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2012 Supreme(P&H) 38
2012(1) LAW HERALD (P&H) (FB) 315
IN THE PUNJAB AND HARYANA HIGH COURT
(FULL BENCH)
Before
The Hon’ble Mr. Justice Hemant Gupta
The Hon’ble Mr. Justice K. Kannan
The Hon’ble Mr. Justice G.S. Sandhawalia
CWP No.7446 of 2011
Shiv Charan Singh
v.
Haryana State Industrial & Infrastructure Development Corporation Limited
{Decided on 09/01/2012}
For the Petitioner:Mr. Vikas Mohan Gupta, Advocate & Ms. Sonal Dutta, Advocate.
For the Respondent No.1:Mr. Rajvir Singh Sihag, Advocate.
Headnote:Guarantor--Liability of--Parties by an agreement cannot confer jurisdiction on the Corporation to proceed against the guarantor under Section 29 of the SFC Act as the jurisdiction under the aforesaid provisions of law can be exercised only against the industrial concern.
Jurisdiction--Of special tribunals or forums is to be determined keeping in view the provisions of the applicable statute alone.
(A) State Financial Corporation Act, 1957, S.29--Guarantor--Liability of--Held; Parties by an agreement cannot confer jurisdiction on the Corporation to proceed against the guarantor under Section 29 of the Act as the jurisdiction under the aforesaid provisions of law can be exercised only against the industrial concern. (Para 22)
A guarantor does not fall within the definition of industrial concern either expressly or impliedly--The right to take over the management and possession is of industrial concern and not of assets of a guarantor--The Corporation has a right to proceed against a guarantor under Section 31 of the Act or under Section 32G of the Act, but Section 29 of the Act confers limited jurisdiction on the Corporation to act against the industrial concern alone--The parties cannot by agreement confer jurisdiction on the Corporation, which the Act does not contemplate--Therefore, Clause 8 of the mortgage deed will not enable take possession of the assets of the guarantor and to sell the same in exercise of powers conferred under Section 29 of the Act. (Para 21)
(B) Civil Procedure Code, 1908, S.9--Jurisdiction--The parties can enter into an agreement for enforcement of legal rights and subjecting themselves to obligations, but cannot agree to confer jurisdiction by agreement on a Forum or a Tribunal--The parties cannot agree to confer jurisdiction on a Rent Controller by a lease deed in a notified urban area or upon a Consumer Court by an agreement, when it does not involve consumer dispute--The jurisdiction of special tribunals or forums is to be determined keeping in view the provisions of the applicable statute alone. (Para 15)
Mr. Hemant Gupta, J.: - I. The Subject of Reference
The present writ petition came up before the Division Bench of this Court on 2.11.2011. The challenge in the writ petition is to action taken by the State Financial Corporation against the petitioner under Section 29 of the State Financial Corporation Act, 1951 (for short ‘the Act’) being guarantor. The learned counsel for respondent No.1 relied upon a Division Bench judgment of this Court reported as M/s Aggarwal Overseas Limited Vs. State of Haryana and others 2008(4) PLR 772 and also the Full Bench judgment of this Court reported as Paramjit Singh Ahuja Vs. Punjab State Financial Industrial Development Corporation Limited & others 2006 (2) PLJ 480 to contend that the State Financial Corporation can proceed against the guarantor under Section 29 of the Act. The question of law in respect of the scope of Section 29 of the Act in view of the judgment of the Supreme Court in Karnataka State Financial Corporation Vs. N. Narasimahaiah & others (2008) 5 SCC 176 reads as under:
“Whether a clause in the deed of guarantee, entitle a financial corporation to proceed against the Guarantors including mortgagors to realize its dues in exercise of powers conferred under Section 29 of the Act?”
After hearing the arguments of the learned counsel for the parties, we find that the question of law as framed by the Division Bench requires to be reframed. The reframed question of law is as follows:
“Whether the parties can agree to confer jurisdiction to the financial Institution to proceed against the guarantor in exercise of the powers conferred under Section 29 of the Act?”
II. The Facts
2. The brief facts, of the present case, which are relevant to decide the point of reference, are that the petitioner is owner and in possession of agricultural land situated in Village Jassat, Tehsil Pataudi, District Gurgaon. Respondent No.2 i.e. M/s Panwar Steels Limited, a company registered under the provisions of Companies Act, 1956 availed financial assistance from respondent No.1. - Haryana State Industrial & Infrastructure Development Corporation Limited (for short ‘the Corporation’) incorporated under the Act. The petitioner stood as guarantor in respect of the financial assistance granted by respondent No.1 to respondent No.2 and executed a mortgage deed dated 22.06.2001 offering the property contained in the document as collateral security. It is pointed out that the Corporation has recovered an amount of Rs.5.5 crores from the assets of respondent No.2, but the property of the petitioner is sought to be auctioned in exercise of the powers conferred under Section 29 of the Act. It is the said action, which is challenged by the petitioner in the present writ petition.
3. It is contended that under Section 29 of the Act, the property of the guarantor cannot be put to sale. Such right of sale can be exercised either under the rights available to the creditor under the Transfer of Property Act, 1882 or in terms of Section 31 of the Act. It is contended that under Section 29 of the Act, the assets of an industrial concern alone can be taken over and put to sale and not the assets of the guarantor. Reliance is placed upon the judgment of Hon’ble Supreme Court in Karnataka State Financial Corporation (Supra).
4. In reply, the Corporation has sought to justify its action in initiating recovery proceedings against the petitioner in view of deed of guarantee dated 28.05.2001 and mortgage deed dated 22.06.2001. It is alleged that the petitioner has given collateral security of his agricultural land and executed a bond of guarantee in lieu of sanction and grant of loan of Rs.5 crore to respondent No.2. It is pointed out that the judgment of Hon’ble Supreme Court in Karnataka State Financial Corporation’s case (supra) relied upon by the petitioner is not applicable to the facts of the present case in the light of provisions of deed of guarantee, as the petitioner has stepped into the shoes of the pri
