Rajasthan Financial Corporation vs Ganpat lal Baboo lal and Others

Mahesh Bhagwati, J.—The crucial legal questions which arise for consideration in this appeal is as to whether the application filed u/s 31(1) of the State Financial Corporation Act, 1951 (for short the Act) is a plaint and whether the provisions of Limitation Act are applicable to it?

This question has emerged in the following circumstances

(i)Respondents Nos. 2 and 3 after availing loan facility from the Appellant (for short RFC) purchased a Ashoka Leyland Bus Model 1981 bearing No. RNB 2607.

Respondents Nos. 4 and 5 executed a deed of guarantee. The Respondent No. 4 also submitted an affidavit with regard to his house situated at Jaipur mentioning therein that he will not transfer his house till the loan is repaid. The liability of the guarantors is coextensive with the principal debtor.

(ii)Loan amounting to Rs. 2,35,000/- was to be paid by the Respondents. When the principal debtor did not make the payment, the notice u/s 30 of the S.F.C. Act was issued. Thereafter, the Bus No. 2607 was taken in possession on 20.7.1989 and was auctioned on 24.7.1990 and an amount of Rs. 52,000/- was received in auction and after adjusting the same a sum of Rs. 3,68,722/- remained due for which the information was given to the Respondents that the amount was not paid therefore, the application was submitted by the RFC. The court below dismissed he said application observing that the application is not within limitation and while dismissing the application the learned trial court has held that the cause of action has accrued on 22.6.1988 which is the date of notice.

Section 31(1) of the Act gives power to the Financial Corporation to enforce claims by simply moving the District Judge by means of the petition and Section 32 of the Act lays down the prompt procedure to be followed by the said judge. Section 32 has been enacted by way of speedy remedy.

In Abdul Mobin Ansari and others Vs. The Maharashtra State Financial Corporation, it has been held that Section 32 of the Act is nothing but an execution proceedings.

Full Bench of the Himachal Pradesh High Court headed by Hon''ble N.M. Kasliwal C.J. (as he then was) in H.P.F.C. v. Tourist Hotel 1989 (2) BCLR 199 has observed that the substantive relief sought in an application u/s 31(1) of the Act 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.

Hon''ble Apex Court in Gujarat State Financial Corporation Vs. Natson Manufacturing Co. Pvt. Ltd. and Others, and in Maganlal Vs. Jaiswal Industries, Neemach and Others, has observed that application u/s 31(1) of the Act cannot be treated as a plaint for the purpose of payment of court fee.

The application was filed before the learned District Judge, Jaipur City, Jaipur as the application for loan was submitted at Jaipur, documents were executed at Jaipur and the load was also sanctioned at Jaipur and the principal debtor and sureties were carrying their business within the limits of jurisdiction of District Judge, Jaipur City, Jaipur as such the court below, when the application was transferred by the District Judge, Jaipur City, Jaipur had jurisdiction to adjudicate the application in view of the provisions contained in Section 31(1) of the Act.

The observation of the court below that the application was barred by the limitation in view of Article 137 of the Limitation Act, is also perverse and bad in law. The court below has not appreciated Section 31 and 32 of the Act in right perspective. As already stated, the application u/s 31(1) of the Act cannot be treated as plaint. The substantive relief sought in the application is alike the relief sought in the execution application.

The court below thus committed a jurisdictional error in dismissing the application filed by the RFC u/s 31(1) of the Act and if the order is allowed to stand, it would occasion failure of justice.

Consequently, I allow this appeal and set aside the order dated 01.11.1993, passed by the learned Additional District Judge, No. 3, Jaipur City, Jaipur. As the District Judge, Jaipur City, Jaipur has jurisdiction to adjudicate the application u/s 31 of the Act, I remit the said application for a fresh decision to the court of Addl. District Judge, Jaipur City, Jaipur. Let copy of this order be forwarded to the Additional District Judge No. 3, Jaipur City, Jaipur. The learned Additional District Judge, if think proper may provide an opportunity of hearing to the principal debtor and sureties. Costs easy.