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TMI Blog2004 (5) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... n Orissa State Financial Corpn. v. Sailendra Narayan Patnaik [1999] BC 78 regarding applicability of Article 137 of the Limitation Act (for short, the Act ) to applications under section 31 of the State Financial Corporations Act ( SFC Act for Short). In view of the conflicting decisions, the Division Bench being of the opinion that an authoritative pronouncement on the points would be perfectly justified, directed the office to place the matter before the Chief Justice for constituting an appropriate Bench, vide order dated 4-3-2004. As stated, the matter is placed before us. 3. The questions referred to by the Division Bench for our consideration are as follows: (1)Keeping in view the expression used in section 31 of the State Financial Corporations Act and the provisions of sub-section (11) thereof, (seems to be of section 32) is an application made to the District Judge for one of the reliefs envisaged under the said provision an application made to a Civil Court? (2)Is an application under section 31 of the State Financial Corporations Act governed by any period of limitation stipulated under the provisions of the Limitation Act, 1963, having regard to the natu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31-5-1988, was beyond the period of limitation prescribed under the statute and dismissed the petition vide order dated 28-1-1997. Against that order this appeal has been filed. M.F.A. No. 5696/1998 has been filed by the KSFC on 18-12-98 against the order dated 31-10-1998 passed by the II Additional District Sessions Judge, Bangalore Rural District, Bangalore, in Misc. Case No. 56/1993. The KSFC sanctioned a loan of Rs. 30 lakhs to the 6th respondent-Ittina Printers (P.) Limited on 14-3-84 and its Directors, respondent Nos. 1 to 5, executed Exs. P1 to 5 with respect to the loan transaction of the 5th respondent as guarantors. Further loans were sanctioned on different dates. Regarding 4th loan transaction, on 23-6-86 respondents 1 to 5 have executed guarantee deeds agreeing to be the guarantors with respect to a particular loan by particular respondents. The deeds were executed on 11-6-1984, 1-2-1986, 27-3-1986 and 23-6-1986. The 6th respondent s asset was taken over by the KSFC and it was sold on 9-8-90. The 6th respondent had paid some amount earlier, but no amount was paid subsequently. The Trial Court observed that the petition was filed in 1993 seeking recovery of the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. He also submits that the appellant is not seeking any relief nor for a decree, and the question of consideration of Article 137 of the Act does not arise in these cases. He further submits that the questions referred by the Division Bench are not necessary and the only question to be considered is whether Article 137 of the Limitation Act is applicable or not. The learned counsel relied on the decisions in Gujarat State Financial Corpn. v. Natson Mfg. Co. (P.) Ltd. AIR 1978 SC 1765; Everest Industrial Corpn. v. Gujarat State Financial Corpn. [1987] 3 SCC 597, Maganlal v. Jaiswal Industries AIR 1989 SC 2113; Hotel Vivek Continental (P.) Ltd. v. M.P. Financial Corpn., Indore AIR 1991 M.P. 156; Amar Cold Storage Ice Factory v. Punjab Financial Corpn. AIR 1994 Punj. Har. 235 and O.K. Gaur Co. v. Rajasthan Finance Corpn. AIR 2001 Raj. 4. 7. Sri K. Gopala Hegde, learned counsel for KSFC also submits that the only question to be considered in these cases is whether Article 137 of the Limitation Act is applicable or not and the Division Bench without there being any issue nor it being raised, has referred the questions on its own to resolve the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration due to inconsistency. The Court should see that the matter should not be referred to a larger Bench in a routine manner. In the instant case, no contrary decision of this Court has been shown nor is in issue. However, the Division Bench has referred the matter to a larger Bench considering the single Judge decisions of different High Courts without considering the Apex Court decision on this point. Be that as it may. 12. Now we take up some cases relied upon by the learned Counsel for the parties : In Gujarat State Financial Corpn. s case ( supra ) while considering the issue pertaining to affixing of Court fees, their Lordships observed as to what is the nature of proceedings contemplated by section 31(1) if it is not a suit by the mortgagee for recovery of mortgage money by sale of mortgaged property. Section 31 would to some extent provide a clue to this question. The substantive relief in an application under section 31(1) is something akin to an application for attachment of property in execution of a decree at a stage posterior to the passing of the decree. ( ii ) In Kerala State Electricity Board s case ( supra ), their Lordships while considering the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Civil Procedure Code regarding execution of decree are applicable. It was also held that under section 31(1) and 31(2) of SFC Act, the liability of surety is co-extensive with that of the loanee industrial concern and where there is any provision confining the liability of surety, the extent of liability shown in the application under section 31(1) has to be in conformity with the surety bond. Their Lordships further held that when special statute confers jurisdiction on District Judge, the District Judge will not be a persona designata but a court of ordinary civil jurisdiction to which the rules of procedure, order, decree, etc., under section 4 of C.P.C. 1908 will apply to such Court. ( iv ) In CCE v. Raghuvar (India) Ltd. [2000] 5 SCC 299 on the question whether limitation period for doing or not doing an act has to be enacted and prescribed and cannot be imported by the courts by implication, their Lordships held that albeit , in absence of a limitation period for exercise of a power affecting the rights of a citizen, courts can hold that the same should be exercised within a reasonable period. ( v ) In Addl. Special LAO v. Thakoredas AIR 1994 SC 2227, their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity for a loan taken by him from the Corporation. The amount of loan not having been paid by the appellant to the Corporation, the Corporation made an application as contemplated by section 31 of the Act before the District Judge, their Lordships held that the order for sale is not decree for purpose of applying section 34 of C.P.C. and the legal fiction cannot be extended for treating the application under section 31(1) as plaint for payment of Court fee. ( vii ) In O.K. Gaur Co. s case ( supra ) AIR 2001 Raj. 4, it was observed by the learned single Judge that on an application under section 31 of the SFC Act, a decree for money cannot be passed because the relief which can be granted under section 32 are against the property whereas a money decree is to be passed by the Civil Court against the concerned person i.e., the judgment debtor. 13. The learned counsel for the parties though have argued that it would not have been necessary to refer the matter, as referred, by framing issues. At the most, the only question that arises for consideration is regarding applicability of Article 137 of Limitation Act to applications under section 31 for SFC Act. 14. It is seen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorised by the Board in this behalf, may apply to the District Judge within the limits of whose jurisdiction the industrial concern carries on the whole or a substantial part of its business for one or more of the following reliefs, namely: ( a )for an order for the sale of the property pledged, mortgaged, hypothecated or assigned to the Corporation as security for the loan or advance; or ( aa )for enforcing the liability of any surety; or ( b )for transferring the management of the industrial concern to the Financial Corporation; or ( c )for an ad interim injunction restraining the industrial concern from transferring or removing its machinery or plant or equipment from the premises of the industrial concern without the permission of the Board, where such removal is apprehended. (2) An application under sub-section (1) 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. Section 32 of the Act reads as follows : "32. Procedure of District Judge in respect of application under section 31. (1) When the application is for the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial concern to the Corporation or confirm the injunction. (6) If cause is shown, the District Judge shall proceed to investigate the claim of the Corporation in accordance with the provisions contained in the Code of Civil Procedure, 1908, in so far as such provisions may be applied thereto. (7) After making an investigation under sub-section (6) the District Judge may - ( a )Confirm the order of attachment and direct the sale of the attached property; ( b )vary the order of attachment so as to release a portion of the property from attachment and direct the sale of the remainder of the attached property; ( c )release the property from attachment; ( d )confirm or dissolve the injunction; ( da )direct the enforcement of the liability or the surety or reject the claim made in this behalf; ( e )transfer the management of the industrial concern to the Financial Corporation or reject the claim made in this behalf : Provided that when making an order under clause ( c ) or making an order rejecting the claim to enforce the liability of the surety under clause ( da ) or making an order rejecting the claim to transfer the management of the industrial concern or the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al district judge, or by any judge of the principal court of civil jurisdiction. (12) For the removal of doubts it is hereby declared that any court competent to grant an ad interim injunction under this section shall also have the power to appoint a receiver and to exercise all the other powers incidental thereto". 15. It may be noted at this stage that by virtue of Act 43 of 1985 certain amendments have been introduced under section 32 of the Act which have already been incorporated in the section culled out above. Section 32-G which is also introduced by Act 43 of 1985 deals with recovery of amounts due to the Financial Corporation as arrears of land revenue and section 46-B of the Act deals with the effect of the Act on other laws and reads as follows: "46-B: Effect of Act on other laws 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 any industrial concern or in any other instrument having effect by virtue of any law other than this Act, but save as aforesaid, the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its liability against the surety also not only when he has furnished security as a guarantor but also to enforce the personal guarantee of the surety and after referring to the various provisions introduced by the Amendment Act 43 of 1985 the Supreme Court has held that the extent of liability referred to in section 31(1) will necessarily have to be in the very nature of things in terms of monetary value even though it may be not possible to call it a decree stricto sensu as defined in section 2(2) of the Code for recovery of money. In the said case, the Supreme Court has considered the provisions of section 46-B, 32-G as also section 32 including sub-section (11) of section 32 and has explained the nature and scope of proceedings under sections 31 and 32 after amendment by Act 43 of 1985. 17. Section 2( a ) and 2( i ) of the Limitation Act, 1963 read as follows: "2. Definitions In this Act, unless the context otherwise requires : ( a ) applicant includes : ( i )a petitioner, ( ii )any person from or through whom an applicant derives his right to apply; ( iii )any person whose estate is represented by the applicant as executor, administrator or other represen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsona designata , but a Civil Court of ordinary jurisdiction. 20. Questions 2 and 3 The answer to these questions also need not detain us for long in view of the fact that the said questions have also been answered by the later decision of the Supreme Court. We have already noted the provisions of sections 31 and 32 of the Act and also the effect of Amendment of section 32 by Act 43 of 1985 and the nature and scope of the said provisions. The earlier decisions of the Supreme Court were rendered before Amendment Act 43 of 1985. Therefore, the decisions relied upon by the learned counsel appearing for the Corporation about the scope and nature of sections 31 and 32 prior to Amendment Act 43 of 1985 are not helpful to him as the question about the applicability of Limitation Act to an application filed under section 31 of the Act did not arise for consideration in the said cases. 21. The question of applicability of the provisions of the Limitation Act, 1963 to the applications under the Special Acts wherein no period of limitation is prescribed had specifically come up for consideration before the Supreme Court in the case of Kerala State Electricity Board ( supra ). In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 18(3)( b ) of the Land Acquisition Act wherein the section itself did not prescribe any limitation for filing the application and in the said case after reiterating the decision of Three Judges Bench decision in Kerala State Electricity Board s case ( supra ) the Supreme Court observed as follows: "...there is no period of limitation prescribed in sub-section (3)( b ) to make that application but it should be done within limitation prescribed by the Schedule to the Limitation Act since no article expressly prescribed the limitation to make such application, the residuary article under article 137 of the Schedule to the Limitation Act gets attracted....." (p. 2229) 22. In view of the above said decisions of the Supreme Court and the answer given by us to the first question that an application filed to District Judge under section 31 of the Act is to a court of ordinary civil jurisdiction and not to District Judge as a persona designata and since no limitation is prescribed under the Act for making any application under section 31 of the SFC Act it has to be held that the application under section 31 of the Act is governed by Article 137 of 1963 Limitation Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kashmir and in view of the definition of suit under the Limitation Act it is clear that suit does not include an appeal or application. Even otherwise, an application filed by the State Financial Corporation which is a statutory body established pursuant to the provisions of the SFC Act cannot be said to be an application filed by the State or Central Government. Similarly, the provisions of Article 136 prescribing the period of limitation for filing application for execution of any decree or order of any Civil Court is also not applicable to an application filed under section 31 of the SFC Act as the said application so filed cannot be said to be in execution of any decree. Having regard to the nature and scope of the provisions of sections 31 and 32 of the Act explained by the Supreme Court in Maharashtra State Finance Corporation case referred to above. Therefore the only article that would be applicable to the application filed under section 31 of the Act would be Article 137 of the Limitation Act which prescribes limitation of three years from the date when the right to apply accrues. The Full Bench decision relied upon by the learned counsel appearing for the Corporation in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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