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2007 DIGILAW 1012 (MAD)

N. Villavarayan v. The Branch Manager, The Tamil Nadu Industrial Investments Corporation Ltd. , Chennai & Others

2007-03-21

S.ASHOK KUMAR

body2007
Judgment :- This Civil Revision Petition is filed by the petitioner, first respondent in the Original Petition, pending on the file of the learned VI Additional Judge, City Civil Court, Chennai, to call for and quash the same as it is not maintainable. 2. The Original Petition before the Additional Judge has been filed to determine the liability of the revision petitioner and respondents 2 to 4 herein jointly and severally and to direct them jointly and severally to pay the first respondent TIIC Ltd., the sum of Rs.7,75,824.24 together with further interest at contractual rate from the date of filing of the OP till date of realisation. The revision petitioner is the principal borrower and respondents 2 to 4 are his guarantors of the loan amount of Rs.2.3 lakhs availed on 211. 1984. The first respondent TIIC Ltd, invoked its right under Section 29 of the State Financial Corporations Act, following the default committed by the petitioner in repayment of the loan sold the hypothecated machineries in public auction on 23. 1995 and recovered a sum of Rs.1,35,000/= on 20.6.1995 towards the loan amount. In order to recover the balance amount with accrued interest as on 33. 1997 amounting to Rs.6,756,059.24 filed the O.P. Against the revision petitioner and the respondents 2 to 4. In the said OP, the respondents 2 and 3 were set ex parte. The revision petitioner and the respondent No.4 filed counter. The revision petitioner is yet to cross examine P.W.1. At this stage the present revision is filed by the principal borrower. .3. Learned counsel for the revision petitioner contended that the O.P., itself is not maintainable either in law or on facts and the O.P, is liable to be dismissed in limini since O.P., proceedings cannot be initiated for the recovery of the amount. In other words, Section 31 of the State Financial Corporations Act does not contemplate for filing money claim by filing an O.P., as the said section does not indicate that the court below has got any power to pass an order in the nature of a money decree. Further, under Section 31 of the Act, the only power vested with the District Judge is to pass an order for the sale of the property pledged, mortgaged or hypothecated for enforcement of any liability of a surety. Further, under Section 31 of the Act, the only power vested with the District Judge is to pass an order for the sale of the property pledged, mortgaged or hypothecated for enforcement of any liability of a surety. This position has been clarified in the decision reported in AIR 1998 Bombay, 207 wherein it has been held that Section 31 of the State Financial Corporations Act exclude the powers on the part of the District Judges to order any payment to be made to the Corporation by way of an independent relief. 4. However, learned counsel for the first respondent herein contended that though the District Judge has no power to pass an order in the nature of a money decree, as already the hypothecated machinaries were sold in public auction by the TIIC Ltd., under Section 29 of the SFC Act, and part amount was recovered, only for recovery of the balance amount, the said O.P., has been filed, and therefore, the Additional Judge has power to consider the other prayer to determine the liability or to pass any other order as he deems fit as prayed for in the said O.P., .5. As rightly contended by the learned counsel for the revision petitioner, under Section 31 of the S.F.C Act, the power of the District Judge is only limited to certain reliefs namely, to sell the property mortgaged or pledged or hypothecated and to determine the liability of the surety. This position is fortified by the decision of the Bombay High Court in AIR 1998 Bombay, 207 (M/s. Kiril Fine Art, Chandrapur others Vs. The Maharashtra State Financial Corporation) wherein it has been held as follows:- ."Even a cursory glance at Section 31 would be enough to suggest that the application under Section 31 could result in to the reliefs enumerated thereunder in Clauses (a), (aa), (b) and (c). indeed, there is nothing from the language of Section 31 to indicate that the Court had any power to pass an order in the nature of the decree for the payment of any amount. Sub Section (1) of S.31 is clear enough to exclude the power on the part of the District Judge to order any payment to be made to the Corporation by way of an independent relief. Sub Section (1) of S.31 is clear enough to exclude the power on the part of the District Judge to order any payment to be made to the Corporation by way of an independent relief. All that can be done by the District Judge is passing an order for the ale of the property pledged, mortgaged or hypothecated or for enforcement of any liability of a surety and under the wider clause (c) District Judge could grant ad interim injunction restraining the industrial concern from transferring or removing its machinery, plant or equipments from the premises. .6. Therefore, it is clear that the trial court cannot pass a decree in the nature of a money decree. However, the prayer to consider the other relief namely, to determine the liability of the principal borrower and guarantors as to either jointly or severally and to pass appropriate orders can also not maintainable since under Sub Section 31(2) of the S.F.C.Act, the application under Sub Section (1) of Section 31 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. Therefore, it is clear that even the liability has to be determined and fixed by the Financial Corporation and not by the District Judge as envisaged in Sub Section (2) of Section 31 and it would always be open to the Corporation to establish its financial liability against the revision petitioner in separate proceedings, if they so choose to proceed against the Industrial concern. 7. For the reasons stated above, this CRP is allowed and the pending O.P.No:153 of 1993 is ordered to be struck of from the file of the learned VI Additional Judge, City Civil Court, Chennai.