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2019 DIGILAW 1610 (KAR)

Mahadevamma D/O Late D Mallappa v. Karnataka State Financial Corporation

2019-07-08

N.K.SUDHINDRARAO

body2019
JUDGMENT : N.K. Sudhindrarao, J. This appeal by the plaintiffs/appellants is directed against the judgment and decree dated 01-01-2011 passed by the IV Additional District and Sessions Judge, Mysore in R.A.No.212/2006, wherein the appeal came to be dismissed confirming the judgment and decree dated 01.07.2006 passed in O.S.No.76/2004 by the learned Civil Judge (Sr.Dn), Hunsur. 2. In order to avoid confusion and overlapping, the parties are referred in accordance with their rankings before the trial Court. 3. Plaintiffs filed a suit against the Karnataka State Financial Corporation and Sri. Gopalagowda, said to be the purchaser of the schedule Unit, seeking declaration to declare that the act of sale of the plaint schedule property made by the 1st defendant- Corporation infavour of the 2nd defendant/purchaser on 27.12.2003 is null and void and also for the consequential relief of permanent injunction restraining the defendants or any persons claiming under them from interfering with the peaceful possession and enjoyment of the plaintiffs in and upon Plaint A schedule property and also for mandatory injunction against the defendants to place them in possession of plaint C schedule property and also another independent relief of mandatory injunction in directing the 1st defendant to supply electricity power to the plaint-A schedule unit. 4. It is stated that plaintiffs are the borrowers in respect of the schedule unit and loan was sanctioned by 1st defendant. The total loan amount is stated to be Rs.11,20,000/-. In clearing the loan amount with interest, they became defaulters and the schedule unit 1 to 3 came to be sold in a public auction and the realization made by the 1st defendant is communicated to the plaintiffs on 27.12.2003. 5. Defendants entered appearance and filed their written statement separately. The main contention of the defendants is the suit is not maintainable. 6. On the basis of the above pleadings, trial Court framed 5 issues and treating issue No.1 "Whether suit is maintainable?" as Preliminary issue touching to the maintainability of the suit itself, dismissed the said suit on 01-07-2007. 7. Plaintiffs preferred an appeal against the said judgment and decree before the IV Additional District and Sessions Judge, Mysore, in R.A.No.212/2006, which came to be dismissed on 01- 01-2011, thereby confirming the judgment and decree passed by the learned trial Judge. 7. Plaintiffs preferred an appeal against the said judgment and decree before the IV Additional District and Sessions Judge, Mysore, in R.A.No.212/2006, which came to be dismissed on 01- 01-2011, thereby confirming the judgment and decree passed by the learned trial Judge. It is against this judgment and decree, the Regular Second Appeal is preferred by the plaintiffs before this Court and the matter has come up for Admission. 8. It is undisputed that plaintiffs borrowed the loan from 1st defendant and became defaulter and also requested the defendants to reschedule the loan structure and also to provide gestation period. It appears that, first the plaintiffs are the members of joint family, there has been partition and other arrangements in respect of the assets and liability and one of the member was entrusted with the responsibility to discharge the loan and in which directions, it is stated that plaintiff No.3 has paid Rs.2,20,000/- on 23.10.2001. 9. The reliefs sought by the plaintiffs are on four folds viz., (i) Declaration that the auction sale conducted by the 1st defendant wherein the schedule units were sold to the 2nd defendant as void. (ii) Permanent injunction against the defendants 1 and 2 from interfering with the possession and enjoyment of the plaintiffs over the schedule unit. (iii) Mandatory injunction to direct the defendants to put the plaintiffs in possession and enjoyment of the schedule unit. (iv) In addition to the said reliefs, another independent reliefs in the form of mandatory injunction i.e. to direct the 1st defendant to provide electricity tot h schedule unit. With these reliefs, they approached the trial court. 10. The learned counsel Sri. Nanjundaswamy submitting on behalf of 2nd appellant would submit that it is high handedness on the part of the 1st defendant to seize and sale the schedule unit. 11. It is to be seen that, suit came to be filed for several reliefs. Regard being had to the fact that the original loan amount that was sanctioned was Rs.11,20,000/-. Plaintiffs chose to file valuation slip valuing the relief under Section 24 D of the Karnataka Court Fees and Suits Valuation Act, 1958. Here it is necessary to make a mention of said statutory provision, which is as under: "24. Regard being had to the fact that the original loan amount that was sanctioned was Rs.11,20,000/-. Plaintiffs chose to file valuation slip valuing the relief under Section 24 D of the Karnataka Court Fees and Suits Valuation Act, 1958. Here it is necessary to make a mention of said statutory provision, which is as under: "24. Suits for declaration.- In a suit for a declaratory decree or order, whether with or without consequential relief, not falling under section 25,- (a) XXX XXX (b) XXX XXX (c) XXXXX;] (d) in other cases, whether the subject matter of the suit is capable of valuation or not, fee shall be computed on the amount at which the relief sought is valued in the plaint or on 1 [rupees one thousand] whichever is higher." 12. The reliefs sought by the plaintiffs are almost comprehensive coverage to absolve the liability by declaring the auction as null and void and for permanent injunction and also for mandatory injunction. It is necessary to make a mention of Section 29 of the State Financial Corporations Act, 1951, which is as under: 29. Rights of Financial Corporation in case of default. (1) Where any industrial concern, which is under a liability to the Financial Corporation under an agreement, makes any default in repayment of any loan or advance or any installment thereof [or in meeting its obligations in relation to any guarantee given by the Corporation] or otherwise fails to comply with the terms of its agreement with the Financial Corporation, the Financial Corporation shall have the [right to take over the management or possession or both of the industrial concerns], as well as the [right to transfer by way of lease or sale] and realise the property pledged, mortgaged, hypothecated or assigned to the Financial Corporation. (2) Any transfer of property made by the Financial Corporation, in exercise of its powers [***] under subsection (1), shall vest in the transferee all rights in or to the property transferred 64 [as if the transfer] had been made by the owner of the property. 9 (3) The Financial Corporation shall have the same rights and powers with respect to goods manufactured or produced wholly or partly from goods forming part of the security held by it as it had with respect to the original goods. 9 (3) The Financial Corporation shall have the same rights and powers with respect to goods manufactured or produced wholly or partly from goods forming part of the security held by it as it had with respect to the original goods. [(4) [Where any action has been taken against an industrial concern] under the provisions of sub-section (1), all costs, [charges and expenses which in the opinion of the Financial Corporation have been properly incurred] by it [as incidental thereto] shall be recoverable from the industrial concern and the money which is received by it [***] shall, in the absence of any contract to the contrary, be held by it in trust to be applied firstly, in payment of such costs, charges and expenses and, secondly, in discharge of the debt due to the Financial Corporation, and the residue of the money so received shall be paid to the person entitled thereto.] [Where the Financial Corporation has taken any action against an industrial concern] under the provisions of sub-section (1), the Financial Corporation shall be deemed to be the owner of such concern, for the purposes of suits by or against the concern, and shall sue and be sued in the name of 70 [the concern]." 13. Learned counsel for the 2nd appellants has relied on the decision of this court in the case of R. Gopalakrishna Vs. Karnataka State Financial Corporation, (2008) ILR(Kar) 2034. 14. This Court perused the judgment of the Apex Court in the case of the State Financial Corporation and another Vs. M/s.Jagadamba Oil Mills and another, (2002) AIR SC 834 wherein, Head Notes (A) to (C) are as under: (A) State Financial Corporations Act (63 of 1951), S. 29 Debt recovery of Corporation seeking to sell industrial unit of debtor by auction Permanent injunction against Granted solely on the basis a decision of Supreme Court, and without discussing factual aspect relating to failure of debtor to repay loan improper. (B)-State Financial Corporations Act, (63 of 1951) S.29 Debt Recovery of Corporation is expected to act fairly Purpose of lending is to promote industrialization Corporation is not expected to write off bad debts. (B)-State Financial Corporations Act, (63 of 1951) S.29 Debt Recovery of Corporation is expected to act fairly Purpose of lending is to promote industrialization Corporation is not expected to write off bad debts. (C) Constitution of India, Arts.14, 226 Administrative action Obligatory for administrative authorities to act fairly Courts cannot act as appellate authority over decision taken by it Cannot substitute its judgment unless action of administrative authority is unfair and unreasonable Administrative Law Natural justice Administrative authority obligation to act fairy court's interference scope. 15. When no statutory violations or deprival of rights are mentioned by the plaintiffs, such reliefs cannot be sought. 16. In the overall circumstances of the case, the reliefs sought for by the plaintiffs are not maintainable. In this connection, I concur with the learned trial Judge and also the first Appellate Judge. 17. The learned counsel for appellants/plaintiffs would also submit that the circumstances of seizure, disconnection of electricity, sale are to be find out and discovered only after a full fledged trial. 18. The submissions of the learned counsel for plaintiffs cannot be accepted. More particularly when the suit or first appeal or second appeal before this Court is not maintainable. 19. In the circumstances, it is also necessary to make further observation on the court fee paid by the plaintiffs before the trial Court in O.S.No.76/2004, first Appellate Court in R.A.No.212/2006 and before this Court in the present second appeal. In this connection, he has to file a fresh valuation slip with reference to market value of the schedule property and the deficit court fee remains to be paid by the plaintiffs within three months from today, failing which, the amount shall be recovered as arrears of land revenue. 20. For the foregoing reasons, the appeal does not bear substantial question of law for consideration by this Court under Section 100 of CPC. Hence, the appeal is rejected. No orders as to costs.