserted in Section 31(1) for enforcing the liability of any surety. 5. This sub-section is in addition to the power given to the District Judge to order sale of the property pledged, mortgaged, hypothecated or assigned to the SFC as security for loan or advance. An application under Section 31 can be filed even before the exercise of power under Section 29 of the 1951 Act or Section 69 of the Transfer of Property Act. 6. Under the circumstances, the High Court was right in coming to the conclusion that the VI Additional City Civil Judge, Bangalore, had no territorial jurisdiction to hear Misc. Case No. 109/1993 in view of Section 31 of the 1951 Act. The High Court was right in observing that the Corporation ought to have instituted the said case before the District Judge, Belgaum, within whose jurisdiction the industrial concern is located. Before concluding, we may indicate the scope of Section 46B. That section mandates that if any other law or memorandum or articles of association or any instrument deriving force from any other enactment is inconsistent with any provisions of the 1951 Act or Rules or orders made thereunder, the latter will prevail and the inconsistency will have no effect but if the provisions of the 1951 Act or Rules made thereunder are not inconsistent, they will be deemed to be in addition to the existing laws and memorandum or articles of association. Thus, the provisions of the 1951 Act and the Rules made thereunder shall have an overriding effect over the existing law and memorandum or articles of association or any other instrument made under the existing law if they are inconsistent but otherwise if not inconsistent they will be deemed to be in addition to and not derogating to any existing law, rules and orders. The 1951 Act is a special statute. Therefore, the provisions of the 1951 Act have to be strictly construed. In our view, reliance on Section 46B of the 1951 Act is misplaced. Section 46B will not control the parameters of territorial jurisdiction of the District Judge prescribed under Section 31(1) of the 1951 Act. Section 31(1) is a special provision. It mandates that all applications under Section 31(1) shall be made to the District Judge within the limits of whose jurisdiction the industrial concern carries on its business. The word may in Section 31(1) only indicates a mode of recovery in addition to any other modes available to the SFC in law.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]4. The right of a State Financial Corporation (SFC for short) recognized under Section 29 of the 1951 Act is different from the right which the SFC can enforce under Section 31. Section 31 enables SFC, without having recourse to the provisions of Section 29 of the 1951 Act or Section 69 of the Transfer of Property Act, to have its right emanating from the agreement, enforced by initiating proceedings contemplated thereunder, namely, applying to the District Judge within the limits of whose jurisdiction the industrial concern carries on its business. Section 31 is one mode of recovery. Therefore, the power under Section 31 and Section 32 are in addition to the power of realization of money under the Transfer of Property Act or any other law. It is within the discretion of SFC to choose the forum under a particular Act. Once there is a default in the payment of loan, it is for the Corporation to decide as to whether it shall proceed under Section 29 for sale of the property mortgaged or whether it shall take any recourse under Section 31 of the 1951 Act. Section 31 of the Act had been enacted to enable the corporation to obtain quicker remedies from the highest Court of Original Civil Jurisdiction in the locality. Where the SFC takes recourse to the provisions of Section 31 of the Act and obtains an order from the Court, it shall ordinarily seek its enforcement in the manner provided for by Section 32 of the 1951 Act, which section is aimed to act in aid of the orders passed under Section 31 of the Act. Where the SFC takes recourse to Section 31 and obtains an order from the Court, it shall seek its enforcement in the manner provided for by Section 32 of the Act, therefore, Section 31 makes a provision for enforcement of claims. It is primarily procedural in nature. The remedy provided for under Section 31 is not in derogation of any other mode of recovery which is available to the SFC under any other law for the enforcement of its claims. The remedy under Section 31 is not the sole or exclusive remedy available to the SFC. It is only an additional remedy which is conferred upon the SFC. The substantive relief in an application under Section 31(1) is not a plaint. This is clear from the form of the application, the nature of the relief, the compulsion to make interim order, the limited enquiry contemplated by Section 32(6), the nature of the relief that can be granted and the method of execution. The proceedings under Section 32 of the 1951 Act are, therefore, nothing but execution proceedings. A combined reading of Section 31 and Section 32 of the 1951 Act indicates that an investigation has to be made to find out the terms and conditions on which loan was given by SFC to the industrial concern and whether SFC was entitled to the relief under Section 31(1) on account of the breech of the terms of agreement. Having discussed the nature of the proceedings under Section 31(1) of the 1951 Act we are of the view that Section 31 read with Section 32 constitutes a Code by itself. It is a special provision. It is a mode of recovery. It does not prevent or exclude the SFC from invoking any other remedy open to it in law. However, once the SFC invokes Section 31(1), it has to proceed in accordance with the procedure prescribed in Section 32. Under Section 31(1), which is invoked by the SFC in this case, an application to obtain quicker remedy has to be made to the District Judge within whose jurisdiction the industrial concern is located. This is the mandate of Section 31(1). It is so mandated because wide powers are given to the District Judge under Sections 31 and 32 to attach, sell and recover outstanding dues of SFCs in the shortest possible time. In fact, sub-section (aa) stood inserted in Section 31(1) for enforcing the liability of any surety5. This sub-section is in addition to the power given to the District Judge to order sale of the property pledged, mortgaged, hypothecated or assigned to the SFC as security for loan or advance. An application under Section 31 can be filed even before the exercise of power under Section 29 of the 1951 Act or Section 69 of the Transfer of Property Act6. Under the circumstances, the High Court was right in coming to the conclusion that the VI Additional City Civil Judge, Bangalore, had no territorial jurisdiction to hear Misc. Case No. 109/1993 in view of Section 31 of the 1951 Act. The High Court was right in observing that the Corporation ought to have instituted the said case before the District Judge, Belgaum, within whose jurisdiction the industrial concern is located. Before concluding, we may indicate the scope of Section 46B. That section mandates that if any other law or memorandum or articles of association or any instrument deriving force from any other enactment is inconsistent with any provisions of the 1951 Act or Rules or orders made thereunder, the latter will prevail and the inconsistency will have no effect but if the provisions of the 1951 Act or Rules made thereunder are not inconsistent, they will be deemed to be in addition to the existing laws and memorandum or articles of association. Thus, the provisions of the 1951 Act and the Rules made thereunder shall have an overriding effect over the existing law and memorandum or articles of association or any other instrument made under the existing law if they are inconsistent but otherwise if not inconsistent they will be deemed to be in addition to and not derogating to any existing law, rules and orders. The 1951 Act is a special statute. Therefore, the provisions of the 1951 Act have to be strictly construed. In our view, reliance on Section 46B of the 1951 Act is misplaced. Section 46B will not control the parameters of territorial jurisdiction of the District Judge prescribed under Section 31(1) of the 1951 Act. Section 31(1) is a special provision. It mandates that all applications under Section 31(1) shall be made to the District Judge within the limits of whose jurisdiction the industrial concern carries on its business. The word may in Section 31(1) only indicates a mode of recovery in addition to any other modes available to the SFC in law.