2011 (8) TMI 977 - SC - Companies Law

Whether impugned action of defendant is illegal and if it is proved, whether plaintiff is entitled for decree of declaration and mandatory injunction? Whether plaintiff or defendant must cooperate with the court in ensuring the effective work on the date of hearing for which the matter has been fixed?

Summary

Issues:
1. Interpretation of Section 29 of the State Financial Corporations Act, 1951.
2. Legality of the takeover of assets by the Corporation.
3. Maintainability of the suit regarding limitation and jurisdiction.
4. Adherence to procedural requirements under Order XVII Rule 3(a) of CPC.
5. Formulation of substantial question of law in second appeal.
6. Justifiability of High Court's decision in setting aside concurrent judgments.

Analysis:

1. The case involved the interpretation of Section 29 of the State Financial Corporations Act, 1951, concerning the Corporation's power to take over mortgaged property due to non-payment. The plaintiff, a company, had availed loans from the Corporation and failed to repay, leading to the Corporation exercising its rights under the Act to take over the assets.

2. The legality of the takeover of the plaintiff's assets by the Corporation was challenged in the suit. The plaintiff sought a declaration that the takeover and subsequent sale proceedings were illegal and requested restoration of possession of the property. The Corporation defended its actions, stating that it followed due process under the law.

3. The issue of maintainability of the suit was raised by the Corporation, questioning the jurisdiction of the Civil Court and the limitation period for filing the suit. These procedural aspects were crucial in determining the validity of the plaintiff's claims against the Corporation.

4. The trial court's application of Order XVII Rule 3(a) of the CPC was significant in this case. The court closed the plaintiff's evidence after multiple adjournments due to the plaintiff's failure to produce evidence. This decision ultimately led to the dismissal of the suit by the trial court.

5. The High Court's decision in the second appeal was challenged on the grounds of not formulating a substantial question of law as required under Section 100 CPC. The Supreme Court emphasized the importance of adhering to procedural requirements and formulating substantial questions of law before deciding a second appeal.

6. The Supreme Court criticized the High Court's decision to set aside the concurrent judgments of the lower courts based on misplaced sympathy. The Court highlighted the plaintiff's failure to produce evidence despite multiple opportunities and stressed the need for courts to prevent abuse of procedural rules and unnecessary adjournments in litigation.

In conclusion, the Supreme Court allowed the appeal, setting aside the High Court's judgment and emphasizing the importance of procedural adherence, formulation of substantial questions of law, and preventing delays in the judicial process.