BHARAT CHEMICAL WORKS BARODA Vs. GUJARAT STATE FINANCIAL CORPORATION

JUDGEMENT

(1.) This appeal arises out of an order made by the District Judge Baroda in a proceeding under sub-sec. (1) of sec. 31 of the State Financial Corporation Act 1951 (hereinafter referred to as the Corporation Act) for the sale of the Property of the appellants specified in the schedule attached to the application. The order is challenged on several grounds. We shall deal with each of those grounds separately in the course of this judgment. Ground No. 1: In view of sub-sec. (4) of sec. 3 and sec. 7 of the Gujarat Public Moneys (Recovery of Dues) Act 1979 (hereinafter referred to as the Recovery Act) the proceeding under sec. 31 of the Corporation Act could not have been continued and no order for the sale of the property in question could have been passed in Such a proceeding

(2.) Sec. 3 sub-sec. (1) of the Recovery Act in so far as it is relevant for the present purposes provides that where any person is a party to any agreement relating to a loan advance or grant given to him by the Corporation (the definition of which term covers the respondent-Corporation) by way of financial assistance and such person makes any default in payment of the loan or advance or any instalment thereof or otherwise fails to comply with the terms of the agreement then the Managing Director of the Corporation or where there is no Managing Director the Chairman thereof by whatever name called may send to the Collector a certificate as early as possible in the prescribed form mentioning the sum due from such person and requesting that such sum may be recovered as if it were an arrear of land revenue. Sec. 3. sub-sec. (4) which is invoked to support the submission under consideration provides that no suit for the recovery of any such due as aforesaid shall lie in a civil court against any person referred to in sub-sec (1) and no injunction shall be granted by a civil court in respect of any action taken or intended to be taken in pursuance of the right conferred by this section. Sec. 7 which is also invoked in so far as relevant provides that all suits of the nature referred to in sub-se-c. (4) of sec. 3 pending in any Civil Court immediately before the commencement of this Act shall abate upon such commencement so however that such abatement shall be without prejudice to the right of the Corporation to recover any sum which may be the subject matter of such suit in accordance with the provisions of this Act or any other law for the time being in force.

(3.) The submission on behalf of the appellants is that the proceeding under sub-sec. (1) of sec. 31 of the Corporation Act is a suit instituted in a civil Court for the recovery of the sum due from them under an agreement relating to a loan advanced to them by the Corporation by way of financial assistance and that in view of sub-sec. (4) of sec. 3 of the Recovery Act such a suit would not lie and that in the instant case the suit which was pending when the Recovery Act came into force would abate under sec. 7 and that therefore on order for the sale of the property in question could have been validly made in the said suit.