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HIGH COURT OF CALCUTTA
HAZARI
WEST BENGAL FINANCIAL CORPORATION - Appellant
Versus
GLUCO SERIES PRIVATE LTD. - Respondent
Matter 53 Of 1972
Decided On : June 8, 1972
STATE FINANCIAL CORPORATIONS ACT, 1951 - SECTIONS 31, 32 - WEST BENGAL FINANCIAL CORPORATION ACT, 1951 - SECTIONS 31, 32 - RECEIVER - APPOINTMENT OF - AD INTERIM - JURISDICTION - NOTICE - FORM OF - ATTACHMENT - INJUNCTION - SALE - POWER OF.
Fact of the Case:
Petitioner, West Bengal Financial Corporation, is a body corporate established under the State Financial Corporations Act, 1951. The respondent is a private limited company incorporated under the Companies Act, 1956. The petitioner advanced a loan of Rs. 4,38,000/- to the respondent and agreed to advance a further sum of Rs. 1,62,000/-. The respondent mortgaged and charged all lands, buildings and plants in favor of the petitioner. The respondent failed to repay the loan and interest, and also failed to keep the mortgaged premises in good repair and to insure the same. The petitioner served a notice on the respondent requiring it to discharge its liabilities forthwith. The respondent failed to comply with the notice. The petitioner filed an application under Sections 31 and 32 of the State Financial Corporations Act, 1951, praying for sale of the mortgaged properties, ad interim order of attachment, ad interim injunction, appointment of receiver, and costs.
Finding of the Court:
The Court held that the petitioner was entitled to an order for sale of the mortgaged properties under Section 31 of the State Financial Corporations Act, 1951. The Court also held that the petitioner was not entitled to the appointment of an ad interim receiver under Section 32 of the Act. The Court further held that the notice served on the respondent was not a proper notice under Section 32(4) of the Act.
Issues: 1. Whether the petitioner was entitled to an order for sale of the mortgaged properties under Section 31 of the State Financial Corporations Act, 1951? 2. Whether the petitioner was entitled to the appointment of an ad interim receiver under Section 32 of the Act? 3. Whether the notice served on the respondent was a proper notice under Section 32(4) of the Act?
Ratio Decidendi: 1. The Court held that the petitioner was entitled to an order for sale of the mortgaged properties under Section 31 of the State Financial Corporations Act, 1951, because the respondent had failed to repay the loan and interest, and had also failed to keep the mortgaged premises in good repair and to insure the same. 2. The Court held that the petitioner was not entitled to the appointment of an ad interim receiver under Section 32 of the Act, because the appointment of a receiver is not an order of attachment and the Court had no jurisdiction to appoint a receiver at the interim stage. 3. The Court held that the notice served on the respondent was not a proper notice under Section 32(4) of the Act, because the notice did not state the grounds on which the ad interim order of attachment was sought.
Final Decision: The Court passed an order for sale of the mortgaged properties in terms of prayer (a) of the petition. The Court also directed the Registrar, Original Side, to sell the properties mortgaged, hypothecated and charged or substantial portion of the same and out of the sale proceeds the petitioner is entitled to payment of the sum of Rupees 6,82,854. 09 as claimed in the petition with interest thereon at 6% per annum from the date of the filing of the petition till the date of payment. The petitioner however will pay the costs of the application to the respondent. The joint receiver s appointed at the instance of the petitioner will be discharged and the remuneration of the joint receivers assessed at 30 G. Ms. each to be paid by the petitioner at whose instance the joint Receivers were appointed. The sale of the mortgaged and/or charged properties to be made by the Registrar. Original Side of this Court as provided under the Rules of this Court. Certified for two councel. There will be stay of operation of the order for four weeks. Order accordingly.
( 1 ) THE petitioner West Bengal Financial Corporation is a body corporate established under the State Financial Corporations Act, 1951 (Act, LXIII of 1951) (hereinafter referred to as the said Act ). The petitioner No. 2 Shri Kalipada Chatterjee is an Officer of the West Bengal Financial Corporation (hereinafter referred to as the Financial Corporation ). The respondent is a private limited company incorporated under the Companies Act, 1956 (hereinafter referred to as the respondent company ).
( 2 ) THIS application by the petitioner is under Sections 31 and 32 of the said Act. The prayer of the petitioner is for (a) sale of land, buildings, machinery and other assets mortgaged and charged in favour of the Financial Corporation (b) ad interim order of attachment (c) ad interim or injunction (d) for notice to be issued calling upon the respondent company to show cause why the ad interim orders of attachment and injunction should not be made absolute, (e) if the respondents fail to show sufficient cause then the ad interim orders may be made absolute, (f) for appointment of receiver to take possession (g) receiver be directed to sell the mortgage property and (h) ad interim order in terms of prayers (f) and (g) ad interim orders for appointment of receiver and for sale by Receiver and costs.
( 3 ) IN this application the petitioners are not only asking for reliefs mentioned in Section 31 of the said Act, but in addition are asking for appointment of receiver and for sale by the Receiver of the mortgaged and charged properties.
( 4 ) THE petitioner No. 1 is a Corporation solely established under the said Act. The Act contains elaborate provisions as to incorporation of State Financial Corporation their capital and management. The general superintendence and management of the affairs of the business of the Financial Corporation vests in a Board of Directors which, with the assistance of an executive committee and a managing director, exercise all the powers which may be exercises or discharged by the Financial Corporation. The powers and duties of the Board are set out in Chapter III of the said Act. The Board in discharging its functions under the Act shall act on business principle, due regard being had by it to the interests of industry, commerce and general public. Section 25 enumerates the business which the Financial Corporation may transact. The several kinds of business it may transact are set out in Section 24 of the Act.
( 5 ) UNDER Section 29 of the said Act where any industrial concern is under a liability to Financial Corporation under an agreement makes any default in repayment of loan or advance it has right to take over the management of the industrial concern as well as the right to transfer by way of lease or sale and realise the property pledged, mortgaged, hypothecated or assigned to the Financial Corporation. This right or power of the Financial Corporation can be exercised by it without coming to Court.
( 6 ) UNDER Section 30 of the said Act the Financial Corporation has power to call for repayment before the agreed period. This section provides that notwithstanding anything in any agreement to the contrary. The Financial Corporation may by notice in writing require any industrial concern to which it has granted any loan or advance to discharge forthwith in full its liabilities to the Financial Corporation if the industrial concern has failed to comply with the terms of contract with the Financial Corporation in the matter of the loan or advance or if there is a reasonable apprehension that the industrial concern is unable to pay its debts or if the property pledged, mortgaged or hypothecated for the loan is not insured or kept insured by the industrial concern to the satisfaction of the Financial Corporation.
( 7 ) THE Act provides special provisions for enforcement of claims by the Financial Corporation which is contained in Section 31 of the Act. This application has been made under the s
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