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IN THE HIGH COURT OF BOMBAY
C. Mookerjee, C.J. S.P. Bharucha, J.
Maharashtra State Financial Corporation.... Appellants.
Versus
Jaycee Drugs Pharmaceuticals Pvt. Ltd. and others.... Respondents.
Appeal No. 423 of 1987 in Misc. Petition No. 29 of 1986, decided on 10-7-1990.
Advocates appeared :
T.R. Andhyarujina with Virag V. Tulzapurkar i/b Nanu Hormasji Co., for the appellants.
J.I. Mehta with S.C. Dharmadhikari i/b Kanga Co., for the respondents.
Section 31 and 32(11)(a) - Whether expression District judge shall mean the judge of a principal civil court of original jurisdiction and shall not include High Court in exercise of its ordinary or extra-ordinary original civil jurisdiction.
Held, the expression City Civil Court having jurisdiction in sub-section (11)(a) of Section 32 is also referable to the territorial and not to the limits of pecuniary jurisdiction of the City Civil Court in the three Presidency towns. There is no reason to hold that Section 32 (11)(a) engrafts an exception to Section 31(1) under which the jurisdiction of the District Judge means his territorial jurisdiction and nothing else. The word jurisdiction both in Section 31(1) and Section 32(11)(a) bears the same meaning i.e. territorial. Therefore where is a City Civil Court jurisdiction over a Presidency town and an industrial concern carries on whole or a substantial part of its business within that Presidency town a Judge of that Court shall exercise the jurisdiction of the District Judge. Where there is no City Civil Court in a Presidency town the High Court shall exercise the functions of the District Judge under Section 31 read with Section 32 of the Act.
Therefore in all the Presidency Towns of Bombay the City Civil Court and not the Court can exercised the functions of the District Judge under Section 31 and 32 of the Act.
2. M/s. Jaycee Drugs Pharmaceuticals Pvt. Ltd., Respondent No. 1 had executed an indenture of Mortgage dated 29th June, 1979 in favour of the appellant, the Maharashtra State Financial Corporation, in respect of certain immoveable property, machinery and plant etc., described in the schedule to the said Indenture and also goodwill and uncalled capital of the mortgagor company to secure repayment of the loan of the sum of Rs. 30,00,000/- to the Corporation and interest thereon. On 29th June, 1979, 2nd, 3rd and 4th respondents executed another Indenture in favour of Maharashtra State Financial Corporation, the Appellant, covenanting, agreeing and declaring inter alia that if at any time default shall be made by the 1st respondent herein in making payment of the principle sum or the interest thereron under the aforesaid Deed of Mortgage, as the Guarantors they would pay to the Corporation on demand the said monies. Under the said Indenture, 2nd, 3rd and 4th respondents agreed that the guarantee shall be enforceable notwithstanding that the security specified in the mortgage still remains outstanding and unrealised. The said guarantee/surety was in the nature of a personal bond and the guarantors did not furnish any property by way of security for performance of their obligation towards the Appellant Corporation.
3. On 24th December, 1985 the Appellants Maharashtra State Financial Corporation in the instant Misc. Petition No. 29 of 1986 under section 31 and 32 of the State Financial Corporations Act, 1951, hereinafter referred to as 'the Act' praying that M/s. Jaycee Drugs Pharmaceuticals Pvt. Ltd., the principal debtor and also 2nd, 3rd and 4th respondents who were sureties be jointly and severally, ordered and decreed to pay to the petitioners the sum of Rs. 15, 87,391.20 p. as per the particulars given and interest at the rate of 14 1/2 % per annum and also costs of the petition. The case of the petitioner Corporation was that under the mortgage deed executed by the principal debtor a sum of Rs. 15,87,391.20 was due towards the principal and Interest. The further case of the Corporation was that as provided under the Act they had taken possession of the assets of respondent No. 1 company sometime in September 1984. Thereafter they had advertised for sale on three or four occasions. The best offer they could get was Rs. 5,00,000/- for the land. According to the Appellant Corporation, respondent Nos. 2, and 3 and 4 having guaranteed repayment of the said amount due they were also bound and liable for the said sum payable to the petitioner Corporation.
4. In their affidavit-in-reply, the respondent Nos. 2 to 4 had raised various contentions but only two of them were principally urged before the learned Single Judge who heard the Misc. Petition. The first submission was that the High Court had no jurisdiction to entertain the petition under section 31 read with section 32 of the Act. The second submission on behalf of the respondents was that no relief by way of decree for payment of money can be obtained in a proceeding under section 31 against respondents Nos. 2 to 4 who had furnished a personal bond standing as sureties.
5. The attention of the learned Single Judge was drawn to a judgment given by a learned Single Judge of the Court in Misc. Petition No. 357 of 1985 (The Maharashtra State Financial Corporation v. Hindtex Engineers Pvt. Ltd.)1, Since reported in 1987 Mah.Law Journal, page 243, (Bom) inter alia holding that the High Court alone and not Bombay city Civil Court has jurisdiction to entertain a petition under section 31 against an industrial concern carrying on business in the
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