JUDGMENT

OJHA, J. (for Ranganathan, J. and himself). - Special leave granted.

2. This appeal by special leave has been preferred against the judgment dated July 10, 1990 of the Bombay High Court in Appeal No. 423 of 1987. Respondent 1 is a private limited company whereas respondents 2 to 4 are its Directors. Respondent 1, for setting up a factory, sought financial assistance from the appellant and the appellant sanctioned a loan of Rs. 30 lakhs. In order to secure the loan respondent 1 executed a deed of mortgage of certain properties on June 29, 1979 and respondents 2 to 4 on the same date by executing a deed of guarantee stood surety for repayment of the said loan. It was a case of personal guarantee only as no property was given in security. For the sake of brevity the appellant, respondent 1 and respondents 2 to 4 shall hereinafter be referred to as the Corporation, the Company and the sureties respectively. The amount of loan was to be advanced in phases and after the Corporation had advanced a part of the total sanctioned loan, the Company did not want to avail of the balance of the amount as it seems to have lost interest in setting up the factory for reasons with which we are not concerned. The Corporation consequently called upon the Company to repay the amount already advanced together with interest and on its failure to do so look possession under Section 29 of the State Financial Corporations Act, 1951 (for short the Act) over the industrial concern, a term defined under Section 2(c) of the Act and took steps to realise its outstanding dues by transfer of property in the manner provided therein. However, notwithstanding advertisements for sale thereof having been made on several occasions the Corporation could not get an offer of more than about Rupees five lakhs.

3. Having failed to recover the amount due to it in the manner stated above, the Corporation proceeded to recover the same from the sureties whose liability was co-extensive and for this purpose it filed a petition in the High Court under Sections 31 and 32 of the Act arraying the Company as respondent 1 and the sureties as respondents 2 to 4, with the prayer that "the respondents be jointly and severally ordered and decreed to pay to the petitioners the sum of Rs. 15,87,391.20 as per particulars hereto annexed and marked Ex. H with further interest at the rate of 14 1/2 per cent per annum till payment and may further "be ordered to pay to the petitioners costs of the petition". Thus, according to the relief claimed in the petition the liability of the respondents with regard to the amount payable to the Corporation on the date of making of the petition was for a sum which was more than Rupees fifty thousand which, as will be presently shown, represents maximum amount over which the Bombay City Civil Court has pecuniary jurisdiction.

4. The respondents contested the petition and raised three pleas in defence : (1) A petition under Sections 31 and 32 of the Act could be filed only in the Bombay City Civil Court and the High Court had no jurisdiction to entertain it, (2) the relief claimed in the petition could not be granted under Sections 31 and 32 of the Act inasmuch as these sections did not contemplate passing of a money decree not only against the principal debtor but also against the sureties; and (3) the provisions in the Act relating to enforcement of the liability of a surety were ultra vires Article 14 of the Constitution.

5. The learned Single Judge of the High Court before whom the petition came up for hearing did not, in view of his finding on the first two pleas, entertain any argument on the last plea nor has the said plea been raised before us and as such the same does not need to be gone into. As regards the second plea it was conceded before the learned Single Judge on behalf of the Corporation by its learned counsel that no such money decree could be passed against the Company as was claimed in the petition. It was, however, asserted tha