(Per : HONOURABLE MR.JUSTICE JAYANT PATEL) 1. The present appeal is directed against the order dated 27.2.2012 passed by the learned District Judge below Civil Misc. Application No.56 of 2002 and the interim application Exh. 5 therein, whereby the learned Judge found that since the properties are located outside Mehsana District, the application is barred and hence, he dismissed the application.
2. The short facts are that as per the appellant – Corporation, respondent No.1 had taken loan from the appellant. The appellant is a State Financial Corporation duly constituted under the provisions of State Financial Corporation Act (hereinafter referred to as 'the Act'). As per the appellant, in the said loan, respondent No.1 was the loanee, respondent No.2 to 4 were guarantors and respondent No.5 was the person, who purchased the property from respondent No.2. Since, there was default in payment of loan, application under Section 31 of the Act was made by the appellant before the Court of the learned District Judge, Mehsana with the prayer to attach the property and to recover the amount from the property as mentioned in paragraph 15 of the application, wherein the property of the defendant No.2, 3, and 4 were described. The description of the properties shows that they were at Ahmedabad and Mumbai. The learned District Judge found that as the properties are outside Mehsana District and the power is to be exercised by him for attachment of the properties on the principles of Order 21 Rule 54 of CPC, he has no jurisdiction over the properties situated outside Mehsana District and, therefore, he rejected the application under Order 7 Rule 11 of CPC. Under these circumstances, the present appeal before this Court.
3. We have heard Ms.Vaccha Desai for Mr.Shelat, learned Counsel for the appellant and Mr.Ashok Parmar, learned Counsel for respondents No.2 and 5. Mr.Nehal Joshi, learned Counsel had initially appeared for respondent No.3 and 4, but he states that respondent No.3 has expired pending appeal and, therefore, now his authority will continue for respondent No.4 only, since the appellant has not brought on record the legal heirs of deceased respondent No.3. Respondent No.1 is served, but none has appeared on its behalf.
4. The learned Counsel for the appellant has brought to our notice the decision of the Apex Court in the case of Karnataka State Industrial Investment and Development Corporation Limited v. S.K.K. Kulkarni and Ors., reported in (2009) 2 SCC 236, whereby, in her submission, the Apex Court has interpreted Section 31 of the Act and has found that the application under Section 31 is competent before the Court where the Unit is located. She submitted that as the Industrial Unit is located in Mehsana District, the application could be maintained and the learned Judge has committed error in rejecting the application on the point of jurisdiction and, therefore, this appeal may be allowed.
5. Whereas Mr.Joshi and Mr.Parmar, learned Counsel appearing for the respective respondents submitted that respondent No.3 has expired pending the appeal and it was so intimated to the learned Counsel for the appellant, but no legal heirs of respondent No.3 are joined and, therefore, the appeal may stand abated qua respondent No.3. The learned Counsel also submitted that respondent No.3 and 4 in their capacity as the guarantors have stood discharged and for claiming the appropriate relief on that basis, they have preferred Civil Suit before the City Civil Court and the interim relief was granted and thereafter the matter is further carried before this Court in First Appeal and there also, the interim injunction has been granted. Therefore, it has been submitted that the prohibitory order passed by the Civil Court read with the order of this Court qua the properties of Defendants No.3 and 4 are required to be considered.
6. In the decision of the Apex Court in the case of Karnataka State Industrial Investment and Development Corporation Limited v. S.K.K. Kulkarni and Ors., (supra) the Apex Court, after considering the provisions of Section 31, has observed that SFC Act is a special act and when specific remedy is provided, the application before the District Judge, within whose jurisdiction the industrial concern carries the business, has to be made. The relevant observations are at paragraph 12 and 13, which are as under:-
“12. Before concluding, we may indicate the scope of Section 46B.That section mandates that if any other law or memorandum or articles of association or any instrument deriving force from any other enactment is inconsistent with any provisions of the 1951 Act or Rules or orders made thereunder, the latter will prevail and the inconsistency will have no effect but if the provisions of the 1951 Act or Rules made thereunder are not inconsistent, they will be deemed to be in addition to the existing laws and memorandum or articles of association. Thus, the provisions of the 1951 Act and the Rules made thereunder shall have an overriding effect over the existing law and memorandum or articles of association or any other instrument made under the existing law if they are inconsistent but otherwise if not inconsistent they will be deemed to be in addition to and not derogating to any existing law, rules and orders.
13. The 1951 Act is a special statute. Therefore, the provisions of the 1951 Act have to be strictly construed. In our view, reliance on Section 46B of the 1951 Act is misplaced. Section 46B will not control the parameters of territorial jurisdiction of the District Judge prescribed under Section 31(1) of the 1951 Act. Section 31(1) is a special provision. It mandates that all applications under Section 31(1) shall be made to the District Judge within the limits of whose jurisdiction the industrial concern carries on its business. The word "may" in Section 31(1) only indicates a mode of recovery in addition to any other modes available to the SFC in law.”
7. If the aforesaid observations are considered, it can be said that the learned District Judge has committed error in finding that the application was not maintainable under Section 31 of the Act, since it is an admitted position that the Industrial Unit is located in Mehsana District. After the attachment of the rights of the parties, as per the scope and ambit of Section 31 read with Section 32 of the Act, further procedure for effecting the order as per the provisions of Section 32(8) onwards are required to be followed. Therefore, if such provisions are considered and more particularly Section 32(8-A), while effecting the order the procedure as required under CPC, including that of execution of the decree may be required to be followed, which may include the transfer of the order as if decree to the Court within whose jurisdiction the properties are located, but such, in any case, would be after investigation of the rights or the claim pertaining to the property as per the requirement of Section 32(7) of the Act. Under these circumstances, it appears that the rejection of the application by the learned District Judge on a mere ground that the properties against which the action was prayed were located outside Mehsana District could not be said as valid in the eye of law.
8. In view of the aforesaid observations and discussions, the impugned order passed by the learned District Judge deserves to be quashed and set aside and the matter deserves to be remanded to the learned District Judge for consideration in accordance with law.
9. The attempt made by the learned Counsel for the respondents No.2 to 5 to contend that the prohibitory order passed by the City Civil Court read with the order of this Court in the other connected First Appeal deserves to be considered only to the extent that when the learned District Judge may decide the application, any prohibitory order or any competent forum needs to be considered by him, since such orders are to bind the Financial Corporation also. Even this Court in the present proceedings, when considered the matter on 15.7.2002 in Civil Application No.3485 of 2002, it was observed as under:-
... Heard. It is stated by Mr.M.K.Shelat, learned advocate for the appellant [original applicant) that when the order dated 6.5.2002 came to be passed issuing ad.interim relief in terms of para 5(A) of the civil application No. 3485 of 2002, because of the communication gap, it was not known to Mr. Y.C. Modi, who has filed affidavit in support of interim relief prayed, that by virtue of the order passed in Civil Suit No. 1495 1995 and the order passed therein in Notice of Motion by the City Civil Court, Ahmedabad, restraining the defendants from proceeding further in respect of the said property in respect of the outstanding dues of defendant No.5 Company against the plaintiffs i.e. respondent No.3 and 4. It is further stated that from the affidavit in reply filed on behalf of the respondents no.3 and 4, it has come to the knowledge of the appellant that further proceedings against the said property in respect of the alleged dues are stayed against the present respondents no.3 and 4 and, therefore, the appellant will not proceed further against the present respondents nos. 3 and 4 in view of the above injunction order later on modified by the High Court in Civil Application NO. 479 of 1997 in First Appeal No. 33 of 1997 vide order dated 18.1.1997 that the respondent NO.3 and 4 shall not transfer or alienate the property in question till the hearing and disposal of the civil suit no. 1495 of 1995 pending before the Court of the learned City Civil Judge, Ahmedabad also requiring respondent NO.3 to furnish security to the extent of Rs.6 lacs of the immovable property to the satisfaction of the trial court within two days from the date of the order. Affidavit sworn in on 15th July, 2002 by Shri Y.C. Modi on behalf of the appellant Corporation has been placed on record stating the above facts. It is stated by Mr. Shelat that in view of the above, interim order dated 6.5.2002 be modified accordingly.
In view of the above, order dated 6.5.2002 is modified to the effect that the said order shall not operate against respondents no.3 and 4 and that the said order dated 6.5.2002 will operate only against respondents nos. 1, 2 and 5 alone. First Appeal No. 911 of 2002 be listed for final hearing on 6th August, 2002 alongwith the present civil application.”
10. Therefore, it is not a matter where dehors the order passed by any competent Court the learned District Judge would proceed to recover the amount. It is only after consideration of the said order further rights and contentions of the parties may be examined. As that stage has not reached, we leave the matter at that stage without observing further, except to the extent that the rights and contentions of both the sides would remain open on such aspects, and the learned District Judge will examine the matter in accordance with law.
11. As regards the contention raised for abatement of the present appeal against respondent No.3 is concerned, we find that if the impugned order of the learned District Judge is maintained qua defendant No.3 by observing that the first appeal shall stand abated, it will create a situation that the order for want of jurisdiction qua respondent shall continue to operate, whereas it would not operate qua remaining respondents. Further, the rights claimed in the present appeal by the appellant is for maintaining the jurisdiction of the learned District Judge under Section 31 and, therefore, to that extent the rights of the appellant would continue to survive, subject to the contentions of the legal heirs of original respondent No.3 that they have not inherited any property of the original respondent No.3 or otherwise. As such, the legal heirs of respondent No.3 in other proceedings of City Civil Court and before this Court have continued to represent the interest of respondent No.3, in capacity as the guarantors. Therefore, we find that it cannot be said that the appeal would stand abated qua respondent No.3, but we find it proper to make suitable observations, leaving the learned District Judge to finally decide the aspects of joining of the legal heirs of defendant No.3 in the appropriate proceedings.
12. It was submitted by Mr.Joshi, learned Counsel for the respondents that the original application made before the learned District Judge could be said as barred and such being a contention available to the respondent No.4, this Court may consider the same. He relied upon the decision of the Apex Court in the case of Maharashtra State Financial Corporation v. Ashok K. Agarwal & Ors., reported in AIR 2006 SC 1584 for contending that the application is barred. We find that the learned District Judge has not decided the point of limitation, nor has he, at any stage, considered the aspect of limitation and in the impugned order the District Judge has only considered the point of jurisdiction only the ground that the properties were located outside Mehsana. Therefore, we need not examine the aspects of limitation at this stage, leaving the respondents to raise such contention, if available in law, before the learned District Judge and if such contention is raised, it is hardly required to be stated that the same is to be decided in accordance with law.
13. In view of the aforesaid observations and discussions, the impugned order passed by the learned District Judge is quashed and set aside with the direction that the Civil Misc. Application No.56 of 2002 shall stand restored to the Court of the District Judge, Mehsana with the further direction that the learned District Judge Mehsana shall consider the application in accordance with law, after giving opportunity of hearing to all parties, including the legal heirs of deceased Natvarlal Narandas Prajapati. Until the matter is further considered and appropriate order is passed by the learned District Judge, the interim order passed below Civil Application No.3485 of 2002 dated 15.7.2002 shall continue to remain in operation.
14. The appeal is allowed to the aforesaid extent. Considering the facts and circumstances, there shall be no order as to costs.
15. The Civil Application is disposed of accordingly.
(Jayant Patel, J.) (C. L. Soni, J.) vinod