GUJARAT STATE FINANCIAL CORPORATION v. JAYINDUSTRIES, RAJKOT
1984-12-05
J.P.DESAI
body1984
DigiLaw.ai
J. P. DESAI, J. ( 1 ) THE respondent M/s. Jayshree Industries took a loan from the appellant-Gujarat State Financial Corporation and pledged and hypothecated machinery and other properties with the Corporation as a security for the said loan. The amount was payable by instalments. As the respondent failed to pay the instalments as agreed the appellant-Corporation filed Miscellaneous Civil Application No. 113 of 1977 in the District Court at Rajkot under sec. 31 of the State Financial corporations Act 1951 (hereinafter to be referred to as the Act for enforcement of its claim by attachment and sale of the pledged and hypothecated properties of the opponent Jayshree Industries. The application was resisted by the responded. Pending the hearing of the said application the respondent gave an application. Ex. 42. requesting the District Judge to grant instalments. Another application Ex. 49 was also submitted to the learned District Judge raising a contention that the sale proclamation which was issued was illegal and may be canceled and a fresh sale proclamation may be issued. The applications were resisted by the Corporation. So far as the grant of instalments is concerned it was also contended that their is no provisions for grant of instalments in such proceedings and therefore. the respondent was not entitled to claim any instalments. It was also contented that the provisions of Order 20 Rule 11 C. P. C. do not apply to these proceedings and. therefore the respondent cannot claim any relief under the said provisions of the Civil that Procedure Code. As regards legality of the sale proclamation it was contended that it was quite legal. The learned District Judge who heard these applications held that the provisions of the Civil Procedure Code which are not inconsistent with the provisions of the Act can be availed of and instalments can be granted and accordingly be allowed that application and granted instalments He held that the sale proclamation was not shown to be illegal but as ins instalments were being granted to the opponent the application was allowed and the proclamation of sale was set aside and the sale was postponed. Being dissatisfied with the order of the learned District Judge the Gujarat State Financial Corporation has come in appeal before this court. ( 2 ) THE learned advocate Mr. V. B. Patel who appears on behalf of the appellant-Corporation drew my attention to sec.
Being dissatisfied with the order of the learned District Judge the Gujarat State Financial Corporation has come in appeal before this court. ( 2 ) THE learned advocate Mr. V. B. Patel who appears on behalf of the appellant-Corporation drew my attention to sec. 46b of the Act which reads as follows:"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 an 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". Relying upon the above provisions in the Act he urged that the provisions of the Civil Procedure Code cannot have any application except where specifically provided in the Act. lie drew my attention to sub-sec. (6) of sec. 32 which prosides that the District Judge shall proceed to investigate the claim of the Corporation in accordance with the provisions contained in the Civil Procedure Code 1908 in so far as such provisions may be applied thereto. He also drew Why attention to some other provisions in the Act which provide for following the provisions of the Civil Procedure Code. He took me through the whole of the Act and submitted that there was no provision in the Act enabling the learned District Judge to grant instalments and hence looking to the Provisions of sec. 46 of the Act instalments cannot be granted by having recourse to Order 20 Rule 11 C. P. C. as done by the learned District Judge. In view of the above provisions of the Act which do not provide for grant of instalments or application of order 20 Rule 11 C. P. C. to these proceedings the learned advocate Mr. D. D. Vyas who appeared on behalf of the respondent was not able to support the order of the learned District Judge because the order proceeded on the assumption that Order 20 Rule 11 C. P. C. can be pressed into service in such proceedings.
D. D. Vyas who appeared on behalf of the respondent was not able to support the order of the learned District Judge because the order proceeded on the assumption that Order 20 Rule 11 C. P. C. can be pressed into service in such proceedings. I may also mention here that even if the provisions of the Code of Civil Procedure are applicable to such proceeding. then also instalments could not be granted because the properties of the opponent-respondent are pledged hypothecated with the Corporation and the application is filed for attachment and sale of these properties which factual position is not disputed by Mr. Vyas. ( 3 ) A decision of this Court reported in J. P. Steel Industries v. state Bank of Saurashtra 19 G. L. R. 998 shows that in a suit to recover the mortgage amount no instalments can be granted under Order 20 Rule 11 C. P. C. The provisions of order 34 of the Code of Civil Procedure which pertain to suits relating to mortgage also apply to a suit in case the properties are pledged or hypothecated. In view of this instalments could not have been granted in these proceedings under Order 20 Rule 11 C. P. C. even if the provisions of the Code of Civil Procedure were applicable. Mr. Patel also drew my attention to a decision of this Court reported in. wherein it is laid down that in a suit to recover amount by sale of properly charged instalments cannot be granted. The learned advocate Mr. Vyas was also unable to satisfy me as to how provisions of Order 20. Rule 11 C. P. C. could have been pressed into service in these proceedings in the above circumstances. Mr. Vyas of course relied Upon a decision of the Supreme Court in the case of The Gujarat State Financial Corporation v. M/s. Natson Manufacturing Co. Pvt. Ltd. A. I. R. 1978 S. C. 1765 and submitted that an application under sec. 31 of the Act was neither a plaint nor an application for execution but it was something akin to an application for attachment of property in execution of a decree at a stage prior to the final decree and therefore the above two decisions of this Court may not be of any assistance in deciding whether instalments could be granted under Order 20 Rule 11 C. P. C. or not.
It is difficult to accept this submission of Mr. Vyas because such an application would be more in the nature of an application to pass a final decree be attachment and sale of the propose. The application cannot in the strict sense of the term be said to le an application for execution because before execution a final decree must follow the preliminary decree. But any way it is not necessary to dilate upon this question any further because the provisions of the Code of Civil Procedure and particularly Order 20 Rule 11 are not applicable in the present case. I may observe here that if we that the application under sec. 31 (1) either as an application for execution or as an application for passing a final decree then also instalments cannot be granted without the consent of the Corporation looking to the provisions of Order 20 Rule 11 C. P. C. These provisions clearly show that if instalments are already granted by a decree instalments cannot again be granted in execution proceedings unless the judgment-creditor consents. In the present case the agreement between the Corporation and the respondent provided for instalments and that agreement has to be treated as at any rate a decree between the parties if we treat an application under sec. 31 (1) as an application for execution or an application for passing a final decree. ( 4 ) THE learned advocate Mr. Vyas urged that even though there is no provision in the Act empowering the Court to grant instalments the Court can certainly do so in exercise of inherent powers The learned advocate Mr. V. B. Patel on the other hand urged that the Act is a self-contained Code which lays down the whole procedure and no inherent powers could be invoked. He also. in the alternative. urged that inherent powers could be invoked if at all they could be invoked only for advancing the purpose of the Act and not for defeating the purpose of the Act so far as enforcement is concerned. He submitted that where a statute takes over and occupies the field previously not regulated by a legislation the rights and power conferred and the obligations imposed by the statute must be worked out within the statutory frame-work and if a statute confers a particular right and prescribes a particular mode for its enforcement.
He submitted that where a statute takes over and occupies the field previously not regulated by a legislation the rights and power conferred and the obligations imposed by the statute must be worked out within the statutory frame-work and if a statute confers a particular right and prescribes a particular mode for its enforcement. the enforcement of the right must be sought in that mode. He urged that the Act confers a particular right on the Corporation and prescribes a particular mode for its enforcement and hence the enforcement of the right must be sought in that mode alone. It is true that the provisions of the Code of Civil Procedure do not apply to these proceedings and therefore we cannot also look into sec. 151 C. P. C. but it cannot be gainsaid that inherent powers which are saved by sec. 151 C. P. C. are inherent in the Code and they are not conferred by the Code of Civil Procedure or any other statute. Hence it cannot be disputed that a Court has inherent powers even if no specific provision having such inherent powers is contained in the Act. ( 5 ) THE learned advocate Mr. D. D. Vyas drew my attention to the decision of the Supreme Court in the case of J. M. D. Syndicate v. The Commissioner of income-tax New Delhi A. I. R. 1977 Supreme Court 1348 in support of his contention that the District Judge exercising powers under sec. 31 of the Act would have inherent powers even if the Code of Civil Procedure does not apply. It appears from the facts of the case before the Supreme Court that the High Court declined to answer a reference made to it under the Income-tax Act on account of paper-book being not supplied. But party then applied to the High Court to rehear the reference because the party could not supply the paper-book within time because the notice of the High Court was misplaced by the partys clerk. The High Court rejected that application after observing that it had become functus officio to entertain the application because of its earlier order declining to answer the reference. The matter was carried before the Supreme Court and it was contended that the High Court had inherent powers to recall its earlier order and dispose of the reference on merits.
The High Court rejected that application after observing that it had become functus officio to entertain the application because of its earlier order declining to answer the reference. The matter was carried before the Supreme Court and it was contended that the High Court had inherent powers to recall its earlier order and dispose of the reference on merits. The Supreme Court accepted that contention and held that the High Court had inherent powers to recall the order made in the absence of the party and to dispose of the reference on merits because there was nothing in any of the provisions of the Income-tax Act either expressly or by necessary implication which would stand in the way of the High Court from passing an order for disposal of the reference on merits. ( 6 ) MR. Vyas also drew my attention to another decision of the Supreme court reported in The Newabgani Mills Co. Ltd. v. The Union of India A. I. R. 1976 S. C. 1152 wherein also the Supreme Court has observed thai though there are limitations on the powers of the Court it cannot abandon its inherent powers. The Supreme Court observed that the inherent power has its roots in necessary and its breadth is co-extensive with the necessity. ( 7 ) MY attention was also drawn to another decision of the Supreme Court in the case of Income-tax Officer v. M. K. Mohammed Kunhi A. I R. 1969 S. C. 430 wherein the Supreme Court held that an express grant of statutory power carries with it by necessary implication the authority to use all reasonable means to make such grant effective. The Supreme Court held in that case that the powers which have been conferred by sec. 254 on the Appellate Tribunal with widest possible amplitude must carry with them by necessary implication all powers and duties incidental and necessary to make the exercise of these powers fully effecttive. It appears that there is no provision in the income-tax Act with regard to stay of proceedings pending appeal before the Appellate Tribunal. But the Supreme Court held that the Appellate Tribunal must be held to have the power to grant stay as incidental or ancillary to its appellate jurisdiction. ( 8 ) THE learned advocate Mr.
It appears that there is no provision in the income-tax Act with regard to stay of proceedings pending appeal before the Appellate Tribunal. But the Supreme Court held that the Appellate Tribunal must be held to have the power to grant stay as incidental or ancillary to its appellate jurisdiction. ( 8 ) THE learned advocate Mr. Vyas also drew my attention to a decision of this Court reported in Soni Vrajlal v. Soni jagvinder Govindji A. I. R. 1972 Gujarat 148 In this decision of this Court. it has been observed that the inherent power has not been conferred upon the Court-by sec. 151 of the Code of Civil Procedure but it is a power inherent it the Court by virtue of its duty to do justice between the parties before it and that where there is no express bar of any express provision of the Civil Procedure C7ode fettering the Courts power or precluding the Court from doing something the Court to advance substantial justice can and must interfere so as to set aside the procedural irregularity to achieve the desired primary object for which the Court exists viz. to do justice between the parties. It is also observed in this decision that one of the first and highest duties of all Courts is to take care that the act of the Court does no injury to any of the suitors and when the expression the set of the Court is used it does not mean merely the act of the primary Court or of any intermediate Court of appeal but the act of the Court as a whole. from the lowest Court which entertains jurisdiction over the matter upto the highest Court which finally disposes of the case. It is further observed that it is the duty of the aggregate of these Tribunals to tale care that no act of the Court in the course of the which of the proceedings does an injury to the suitors in the Court. This decision reiterates what is settled position that the inherent power has not been conferred upon the Court by any statute but it is a power inherent in the Court by virtues of its duty to do justice between the parties before it.
This decision reiterates what is settled position that the inherent power has not been conferred upon the Court by any statute but it is a power inherent in the Court by virtues of its duty to do justice between the parties before it. I would however like to point out here at this stage that while making the above observations the learned single Judge of this Court who decided this matter has pointed out that the act of the Court in exercise of the inherent powers must be such as does no injury to any of the suitors. ( 9 ) IN view of these decisions of the Supreme Court we can say that the District Judge exercising power under sec. 31 and other provisions of the Act can exercise inherent powers which are inherent in the Court itself. It does not make any difference that the District Judge exercises these powers by virtue of the provisions of the Act. ( 10 ) THE learned advocate Mr. V. B. Patel on the other hand drew my attention to a decision of this Court reported in Chimanlal Chhaldas Patel v. Lilachand A. I. R. 1972 Gujarat 26 wherein the scope of the inherent powers had been discussed at para. 18 of the judgment. P. D. Desai J. (as he then was) speaking for the Division Bench has observed with regard to the scope of the inherent powers at para 18 as follows:"a question however may be legitimately posed: If the Court exercise of its inherent power under sec. 151 of the Code have not passed the order in question? The answer to the question must depend upon the true application of the scope nature and object Of the inherent powers of the Court. It must be remembered that the inherent power has not been conferred on the court by sec. 151; the section merely saves a power which is inherent in the Court by virtue of its duty to do justice between the parties before it. The section does not invest the Court with a power or jurisdiction in effect to avoid the application of the procedure prescribed in an appropriate provision Of the Code or to adopt a special procedure not sanctioned by the Code. In other words the Inherent powers of the Court are in addition to the special powers specifically conferred on the Court by the Code.
In other words the Inherent powers of the Court are in addition to the special powers specifically conferred on the Court by the Code. They are complimentary to these powers and the Court would be free to exercise the when the exercise of these powers is not in any way in conflict with what has been expressly provided in the Code or against the intention of the Legislature. The inherent power cannot be exercised in a manner which would be contrary or different from the procedure expressly provided in the Code. It is equally important to note that these powers cannot be exercised over the substantive rights which any litigant possesses and such right could only be affected by specific power conferred red on the Courts. The powers to affect substantive right which a litigant possesses cannot come within the scope of inherent powers Of the Court. The question posed above will have to be considered in the light of these well-settled principles". ( 11 ) THE observations made by the Division Bench in the above case clearly to show that exercise of inherent powers for granting instalments in proceedunder the Act would be on the face of it in conflict with what has been expressly provided in the Act as also against the intention of the Legislature Which has laid down a specific procedure not making any provision for grant of instalments and at the same lime making a specific provision by sec. 46 B that the provisions of the Act and of any rules or orders made thereunder shall have effect not withstanding anything inconsistent therewith contained in any other law for the time being in force. If Instalments are granted in exercise of inherent powers in proceedings under the Acts then it would be exercise of the same in a manner which Would be contrary to and different from the procedure expressly provided in the Act itself. The exercise of inherent powers for grant of instalments in proceedings under the Act would be affecting the substantive right of The corporation because by virtue of the provisions of the Act. the corporation is entitled to get the property attached and sold and the question of grant of instalments in investigation of the claim and attachment and sale of the property would not arise.
the corporation is entitled to get the property attached and sold and the question of grant of instalments in investigation of the claim and attachment and sale of the property would not arise. Even if inherent powers of the Court can be and may be invoked for some purpose in aid of the procedure laid down by the Act they can certainly not be exercised for grant of instalments which would be against the specific procedure laid down by the Act. It cannot be said with any stretch of imagination that exercise of inherent powers for grant of instalments would be complymentary to the powers conferred on the Court by the Act itself. The grant of instalments in exercise of inherent powers would have the effect of avoiding the application of the procedure prescribed by the Act itself which on the face of it is not permissible. ( 12 ) IN the case of Income-tax Officer v. M. K. Mohammed Kunhi (supra) the question was whether the Income-tax Appellate Tribunal can grant stay of proceedings even in absence of any specific provisions empowering the Appellate Tribunal to grant such stay. Sec. 990 (6) of the said Act deals with a situation when an appeal is pending before the Appellate Assistant Commissioner but the Act is silent in that behalf when an appeal is pending before the Appellate Tribunal. It has been held in that case when sec. 254 of the Act confers appellate jurisdiction. it impliedly grants the power of doing all such acts. or employing such means as are essentially necessary to its execution and that the statutory power carries with it the duty in proper cases to make such orders for staying proceedings as will prevent the appeal. if successful from being rendered nugatory. It is obvious that grant of stay of proceedings in exercise of inherent powers will be something supplemental to thee powers of appeal and it does not affect any substantive rights of the parties.
if successful from being rendered nugatory. It is obvious that grant of stay of proceedings in exercise of inherent powers will be something supplemental to thee powers of appeal and it does not affect any substantive rights of the parties. In Nawabganj Sugar Mills Case (supra) it appears that the price of levy sugar was pegged down by the State and the millowners after obtaining stay of the Government order were charging excessive price and the order of the Government was upheld by the High Court and the question was whether the consumers were entitled to repayment of the sail excess and it was in this connection till the Supreme Court took the view that inherent powers call he exercised in favour of rule consumers in such a situation. alias decisions of the Supernal Court thus do not support the contention of Mr. Vyas that inherent powers can be invoked in proceedings under the Act for grant of installments. ( 13 ) THE learned advocate Mr. Vyas drew my attention to the Statement of Objects and Reasons for bringing the statute on the statute-book and urged that the object was to provide medium and long term term to industrial undertakings which fall outside the normal activities of commercial banks and that way to nurse the industries and that object would be defeated if it is held that install its cannot be granted while dealing with an application under sec. 31 of the Act. Now it is true that the object of the Act is as stated in the Statement of Object and Reasons belt at the same time the Act itself provides a special procedure for enforcing the claim of the Corporation by attachment and sale of the properties of the industry concerned. The Legislature while enacting this ct did not think it necessary or proper to make a provision for grant of installments in proceedings under Act. The Legislature on the other hand thought it proper to enact sec. 46b making a specific provision that the provisions of the Act and of the rules made thereunder were to prevail notwithstanding anything inconsistent contained in any other law for the time being in force. The Legislature thus clearly expressed its intention that the procedure laid down by the Act was to be followed in enforcing the claim of the Corporation for recovery of the dues.
The Legislature thus clearly expressed its intention that the procedure laid down by the Act was to be followed in enforcing the claim of the Corporation for recovery of the dues. It may also be mentioned here that the facility of installments is already granted while sanctioning the loan and therefore also it appears that the Legislature did not think it proper to empower the court to give the facility of installments again. In view of this I am not inclined to accept this contention of Mr. Vyas ( 14 ) THE discussion made above will go to show that the learned Distort Judge committed an error in granting installments in the present case. The learned District Judge clearly erred in taking the view that the installments could be granted under Order 20 Rule 11 C. P. C. in these proceedings. The order passed by hire granting installments is thus required to be set aside. ( 15 ) NOW so far as the order setting aside the proclamation is concerned the learned Joint District Judge held that the proclamation was quite legal but he set aside the same only because he was inclined to grant installments. He would not have set aside the sale proclamation if he had not grant instalment. to the opponent of that application. The said order passed by the learned Joint District Judge is also therefore required to be set side. It may however be nonaligned here that if on account of lapse of time or for any other reason a fresh proclamation is required to be issued the Court shall have to issue a fresh proclamation of sale. ( 16 ) AS a result of the aforesaid discussion the appeal is allowed the order passed by the learned Joint District Judge below Ex. 42 granting insalments and also the order passed below Ex. 49 setting aside the sale proclamation are both set aside. The respondent to bear the costs of this petition and pay those of the appeal to the appellant. Appeal allowed. .