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1979 Supreme(J&K) 55
IN THE HIGH COURT OF JAMMU AND KASHMIR AT SRINAGAR
Mian Jalal-ud-Din,Gh. Mohammad Mir, JJ.
Taj Mohi-ud-Din - Appellant
Versus
State Financial Corporation, J&K - Respondent
CIMA No. 20/1975
Decided On : 18 June, 1979
Advocate For Appellant: P.L. Kaul
Advocate For Respondent: N.K. Ganjoo
The provisions of Section 32 of the State Financial Corporation Act, 1951, and the Regulations thereunder, provide a complete machinery for the enforcement of outstanding dues to the corporation, and the corporation is not required to issue a notice to the debtor before initiating proceedings under Section 32.
Headnote:
STATE FINANCIAL CORPORATION ACT, 1951 - SECTION 32 - ATTACHMENT OF PROPERTY - ORDER FOR SALE - VALIDITY - NOTICE TO DEBTOR - NECESSITY - MANAGING DIRECTOR'S AUTHORITY TO SIGN PETITION - ORDER OF AD-INTERIM INJUNCTION - LAPSE WITH DISMISSAL OF PETITION - RESTORATION OF CASE - EFFECT - OPPORTUNITY TO PRODUCE EVIDENCE - DELAY IN LIQUIDATION OF LOAN.
Fact of the Case:
The appellant borrowed a loan of Rs. 40,000 from the respondent, Jammu and Kashmir State Financial Corporation, and mortgaged his property as security. The appellant defaulted in repayment of the loan, and the respondent filed an application under Section 31 of the State Financial Corporation Act, 1951, for recovery of the outstanding amount by sale of the mortgaged property. The District Judge issued an order of attachment and ad-interim injunction restraining the appellant from transferring or removing the mortgaged property. The appellant challenged the order, arguing that the respondent had not issued a notice before initiating proceedings, the Managing Director was not authorized to sign the petition, the order of attachment had lapsed with the dismissal of the petition for default, and no opportunity was given to produce evidence.
Finding of the Court:
The court held that the respondent was not required to issue a notice to the appellant before initiating proceedings under Section 32 of the Act, as the notice is required to be given only by the court when a petition is made under that section. The court also held that the Managing Director of the Corporation was duly authorized to sign and verify the petition, as per Sections 51 and 54 of the Regulations. The court further held that the order of ad-interim injunction did not lapse with the dismissal of the petition for default, as it was automatically restored when the case was restored. The court also held that the appellant had not made any request to produce evidence in support of his objections, and therefore, it could not be said that he was denied an opportunity to produce evidence.
Issues: 1. Whether the respondent was required to issue a notice to the appellant before initiating proceedings under Section 32 of the Act? 2. Whether the Managing Director of the Corporation was authorized to sign and verify the petition? 3. Whether the order of ad-interim injunction lapsed with the dismissal of the petition for default? 4. Whether the appellant was denied an opportunity to produce evidence?
Ratio Decidendi: 1. Section 32 of the Act does not require the giving of notice by the corporation to the debtor. Notice is to be given only when a petition under Section 32 is made before the court. 2. Sections 51 and 54 of the Regulations authorize the Managing Director of the Corporation to sign and verify all the documents connected with the legal proceedings for and on behalf of the corporation. 3. After the case is restored to its original number, the parties are relegated to the same position which they occupy before the order of dismissal for default is made. 4. The appellant did not make any request to produce evidence in support of his objections, and therefore, it cannot be said that he was denied an opportunity to produce evidence.
Final Decision: The court dismissed the appeal, holding that the order of attachment and sale was valid.
1. The civil first miscellaneous appeal under Section 32 (9) of the State Financial Corporation Act of 1951, hereinafter referred to as "The Act", is against the judgment and order of the District Judge, Srinagar, dated 8-12-1975 whereby he made the order of attachment absolute and has directed that the attached property be sold by auction.
2. It appears that the respondent herein made an application under Section 31 of the Act before the District Judge, for an order for the recovery of Rs. 48,735,07 with interest accruing thereupon up to the date of realization of the suit amount by sale of properties and house mortgaged by the appellant to the petitioner as security for the loan of Rs.40,000/- on the basis of registered mortgage deed and also for an ad-interim injuction restraining the appellant from transferring and removing the plant and the machinery from their premises without the written permission of the Board of Directors of the Jammu and Kashmir State Financial Corporation, The respondent, herein, i.e. the Jammu and Kashmir State Financial Corporation averred in the petition that by a deed of mortgage dated 23-9-1970 executed by the appellant in favour of the Corporation, obtained a loan of Rs.40.000/-It was agreed that the amount will be repaid by instalments. Appellant No. 1 as per stipulation entered by him in the deed of security dated 23-9-1970 duly executed by him in favour of the Corporation covenanted and agreed with the Corporation that in the event of default made by the principal borrower i.e. appellant No. 2. the Corporation shall be entitled to act as if appellant No. 1 was the principal debtor to the corporation and that he would pay to the corporation the whole of such principal interest and other monies as would due be to the corporation. Appellant Nos. 1 and 2 committed defaults in payment of the principal, interest and other monies and, therefore, there was breach of the terms and conditions of the mortgage deed and also other covenants and, therefore, the petitioner was entitled to the reliefs as set out in the petition. When the application came up before the District Judge on 16-3-1974 he issued notice to the appellants and by the same order issued ad-interim injuction in terms of Section 32(1) of the Act restraining the appellants to transfer or remove the plant and the machinery and other articles till further orders which is a security of the Industrial concern mortgage to the corporation. He further directed that the property mortgaged with the corporation be also attached in terms of Section 32(1) of the Act. The appellants were given notice to show cause as to why the order of attachment and also the order of ad-interim injuction be not made absolute. Letter on it transpired that the application was dismissed for default which was latter on restored. Thereafter a review petition was filed which was also dismissed Against that order a revision was taken before this court which was dismissed on 25-9-1975, the court observing that the revision petition was mis-conceived and in the main petition the appellants have yet to file their objections under Section 32 of the Act. The appellants were accordingly directed to file objection within three weeks. It, therefore, follows that right from March 1974 when the application was made proceedings have lingered on up-to-date, the appellants taking advantage of complexities of the laws of procedure. However, when the matter came up before the District Judge on 8-12-1975, he passed the impugned order. In the order he observed that the appellant did not show any cause as to why the attachment already made should not be made absolute. He thought it expedient in the interests of justice to make an order making the attachment absolute. He, therefore, issued order for the sale of the attached property. Against this order, the appellants have come up in appeal.
3. We have heard learned counsel for the parties at length.
4. Shri P, L. Kaul has su
