Case: Asnew Drums Private Limited &amp; Others Vs. Maharashtra State Finance Corporation &amp; Others

2. This First Appeal was purported to be filed under sub-section (9) of Section 32 of the State Financial Corporation Act (63 of 1951) - hereinafter referred to as the Act - from the judgment and order dated January 16, 1970, passed by the Gopal U. Rijhsinghani; Joint Judge, Thana, in Miscellaneous Application No.111 of 1969. Two points arise in this appeal; (1) Whether an appeal lies to the High Court under Section 32 (9) of the Act? (2) if the appeal lay, was it a case for a summary dismissal?3. In order to appreciate these points it is necessary to set out a few facts. One of the appellants, Asnew Drums Private Ltd., hereinafter referred to as the appellant company, made an application to the Bombay (now Maharahstra) State Financial Corporation for a loan of Rupees 10 lakhs for installing and erecting machinery plant and other fixtures for its drum reconditioning factory at Kalve, Thana District, Bombay. The appellant Company executed a registered deed of mortgage by way of security, pledging all lands buildings, machineries etc. On August 10, 1965, the Finance Corporation filed Miscellaneous Application No.75 of 1965 against the appellant company and two of its Directors under Section 31 of the Act for sale of company properties mortgaged and for issue of interim injunction restraining the company from dealing with these properties.4. The relevant part of S.31 (1) of the Act(1) Where an industrial concern, in breach of any agreemeent, makes any default in repayment of any loan or advance or any instalment thereof....then without prejudice to the provisions of S.29 of this Act and of Section 69 ofthe Transfer of Property Act, 1882, any officers of the Financial Corporation, generally or specially authorised by the Board in this behalf, may apply to the district judge within the limits of whose jurisdiction the industrial concern carries on the whole or a substantial part of its business for one or more of the following reliefs, namely:(a) for an order for the sale of the property pledged, mortgaged, hypothecated or assigned to the Financial Corporation as security for the loan or advance; or(b) .........(c) for an ad interim injunction restraining the industrial concern from transferring or removing its machinery or plant or equipment from the premises of the industrial concern without the permission of the Board, where such removal is apprehended".CPC.6. Section 32 of the Act lays down the procedure to be adopted by the District Judge in respect of application under S. 31 (1) (a) and (c) of the Act. Sub-s. (6) of S. 32 providescause is shown, the district judge shall proceed to investigate the claim of the Finance Corporation in accordance with the provisions contained in theCode of Civil Procedure, 1908, in so far as such provisions may be appliedis under this sub-section that the District Judge investigated the claim although we were informed that no rules had been framed containing the provisions of theCode of Civil Procedure to be applied for this purpose. The relevant part of sub-section (7) provides that after making an investigation under sub-s. (6) the District Judge may confirm the order of attachment and direct the sale of the attached property. It is under this sub-section that the District Judge confirmed the order of attachment and directed the sale of the attached property.7. Sub-section (8) of S.32 calls for interpretation in this appeal. It(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 theCode 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". The District Judge applying the relevant provisions of theCode of Civil Procedure issued various proclamations for sale. The last one year issued in pursuance of the order dated June 30, 1969 of the District Judge directing that the properties be again put up for sale. On July 22, 1969 a fresh proclamation for the fifth time for sale was issued and on August 20, 1969 a public notice was published in the Times of India only. On August 28, 1969, the highest bid for lot No. 1 was Rupees 5,70,000/- and for lot No.2 Rs. 5,40,000/-. The sale was adjourned to September 3, 1969 but no public notice of this adjournment was given.The District Judge directed the Financial Corporation to get the evaluation of the property made by some expert. It is stated that M/s. Corona Electricals valued land at Rs.3,04,610/-, building at Rs. 7,41,486/- and machinery at Rs.7,02,000/- - total Rs.17,47,096/-. On September 2, 1969, the appellant company protested against this hurried valuation, but on September 3, 1969 the whole property was sold for Rs. 11,50,000/- to M/s. Kayjay Industries Private Ltd., auction purchasers, who deposited in Court Rs.2,87,500/- being 1/4th of the amount of the bid. On September 12, 1969, the remaining amount was paid by the auction-purchasers and on October 3, 1969 the appellant company applied for setting aside the sale. On January 16, 1970 this application was dismissed. On February 13, 1970 the appellant company filed F. A. No. 152/70 in the Bombay High Court. The Bombay High Court, as already stated, rejected the appeal on February 16, 1970 on the ground that no appeal lay and also on the ground that there was no merit in the appeal.

Reasoning:
It is true that an appeal has been expressly provided in this case but the reason for this is that if there had been no specific provision in sub-s. (9), no appeal would lie otherwise because it is not provided in sub-s. (5) or sub-section (7) that the District Judge should proceed in the manner provided in theCode of Civil Procedure.11. We are not impressed by the argument that the Act confers jurisdiction on the District Judge as persona designata because sub-s. (11) of S. 32 providesfunctions of a district judge under this section shall be exercisable (a) in a presidency town, where there is a city civil court having jurisdiction by a judge of that court and in the absence of such court, by the High Court; and (b) elsewhere, also by an additional districtprovisions clearly show that the District Judge is not a persona designata.12. It was contended that the whole idea of the Act was to have expeditious execution as otherwise large funds of the State Financial Corporation would be locked up during execution proceedings. If this was the intention of the Legislature, it would have expressly provided that no appeal would lie against an order made under sub-s. (8) of S. 32.13. In the result we hold that an appeal lay to the Bombay High Court and the High Court erred in holding that no appealfacie this Court thought that there was something to be said on the merits of the case. We accordingly hold that the High Court was not justified in dismissing the appeal summarily