# ASNEW DRUMS PRIVATE LTD. & ORS v. MAHARASHTRA STATE FINANCE CORPORATION & ORS

- **Citation:** [1972] 1 S.C.R. 351
- **Court:** Supreme Court of India
- **Decided:** 1971-08-24
- **Case number:** Civil Appeals Nos.' 1021 A and 1022 of 1971
- **Bench:** S. M. S!Kri, A. N. Ray, D. G. Palekar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/asnew-drums-private-ltd-ors-v-maharashtra-state-finance-corporation-ors-5362
- **Pages:** 6

## Headnote

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.
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 filecl 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 holdipg 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 0., XLIII r. I (j). It is difficult to understand why the
scope of the language should be cut down by not including appeals pro-
,;ded 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 provicle 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 BJ
The fact that an appeal to the High Court has been .expressly provided
in s. 32(9') could not lead to a different 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
proceed in the manner provided in the Code of Civil Procedure., [355 DJ
(b) On a correct reading of s. 32( 11) it cannot be said that the Act
confers iurisdictiQn 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 Corpo-
.ration 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 app~_al summarilv. [3% A 1
352
SUPREME COURT REPORTS
[1972] l S.C.R.

## Text

A
B
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351
ASNEW DRUMS PRIVATE LTD. & ORS.
v.
MAHARASHTRA STATE FINANCE CORPORATION & ORS.
August 24, 1971
[S. M. S!KRI, C.J., A. N. RAY AND D. G. PALEKAR, JJ.]
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.
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 filecl 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 holdipg 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 0., XLIII r. I (j). It is difficult to understand why the
scope of the language should be cut down by not including appeals pro-
,;ded 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 provicle 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 BJ
The fact that an appeal to the High Court has been .expressly provided
in s. 32(9') could not lead to a different 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
proceed in the manner provided in the Code of Civil Procedure., [355 DJ
(b) On a correct reading of s. 32( 11) it cannot be said that the Act
confers iurisdictiQn 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 Corpo-
.ration 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 app~_al summarilv. [3% A 1
352
SUPREME COURT REPORTS
[1972] l S.C.R.
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos.' 1021
A
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
B
Dist!. Court, Thana, Bombay in Misc.
Applications Nos. 111
of 1969 and 75 of 1965, respectively.
V. M. Tarkunde, B. Dalla and B. R. Agarwal, for the appellant (in all the appeals).
M. N. Phadke and A.G. Ratnaparkhi, for respond•mts Nos. 1 c
and 2 (in all the appeals).
C. K. Daphtary, Bishan Narain, Barish Chandra, S. !a/an and
H. K. Puri, for respondent no. 3(in all the appeals).
The Judgment of the Court was deliv~red by
:., SIKRI, C. !.-Civil Appeal No. 1021 of 1971, by special
D
kave 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.
E
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)-
hereinafo~r referred to as the Act-from the judgment and order
dated January 16, 1970, passed by Gopal U. Rijhsinghani, Joint F
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.,
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hereinafter referred to as the appellant company, made an application to the Bombay (now Maharashtra) State Financial Corporation for a loan of Rs. 10 laklis for installing and erecting machinery plant and other fixtures for rts drum reconditioning factory
at Ka!ve, Thana District, Bombay.
The appellant Company executed a registered deed of mortgage by way of security, pledging
H
all lands, buildings, machineries etc. On August 10, 1965, the
Finance Corporation filed Miscellaneous Application No. 7 5 of
1965 against the appellant company and two of its Directors under
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G.
H
ASNEW DRUMS LTD. V. M.S.F. CORP. (Sikri, C.J.)
35 3
s. 31 of the Act for sale of company properties mortgaged and fer
issue of interim injunction restraining ·the company from dealing
with th~se properties.
The relevant part of Section 31 ( 1) of the Act provides :
"31 ( 1) Where an industrial concern, in breach of
r1ny agreement, makes any default in repayment of any
Joan 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 passeda n order for issue of sale proclamation as required
under 0 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. 31 (I) (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 inves.ti3ation under sub-s. ( 6) the District Judge may confirm the
354
SUPREME COURT REPORTS
[1972] l S.C.R.
order of attachment and direct the sale of the attached property.
A
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 1his 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 prope_rty
in execution of a decree as if the Financial Corporat10n
were the decree-holder."
B
c
The District Judge applying the relevant provisions of the Code
cf Civil Procedure issued various proclamations for sale.
The
last one was issued in pursuance of the order daetd 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
j)
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. 5,40,000t-. The sale was adjourned to ~ptember 3, 1969
but no public notice of this adjournment was given.
The District Judge directed the Financial CorpQilltion to get
the evaluation of the property made by some expert. It is stated
that M/s. Corona Electricals valued land at Rs. 3,04,610/-, building at Rs. 7,41,486/- and machinery at Rs. 7,02,000/-,-totaf
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 Hh 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
~ide the sale.
On January 16, 1970. this application was dismissed. On February 13, 1970 the appellant company filed F.A.
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No. 152/70 in the Bombay High Court. The Bombay High Court,
as already stated. rejected the appeal on February 16, 1970 on
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the ground! hat 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
H
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 execu1ion of a decree is appea\able under 0. XLUI
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B
c
D
E
F
G
H
ASNEW DRUMS LTD. V. M.S.F. CORP. (Sikri, C.J.)
355
r. 1 (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 intenrion 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.
-..
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 tills 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 provided in sub-s. (5) or sub-s. (7) that the District Judge should
proceed in the manner provided in the Code of Civil Procedure.
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
SUPREME COURT REPORTS
[1972J 1 s.C.R.
A
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. 1021of1971, 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.
B
Civil Appeal No. 1852 of 1970 was filed after th.is Court granted special leave against the order of the District Judze. dated
January 16, 1970. As we h1Ve remanded Civil Appeal No. 1021
of 1971, 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.
C
Civil Appeal No. 1022 of 1971, by special leave, was filed
against the order of the BombGy 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 th~ High Court, this appeal also becomes infructuous.
D
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
money and delay will prejudice them a great deal. In the meanE
time,
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 instruc1
tion, 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 I 022 of
1971
held
I infruc11w11s.
G.C.
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