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2010 Supreme(Kar) 341
AIR 2010 Kant 171, ILR 2010 KAR 3613
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
Subhash B. Adi, J.
HMP Cements Limited (Now Known as Global Cements Ltd.) represented by its Director, Mr. D.V. Pillai and HMP Snehalata Malleshwaram Properties (P) Ltd. (Now Known as Malleshwaram, Properties Private Limited) represented by its Director, Mr. Sushil Kumar Gadia – Appellant
Vs.
Karnataka State Industrial Investment and Development Corporation Ltd. represented by its Asst. General Manager (Legal), HMP Engineering Ltd. Regd. (rep. by its Managing Director), Sri Mahabit Prasad Poddar S/o Hemraj Poddar and Sri Dewaki Nandan Poddar S/o Hemraj Poddar – Respondent
Writ Petition Nos. 7224 and 10811/2008
Decided On: 23.03.2010
For Appellant/Petitioner/Plaintiff: C.G. Gopala Swamy, Adv. in W.P. No. 7224/2008 and D.S. Joshi, Adv. in W.P. No. 10811/2008
For Respondents/Defendant: D.S. Joshi, Adv. for R1 in W.P. No. 7224/2008 and C.G. Gopala Swamy, Adv. for R1 and 5 in W.P. No. 10811/2008
Headnote:STATE FINANCIAL CORPORATIONS ACT, 1951 - Sections 31 (1)(aa), 31(A) & 32(4A): [Subhash B. Adi, J] Enforcement of liability against surety - Maintainability - Miscellaneous proceedings duly initiated on an application filed by surety and show cause notice issued by Court - Same was not challenged by the surety or borrowers - Procedure contemplated under Act has been fully complied and recovery becomes enforceable in terms of order passed - Held, Since Section 31(A) contemplates for attachment in terms of the provisions of CPC, Execution proceedings initiated is not contrary to provisions of the Act. Execution proceedings is maintainable
Subhash B. Adi, J.
1. Petitioners are judgment debtors Nos. 1 and 5 in Execution No 138/2006. They have called in question the order dated 10.4.2008 passed by 6th Additional City Civil Judge, Bangalore. Respondents Hob/2 to 4 are the co-judgment debtors. No relief is sought against respondent Nos. 2 to 4. Their presence is not required for the disposal of this matter.
2. Heard the teamed counsel Sri C.G. Gopalaswamy and Sri D.S. Joshi, learned Counsel far petitioners and contesting respondent No. 1.
3. Both the respondent No. 1 as well as the petitioners haw assailed the order paused by the executing court dated 10.4.2008. Insofar as the petitioners are concerned, they have questioned the maintainability of the execution proceedings. As far as respondent: No. 1 is concerned, it has assailed the order only as regard to the attachment once again.
4. Petitioner No. 1, and respondents 2 to 4 are the borrowers and petitioner No. 5 is a surety as well as the guarantor for the loan raised by them.
5. Respondent No. 1 filed Misc. 246/2000 under Section 31(1)(aa) and 32 of the State Financial Corporation Act, 1951, (hereinafter referred to an 'the Act'). In the said miscellaneous, proceedings by order dated 3.2.3005 the court passed order as under:
Petition filed Under Section 31(1), (1)(aa) and 32 of the SFC, is allowed with costs.
The respondents 1 to 5 are jointly and severally liable to pay claimed amount of Rs. 3,43,52,916.16 paise with future interest at 24.5% p. a on the footing of compound interest on quarterly rests basis from 2010.1999 till the realisation of the entire claimed amount.
Issue Recovery Certificate against the respondents.
6. The recovery certificate was issued against the petitioner and respondents 2 to 4. Thereafter, in the miscellaneous proceedings a notice was issued to the surely the respondent No. 1, to show cause as to why an order should not be made against the surety. Despite the notice, petitioner and respondent No. 2 to 4 did not file objections to the said show cause notice. In view of the same, Court passed the order on 3.2.2005 under Section 31(1)(aa) r/w 32 of the Act as under:
Petition filed under Section 31(1), (1)(aa) and 32 of the SFC, is allowed with costs.
The respondents 1 to 5 are jointly and severally liable to pay claimed amount of Rs. 3,43,52,916.16 paise with future interest at 24.5% p. a on the footing of compound interest on quarterly rests basis from 20.10,1999 till the realisation of the entire claimed amount.
Issue Recovery Certificate against the respondents.
7. In view of the above order Under Section 31(1)(aa) R/W 32 of the Act, the respondent No. 1 filed, an execution petition and in the said petition, it filed an application under Order 21 Rule 11 of CPC for execution of the order dated 3.2.2005 passed in Miac. 246/2000 and sought for attachment and sale of the petition schedule movables and immovable property of judgment debtors, arrest of the judgment debtors and detention in civil prison and also for transfer of the decree to any other district court, if need be.
8. In terms of the prayer made in. the execution case, a sale proclamation was issued for sale of immovable properties, as the sale did not ensured adequate amount, the spot sale was set aside.
9. Till the setting aside of the spot sale the Judgment Debtors had entered appearance or filed objections. It is only thereafter they filed objection as regard to the maintainability of the execution proceedings interalia alleging that, no decree for payment of any amount could have been passed by the learned District Judge and the order is not executable. Further, execution case is liable to be dismissed, as the goods hypothecated are seized by the DRT-III, Calcutta no charge is created over the schedule property, as the title deeds of the property were submitted subject to conditions. It is further stated that, there is no proper and valid attachment order passed as required under law, the provisions of The Recovery of Debt Due to
