IMPORTANT POINT
A decree cannot be passed under Section 31 of the State Financial Corporations Act, 1951, and any execution petition based on such a decree is not maintainable.

ORDER :

1. The present revision petition has been preferred against the order dated 11.09.2006 passed by the District Judge, Sriganganagar in Civil Execution Case No. 64/2000 whereby the objections under Order 21 Rule 22, CPC as preferred by objector/petitioner-Balvir Singh were rejected.

2. The facts are that an application under Section 31 of the State Financial Corporations Act, 1951 (hereinafter referred to as, ‘the Act of 1951’) was preferred by the Rajasthan Financial Corporation (hereinafter referred to as, ‘RFC’) with the averments that one Gurucharan Singh (non petitioner No. 2) was granted a loan of Rs.1,99,000/- by the RFC to purchase a truck. Balvir Singh (petitioner) and Shakuntala (non petitioner No. 3) stood as guarantors for Gurucharan Singh qua the said loan. The loanee, Gurucharan Singh failed to repay the loan and hence, RFC be held entitled to recover the due amount from the properties of Balvir Singh and Shakuntala, the guarantors.

3. No reply to the said application was filed by Gurucharan Singh or Balvir Singh. However, Shakuntala did file a reply denying the execution of any such guarantee deed by her and submitted that without proceeding against the principal debtor i.e. Gurucharan Singh first, no recovery can be made from her/her properties.

4. The said application under Section 31 of the Act of 1951 was decided vide order dated 28.05.1999 in favour of RFC and it was held that RFC is entitled to recover the amount from the properties of the guarantors.

5. RFC then preferred an execution petition on 02.12.2004 against the guarantors i.e. present petitioner Balvir Singh and the other guarantor Shakuntala for recovery of the amount of Rs.13,36,208/- which was later amended to Rs.6,82,359/-.

6. Petitioner Balvir Singh, in the said execution proceedings, filed objections under Order 21 Rule 22, CPC with the submission that the execution petition itself was not maintainable in view of Section 31 of the Act of 1951 and the same be dropped. It was also submitted that until and unless, recovery is first sought to be made from the principal debtor, the proceedings cannot be allowed to continue against the guarantors. Further, the amount recovered from the auction of the Truck (seized by RFC) also deserved to be adjusted.

7. Aggrieved of the said objections as preferred by the present petitioner having been dismissed vide the order impugned dated 11.09.2006, the present revision petition has been preferred.

8. Learned counsel for the petitioner submitted that the order impugned dated 11.09.2006 is in total contravention to the basic provision of Sections 31 & 32 of the Act of 1951 insofar as no decree in terms of Section 31 of the Act of 1951 could have been passed by the Court. Counsel submits that Section 31 of the Act of 1951 itself is the enabling provision in terms of which the Court has the jurisdiction to get the liability of the principal debtor as well as the surety enforced but in any manner, the Court is not competent to pass any decree in terms of the said provision.

9. Counsel further submitted that when no decree could have been passed on the application under Section 31 of the Act of 1951 as preferred by the respondent-RFC, any petition for execution of any such order/decree cannot also be said to be maintainable. He argued that the objection as raised by the surety regarding the maintainability of the execution proceedings was very much tenable and ought to have been sustained.

In support of his submissions, counsel relied upon the judgments passed by the Co-ordinate Bench of this Court in the cases of Peetam Oil and Flour Mill vs. The RFC & Ors. (2015) 2 WLN 105 and N.L.P. Organics Pvt. Ltd. & Ors. vs. Rajasthan Financial Corporation, (2007) AIR (Raj) 10.

10. Per contra, learned counsel for the respondent-RFC submitted that Section 31 of the Act of 1951 provides for distinct provisions qua a principal debtor and a surety. So far as the principal debtor is concerned, it provides for direct attachment and se