TMI Blog1978 (8) TMI 229X X X X Extracts X X X X X X X X Extracts X X X X ..... he Corporation guaranteed numerous such loans, advanced to the industrial concerns in the state of Gujarat on certain terms and conditions agreed between the parties. When the industrial concern defaults in repayment of loan or fails to comply with the terms of the agreement the Corporation is entitled to make an application to the District Judge within the limits of whose jurisdiction the industrial concern carries on the whole or substantial part of its business for one or more of the reliefs set out in s. 31(1) of the Act. The Corporation appears to have, made applications purporting to be under s. 31(1) of the Act in various District Courts in the State of Gujarat against different industrial concerns. A question was raised in the District Courts about the proper court fee payable on such applications. The Corporation contended that the application would be governed by Article 1 (of Schedule II o the Bombay Court) Fee Act, 1959, and a fixed court fee in the amount of 65 paise would be payable in respect of the application. On the other hand, the State contended that application would be governed either by Article I Schedule I or at any rate by Article 7 of Schedule I and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relief claimed in the application is one which is capable of being value in terms of monetary gain or prevention of monetary loss and would attract Article 7 of Schedule I, is not correct. The State Financial Corporations Act, 1951, was enacted by the Parliament with a view to enabling the State Governments to establish a Financial Corporation for enhancing the pace of industrialisation by providing credit on easy terms for setting up industrial concerns and/or for expanding the activities of the existing industrial concerns. Section 25 enables the Financial Corporation to carry on and transact any of the business set out therein which includes guaranteeing on such terms and conditions as may be agreed upon (i) loans raised by industrial concerns which are repayable within a period not exceeding 20 years and are floated in the public market or (ii) loans raised by industrial concerns from scheduled banks or State Co-operative Banks. It can also underwrite the issue of stock, shares, bonds or debentures by an industrial concern. The Corporation can either guarantee the loan raised by the industrial concern or may even grant itself a loan on such terms and conditions as may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other particulars as may be prescribed. Section 32(1) provides that when an application is made seeking reliefs mentioned in clauses (a) and (c) of sub-s. (1) of s. 31, it is obligatory upon the District Judge to pass an ad interim order attaching the security or so much of the property of the industrial concern as would on being sold realise an amount equivalent in value to the outstanding liability of the industrial concern to the Financial Corporation together with the costs of the proceedings with or without an ad interim injunction restraining the industrial concern from transferring or removing its machinery, plant or equipment. If the applicant seeks relief mentioned in clause (b) of sub-section (1) of s. 31, the District Judge shall pass an order of ad interim injunction restraining the industrial concern from transferring or removing its machinery, plant or equipment. A notice accompanied by copies of the interim order and the application is required to be served upon the industrial concern calling upon it to show cause why ad interim order of attachment should not be made absolute or the injunction confirmed or the management transferred to the Corporation. If no c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed property. On a breach of an agreement by an industrial concern the Corporation can seek one or more of the three reliefs set out in s. 31(1). If the Corporation seeks the relief of transferring the management of the industrial concern to the Financial Corporation it could hardly be said that the application purports to be a plaint for recovering the mortgage money by sale of mortgaged properly. It would be inappropriate to say that on an analogy an application under s. 31(1) is something akin to a suit by a mortgagee to recover mortgage money by sale of mortgaged property. At any rate, in an application under s. 31 (1) the Corporation does not and cannot pray for a decree for its outstanding dues. It can make an application for one of the three reliefs, none of which, if granted, results in a money decree, or decree for recovery of outstanding loan or advance. Section 31(1) of the Act, in the circumstances therein set out, permits the Corporation to seek one or more of the three reliefs therein stated. It is difficult to comprehend that merely the form of relief would attract one or the other Article of Court-fees Act. If relief of sale of mortgaged property is sought which perm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransferring the management of the industrial concern to the Financial Corporation or merely injunct the industrial concern from transferring or removing its machinery or plant or equivalent from the premises of the concern without the permission of the Board. An application for transfer of management of the industrial concern could by no stretch of imagination, be said to be an application for repayment of the loan though Mr. Patel did say that the management can only be retained till such time as the Corporation reimburses itself. Further, if an application under s. 31(1) is merely for an injunction restraining the industrial concern from transferring or removing its machinery or plant or equipment with- out the permission of the Board, it could hardly, or even remotely. be said that such a relief substantively provides for repayment of the loan or it is a relief to prevent an anticipatory loss. Let it he recalled at this stage that if the Court-fees Act is a taxing statute its provisions have to be construed strictly in favour of the subject litigant (vide State of Maharashtra v. Mishrilal Tarachand Lodha ors.,) In a taxing statute the strict legal position as disclosed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntentions that can be raised in a suit. The claim of the Corporation is that there is a breach of agreement or default in making repayment of loan or advance or instalment thereof and, therefore, the mortgaged property should be sold. It is not a money claim. The contest can be that the jurisdictional fact which enables the Corporation to seek the relief of sale of property is not available to it or no case is made out for transfer of management of the industrial concern. Sub-s. (7) of s. 32 prescribes what reliefs can be given after investigation under sub-s. (6) is made, and it clearly gives a clue to the nature of contest under Sub-s. (6). Sub-s. (8) of s. 32 only prescribes the mode and method for executing the order of attachment or sale of property as provided in the Code of Civil Procedure. Sub-ss. (6), (7) and (8) of s. 32 read together would give an opportunity to the industrial concern to appear and satisfy the District Judge what the situation envisaged by s. 31(13 has not arisen and the relief should not be granted. In the absence of a provision giving such an opportunity to the industrial concern to whose detriment the order is required to be made, a serious questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r an application in a nature of a plaint as contemplated by Article 7 of Schedule I of Court-fees Act. Once Article 7 of Schedule I of the Court-fees Act is excluded there was (and could be) no dispute that an application under s. 31(1) of the Act would be covered by the residuary Article l(c) of Schedule II of the Court-fees Act and it should bear a fixed court fee in the sum of 65 paise. Therefore, the High Court was clearly in error in holding that the application should bear ad valorem court fee. When dealing with a question of court fee, the perspective should be informed by the spirit of the magna carta and of equal access to justice which suggests that a heavy price tag on relief in Court should be regarded as unpalatable. In this view of the matter this appeal is allowed and the order made by the High Court as well as the orders made by the various District Judges except the District Judge, Broach, are set aside. On the question of costs, we looked at the specimen applications filed by the Corporation disclosing a clear lack of wisdom on the part of the Corporation in asking for a decree for certain amount which could not be granted under s. 31 (1). Therefore, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
