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High Court Of Himachal Pradesh
N.M.KASLIWAL,V.K.MEHROTRA,V.P.BHATNAGAR
HIMACHAL PRADESH FINANCIAL CORPORATION - Appellant
Versus
TOURIST HOTEL AND RESTAURANT - Respondent
F. A. O. Nos. 108, 130 of 1982, and F. A. O. No. 42 of 1978
Decided On : 05/02/1989
STATE FINANCIAL CORPORATION ACT, 1951 - SECTIONS 31, 32 - FUTURE INTEREST - AWARD - INDUSTRIAL CONCERN DEFAULT - ENFORCEMENT OF CLAIMS - PROCEDURE - DISTRICT JUDGE'S JURISDICTION - SUPREME COURT PRECEDENTS.
Fact of the Case:
Himachal Pradesh Financial Corporation (Corporation) filed a petition under section 31 of the State Financial Corporation Act, 1951 (Act) in the court of District Judge, Dharamsala, claiming an amount of Rs. 56,320.97, including interest, against the respondents. The District Judge disallowed the claim for future interest, relying on a Division Bench judgment of the Himachal Pradesh High Court. The Corporation filed an appeal, which was referred to a Full Bench along with two other appeals raising identical questions.
Finding of the Court:
The Full Bench examined sections 31 and 32 of the Act and concluded that the substantive relief sought in an application under section 31(1) is akin to an application for attachment of property in execution of a decree. The procedure to be followed by the District Judge is outlined in section 32. The investigation envisaged under section 32(6) does not expand the contest to render the application a suit between the parties.
Issues: 1. Whether future interest can be awarded under section 32 of the Act from the date of filing the petition under section 31 till realization of the amount? 2. Whether the District Judge has the jurisdiction to award future interest?
Ratio Decidendi: 1. The scheme of sections 31 and 32 of the Act indicates that there is no further stage of execution, and the order passed by the District Judge under section 32 is akin to an order for attachment of property in execution of a decree. 2. While determining the outstanding liability of the industrial concern, the District Judge is bound to calculate and include future interest which may have fallen due from the date of filing of application till its payment in terms of the agreement between the parties. 3. The Parliament intended to allow future interest to the Financial Corporation in the scheme of the Act. 4. The Financial Corporation cannot be put in a more disadvantageous position than an ordinary creditor who could have been awarded future interest under section 34 of the Code of Civil Procedure, 1908. 5. The Supreme Court decisions in Gujarat State Financial Corporation v. Natson Manufacturing Co. Pvt. Ltd. and Everest Industrial Corporation v. Gujarat State Financial Corporation have settled the issue of awarding future interest under the Act.
Final Decision: The Full Bench answered the reference by holding that the decision in H. P. Financial Corporation v. Himachal Printing Press (F.A.O. No. 73 of 1980) and followed by P. D. Desai, C.J. in M/s. Laxmi Furniture and Saw Mills v. H. P. Financial Corporation do not lay down the correct law. The Division Bench decision in Bhowani Prashad Kapur v. The H. P. Financial Corporation lays down the correct law. Future interest from the date of filing the petition under section 31 of the Act till the entire amount due is paid can be allowed under section 32 of the Act according to the terms of the agreement.
N. M. Kasliwal, C. J.—We would narrate the facts of F. A. O. No. 108 of 1982, as the order of reference has been made initially in the above appeal.
2. Himachal Pradesh Financial Corporation (hereinafter referred to as the Corporation) filed a petition under section 31 of the State Financial Corporation Act, 1951 (in short the Act), in the court of District Judge, Dharamsala on October 28, 1972. According to the Corporation, an amount of Rs. 56,320.97, including interest, had fallen due against the respondents. The Corporation also claimed future interest from the date of the petition to the date of payment in accordance with the terms of the agreement. The learned District Judge by his order dated August 5, 1982 disallowed the claim of the appellant for future interest placing reliance on a Division Bench Judgment of this court in Himachal Pradesh Financial Corporation v. M[s. Himachal Printing Press, F. A. O. No. 73 of 1980, decided on August 26, 1980. Aggrieved against the above order of the District Judge, the Corporation filed the above appeal.
3. The matter came up for admission before a learned Single Judge of this court on September 17, 1982. Mr. Khanna, learned Counsel for the appellant-Corporation, pointed out that the operation of the judgment of the Division Bench given in H. P. Financial Corporation v. Himachal Printing Press (supra), on which reliance had been placed by the learned District Judge, had been stayed by the Supreme Court. It was further contended by Mr. Khanna that another Division Bench of this Court had also taken a different view about the scope of enquiry by the District Judge under section 31 of the Act. Learned Single Judge held that in view of the fact-that two different views had been taken by two different Division Benches of this court, he thought it proper to place the matter before Honble the Chief Justice for constituting a Full Bench.
4. After the passing of the above order in F. A. O. No. 108 of 1982, identical question arose in the above mentioned two appeals Nos. F. A. O. 130 of 1982 and F. A. O. 42 of 1978 and as such, in both the above cases also an order was passed on October 15, 1982 and April 24, 1987 respectively for referring the matter to Full Bench alongwith F. A. O. No 108 of 1982.
5. The short controversy which has to be resolved by the Full Bench is as to which of the two Division Benches of this court, namely, in F. A. O. No 73 of 1980, H. P. Financial Corporation v. M/s. Himachal Printing Press decided on August 26, 1980 or F. A. O. No. 81 of 1980 Bhawani Par shad Kapur v. The Himachal Pradesh Financial Corporation, decided on November 25, 1981, also reported in AIR 1983 H. P. 43r lays down the correct law and whether the future interest from the date of the filing of the petition under section 31 of the Act till realisation of the amount can be awarded or not under section 32 of the Act. The Division Bench consisting of V. D. Misra, C. J. and H. S. Thakur, J. in H. P Financial Corporation v. Himachal Printing Press f supra), took the view that future interest cannot be allowed, while another Division Bench consisting of T. R. Handa and V. P. Gupta, JJ. in Bhawani Parshad Kapur v. H. P. Financial Corporation (supra), held that such future interest could be awarded to the Financial Corporation in accordance with the agreement arrived at between the parties. It may also be mentioned that P. D. Desai, C. J. in M/s, Laxmi Furniture and Saw Mills v. H. P. Financial Corporation, (Civil Revision No. 87 of 19B1) decided on March 14, 1985, reported in AIR 1985 HP 108, followed the Division Bench decision in H. P. Financial Corporation v. M/s. Himachal Printing Press (supra) Mr. K. D. Sood and Mr. Indar Singh, appearing on behalf of the industrial concerns, supported the view taken in H. P. Financial Corporation v. M/s. Himachal Printing Press (supra). Mr. Sood contended that neither section 31 nor 32 of the Act contained any provision for the award of future interest to the
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