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TMI Blog1985 (2) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... td., It was stated in the said application under Sections 31 and 32 that the Engineers (Overseas) Corporation Private Ltd., was engaged in the manufacturing and processing of goods and was an industrial concern within the meaning of the State Act and the said Company had been carrying on its business at Premises No. 42, Raja Santosh Road, Alipore, and the respondent No. 2, Sisir Kumar Arnab was at all material time, a Director of the said Company. The Company was empowered by its memorandum and Article of Association to borrow and/or raise money and to secure the payment or repayment of all sum or sums so borrowed or taken on loan by creation of mortgage, charge or other security upon all or any part of the property of the respondent company. The said company borrowed certain sums of money from the West Bengal Financial Corporation under an Indenture of Mortgage and Guarantee dt. 9th August, 1965 executed by the said company in favour of the West Bengal Financial Corporation and the said Sisir Kumar Arnab was also a guarantor in his personal capacity in respect of the loan and advance and mortgage made under the said indenture. 2. It was contended by [he West Bengal Financial Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d application under Sections 31 and 32 of the Act by the impugned judgment passed on March 17, 1977 in Misc. Case No. 176 of 1970. By the said order, the learned District Judge affirmed the ad interim order of attachment of the mortgage properties and directed for sale of the attached properties. As aforesaid, the Engineers (Overseas) Corporation Ltd., has preferred the instant appeal. 3. At the hearing of this appeal, Mr. Chunder, learned Counsel appearing for the respondents raised a preliminary objection against the challenge sought to be made by the said company against the order of the District Judge upholding the constitutional validity of the State Act. It has been submitted by Mr. Chunder that such order having been passed on Sept. 9, 1971, the appellant-company should have preferred an appeal if it had intended to challenge the said finding of the learned District Judge. Mr. Chunder has contended that the District Judge had fully adjudicated the contentions of the parties so far as the constitutional validity of the State Act is concerned and in the absence of any challenge being made at the relevant time, the company is precluded from challenging such adjudication at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kerala High Court Act and constitutional validity of the impugned provisions of the said levy order was decided as a preliminary issue and thereafter the case was posted for further hearing. 6. An appeal was preferred against such decision of the preliminary issue and the question arose as to whether or not, the said adjudication was appealable. It was held that such adjudication on the preliminary point was appealable and amounted to a judgment within the meaning of Clause 15 of the Letters Patent of the Bombay, Calcutta and Madras High Court and Section 2(9) of the Code of Civil Procedure. Mr. Chunder has submitted that the said order deciding the preliminary issue about the constitutional validity does not also show on the face of it, that the Court has granted any liberty to the appellant to agitate the said contention in future. In the aforesaid circumstances, the appellant not having moved against the said order will not be permitted to agitate the constitutional validity within the scope and ambit of the instant appeal. 7. Mr. Mitter, learned Counsel for the appellant, has, however, disputed the aforesaid contention of Mr. Chunder. He has contended that the lis between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Federal Court and has submitted that a very important and vital question namely the constitutional validity of the State Act had been adjudicated by the learned District Judge on Sept 9, 1971 but the lis between the parties had not been finally determined and the lis arising out of the said application under Sections 31 and 32 was required to be decided in the ordinary way and as a matter of fact, has been decided on merits subsequently and the instant appeal has been preferred against the said order of the learned District Judge, Mr. Mitter has, therefore, contended that in the aforesaid circumstances, it cannot be held that the appellant is precluded from raising the question of constitutional validity of the State Act and the preliminary objection raised by Mr. Chunder should be disallowed. 9. After giving my anxious consideration to the submissions of the respective parties, it appears to me that the said adjudication on the question of constitutional validity of the State Act did not finally dispose of the lis between the parties arising out of the application under Sections 31 and 32 of the State Act and although the appellant could challenge the said adjudication by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s held that it is not always possible to make clear cut division of powers of authorised legislation under Lists 1, 2 and 3 of the 7th Schedule of the said Act They are bound to overlap from time to time and the rule of interpretation is to find out the pith and substance and its true nature and character. Applying the said test, the Privy Council has held that Bengal Money Lenders Act, is in substance, an Act concerning money lending and money lenders and such Act was therefore validly enacted by the State Legislature. Mr. Mitter has also referred to a decision of the Supreme Court made in the case of Ishwari Khetan Sugar Mills v. State of U.P., reported in [1980]3SCR331 . The Supreme Court has also upheld the theory of pith and substance for testing the constitutional validity of an Act so far as the legislative competence is concerned It has been held by the Supreme Court that the pith and substance of the legislation must come within one entry or the other. But even when some portion of the subject-matter of the legislation incidentally trenches upon and might enter upon another list, the Act as a whole will be a valid legislation notwithstanding such trenching, provided the pi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is within the exclusive jurisdiction of the Parliament under Schedule VII of the Constitution. Mr. Chunder has submitted that under the State Act the Industrial Financial Corporation has been permitted to purchase shares and debentures. Provisions have also been made for incorporation, regulation and winding up of the Financial Corporation. Provisions have also been made for liquidation of the Industrial Financial Corporation. Mr. Chunder has drawn our attention to the entry No. 43 of list 1 of Schedule VII of the Constitution which provides for legislation by the Parliament in the matter of incorporation of, regulation and winding up of the Financial Corporation. He has drawn our attention to Section 45 of the State Act which provides for the liquidation of the West Bengal Financial Corporation. Mr. Chunder has therefore, submitted that this Act, even applying the test of pith and substance of the Legislation, cannot be held to be an Act primarily for money lending business. Mr. Chunder has also submitted that under the provisions of the State Act, the Financial Corporation has the power to take management of the borrower firm. In this connection, he has referred to a decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oration. The State Act, in my view, has been enacted primarily for the purpose of ensuring development of medium and small scale industries and for the purpose of such development, financial aid has become a matter of necessity and as such, provisions of financial aid by way of loan advance and recovery of such financial assistance have been provided for in the State Act. It appears that the West Bengal Financial Corporation has been authorised to take over management of the borrower unit in some cases. There is also provision for incorporation and liquidation of the State Financial Corporation. Accordingly, it cannot be held that the State Act is primarily an Act for money lending and as such, if the pith and substance theory is applied, the State Act must fall within the ambit of the State List concerning money lending as contended by Mr. Mitter. 15. I respectfully agree with the view expressed by the Assam High Court in Chargola Tea Company's Case (AIR 1973 Gau 136) (supra) and hold that there is no want of legislative competence so far as the State Act is concerned. 16. Mr. Mitter has also challenged the vires of the State Act on the ground of unreasonable discriminat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision of appeal has been made and such appeal from the order of the learned District Judge lies before the High Court of the State. He has submitted that the special procedures provided for in Sections 31 and 32 are not disadvantageous to the mortgagor and no real injury is to be suffered by the mortgagor because of the said special provisions. On the contrary, the provisions in Sections 31 and 32 ensure speedy disposal of the dispute before a competent and high judicial authority. In this connection Mr. Chunder has referred to a Full Bench decision of the Orissa High Court made in the case of State Financial Corporation v. Satpathy Brother Nanda Co. (P) Ltd, reported in AIR1975Ori132 . The Full Bench of the Orissa High Court has considered the provisions of Sections 31 , 32 and 46-B of the concerned State Act for appreciating the contention raised before it that by making special provisions for enforcing the mortgage, a discrimination has been made offending Article 14 of the Constitution. It has been held by the Orissa High Court that under the said provisions a very high judicial authority like the District Judge has been empowered to adjudicate the disputes between the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be administrative officers there is provision in these Acts for giving notice to the party affected, to inform him of the grounds on which the order of eviction is proposed to be made, for the party affected to file a written statement and produce documents and be represented by lawyers. The provisions of the Civil Procedure Code regarding summoning and enforcing attendance of persons and examining them on oath, and requiring the discovery and production of documents are valuable safeguards for the person affected. So is the provision for appeal.......... 18. Mr. Chunder has submitted that for the purpose of adjudication, learned District Judge has been authorised to apply the provisions of Civil Procedure Code as far as such provisions are applicable. 19. For the purpose of disposing of this application under Sections 31 and 32, the party affected gets all reasonable opportunities to defend before the high authority like the District Judge and has also a right to prefer an appeal before the High Court. Mr. Chunder has therefore submitted that even on the test indicated by the Supreme Court in the case of Maganlal Chhagganlal, [1975]1SCR1 (supra), it cannot be held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nancial Corporation and the Company did not receive the amount stated to have been advanced by the Corporation. 22. Mr. Mitter has submitted that if the mortgagor does not voluntarily execute the deed but is made to sign a document at the dictation of a person, such execution cannot be held to be a proper execution by the mortgagor and the admission of execution under such circumstances cannot be taken to be an admission of the execution of the document lawfully. In such circumstances, the requirement of proof according to the proviso to Section 68 of the Evidence Act remains. In this connection, Mr. Mitter has referred to a decision of this Court in the case of Ebrahim Mondal v. State of West Bengal, reported in 40 CWN 151. It has been held in the said decision that Section 68 of the Evidence Act is imperative and the Rule under Section 68 is mandatory. In a case where the attestation according to law is specially required to be so made, it is necessary to call at least one attesting witness to prove execution of the document. Mr. Mitter has also referred to the decision of the Privy Council in the case of Surendra Bahadur Singh v. Behari Singh, reported in: 43 CWN 669 : (AIR 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the respective contentions of the learned Counsel for the parties, it appears to me that in the facts and circumstances of this case, the Company and its Directors did not deny the execution of the mortgage deed sought to be enforced under Sections 31 and 32 of the said Act. It was specifically admitted that such mortgage deed had been executed by the said Company but it was alleged that such deed was the outcome of coercion and undue influence and there is also allegation that the entire sum referred to in the mortgage deed was not advanced. In our view, Mr. Chunder is justified in his contention that in the facts of this case, the execution has not been denied but the defendants have contended that on the score of undue influence and coercion and also for other reasons, the said deed of mortgage was not enforceable. In the aforesaid circumstances, examination of the attesting witnesses for the purpose of proof of the execution of the document was not necessary and the learned District Judge was justified in proceeding on the footing that the deed of mortgage has been duly proved. 25. Mr. Mitter has contended that under the State Act itself, the learned District Judge could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, not desirable to force the taking over of management of a losing concern on the West Bengal Financial Corporation. More so, neither of the parties had asked for such handing over of the management. In my view, there is enough force in the aforesaid contention of Mr. Chunder. Although it appears to me that the District Judge could have directed for payment by instalment, in the instant case, no such direction need be given at this stage. Firstly, the ad interim order of attachment has been made final and secondly, even twenty years' limitation for full payment of the loan is going to expire within a few months and as such no useful purpose will be served, by granting any instalment now. In the circumstances, no interference is called for in this appeal. 26. The appeal, therefore, fails and is dismissed but I make no order as to costs. S.P. Das Ghosh, J. 27. I agree. The appeal should be dismissed. But I want to make some additions to the judgment just now dictated by My Lord 28. This is an appeal under Section 32(9) of the State Financial Corporation Act, 1951 ( Act in short). Under Section 32(8) of the Act, an order of attachment or sale of property under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, power to impose condition for accommodation, power to call for repayment before the agreed period as well as power to take over management will show that apart from credit to industrial undertakings, the corporation had many other functions, which an ordinary money-lender does not have. Parliament was, thus, empowered under Entry 43 of List I to enact the Act. 30. For finding out if the guarantee of equal protection under Article 14 of the Constitution has been violated, the test is not the degree of inequality, but the reality of it. As the purpose of the Act appears to promote industries and to provide credits to as many industries as possible, special procedure has been laid down in the Act for recovery of the dues of the corporation. This procedure prescribes some additional powers of the District Judge as well as of the High Court in dealing with the matters mentioned in Section 32 of the Act Those provisions in Section 32 of the Act show that the parties would get much better and quicker justice than what they could obtain in an ordinary civil Court. This procedure for recovery of the dues of the corporation is saved by Section 4(1) of the Code of Civil Procedure, The A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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