Virolex Cables and Another vs The Tamil Nadu Industrial Investment Corporation Limited and Another

Srinivasan, J.—This civil revision petition is directed against the order, dismissing the application for entering caveat as not maintainable. The

caveat was filed by the petitioners in the expectancy of a proceeding by the Tamil Nadu Industrial Investment Corporation Limited under the

provisions of the State Financial Corporations Act, 1951. The District Judge dismissed the application, holding that u/s 32 of the said Act, a

financial corporation is entitled to get orders without notice to the defaulter and there is no question of the defaulter filing a caveat with reference to

a proceeding u/s 31 of the Act.

Learned Counsel for the petitioners contends that the District Judge is functioning as District Court and the powers under the said Act are not

conferred on him as ''persona designata'', but conferred on the Court itself. Hence, he argued that the provisions of Section 148-A of the CPC will

automatically apply and they cannot be excluded by the provisions of the said Act. It is also argued that it will be depriving the Court of its

independence, and the provisions of the relevant sections cannot he construed in that fashion.

I do not agree with the latter contention of learned Counsel. With regard to the first contention the question does not arise for my consideration

as it is not contended by the respondents in the revision that the powers are conferred under the Act on the District Judge as ''persona designata''.

However, the provisions of Section 148-A, C.P.C., will not apply because they are impliedly excluded by the provision of Section 32 of the

aforesaid Act.

u/s 31(1) of the Act, if an industrial concern commits a default in repayment of loan or advance, the Financial Corporation may apply to the

District Court for an order for sale of property pledged, mortgaged or hypothecated or assigned to the Financial Corporation, for enforcing the

liability of any surety, for transferring the management of the industrial concern to the Financial Corporation, and for ad interim injunction restraining

the industrial concern from transferring from the premises of the industrial concern without the permission of the Board, where such removal is

apprehended.

In so far as the prayers for an order for sale of the property and for an injunction restraining the industrial concern from transferring the

management of the industrial concern are concerned, Section 31(1) provides that the Court shall pass an ad interim order attaching the security or

so much of the property of the industrial concern as would on being sold realise in its estimate an amount equivalent in value to the outstanding

liability of the industrial concern to the Financial Corporation, with or without an ad interim injunction restraining the industrial concern from

transferring or removing its machinery, plant or equipment.

With reference to two other reliefs, it is mandatory on the part of the Court to similarly pass ad interim orders. Thus, Section 32 makes it

compulsory on the part of the Court to pass interim orders, before issuing any notice to the industrial concern. Sub-section (4) of Section 32

provides as follows:

At the same time as he passes an order under Sub-section (1), the District Judge shall issue to the industrial concern a notice accompanied by

copies of the order, the application and the evidence, if any, recorded by him calling upon it to show cause on a date to be specified in the notice

why the ad interim order of attachment should not be made absolute or the injunction confirmed.

Therefore, it is seen that the notice to the industrial concern has to be issued by the Court after passing the ad interim order. It is certainly open to

the Court to satisfy itself of the correctness of the case put forward by the Financial Corporation by recording evidence before passing any orders,

but the section does not contemplate hearing of the industrial concern by the Court before passing the ad interim order. Therefore, by virtue of the

terms of Section 32 of the Act, the provisions of Section 148-A, C.P.C., are automatically excluded. Consequently, the order of the Court below

dismissing the caveat is correct. The civil revision petition has to fail and is dismissed. No costs.