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PETITIONER: ASNEW DRUMS PRIVATE LTD. & ORS.

       Vs.

RESPONDENT: MAHARASHTRA STATE FINANCE CORPORATION & ORS.

DATE OF JUDGMENT24/08/1971

BENCH: SIKRI, S.M. (CJ) BENCH: SIKRI, S.M. (CJ) RAY, A.N. PALEKAR, D.G.

CITATION:  1972 AIR  801            1972 SCR  (1) 351  1971 SCC  (3) 602

ACT: State  Financial  Corporation Act (Maharashtra  Act,  63  of 1951)--Appeal  whether lies to High Court against  order  of sale of mortgaged property by District Judge under s. 38(2)- District  Judge whether persona designata-summary  dismissal of appeal whether justified.

HEADNOTE: Section  32(8) of the State Financial Corporation Act,  1961 provides  "An order of attachment or sale of property  under this  section  shall  be  carried  into  effect  as  far  as practicable  in  the manner provided in the  Code  of  Civil Procedure,  1908 for the attachment or sale of  property  in execution  of a decree as if the Financial Corporation  were the  decree-holder".  The appellant’s properties which  were mortaged  under a registered deed to the  Maharashtra  State Financial  Corporation were ordered to be sold by  an  order passed by the District Judge under s. 32(8) of the aforesaid Act.  The High Court dismissed the appeal filed against  the order  of the, District Judge on the ground that  no  appeal lay.  On merits also the appeal was dismissed summarily.  In appeal to this Court by special leave, HELD  : (i) The High Court erred in holding that  no  appeal lay. (a)There  is  no  doubt  that  under  the  Code  of  Civil Procedure an order setting aside or refusing to set aside  a sale in execution of a decree in appealable under O..  XLIII r. 1(j).  It is difficult to understand why the scope of the language  should be cut down by not including  appeals  pro- vided under the Code of Civil Procedure within the ambit  of the  words  "in  the manner provided in the  Code  of  Civil Procedure".   "Manner"  means  method of  procedure  and  to provide for an appeal is to provide for a mode of procedure. The  State Financial Corporation lends huge amounts  and  it could  not  be  imagined that it was the  intention  of  the Legislature to make the order of sale of property, passed by the  District Judge, final and only subject to an appeal  to the  Supreme Court under Art. 136 of the Constitution.  [354 H-355 B] The fact that an appeal to the High Court has been expressly provided  in  s.  32(9)  could  not  lead  to  a   different

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conclusion.,  The  reason why an appeal has  been  expressly provided  therein  is  that if there had  been  no  specific provision  in  sub-s.. (9), no appeal  would  lie  otherwise because it is not provided in sub-s. (5) or sub-s. (7)  that the District Judge should proceedin the manner provided in the Code of Civil Procedure. [355 D] (b)  On  a  correct reading of s. 32(11) it cannot  be  said that the Act confersjurisdiction on the District  Judge as persona designata. [355 E-F] (c)  The  contention that the whole idea of the Act  was  to have  expeditious execution as otherwise large funds of  the State  Financial  Corporation  would  be  locked  up  during execution  proceedings could not be accepted.  If  this  was the  intention of the legislature it. would have  expressly. provided  that  no appeal would lie against, an  order  made under sub-s. (8) of s. 32. [355 G] (ii)  On  the  facts  of the case the  High  Court  was  not justified in dismissing the appeal summarily. [356 A] 352

JUDGMENT: CIVIL  APPELLATE JURISDICTION : Civil Appeals Nos. 1021  and 1022 of 1971 and 1852 of 1970. Appeals by special leave from the orders dated February  16, 1970  and August 20, 1970 of the Bombay High Court in  First Appeal  No.  152 of 1970 and Civil Application No.  2183  of 1970 and from the judgment and order dated January 16,  1970 of  the Distt.  Court, Thana, Bombay in Misc.   Applications Nos. 111 of 1969 and 75 of 1965, respectively. V.M. Tarkunde, B. Datia and B. R. Agarwal, for the appel- lant (in all the appeals). M.N. Phadke and A. G. Ratnaparkhi, for respondents Nos. 1 and 2 (in all the appeals). C. K.  Daphtary, Bishan Narain, Harish Chandra,  S.  Jalan and H. K. Puri, for respondent no. 3(in all the appeals). The Judgment of the Court was delivered by SIKRI, C. J.-Civil Appeal No. 1021 of 1971, by special leave is  directed against the judgment of the Bombay High  Court, dated February 16, 1970, dismissing First Appeal No. 152  of 1970, summarily.  The judgment of the High Court reads "No appeal lies. Even on merits we do not find any substance. Dismissed." This First Appeal was purported to be filed under sub-s. (9) of  s.  32  of the State Financial Corporation  Act  (63  of 1951)hereinafter  referred to as the Act-from  the  judgment and  order  dated  January  16, 1970,  passed  by  Gopal  U. Rijhsinghani,   Joint   Judge,   Thana,   in   Miscellaneous Application  No.  111  of 1969.  Two points  arise  in  this appeal : (1) Whether an appeal lies to the High Court  under s.  32(9) of the Act ? (2) if the appeal lay, was it a  case for a summary dismissal ? In  order to appreciate these points it is necessary to  set out a few facts.  One of the appellants, Asnew Drums Private Ltd., hereinafter referred to as the appellant company, made an  application  to  the  Bombay  (now  Maharashtra)   State Financial  Corporation  for  a  loan of  Rs.  10  lakhs  for installing  and erecting machinery plant and other  fixtures for   its  drum  reconditioning  factory  at  Kalve,   Thana District,   Bombay.   The  appellant  Company   executed   a registered  deed of mortgage by, way of  security,  pledging all lands, buildings, machineries etc.  On August 10,  1965, the Finance Corporation filed Miscellaneous Application  No.

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75  of  1965 against the appellant company and  two  of  its Directors under  35 3 s.31 of the Act for sale of company properties  mortgaged and for issue of interim injunction restraining the  company from dealing with these properties. The relevant part of Section 31 (1 ) of the Act provides               " 31(1) Where an industrial concern, in breach               of   any  agreement,  makes  any  default   in               repayment  of  any  loan  or  advance  or  any               instalment   thereof..........  then   without               prejudicate to the provisions of s. 29 of this               Act  and  of  section 69 of  the  Transfer  of               Property  Act,  1882,  any  officers  of   the               Financial Corporation, generally or  specially               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  Financial  Corporation   as               security for the loan or advance. or               (b)............               (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." On  August  18, 1965, the District Judge issued  an  interim injunction  restraining  the company  from  transferring  or removing  its machinery, plant or equipment.  On  April  11, 1966,  the District Judge confirmed the order of  injunction and  attachment and ordered the sale of  attached  machinery and  plant of the company and passed an order for  issue  of sale proclamation as required under s. XXI r. 66, C.P.C. Section 32 of the Act lays down the procedure to be  adopted by the District Judge in respect of ’applications under s. 3 1  (  1  )  (a) and (c) of the Act.  Sub-s.  (6)  of  s.  32 provides  that "if cause is shown, the district judge  shall proceed to, investigate the claim of the Finance Corporation in  accordance with the provisions contained in the Code  of Civil  Procedure, 1908, in so far as such provisions may  be applied  thereto."  It is under this  sub-section  that  the District.   Judge  investigated the claim although  we  were informed  that  no  rules had  been  framed  containing  the provisions of the Code of Civil Procedure to be applied  for this purpose.  The relevant part of sub-s.(7) provides  that after  making an investigation under sub-s.(6) the  District Judge may confirm the 354 order  of  attachment and direct the sale  of  the  attached property.   It is under this sub-section that  the  District Judge  confirmed  the order of attachment and  directed  the sale of the attached property. Sub-section  (8) of s. 32 calls for interpretation  in  this appeal.  It provides :               "32(8).   An  order of attachment or  sale  of               property  under this section shall be  carried               into  effect  as  far as  practicable  in  the               manner   provided   in  the  Code   of   Civil               Procedure, 1908 for the attachment or sale  of

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             property  in execution of a decree as  if  the               Financial Corporation were the decree-bolder." The  District Judge applying the relevant provisions of  the Code  of  Civil Procedure issued various  proclamations  for sale.   The  last one was issued in pursuance of  the  order dated June 30, 1969 of the District Judge directing that the properties  be  again put up for sale.  On July 28,  1969  a fresh  proclamation for the fifth time for sale  was  issued and on August 20, 1969 a public notice was published in  the Times  of India only.  On August 28, 1969, the  highest  bid for  lot  No.  1 was Rs. 5,70,000/- and for lot  No.  2  Rs. 5,40,000/-.  The sale was adjourned to September 3, 1969 but no public notice of this adjournment was given. The District Judge directed the Financial Corporation to get the  evaluation of the property made by some expert.  It  is stated  that  M/s.   Corona Electrical valued  land  at  Rs. 3,04,610/’-, building at Rs. 7,41,486/- and machinery at Rs. 7,02,000/-total Rs. 17,47,096/-.  On September 2, 1969,  the appellant company protested against this hurried  valuation, but on September 3, 1969 the whole property was sold for Rs. 11,50,000/- to M/s.  Kayjay Industries Private Ltd., auction purchasers,  who  deposited in Court  Rs.  2,87,500/-  being 1/4th of the amount of the bid.  On September 12, 1969,  the remaining was paid by the auction-purchasers and on  October 3, 1969 the appellant company applied for setting aside  the sale.  On January 16, 1970. this application was  dismissed. On  February 13, 1970 the appellant company filed  F.A.  No. 152/70 in the Bombay High Court.  The Bombay High Court,  as already stated, rejected the appeal on February 16, 1970  on the  ground  had no appeal lay and also on the  ground  that there was no merit in the appeal. The  question  which really arises is whether by  using  the words  "in  the  manner  provided  in  the  Code  of   Civil -Procedure" in s. 32(8) the Legislature intended to  include the provisions in the Code dealing with appeals.  There  is, no  doubt  that under the Code of Civil Procedure  an  order setting  aside or refusing to set aside a sale in  execution of a decree is appealable under O. XLIII  355 r.I (j).  It is difficult to understand why the scope  of the  language  should be cut down by not  including  appeals provided under the Code of Civil Procedure within the  ambit of  the words "in the manner provided in the Code  of  Civil Procedure".   "Manner"  means  method of  procedure  and  to provide for an appeal is to provide for a mode of procedure. The  State Financial Corporation lends huge amounts  and  we cannot for a moment imagine that it was the intention of the Legislature to make the order of sale of property, passed by the  District Judge, final and only subject to an appeal  to the Supreme Court under art. 1 3 6, of the Constitution. The  learned  counsel for the  respondents  contended  that, wherever the Legislature wanted to provide for an appeal  to the High Court, it did so specifically.  In this  connection he  pointed out that sub-s.(9) of s. 32 provided  that  "any party  aggrieved by an order under sub-section (5)  or  sub- section  (7)  may, within thirty days from the date  of  the order,  appeal to the High Court, and upon such  appeal  the High Court may, after hearing the parties, pass such  orders thereon as it thinks proper." It is true that an appeal  has been expressly provided in this case but the reason for this is  that if there had been no specific provision  in  sub-s. (9),  no appeal would lie, otherwise because it is not  pro- vided  in sub-s. (5) or sub-s. (7) that the  District  Judge should  proceed in the manner provided in the Code of  Civil Procedure.

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We  are not impressed by the argument that the  Act  confers jurisdiction  on  the District Judge  as  persona  designata because sub-s. (11) of s. 32 provides that "the functions of a district judge under this section shall be exercisable (a) in  a  presidency town, where there is a  city  civil  court having  jurisdiction,  by a judge of that court and  in  the absence of such court, by the High Court; and (b) elsewhere, also  by  an additional district  Judge."  These  provisions clearly  show  that  the District Judge  is  not  a  persona designata. It was contended that the whole idea of the Act was to  have expeditious execution as otherwise large funds of the  State Financial  Corporation would be locked up  during  execution proceedings.  If this was the intention -of the Legislature, it  would have expressly provided that no appeal  would  lie against an order made under sub-s. (8) of s. 32. In the result we hold that an appeal lay to the Bombay  High Court  and  the High Court erred in holding that  no  appeal lay. The  next  question is whether it was a case  in  which  the appeal  should  have been dismissed summarily.   This  Court gave special leave against the order of the District  Judge, dated  January  16, 1970, (Civil Appeal No. 1852  of  1970). Prima facie this Court 356 thought that there was something to be said on the merits of the  case.  We accordingly hold that the High Court was  not justified in dismissing the appeal summarily. We  accordingly  allow Civil Appeal No. 1021 of 197  1,  set aside  the  judgment  and order of  the  High  Court,  dated February  16, 1970, and remand the case to it  for  disposal according to law. Civil  Appeal  No. 1852 of 1970 was filed after  this  Court granted  special  leave against the order  of  the  District Judge,  dated January 16, 1970.  As we have  remanded  Civil Appeal  No. 1021 of 197 1, directing the High Court to  hear and  dispose  of  the  appeal from the  same  order  of  the District  Judge, according to law, Civil Appeal No. 1852  of 1970 becomes infructuous. Civil  Appeal No. 1022 of 1971, by special leave, was  filed against  the  order of the Bombay High Court  rejecting  the application  of the appellants for leave to appeal  to  this Court  against their judgment and order dated  February  16, 1970.   In view of our decision in Civil Appeal No. 1021  of 1971, remanding the case to the High Court, this appeal also becomes infructuous. There will be no order as to costs in these three appeals. We  have  no doubt that the High Court will dispose  of  the appeal, we have remanded, expeditiously, if possible  within three  months,  as  the  auction  purchasers  have   already deposited  the  full Toney and delay will prejudice  them  a great  deal.  In the meantime, the purchase money  lying  in deposit in the District Court be allowed to be withdrawn  by the  Maharashtra  State Finance  Corporation.   The  learned counsel for the Corporation, on instruction, undertakes that the  Corporation  will refund the money if directed  by  the High Court. Civil Appeal No. 1021 of 1971 remanded. Civil  Appeals  Nos.  1852 of 1970 and  1022  of  1971  held infructuous. G.C. 3 5 7