A District Judge lacks jurisdiction to order direct payments in cases under S.31 of the State Financial Corporation Act.

1. This appeal, filed under S.32 (9) of the State Financial Corporation Act, 1951 , challenges the judgment and order passed by District Judge, Chandrapur. The District Judge, Chandrapur has allowed application filed by the Maharashtra State Financial Corporation (hereinafter called "Corporation", for the sake of brevity, under S.31 and S.32 of the State Financial Corporation Act against the appellants. It was inter alia contended by the Corporation in this application that the present appellants M/s. Kiril Fine Art and Its proprietor Neeraj Sadanand Totawar had borrowed an amount of Rupees 1,36,000/- and had agreed to repay the said amount within a period of 10 years by 17 half yearly instalments of Rs.8,000/- each. According to the Corporation, the present appellants had agreed to pay interest at the rate of 14 per annum with six monthly rests. It was then pointed out that the appellants had also agreed for hypothecation of all existing tangible movable property plant fixed or otherwise machinery fixtures, fittings, electric and other installation and all other articles fixed and lying on the premises at Plot Nos. 77 and 78, Sheet No. 13, Block No. 50, near Kanyaka Mandir Bhapapeth, Chandrapur. The respondent had filed letter of hypothecation as Annexure - A and list of moveable property i.e. plant, machinery and other assets a Annexure - B. It was then claimed that that the appellants had agreed that in case of default for a period exceeding one month in the payment of agreed instalment, then Corporation, then Corporation would be entitled to exercise all the other rights and remedies under the said letters of Hypothecation. It is pointed out in para 8 of the application that some amounts were disbursed in favour of the appellants on particular dates as mentioned in para 8. It is then mentioned that inspite of demands and reminders the appellants, the appellants defaulted in respect of payment of instalments, interest and expenses. The total principal amount so defaulted according to the Corporation came to Rs.1,16,489.47. Calculating the interest thereupon and expenses, total amount recoverable by the Corporation against the appellants came to Rs.4,90,928/-. It was then contended that in pursuance of this, a resolution was passed by the Board of Directors of the Corporation that this debt should be recalled and the appellants should be directed to pay the same by appropriate proceedings under S.31 of the State Financial Corporation Act. This resolution was also filed along with the application, which was Annexure - D to the application. In para 12, it was stated that by notice dated 28-3-89, loans were recalled and the appellants were directed to pay an amount of Rs.5,20,035.31 as outstanding on 28-3-89 and that in spite of this, appellants had committed breach of their obligations under the covenants. It was claimed that under the circumstance, the Corporation had become entitled to proceed under S.31 of the State Financial Corporation Act to realise the hypothecated debts by sale of hypothecated property and were further entitled to ad - interim injunction was also prayed for on this ground. Finally, in the prayer clause, Corporation prayed for the sale of all plaint and machineries, equipments, accessories mentioned in the schedules for the realisation of outstanding hypothecated debt of Rs. 5,20,035.01, with future interest @ 14.5% p.a. with half yearly rests. The Corporation also prayed for the payment of net sale proceeds of the properties mentioned in prayer (a) for appropriating the same towards the amount as may be found due under the term