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TMI Blog2004 (5) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... . v. Sailendra Narayan Patnaik [1999] BC 78 regarding applicability of Article 137 of the Limitation Act (for short, 'the Act') to applications under section 31 of the State Financial Corporations Act ('SFC Act' for Short). In view of the conflicting decisions, the Division Bench being of the opinion that an authoritative pronouncement on the points would be perfectly justified, directed the office to place the matter before the Chief Justice for constituting an appropriate Bench, vide order dated 4-3-2004. As stated, the matter is placed before us. 3. The questions referred to by the Division Bench for our consideration are as follows: (1)Keeping in view the expression used in section 31 of the State Financial Corporations Act and the provisions of sub-section (11) thereof, (seems to be of section 32) is an application made to the District Judge for one of the reliefs envisaged under the said provision an application made to a Civil Court? (2)Is an application under section 31 of the State Financial Corporations Act governed by any period of limitation stipulated under the provisions of the Limitation Act, 1963, having regard to the nature of jurisdiction and the remedy provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prescribed under the statute and dismissed the petition vide order dated 28-1-1997. Against that order this appeal has been filed. M.F.A. No. 5696/1998 has been filed by the KSFC on 18-12-98 against the order dated 31-10-1998 passed by the II Additional District & Sessions Judge, Bangalore Rural District, Bangalore, in Misc. Case No. 56/1993. The KSFC sanctioned a loan of Rs. 30 lakhs to the 6th respondent-Ittina Printers (P.) Limited on 14-3-84 and its Directors, respondent Nos. 1 to 5, executed Exs. P1 to 5 with respect to the loan transaction of the 5th respondent as guarantors. Further loans were sanctioned on different dates. Regarding 4th loan transaction, on 23-6-86 respondents 1 to 5 have executed guarantee deeds agreeing to be the guarantors with respect to a particular loan by particular respondents. The deeds were executed on 11-6-1984, 1-2-1986, 27-3-1986 and 23-6-1986. The 6th respondent's asset was taken over by the KSFC and it was sold on 9-8-90. The 6th respondent had paid some amount earlier, but no amount was paid subsequently. The Trial Court observed that the petition was filed in 1993 seeking recovery of the amount and not for enforcing the liability of guaran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any relief nor for a decree, and the question of consideration of Article 137 of the Act does not arise in these cases. He further submits that the questions referred by the Division Bench are not necessary and the only question to be considered is whether Article 137 of the Limitation Act is applicable or not. The learned counsel relied on the decisions in Gujarat State Financial Corpn. v. Natson Mfg. Co. (P.) Ltd. AIR 1978 SC 1765; Everest Industrial Corpn. v. Gujarat State Financial Corpn. [1987] 3 SCC 597, Maganlal v. Jaiswal Industries AIR 1989 SC 2113; Hotel Vivek Continental (P.) Ltd. v. M.P. Financial Corpn., Indore AIR 1991 M.P. 156; Amar Cold Storage & Ice Factory v. Punjab Financial Corpn. AIR 1994 Punj. & Har. 235 and O.K. Gaur & Co. v. Rajasthan Finance Corpn. AIR 2001 Raj. 4. 7. Sri K. Gopala Hegde, learned counsel for KSFC also submits that the only question to be considered in these cases is whether Article 137 of the Limitation Act is applicable or not and the Division Bench without there being any issue nor it being raised, has referred the questions on its own to resolve the controversy. Therefore, the reference is uncalled for except for consideration of Articl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manner. In the instant case, no contrary decision of this Court has been shown nor is in issue. However, the Division Bench has referred the matter to a larger Bench considering the single Judge decisions of different High Courts without considering the Apex Court decision on this point. Be that as it may. 12. Now we take up some cases relied upon by the learned Counsel for the parties : In Gujarat State Financial Corpn.'s case (supra) while considering the issue pertaining to affixing of Court fees, their Lordships observed as to what is the nature of proceedings contemplated by section 31(1) if it is not a suit by the mortgagee for recovery of mortgage money by sale of mortgaged property. Section 31 would to some extent provide a clue to this question. The substantive relief in an application under section 31(1) is something akin to an application for attachment of property in execution of a decree at a stage posterior to the passing of the decree. (ii) In Kerala State Electricity Board's case (supra), their Lordships while considering the application under section 16(3) of Telegraph Act and considering the applicability of Limitation Act, 1963 observed that while the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensive with that of the loanee industrial concern and where there is any provision confining the liability of surety, the extent of liability shown in the application under section 31(1) has to be in conformity with the surety bond. Their Lordships further held that when special statute confers jurisdiction on District Judge, the District Judge will not be a persona designata but a court of ordinary civil jurisdiction to which the rules of procedure, order, decree, etc., under section 4 of C.P.C. 1908 will apply to such Court. (iv) In CCE v. Raghuvar (India) Ltd. [2000] 5 SCC 299 on the question whether limitation period for doing or not doing an act has to be enacted and prescribed and cannot be imported by the courts by implication, their Lordships held that albeit, in absence of a limitation period for exercise of a power affecting the rights of a citizen, courts can hold that the same should be exercised within a reasonable period. (v) In Addl. Special LAO v. Thakoredas AIR 1994 SC 2227, their Lordships considering the decision in Nityanand M. Joshi v. L.I.C. of India AIR 1970 SC 209 and in T.P.K.K. Amson & Besom's case (supra) and the respective defence and the words 'award ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... District Judge, their Lordships held that the order for sale is not decree for purpose of applying section 34 of C.P.C. and the legal fiction cannot be extended for treating the application under section 31(1) as plaint for payment of Court fee. (vii) In O.K. Gaur & Co.'s case (supra) AIR 2001 Raj. 4, it was observed by the learned single Judge that on an application under section 31 of the SFC Act, a decree for money cannot be passed because the relief which can be granted under section 32 are against the property whereas a money decree is to be passed by the Civil Court against the concerned person i.e., the judgment debtor. 13. The learned counsel for the parties though have argued that it would not have been necessary to refer the matter, as referred, by framing issues. At the most, the only question that arises for consideration is regarding applicability of Article 137 of Limitation Act to applications under section 31 for SFC Act. 14. It is seen that the SFC Act has not provided any period of limitation but in view of section 31 of SFC Act, i.e., special provisions for enforcement of claims by Financial Corporation that if any industry or concern fails to repay any loan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly:- (a )for an order for the sale of the property pledged, mortgaged, hypothecated or assigned to the Corporation as security for the loan or advance; or (aa)for enforcing the liability of any surety; or (b )for transferring the management of the industrial concern to the Financial Corporation; or (c )for an ad interim injunction restraining the industrial concern from transferring or removing its machinery or plant or equipment from the premises of the industrial concern without the permission of the Board, where such removal is apprehended. (2) An application under sub-section (1) shall state the nature and extent of the liability of the industrial concern to the Financial Corporation, the ground on which it is made and such other particulars as may be prescribed. Section 32 of the Act reads as follows : "32. Procedure of District Judge in respect of application under section 31.-(1) When the application is for the reliefs mentioned in clauses (a) and (c) of sub-section (1) of section 31, the District Judge shall pass an ad interim order attaching the security or so much of the property of the industrial concern as would on being sold realise in his estimate an amount equ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d thereto. (7) After making an investigation under sub-section (6) the District Judge may - (a )Confirm the order of attachment and direct the sale of the attached property; (b )vary the order of attachment so as to release a portion of the property from attachment and direct the sale of the remainder of the attached property; (c )release the property from attachment; (d )confirm or dissolve the injunction; (da)direct the enforcement of the liability or the surety or reject the claim made in this behalf; (e )transfer the management of the industrial concern to the Financial Corporation or reject the claim made in this behalf : Provided that when making an order under clause (c) or making an order rejecting the claim to enforce the liability of the surety under clause (da) or making an order rejecting the claim to transfer the management of the industrial concern or the Financial Corporation under clause (e), the District Judge may make such further orders as he thinks necessary to protect the interests of the Financial Corporation and may apportion the costs of the proceedings in such manner as he thinks fit : Provided further that unless the Corporation intimates to the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be noted at this stage that by virtue of Act 43 of 1985 certain amendments have been introduced under section 32 of the Act which have already been incorporated in the section culled out above. Section 32-G which is also introduced by Act 43 of 1985 deals with recovery of amounts due to the Financial Corporation as arrears of land revenue and section 46-B of the Act deals with the effect of the Act on other laws and reads as follows: "46-B: Effect of Act on other laws-The provisions of this Act and of any rules or orders made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in the memorandum or articles of association of any industrial concern or in any other instrument having effect by virtue of any law other than this Act, but save as aforesaid, the provisions of this Act shall be in addition to, and not in derogation of, any other law for the time being applicable to an industrial concern". 16. It is clear from the above said provisions of the Act that they make special provision enabling the Corporation to recover its dues by resorting to the provisions of section 31 of the Act and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the very nature of things in terms of monetary value even though it may be not possible to call it a decree stricto sensu as defined in section 2(2) of the Code for recovery of money. In the said case, the Supreme Court has considered the provisions of section 46-B, 32-G as also section 32 including sub-section (11) of section 32 and has explained the nature and scope of proceedings under sections 31 and 32 after amendment by Act 43 of 1985. 17. Section 2(a ) and 2(i) of the Limitation Act, 1963 read as follows:- "2. Definitions-In this Act, unless the context otherwise requires :- (a)'applicant' includes : (i)a petitioner, (ii)any person from or through whom an applicant derives his right to apply; (iii)any person whose estate is represented by the applicant as executor, administrator or other representative; (b ) to (k)****** (l)suit : 'suit' does not include an appeal or an application. 18. Under Article 112 where a suit (except a suit filed before Supreme Court) is filed by or on behalf of the Central Government or any State Government, including the Government of State of Jammu & Kashmir, the period of limitation of 30 years begins to run as against a like suit by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d scope of the said provisions. The earlier decisions of the Supreme Court were rendered before Amendment Act 43 of 1985. Therefore, the decisions relied upon by the learned counsel appearing for the Corporation about the scope and nature of sections 31 and 32 prior to Amendment Act 43 of 1985 are not helpful to him as the question about the applicability of Limitation Act to an application filed under section 31 of the Act did not arise for consideration in the said cases. 21. The question of applicability of the provisions of the Limitation Act, 1963 to the applications under the Special Acts wherein no period of limitation is prescribed had specifically come up for consideration before the Supreme Court in the case of Kerala State Electricity Board (supra). In the said case, the Supreme Court was considering the question as to whether the provisions of Article 137 of the Limitation Act, 1963 would be applicable to an application filed under section 16 of the Telegraph Act which enables the claimant to make an application to the District Judge for enhancement of compensation awarded by the Electricity Board for cutting of trees in a private land. In the said case, the Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within limitation prescribed by the Schedule to the Limitation Act since no article expressly prescribed the limitation to make such application, the residuary article under article 137 of the Schedule to the Limitation Act gets attracted....." (p. 2229) 22. In view of the above said decisions of the Supreme Court and the answer given by us to the first question that an application filed to District Judge under section 31 of the Act is to a court of ordinary civil jurisdiction and not to District Judge as a persona designata and since no limitation is prescribed under the Act for making any application under section 31 of the SFC Act it has to be held that the application under section 31 of the Act is governed by Article 137 of 1963 Limitation Act. Under the circumstances, there is no merit in the contention of the learned counsel appearing for the Corporation Sri Joshi that in view of the fact that no period of limitation is prescribed for making an application under section 31, the Court cannot interpret the section in such a way as to include period of limitation or to infer the period of limitation, as in view of the abovesaid decision of the Supreme Court, and the contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication for execution of any decree or order of any Civil Court is also not applicable to an application filed under section 31 of the SFC Act as the said application so filed cannot be said to be in execution of any decree. Having regard to the nature and scope of the provisions of sections 31 and 32 of the Act explained by the Supreme Court in Maharashtra State Finance Corporation case referred to above. Therefore the only article that would be applicable to the application filed under section 31 of the Act would be Article 137 of the Limitation Act which prescribes limitation of three years from the date when the right to apply accrues. The Full Bench decision relied upon by the learned counsel appearing for the Corporation in the case of Godan Namboothiripad v. Kerala Finance Corpn. AIR 1998 Ker. 31 which deal with the applicability of Article 112 of the Limitation Act to an application filed under Kerala Land Revenue Recovery Act is not helpful to contend that the said article applies to application filed under section 31 of the SFC Act and the said decision would be helpful to the Corporation only when an application is filed under section 32-G of the Act for recovery of amou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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