Industrial Finance Corporation of India and another vs Sehgal Papers Limited and others

Gokal Chand Mittal, J.—By order dated 22nd April, 1982, it was decided that issues Nos. 4 and 5 be treated as preliminary issues and should be decided first.

Having heard the counsel for the parties at length, I am of the view that issue No. 4 deserves to be decided in the negative, i.e., against the respondent Ms. Sehgal Papers Limited and since the matter is covered by authoritative decisions, it has become wholly unnecessary to decide issue No. 5. The two issues are as follows :--

Issue No. 4.--Whether section 30 of the Industrial Finance Corporation Act is ultra vires Articles 14 and 19 of the Constitution of India ? If so, its effect ?

Issue No. 5.--Whether issue No. 4 can be decided by the Court while dealing with the petition u/s 30 of the Industrial Finance Corporation Act ?

Coming to issue No. 4, the main point for decision is whether section 30 of the Industrial Finance Corporation Act, 1948 (hereinafter referred to as the Act) is ultra vires Articles 14 and 19 of the Constitution of India inasmuch as two remedies are provided to the Industrial Finance Corporation of India ; one being u/s 30 of the Act and the other being by filing a regular civil suit and that there are stringent provisions contained in section 30(3) and (14) of the Act because the moment the reliefs as contained in clauses (a; and (b) of section 30 (1) of the Act, are claimed, the Court is duty-bound to issue ad interim order attaching the security or so much of the property of the Industrial concern as is necessary to satisfy the outstanding liability and that too without affording any opportunity of being heard and to show that it was not a fit case for not resorting to ad interim order of attachment.

The first limb of the argument is fully met by the decision of the Supreme Court in Maganlal Chhaganlal (P) Ltd. Vs. Municipal Corporation of Greater Bombay and Others, as also State Financial Corporation Ltd. Vs. Satpathy Brothers and Nanda Co. (P.) Ltd. and Others, Srinivasa Kandasari Sugars, Narasimhunipet Vs. Government of Andhra Pradesh and Others, and The Director of Industries, U.P. and Others Vs. Deep Chand Agarwal, . In Satpathy Brother''s case (supra) and M/s. Srinivasa Khanasari Sugars, case (supra) sections 29 and 31 of the State Financial Corporations Act 1951 fell for consideration which are in pari materia with various previsions of section 30 of the Act. Therefore, it will be wholly wasteful to dilate on the matter in greater details and it would be suffice to say that I am in full agreement with the reasons recorded in these two decisions and following the same, 1 uphold the vires of section 30 of the Act and hold that it is not violative of Article 14 of the Constitution of India.

Coming to the other limb of the argument that certain subsections of section 30 of the Act provide for stringent action against the defaulting party without notice or opportunity of hearing, I find that the argument, on the face of it, does not stand scrutiny. A reading of sub-sections (5), (6), (7), (8) and (9) clearly go to show that an ad interim order passed under sub-section (sic ) is not final but is an ex parte order which can be recalled, modified or confirmed after hearing the aggrieved party Sub-section (14) authorises appointment of a receiver. Since the Act is a complete Code by itself, that is why specific provision has been made authorizing appointment of a receiver on an application filed u/s 30 of the Act. If an ordinary civil suit had been filed, then a receiver could be appointed under the Code of Civil Procedure. Accordingly, I do not find that subsection (3) or sub-section (14) of section 30 of the Act is violative of either Article 24 or Article 9 of the Constitution of India. All these matters were also considered in Satpathy Brothers'' case (supra), M/s Srinivasa Kandasari Sugars'' case (supra) and Deep Chand Agarwal''s case (supra). Accordingly, I am of the view that section 30 (with all its sub sections) of the Act is intra vires and decide issue No. 4 against M/s Sehgal Papers Limited and in favour of the Industrial Finance Corporation of India.

Since the matter covered under issue No 4 already stands decided by the decisions noted above, it has become wholly unnecessary to decide issue Mo 5 Accordingly, that issue is left open to be gone into in some other suitable case.

Issue No. 4, was claimed as preliminary issue by M/s. Sehgal Papers Limited and since it is decided against it, the remaining matters will proceed further in accordance with the orders passed earlier.