Pharmadia Laboratories & another v. Maharashtra State Finance Corporation & another
1990-04-09
B.V.CHAVAN
body1990
DigiLaw.ai
JUDGMENT - CHAVAN B.V., J.:---This is a revision application filed by M/s. Pharmadia Laboratories, Nagpur and Shri Ashok Kumar Madan Gopal Agrawal, Partner (hereinafter referred as "the debtors"), challenging the order dated 11th August, 1986, passed by the Joint District Judge, Nagpur, below application Exhibit 23 filed on behalf of the debtors requesting the Court to investigate the claim of the debtors under sub-section (6) of section 32 of the State Financial Corporation Act, 1951. 2. The non-applicant the Maharashtra State Financial Corporation, Nagpur filed an application under sections 31 and 32 of the Maharashtra State Financial Corporation Act (hereinafter referred to as "the Act") bearing No. MCA No. 405/85 in the Court of the District Judge, Nagpur, for recovery of the amount of Rs. 1,58,411.03. After filing the substantive application the non-applicant also made an application Exhibit 5 for ad interim injunction, attachment of the mortgaged and hypothecated property on 17-1-1986. The learned trial Judge passed an order issuing ad interim injunction and attaching the mortgaged and hypothecated property with notice to the other side. On receiving the show cause notice the applicants filed reply to the said application Exhibit 5, denying the claim of the non-applicants and contending that the non-applicant No. 1 was not entitled to call upon the applicants/debtors to pay the whole of the loan amount in the absence of any ground under section 30 of the Act. On 12th June, 1986, the learned Judge heard the parties and passed an order that the order regarding an ad interim injunction and attachment of hypothecated and mortgaged property is made absolute. Thereafter on 11th August, 1986, the applicants-debtors filed applications under section 32 of the Act, making a prayer that in accordance with sub-section (6) of section 32 of then Act, the claim of the non-applicant No. 1 requires to be investigated. On the same day the learned Judge heard the Advocates and passed an order that this is not the stage when the claim of the applicants could be investigated and so observing rejected Exhibit 23. 3. Feeling aggrieved by the said order the applicants-debtors have filed the present revision application. 4.
On the same day the learned Judge heard the Advocates and passed an order that this is not the stage when the claim of the applicants could be investigated and so observing rejected Exhibit 23. 3. Feeling aggrieved by the said order the applicants-debtors have filed the present revision application. 4. Shri Paliwal appearing on behalf of the applicants had contended that the notice to show cause that was issued to the applicants was in respect of the application Exhibit 5 for ad interim injunction and the applicants had filed their objections to the said application. Shri Paliwal contended that sub-section (4) of section 32 of the Act contemplates giving of notice to show cause only on the point as to why the ad interim order of attachment should not be made absolute or the injunction confirmed. His contention is that the applicants filed their reply only to that limited extent and, therefore, the learned Judge was not justified in passing the further order, ordering the sale of hypothecated and mortgaged property without investigating the claim as required by sub-section (6) of section 32 of the Act. He, therefore, contended that the order of sale made by the learned Judge was without jurisdiction since it was made without investigation of the claim and the same should be set aside. 5. Looking to the scheme of section 32 of the Act, it is clear that it does not contemplate filing of two separate applications one, for substantive relief and another, for ad interim relief. What sub-section (1) of section 32 says is that when the application is for relief 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 property of the industrial concern with or without an ad interim injunction restraining the industrial concern from transferring or removing its machinery, plant or equipment.
Then the material sub-section is sub-section (4) of section 32, which lays down that at the same time while the District Judge passes an order under sub-section (1), the District Judge shall issue to the industrial concern a notice accompanied by the copies of the order, the application and the evidence, if any, recorded by him calling upon it to show cause on the date to be specified in the notice why the ad interim order of attachment should not be made absolute or the injunction confirmed. Sub-section (5) of section 32 of the Act then provides, if no cause is shown on or before the date specified in the notice under sub-sections (2) and (4), the District Judge shall forthwith make the ad interim order absolute and direct the sale of the attached property or transfer the management of the industrial concern to the Financial Corporation or confirm the injunction. Lastly, sub-section (6) of section 32 of the Act, on which reliance is placed by Shri Paliwal, provides, if cause is shown, the District Judge shall proceed to investigate the claim of the Financial Corporation in accordance with the provisions contained in the said section and pass further orders. 6. It is not correct to contend that when the industrial concern is called upon to show cause under sub-section (4) of section 32 of the Act, it is a notice limited only to the extent of the relief as to whether the ad interim order of attachment or of injunction should be made absolute or not. In fact reading sub-sections (4) and (5) together it is amply clear that while issuing the show cause notice the industrial concern is provided with all the copies of the order, the application and the evidence, if any, recorded in order to enable him to show cause. Therefore, when the industrial concern is called upon to show cause, it is expected to show cause by filing necessary reply or written statement not only to the ad interim order but also to the application on merits. If the industrial concern fails to show cause on merits also then as provided by sub-section (5) of section 32 of the Act the District Judge concerned is obliged to make the ad interim order absolute and direct the sale of the attached property or confirm the injunction as the case may be.
If the industrial concern fails to show cause on merits also then as provided by sub-section (5) of section 32 of the Act the District Judge concerned is obliged to make the ad interim order absolute and direct the sale of the attached property or confirm the injunction as the case may be. In the present case it is an admitted fact that the applicants did not file any written statement in their reply to the main application of the non-applicant. On bare perusal of the reply filed on behalf of the applicant which was produced before me for perusal, it appears that the reply was restricted only to the formal application for injunction Exhibit 5, and it did not deal with any of the contentions raised in the main application. Shri Paliwal contended that the applicants were under the wrong notion that they will be given an opportunity to file a separate written statement to the main application and at that stage they were expected only to file a reply in pursuance of the show cause notice only to the limited extent of making the ad interim order absolute. As I said earlier the provisions of section 32 of the Act, do not contemplate filing of an injunction application separately from the main applicant. It is now common knowledge that even when a reply is filed to the application for interim relief, ultimately, the matter is argued and decided on the basis of prima facie case and other relevant considerations having regard to merits of the plaintiffs's case. It cannot, therefore, lie in the mouth of the applicants to say that they were misled by this practice and, therefore, they expected another opportunity to be given to file a written statement on the merits of the application of the non-applicants. If at all the applicants had any defence they should have incorporated it or filed separately when called upon by the show cause notice issued under sub-section (4) of section 32 of the Act. They having not done that the learned Judge was justified in rejecting the application of the applicants at Exhibit 23 filed by them on the assumption that the stage contemplated by sub-section (6) of section 32 of the Act was still available to the applicants.
They having not done that the learned Judge was justified in rejecting the application of the applicants at Exhibit 23 filed by them on the assumption that the stage contemplated by sub-section (6) of section 32 of the Act was still available to the applicants. However, the applicants having not shown cause on merits of the application as required by sub-section (5) of section 32, the learned Joint District Judge was obliged to pass an order making the ad interim injunction absolute and direct the sale of the attached property, which he has done in the present case. In my view, therefore, the Joint District Judge has not committed any error of jurisdiction nor can it be said that he has acted illegally in exercise of his jurisdiction to call for interference in the revision application. The revision application, therefore, deserves to be dismissed. 7. At this stage Shri Paliwal on behalf of the applicants submitted that the applicants may be granted six months 'time to clear all the outstanding dues of the non-applicant No. 1. It is not for this Court, particularly, in the present revision application to consider such request, but it will be open to the applicants to approach the non-applicant No. 1 offering to make payment with certain time bound programme which the non-applicant No. 1 may consider. 8. Result is that the revision application is dismissed. Rule discharged with no order as to costs. The interim stay stands vacated. Revision dismissed. -----