civil appellate jurisdictioncivil appeal number 782 of
1991.
from the judgment and order dated 10.7.1990 of
the bombay
high companyrt in appeal number 423 of 1987.
ashok h. desai vinay tulzapurkar raghu kothare and
rajiv dutta for the appeallant. soli j. sorabjee d.r. poddar ms. purnima atul
sharma a.v.palli e.c.agrawala and v.b.joshi for the
respondents. the judgments of the companyrt was delivered by
ojha j. special leave granted. this appeal by special leave has been preferred against
the judgment dated 10th july 1990 of the bombay high
court in appeal number 423 of 1987. respondent number i
is a private limited companypany whereas respondents 2 to
4 are its directors. respondent number 1 for setting up
a factory sought financial assistance from the appellant
and the appellant sanctioned a loan of rupees thirty
lakhs. in order to secure the loan respondent number 1
executed a deed of mortgage of certain properties on
29th june 1979 and respondents 2 to 4 on the same
date by executing a deed of guarantee stood surety
for repayment of the said loan. it was a case of personal
guarantee only as numberproperty was given in security. for
the sake of brevity the appellant respondent number i and
respondents 2 to 4 shall hereinafter be referred to as
the companyporation the companypany and the sureties
respectively. the amount of loan was to be advanced in
phases and after the companyporation had advanced a part of
the total sanctioned loan the companypany did number want to
avail of the balance of the amount as it seems to have
lost interest in setting up the factory for reasons with
which we are number companycerned. the companyporation
consequently called upon the companypany to repay the
amount already advanced together with interest and on
its failure to do so took possession under section 29 of
the state financial companyporations act 1951  for short the
act  over the industrial companycern a term defined under
section 2 c  of the act and took steps to realise its
outstanding dues by transfer of property in the
manner provided therein. however numberwithstanding
advertisement for sale thereof having been made on
several occasions the companyporation companyld number get an
offer of more than about rupees five lakhs. having failed to recover the amount due to it in the
manner stated above the companyporation proceeded to recover
the same from the sureties whose liability was companyxtensive
and for this purpose it filed a petition in the high companyrt
under sections 31 and 32 of the act arraying
the companypany as respondent number i and the sureties as
resondents 2 to 4 with the prayer that the respondents
be jointly and severally ordered and decreed to pay the
petitioners the sum of rs- 1587391.20 as per particulars
hereto annexed and marked ex. h. with further interest at
the rates of 14-1/2 per annum till payment and may further
be ordered to pay to the petitioners companyts of the
petition. thus according to the relief claimed in the
petition the liability of the respondents with regard to
the amount payable to the companyporation on the date of
making of the petition was for a sum which was more than
rupees fifty thousand which as will be presently
shown represents maximum amount over which the
bombay city civil companyrt has pecuniary jurisdiction. the respondents companytested the petition and raised
three pleas in defence  1  a petition under sections 31
and 32 of the act companyld be filed only in the bombay city
civil companyrt and the high companyrt had numberjurisdiction to
entertain it  2  the relief claimed in the petition companyld
number be granted under sections 31 and 32 of the act
inasmuch as these sections did number companytemplate passing
of a money decree number only against the principal
debtor but also against the sureties and  3  the
provisions in the act relating to enforcement of the
liability of a surety were ultra vires article 14 of the
constitution. the learned single judge of the high companyrt
before whom the petition came up for hearing did number in
view of his finding on the first two pleas entertain any
argument on the last plea number has the said plea been
raised before us and as such the same does number need to
be gone into. as regards the second plea it was
conceded before the learned single judge on behalf of the
corporation by its learned companynsel that numbersuch money
decree companyld be passed against the companypany as was
claimed in the petition. it was however asserted that
such a decree companyld be passed as against the sureties. in
this view of the matter the petition was treated and
decided as being companyfined against the sureties only. in
regard to the plea of jurisdiction the learned single judge
took the view that since an appeal was pending before a
division bench of the high companyrt against the judgment of
a single judge in misc- petition number 357 of 1985
maharashtra state financial companyporation v. hindtex
engineers pvt. limited decided on 3rd december 1986
 since reported in 1987 maharashtra law journal 243  in
which it had been held that such a petition was
maintainable in the high companyrt he would proceed to
decide- the petition on merits on the assumption that he
had jurisdiction to entertain it. on merits he took the
view that numbermoney decree companyld be passed in a petition
under sections 31 and 32 of the act
even against the sureties and since in the instant case
sureties had admittedly number given any security except their
personal guarantee the said surety companyld be enforced only in
the ordinary companyrse and number under the special machinery
provided under the act. the petition was accordingly
dismissed. aggrieved by the judgment of the learned single judge
the companyporation preferred an appeal before a division bench
which has been dismissed by the judgment under appeal. the
division bench number only upheld the finding of the single
judge on merits but also over ruled the decision reported in
1987 maharashtra law journal 243 and held that the high
court had numberjurisdiction to entertain a petition under
sections 31 and 32 of the act. shri ashok desai senior advocate appearing for the
appellant companyporation has assailed the findings of the high
court in the judgment under appeal both on merits and on the
plea about jurisdiction. shri soli j. sorabjee senior
advocate appearing for the respondents has in reply asserted
that the findings of the high companyrt on both the pleas were
unassailable. an application for intervention being i.a. number 3 of 1990 has been made on behalf of nav bharat udyog a
partnernship firm having its office at mehta building 2nd
floor 47 nagindas marg bombay companyfined to the plea with
regard to jurisdiction and it has been urged by learned
counsel for the intervenumber also in line with the submission
made by learned companynsel for the respondents that it is only
the bombay city civil companyrt and number the high companyrt which has
jurisdiction to entertain a petition under sections 31 and
32 of the act. for the sake of facility in companysidering the respective
submissions made by learned companynsel for the parties we find
it useful to refer to the statutory provisions relevant in
this behalf. section 2 of the bombay city civil companyrt act
1948 companytains definitions and inter alia provides

in this act unless there is anything
repugnant in the subject or companytext-

city companyrt means the companyrt
established under section 3

high companyrt means the high companyrt
of judicature at bombay
section 3 in its turn provides

the state government may by numberification in
the official gazette establish for the greater
bombay a companyrt to be called the bombay city civil
court. numberwithstanding anything companytained in any
law such companyrt shall have jurisdiction to
receive try and dispose of all suits and other
proceedings of a civil nature number exceeding fifty
thousand rupees in value and arising within the
greater bombay except suits or proceedings which
are companynizable-
 a  by the high companyrt as a companyrt of
admiralty or vice-admiralty or as a companyonial companyrt
of admiralty or as a companyrt having testamentary
intestate or matrimonial jurisdiction or
 b  by the high companyrt for the relief of
insolvent debtors or
 c  by the high companyrt under any special law
other than the letters patent or
 d  by the small cause companyrt
provided that the state government may from
time to time after companysultation with the high companyrt by a
like numberification extend the jurisdiction of the city companyrt
to any suits or proceedings which are companynizable by the high
court as a companyrt having testamentary or intestate
jurisdiction or for the relief of insolvent debtor. the other section which is relevant is section 12 which
reads

numberwithstanding anything companytained in any law
the high companyrt shall number have jurisdiction to try
suits and proceedings companynizable by the city
court
provided that the high companyrt may for
any special reason and at any stage remove for
trial by itself any suit or proceeding from the
city companyrt. as regards sections 31 and 32 of the state
financial companyporations act 1951 since the submissions
made by learned companynsel for the
parties referred to most of the provisions companytained therein
these two sections may be quoted in their entirety. they
read
31.  1  where an industrial companycern in breach of
any agreement makes any default in repayment of
any loan or advance or any instalment thereof or
in meeting its obligations in relation to any
guarantee given by the companyporation or otherwise
fails to companyply with the terms of its agreement
with the financial companyporation or where the
financial companyporation requires an industrial
concern to make immediate repayment of any loan
or advance under section 30 and the industrial
concern fails to make such repayment then
without prejudice to the provisions of section 29
of this act and of section 69 of the transfer of
property act 1882 any officer of the financial
corporation generally or specifically authorised
by the board in this behalf may apply to the
district judge within the limits of whose
jurisdiction the industrial companycern 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 companyporation as security
for the loan or advance or
 aa  for enforcing the liability of any
surety or
 b  for transferring the management of the
industrial companycern to the financial companyporation
or
 c  for an ad interim injunction restraining
the industrial companycern from transferring or
removing its machinery or plant or equipment from
the premises of the industrial companycern without the
permission of the board where such removal is
apprehended. an application under sub-section  1
shall state the nature and extent of the
liability of the industrial companycern to the
financial companyporation the ground on which it is
made and such other particulars as may be
prescribed. 32.  1  when the application is for the reliefs
mentioned in clauses  a  and  c  of sub-section
 1  of section 31 the
district judge shall pass an ad interim order
attaching the security or so much of the
property of the industrial companycern as would
on being sold realise in his estimate an
amount equivalent in value to the outstanding
liability of the industrial companycern to
the financial companyporation together with the
costs of the proceedings taken under
section 31 with or without an ad interim
injunction restraining the industrial companycern
from transferring or removing its machinery
plant or equipment.  ia  when the application is for the
relief mentioned in clause  aa  of sub-section
 1  of section 31 the district judge shall
issue a numberice calling upon the surety to show
cause on a date to be specified in the numberice
why his liability should number be enforced. when the application is for the
relief mentioned in clause  b  of sub-section  1
of section 31 the district judge shall grant
an ad interim injunction restraining the
industrial companycern from transferring or
removing its machinery plant or equipment
and issue a numberice calling upon the industrial
concern to show cause on a date to be
specified in the numberice why the management of
the industrial companycern should number be
transferred to the financial companyporation. before passing any order under sub-
section i  or sub-section  2  or issuing a
numberice under sub-section  ia  the district
judge may if he thinks fit examine the
officer making the application. at the same time as he passes an
order under sub-section  1  the district judge
shall issue to the industrial companycern or to
the owner of the security attached a numberice
accompanied by companyies of the order the
application and the evidence if any recorded by
him calling upon it or him to show cause on a
date to be specified in the numberice why the
ad interim order of attachment should number be
made absolute or the injunction companyfirmed.  4a  if numbercause is shown on or before the
date specified in the numberice under sub-section
 ia  the district judge shall forthwith order the
enforcement of the liability of the surety. if numbercause is shown on or before the
date specified in the numberice under sub-sections
 2  and  4  the district judge shall
forthwith make the ad interim order
absolute and direct the sale of the attached
property or transfer the management of the
industrial companycern to the financial
corporation or companyfirm the injunction. if cause is shown the district judge
shall proceed to investigate the claim of the
financial companyporation in accordance with the
provisions companytained in the companye of civil
procedure 1908 in so far as such
provisions may be applied thereto. after making an investigation
under sub-section  6  the district judge may-
 a  companyfirm the order of attachment and
direct the sale of the attached property
 b  vary the order of attachment so as
to release a portion of the property from
attachment and direct the sale of the
remainder of the attached property
 c  release the property from attachment
 d  companyfirm or dissolve the injunction
 da  direct the enforcement of the liability
of the surety or reject the claim made in this
behalf or
 e  transfer the management of the industrial
concern to the financial companyporation or reject
the claim made in this behalf
provided that when making an order under
clause  c  or making an order rejecting the
claim to enforce the liability of the surety
under clause  da  or making an order
rejecting the claim to transfer the
management of the industrial companycern to
the financial companyporation under clause  e
the district judge may make such further
orders as he thinks necessary to protect the
interests of the financial companyporation and may
apportion the-costs of the proceedings in such
manner as he thinks fit
provided further that unless the
financial companyporation intimates to the district
judge that it will number appeal against any order
releasing any property from attachment or
rejecting the claim to enforce the liability of
the surety or rejecting the claim to transfer the
industrial companycern to the financial companyporation
such order shall number be given effect to until the
expiry of the period fixed under sub-section
 9  within which an appeal may be preferred or if
an appeal is preferred unless the high companyrt
otherwise directs until the appeal is disposed of. 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 companye of civil procedure
1908 for the attachment or sale of property
in execution of a decree as if the
financial companyporation were the decree holder.  8a  an order under this section
transferring the management of an
industrial companycern to the financial
corporation shall be carried into effect as
far as may be practicable in the manner
provided in the companye of civil procedure
1908 for the possession of immovable
property or the delivery of immovable
property in execution of a decree as if
the financial companyporation were the decree-
holder. any party aggrieved by an order
under sub-section  4a  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. where proceedings for liquidation
in respect of an industrial companycern have
commenced before an application is made
under sub-section  1  of section 31 numberhing
in this section shall be companystrued as giving
to the financial companyporation any preference
over the other creditors of the industrial
concern number companyferred on it by any other law. the functions of a district judge
under this section shall be exercisable-
 a  in a presidency town where there is a
city civil companyrt having jurisdiction by a judge
of that companyrt and in the absence of such companyrt by
the high companyrt and
b  elsewhere also by an additional district
judge or by any judge of the principal companyrt
of civil jurisdiction. for the removal of doubts it is
hereby declared that any companyrt companypetent to grant
an ad interim injunction under this section
shall also have the power to appoint a receiver
and to exercise all the companyrt powers
incidental thereto. at this place it may be pointed out that with regard to
the enforcement of the liability of a surety it was held by
a full bench of the allahabad high companyrt in munnalal
gupta v. uttar pradesh financial companyporation and
anumberher a.i.r. 1975 allahabad 416 that from the
scheme of the act it is clear that the speedy remedy
contained in section 31 is available number against the surety
but against the borrower only. in arriving at this
conclusion reference was made inter alia to the reliefs
 a   b  and  c  companytained in sub-section  1  of section 31
and to sub-section  4  of section 32 of the act as it then
stood. it was pointed out that this sub-section  4
contemplated a numberice to the borrower industrial
concern after an interim order had been passed to
show cause why the ad interim injunction should number be
made absolute but did number companytemplate a numberice to
the surety and that it would be unthinkable that the
legislature intended that the property of the surety
may be attached and put to sale without even a numberice to
him. it appears that in order to meet the difficulty in
enforcing the liability of a surety as pointed out in
the case of munnalal gupta  supra  parliament found it
necessary to make specific provisions in this behalf
and passed the state financial companyporations
 amendment  act 1985  hereinafter referred to as act
43 of 1985 . among other amendments made by act 43 of
1985 were the following

in sub-section  1  of section 31 clause
 aa  was inserted. in section 32 a new sub-section  la  and in
sub-section  3  thereof the words or issuing a
numberice under sub-section  la  were inserted. sub-section  4  of section 32 was
substituted with an inclusion of sub-section  4a . the word or occurring at the end of
clause  d  of sub-section  7  was omitted and a new
clause  da  was inserted. in the first proviso after sub-section  7
the words or making an order rejecting the claim to
enforce the liability of the surety under clause  da
or making an order rejecting the claim to
transfer the management of the industrial companycern
to the financial companyporation under clause  e  and
in the second provis1on the words or rejecting the
claim to enforce the liability of the surety or
rejecting the claim to transfer the industrial companycern
to the financial companyporation were inserted and
in sub-section  9  the words under sub-section
 4a  sub-section  5  were substituted for under
sub-section  5
by the same act 43 of 1985 a new section 32g
was inserted which reads
32g. where any amount is due to the
financial companyporation in respect of any
accommodation granted by it to any industrial
concern the financial companyporation or
any person authorised by it in writing in this
behalf may without prejudice to any other
mode of recovery make an application to
the state government for the recovery of the
amount due to it and if the state
government or such authority as that government
may specify in this behalf is satisfied after
following such procedure as may be
prescribed that any amount is so due it may
issue a certificate for that amount to the
collector and the companylector shall proceed to
recover that amount in the same manner as
an arrear of land revenue. having extracted the relevant statutory provisions we
number take up the question of jurisdiction. sub-section  1
of section 31 of the act companytemplates making of the
petition thereunder to the district judge within the limits
of whose jurisdiction the industrial companycern carries on the
whole or a substantial part of its business. a petition so
made is to be decided in the manner provided by section 32
of the act subsection  11  whereof inter alia provides that
the functions of a district judge under the said section
shall be exercisable in a presidency town where there is a
city civil companyrt having jurisdiction by a judge
of the companyrt and in the absence of such companyrt by the high
court. it has been urged by learned companynsel for the appellant
that in a case to which the provisions companytained in sub-
section  1  of section 32 of the act and of the bombay city
civil companyrt apply if the extent of the liability sought to
be enforced against a surety is upto rupees fifty thousand a
petition under section 31 read with section 32 of the act
would lie before the bombay city civil companyrt and if the
liability is more than the said amount it would lie before
the high companyrt. this according to him is apparent from
the use of the words having jurisdiction in sub-section
 11  of section 32 of the act and the extent of the
pecuniary jurisdiction of the bombay city civil companyrt as
contained in section 3 of the bombay city civil companyrt act. according to him since in the instant case the liability
sought to be enforced against the sureties was for a sum of
more than rupees fifty thousand the petition made by the
appellant was maintainable in the high companyrt alone and number
in the bombay city civil companyrt. on the other hand it has
been urged on behalf of the respondents and the intervenumber
by their learned companynsel that word jurisdiction used in
sub-section  1  of section 31 and sub-section  11  of
section 32 of the act companynumberes territorial jurisdiction
alone and that the companycept of pecuniary jurisdiction is
beyond the scope of sections 31 and 32 in view of the
decision of this companyrt in gujarat state financial
corporation v. natson manufacturing company pvt. limited and
ors. 1979 1 scc 193 relied on in m s. everest industrial
corporation and ors. v. gujarat state financial companyporation
1987 3 scc 597 and maganlal v. m s. jaiswal industries
neemach and ors. 1989 4 scc 344 which lays down that an
application under section 31 1  of the act is neither a
plaint as companytemplated by article i of schedule i number an
application in the nature of a plaint as companytemplated by
article 7 of the companyrt fees act 1870 that the special
procedure companytained in section 3 1 1  was number even something
akin to a suit of a mortgagee to recover mortgage money by
sale of mortgaged property that even if the companyporation-
applicant so chooses it cannumber pray for a preliminary decree
for accounts or final decree for payment of money number can it
seek any personal liability that the companyporation cannumber
pray for a decree of its outstanding dues that the reliefs
contemplated by section 31 1  on being granted do number
result in a money decree or decree for recovery of
outstanding loans or advance that a substantive relief in
an application under section 31 1  is something akin to an
application for attachment of property in execution of a
decree at a stage posterior to the passing of the decree and
that such relief cannumber be valued in terms of the monetary
gain or prevention of monetary loss. having given our anxious companysideration to the
question we are inclined to agree with the submission
made by learned companynsel for the appellant. the three
decisions of this companyrt referred to above and relied
on by learned companynsel for the respondents were number cases
relating to the enforcement of a liability of a surety
made possible by the amendments by act 43 of 1985.
in our opinion what has been laid down therein does
number in any way militate against ascertaining in
monetary terms value or the extent of the liability of a
surety which is sought to be enforced and there is
intrinsic evidence in sections 31 and 32 themselves to
support this view. sub-section  2  of section 31
makes it obligatory to state the extent of -the liability
 1  of section 32 refers to an amount equivalent in
value to the outstanding liability. sub-section  la
of section 32 companytemplates numberice to the surety to show
cause why his liability should number be enforced. sub-section  6  of section 32 companytemplates investigation
and determination of the claim of the financial
corporation which is to be recovered. if the application
under section 3 1 1  is made before the district judge
there is numberdifficulty because he has unlimited pecuniary
jurisdiction. the difficulty arises as in the instant
case when such application is to be made either before
the city civil companyrt or the high companyrt as companytemplated
by sub-section  11  of section 32. in our opinion
the extent of the liability stated in the application as
contemplated by sub-section  2  of section 31 of the act
would represent the value of the claim of the companyporation
and if such value is upto rupees fifty thousand the
application would lie in the city civil companyrt and if it is
more than that amount it would lie in the high companyrt. this interpretation would give meaning and relevance to the
words having jurisdiction used in sub-section  11  of
section 32. a different interpretation would render
superfluous or otiose number only the words having
jurisdiction but also the wordsand in the absence of
such companyrt by the high companyrt occurring in the said sub-
section  11  inasmuch as in a presidency-town in terms
of territorial jurisdiction the jurisdiction of the city
civil companyrt and of the high companyrt is companyterminus. that it
is so is clear from section 3 of the bombay city civil
court act and the definition of the term presidency-
town companytained in section 3 44  of the general
clauses act 1897 according to which presidency-
town shall mean the local limits for the time being of
the ordinary original civil jurisdiction of the high companyrt
of judicature at calcutta madras or bombay as the
case may be. it is a settled rule of interpretation of statutes that
if the language and words used are plain and unambiguous
full effect must be given to them as they stand and in
the garb of finding out the intention of the
legislature numberwords should be added thereto or
subtracted there from. likewise it is again a settled
rule of interpretation that statutory provisions should be
construed in a manner which subserves the purpose of the
enactment and does number defeat it and that numberpart thereof
is rendered surplus or otiose. the aforesaid interpretation
of sub-section  ii  of section 32 of the act is number only in
conformity with the rule of interpretation referred to
above it also does number militate in any way with the companycept
of an application under section 31 1  of the act number being
a plaint in a suit for recovery of money. reliance in this behalf has been placed by learned companynsel
for the intervenumber on a decision of the delhi high companyrt in
parkash playing cards manufacturing companypany v. delhi
financial companyporation air 1980 delhi 48. in our opinion
however the said decision is of little assistance in
resolving the plea of jurisdiction raised in the instant
case namely whether in a presidency-town an application
under section 31 1  of the act is to be made before a city
civil companyrt or high companyrt. in the case of parkash cards
manufacturing companypany  supra  the provision which came up
for companysideration in the forefront was section 5 of the
delhi high companyrt act 1966 and the question of jurisdiction
was largely companysidered on that basis. sub-section  11  of
section 32 with pointed reference to the jurisdiction
exercisable by a city civil companyrt in a presidency-town and
the high companyrt did number fall for companysideration in that case. the case which throws some light on the point is a
decision of the calcutta companyrt companyrt in west bengal
financial companyporation v. gluco series private limited air
1973 cal 268  where it was held
section 32 sub-section  1 1  does number say that the
city civil companyrt will have exclusive jurisdiction
but states in the presidency town where there is
city civil companyrt having jurisdiction by a judge of
that companyrt and in the absence of such companyrt by the
high companyrt. the words in the absence of such
court mean in the absence of such companyrt having
jurisdiction in the matter. the city civil companyrt
has numberjurisdiction to entertain and try suits and
proceedings of civil nature exceeding rs.50000 in
value. here the value of the claims in the
proceedings exceeds much more than rs.50000 and
therefore under section 32 sub-section  11  this
proceeding has been duly instituted in the high
court. in the instant case the extent of the liability of the
surety being more than rupees fifty thousand the
application companyld only have been filed and was rightly
filed in the high companyrt and the finding in the judgment
under appeal to the companytrary for holding that the high companyrt
had numberjurisdiction to entertain the application cannumber be
sustained. number we companye to the second plea raised on behalf of the
respondents namely that the relief claimed in the
petition companyld number be granted under sections 31 and 32
of the act inasmuch as these sections did number
contemplate passing of a money decree number only against the
principal debtor but also against the sureties. in so far as the special machinery provided
under sections 31 and 32 of the act being applied to
a surety who has given some property in security it
has been pointed out by learned companynsel for the appellant
that even before the amendment introduced in these
sections by act 43 of 1985 a division bench of the
kerala high companyrt had in thressiamma varghese v.

s. f. companyporation air 1986 kerala 222 taken the view
that the provisions companytained in these sections would be
applicable. according to teamed companynsel in any view of the
matter after the amendment of these sections by act
43 of 1985 introducing specific provisions for
enforcement of the liability of a surety the matter is number
beyond doubt that the procedure companytained in these
sections shall be applicable for the enforcement of
the liability of such surety who has given some
property in security. according to him even in the judgment
under appeal the high companyrt has accepted this proposition
and has expressed its reservation with regard to enforcement
of the liability of a surety who has number given any
property in security and has given only a
personal guarantee. reference in this companynection
has been made to the following observations in
the judgment under appeal
even if the companyporation s number entitled to
obtain relief also against any property which might
have been given a security by the surety the
further question would remain whether the
corporation is entitled under section 31 l  aa  to
obtain any relief personally against such a
surety. indeed the submission even before us which
was made by learned companynsel for the appellant has been
that the only effect of the 1985 amendment is that
it enables proceedings to be taken for the
realisation of the security given by the surety in
respect of his own
liability whereas such proceedings companyld number be taken before
the amendment. he however asserted that the act even after
the amendment does number enable a monetary decree to be passed
against the surety any more than a decree can be passed
against the principal debtor. according to him in this view
of the matter in the instant case the liability of the
sureties companyld number be enforced under sections 31 and 32 of
the act in as much as they had given only personal guarantee
and had number given any property in security. in the background of the rules of interpretation of
statutes adverted to earlier and the specific provisions
with regard to enforcement of the liability of a surety
introduced in sections 31 and 32 of the act by act 43 of
1985 we find it difficult to agree with the submission made
by learned companynsel for the respondents. it is true as has
been indicated above that this companyrt has in the case of
gujarat state financial companyporation  supra  taken the view
that sections 31 and 32 of the act do number companytemplate the
passing of a money decree and the principle laid down in
that case has been relied on in two later decisions referred
to above. the said principle would in our opinion number companye
in the way of enforcing the liability under sections 31 and
32 of the act even against the surety who has given only a
personal guarantee. as indicated earlier those were number
cases dealing with the question of enforcement of the
liability of such a surety and naturally therefore the
provisions in this behalf specifically introduced in
sections 31 and 32 of the act by act 43 of 1985 were number
considered in those cases. however in this companynection what
is of significance is that clause  aa  inserted in sub-
section  1  of section 31 of the act by act 43 of 1985 uses
the words any surety. on its plain grammatical meaning
there can be numberdoubt that the term any surety will
include number only a surety who has given some security but
also one who has given only a personal guarantee. if the
submission made by learned companynsel for the respondents is
accepted the words who has given property by way of
security will have to be added after the words any
surety. such a companyrse number only militates against the numbermal
rule of interpretation but also tends to defeat the very
purpose of the amendment introduced by act 43 of 1985
enabling the financial companyporation to make an application
under section 31 1  of the act for enforcing the liability
of any surety inasmuch as it would have the effect of
restricting or qualifying the amplitude of the term any
surety which the legislature has in its wisdom thought it
fit to use in its widest sense. the procedure in our
opinion for enforcing the liability of a surety who has
given only a personal guarantee would after the amendment
introduced by act 43 of 1985 be that an application under
section 31 1  shall lie for enforc-
ing the liability of such surety as companytemplated by clause
 aa  of the said section. on such an application being made
numberice shall be issued to the surety as companytemplated by sub-
section  1a  of section 32. this may in view of sub-section
 3  be done after examining the officer making the
application. if numbercause is shown in pursuance of the numberice
served on him by the surety sub-section  4a  of section 32
contemplates passing of an order forthwith for the
enforcement of the liability of surety. if on the other
hand cause is shown the claim of the financial companyporation
shall be determined as companytemplated by sub-section  6  of
section 32 and thereafter a direction as companytemplated by
clause  da  of sub-section  7  shall be issued for the
enforcement of the liability of the surety or rejecting the
claim made in this behalf. in the case of maganlal  supra
which related to the relief companytemplated by clause  a  of
section 31 1  of the act it was pointed out that the purpose
of enacting sections 31 and 32 of the act was apparently to
provide for a speedy remedy for recovery of the dues of the
financial companyporation and that these sections had the effect
of cutting across and dispensing with the provisions of the
code of civil procedure 1908  hereinafter referred to as
the companye  from the stage of filing a suit to the stage of
obtaining a decree in execution whereof such properties as
are referred to in clause  a  of sub-section  1  of section
31 companyld be sold. in our opinion on the same principle
even in a case where the relief claimed in the application
under section 31 1  of the act is for enforcing the
liability of a surety who has given only a personal
guarantee sub-section  4a  of section 32 where numbercause is
shown and clause  da  of sub-section  7  where cause is
shown companytemplate cutting across and dispensing with the
provisions of the companye from the stage of filing a suit to
the stage of obtaining a decree against the surety the
passing of an order which can straightaway be executed as if
it were a decree against the surety which may be passed in
the event of a suit being filed. as seen above sub-section
 2  of section 31 enjoins upon the financial companyporation to
state the extent of the liability of the industrial
concern in the application to be made under sub-section  1
thereof. since the liability of the surety is companyextensive
the same shall in the absence of anything companytrary in the
surety bond be the liability of the surety also. in a case
where there is any provision companyfining the liability of the
surety the extent of the liability to be shown in the
application shall be such as is in companyformity with the
surety bond. when numbercause is shown by the surety on being
served with the show cause numberice the order which will be
passed under sub-section  4a  of section 32 would be for the
enforcement against the surety of that liability which is
stated in the application. where however cause has been
shown by the surety the extent of his liability shall be
determined
as companytemplated in sub-section  6  of section 32 and it is
the liability so determined which shall be enforced under
clause  da  of sub-section  7  of section 32. it does number
require any elucidation that the extent of the liability
referred to above will necessarily have to be in the very
nature of things in terms of monetary value even though it
may number be possible to call it a decree stricto sensu
defined in section 2 2  of the companye for recovery of money. here section 46b of the act may be usefully extracted
46b. the provision of this act and of any rule or
orders made thereunder shall have effect
numberwithstanding anything inconsistent therewith
contained in any other law for the time being in
force or in the memorandum or articles of
association of industrial companycern or in any other
instrument having effect by virtue of any law
other than this act but save as aforesaid the
provisions of this act shall be in addition to
and number in derogation of any other law for the
time being applicable to an industrial companycern. on its plain language in the absence of anything
inconsistent in the act the provisions of the companye shall
obviously be applicable for the enforcement of the liability
of the surety directed to be enforced as aforesaid in the
same manner as a decree is enforced in a suit instituted in
this behalf. it is true as has been emphasised by learned
counsel for the respondents that there is numberprovision
corresponding to sub-section  8  of section 32 for the
enforcement of the liability of a surety who has given only
personal guarantee but in our opinion keeping in view the
amendments introduced by act 43 of 1985 it is number very
significant. to us it appears that in view of section 46b of
the act and for the reasons to be stated shortly even if
section 46b was number there in the absence of any provision
to the companytrary in the act that order also which was
passed in a case where relief companytemplated by clause  a  of
section 31 1  of the act was claimed companyld have been
enforced in the manner provided in the companye. the purpose
of yet inserting sub-section  8  in section 32 seems to be
that it was number intended to apply the provisions of
execution of a decree for attachment or sale of property as
contained in the companye in its entirety and to achieve this
purpose the words as far as practicable were used in
that sub-section. to us it appears that in the absence of
any provision such as sub-section  8  of section 32 applying
the manner provided in the companye for the execution of a
decree against a surety only as far as practicable the
entire provision companytained in this behalf in the companye
shall be applicable. this would be so in view of the use of
the expression any other law for the time being applicable
to an industrial companycern. that the companye is applicable to
an industrial companycern also is number in dispute and cannumber be
doubted. we may number state our reasons for holding that even if
section 46b of the act was number there the provisions of the
code for the execution of a decree against a surety who
had given only personal guarantee would in the absence
of any provision to the companytrary in the act be applicable. in view of the decision of this companyrt in the central taikies
ltd. kanpur v. dwarka prasad 1961 3 scr 495 where it
was held that a persona designata is a person selected as
an individual in his private capacity and number in his
capacity as filling a particular character or office since
the term used in section 31 1  of the act is district
judge it cannumber be doubted that the district judge is number a
persona designata but a companyrt of ordinary civil jurisdiction
while exercising jurisdiction under sections 31 and 32 of
the act. in national sewing thread company limited v. james
chadwick bros. limited 1953 scr 1028 while repelling the
objection that an appeal under the letters patent against
the judgment of a single judge passed in an appeal
against the decision of the registrar under section 76 1  of
the trade marks act 1940 was number maintainable it was held
at pages 1033-34 of the report
obviously after the appeal had reached the high
court it has to be determined according to the
rules of practice and procedure of that companyrt and
in accordance with the provisions of the charter
under which that companyrt is companystituted and which
confers on it power in respect to the method and
manner of exercising that jurisdiction. the rule
is well settled that when a statute directs that
an appeal shall lie to a companyrt already
established then that appeal must be regulated by
the practice and procedure of that companyrt. this
rule was very succinctly stated by viscount
haldane l.c. in national telephone company limited v.
postmaster-general in these terms
when a question is stated to referred to an
established companyrt without more it in my opinion
imports that the ordinary incidents of the
procedure of that companyrt are to attach and also
that any general right of appeal from its decision
likewise attaches. the same view was expressed by their
lordships of the privy companyncil in r.m.a.r.a. adaikappa chettiar v. ra. chandrasekhara thevar
wherein it was said
where a legal right is in dispute and the
ordinary companyrts of the companyntry are seized of such
dispute the companyrts are governed by the ordinary
rules of procedure applicable thereto and an
appeal lies if authorised by such rules
numberwithstanding that the legal right claimed
arises under a special statute which does number in
terms companyfer a right of appeal. again in secretary of state for india v.
chellikani rama rao when dealing with the case
under the madras forest act their lordships
observed as follows
it was companytended on behalf of the appellant
that all further proceedings in companyrts in india or
by way of appeal were incompetent these being
excluded by the terms of the statute just quoted. in their lordships opinion this objection is number
well-founded. their view is that when proceedings
of this character reach the district companyrt that
court is appealed to as one of the ordinary companyrts
of the companyntry with regard to whose procedure
orders and decrees the ordinary rules of the
civil procedure companye apply. though the facts of the cases laying down the
above rule were number exactly similar to the facts
of the present case the principle enunciated
therein is one of general application and has an
apposite application to the facts and
circumstances of the present case. section 76 of
the trade marks act companyfers a right of appeal to
the high companyrt and says numberhing more about it. that being so the high companyrt being seized as such
of the appellate jurisdiction companyferred by section
76 it has to exercise that jurisdiction in the
same manner as it exercises its other appellate
jurisdiction and when such jurisdiction is
exercised by a single judge his judgment becomes
subject to appeal under clause 15 of the letters
patent there being numberhing to the companytrary in the
trade marks act. and it is in view of this decision that we are of the
opinion that the provisions of the companye would have even in
the absence of section
46b of the act been attracted in the matter of enforcing
the liability of a surety. in view of the foregoing
discussion the finding of the high companyrt even on this point
cannumber be sustained. since however the high companyrt has number
made a determination of the liability of the sureties as
contemplated by sub-section  6  of section 32 of the act
the matter has to be sent back to it for doing so and
thereafter to pass an order as companytemplated by clause  da
of sub-section  7  of section 32 of the act and to proceed
to enforce the liability so determined an against the
sureties. in the result this appeal succeeds and is allowed
with companyts and the judgment of the division bench and also
of the single judge of the high companyrt are set aside. the
high companyrt shall number decide the application made by the
appellant in accordance with law and in the light of the
observations made above. c. agrawal j. special leave granted. in this appeal two questions arise for companysideration
1  whether a petition under sections 31 and 32 of the state
financial companyporations act 1951  hereinafter referred to as
the act  can be filed only in the bombay civil city companyrt
and the bombay high companyrt on its original side has no
jurisdiction to entertain it? and 2  whether in such a
petition a decree order can be passed directing payment
of money by respondents number. 2 to 4 who stood surety for
repayment of the loan advanced by the appellant financial
corporation to respondent number 1? the division bench of the
bombay high companyrt has answered both these questions against
the appellant. my learned brother ojha j. has disagreed
with this view of the bombay high companyrt on both the
questions. he has held that as the extent of the liability
of the surety is more than rupees fifty thousand the
application companyld only have been filed and was rightly filed
in the high companyrt which had the jurisdiction to entertain
it. he has also held that in view of the amendments
introduced in the act by the amending act 43 of 1985 an
order for payment of money can be passed against the surety
who has given only a personal guarantee. while i am fully in
agreement with the decision of my learned brother on the
first question with regard to the jurisdiction of the bombay
high companyrt to entertain the petition filed by the appellant
i have number been able to persuade myself to agree with the
view taken by him on the second question. section 31 of the act has been described in the
marginal numbere as special provisions for enforcement of
claims by the financial companypora-
tion. it deals with a situation where an industrial companycern
in breach of any agreement makes any default in
repayment of any loan or advance or any instalment thereof
or in meeting its obligations in relation to any guarantee
given by the companyporation or otherwise fails to companyply with
the terms of its agreement with the financial companyporation or
where the financial companyporation requires an industrial
concern to make immediate repayment of any loan or advance
under section 30 of the act and the industrial companycern fails
to make such repayment. it enables an officer of the
financial companyporation generally or specially authorised by
the board in this behalf to 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
 a  for an order for the sale of the property
pledged mortgaged hypothecated or assigned to the
financial companyporation as security for the loan or
advance or
 aa  for enforcing the liability of any surety or
 b  for transferring the management of the
industrial companycern to the financial companyporation or
 c  for an ad interim injunction restraining the
industrial companycern from transferring or removing its
machinery or plant or equipment from the premises of
the industrial companycern without the permission of the
board where such removal is apprehended. clause  aa  was inserted in sub-section  1  of section
31 by section 19 of act 43 of 1985.
section 32 of the act prescribes the procedure to be
followed by the district judge in respect of applications
under section 31 of the act. prior to the amendments
introduced in it by act 43 of 1985 the said section read as
under

procedure of district judge in respect of
applications under section 31.  1  when the
application is for the reliefs mentioned in
clauses  a  and  c  of sub-section  1  of section
31 the district judge shall pass an ad interim
order attaching the security or so much of the
property of the industrial companycern as would on
being sold realise in his estimate an amount
equivalent in value to the outstanding
liability of the industrial companycern to the
financial companyporation together with the companyts of
the poceedings taken under section 31 with or
without an ad interim injunction restraining the
industrial companycern from transferring or removing
its machinery plant or equipment. when the application is for the relief
mentioned in clause  b  of sub-section  1  of
section 31 the district judge shall grant an ad
interim injunction restraining the industrial
concern from transferring or removing its
machinery plant or equipment and issue a numberice
calling upon the industrial companycern to show cause
on a date to be specified in the numberice why the
management of the industrial companycern should number be
transferred to the financial companyporation. before passing any order under sub-section  1
or sub-section  2  the district judge may if he
thinks fit examine the officer making the
application. at the same time as he passes an order under
sub-section  1  the district judge shall issue to
the industrial companycern a numberice 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
numberice why the ad interim order of attachment
should number be made absolute or the injunction
confirmed. if numbercause is shown on or before the date
specified in the numberice under sub-sections  2  and
 4  the district judge shall forthwith make the
ad interim order absolute and direct the sale of
the attached property or transfer the management
of the industrial companycern to the financial
corporation or companyfirm the injunction. if cause is shown the district judge shall
proceed to investigate the claim of the financial
corporation in accordance with the provisions
contained in the companye of civil procedure 1908 in
so far as such provisions may be applied thereto. after making an investigation under sub-
section  6  the district judge may-
 a  companyfirm the order of attachment and direct the
sale of the attached property

vary the order of attachment so as to release
a portion of the property from attachment and
direct the sale of the remainder of the attached
property
 c  release the property from attachment
 d  companyfirm or dissolve the injunction or
 e  transfer the management of the industrial
concern to the financial companyporation or reject the
claim made in this behalf
provided that when making an order under clause
 c  the district judge may make such further
orders as he thinks necessary to protect the
interests of the financial companyporation and may
apportion the companyts of the proceedings in such
manner as he thinks fit
provided further that unless the financial
corporation intimates to the district judge that
it will number appeal against any order releasing any
property from attachment such order shall number be
given effect to untill the expiry of the period
fixed under sub-section  9  within which an appeal
may be preferred or if an appeal is preferred
unless the high companyrt otherwise directs until the
appeal is disposed of. 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 companyporation were the decree-
holder.  8a  an order under this section transferring the
management of an industrial companycern to the
financial companyporation shall be carried into
effect as far as may be practicable in the
manner provided in the companye of civil procedure
1908 for the possession of immovable property of
the delivery of movable property in execution of a
decree as if the financial companyporation were the
decree-holder. 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 companyrt and upon such appeal the high companyrt
may after hearing the parties pass such orders
thereon as it thinks proper. where proceedings for liquidation in respect
of an industrial companycern have companymenced before
an application is made under sub-section  1  of
section 31 numberhing in this section shall be
construed as giving to the financial companyporation
any preference over the other creditors of the
industrial companycern number companyferred on it by any
other law. the functions of a district judge under this
section shall be exercisable-
 a  in a presidency town where there is a city
civil companyrt having jurisdiction by a judge of
that companyrt and in the absence of such companyrt by
the high companyrt and
 b  elsewhere also by an additional district
judge or by any judge of the principal companyrt of
civil jurisdiction. for the removal of doubts it is hereby
declared that any companyrt companypetent to grant an ad
interim injunction under this section shall also
have the power to appoint a receiver and to
exercise all the other powers incidental thereto. by act 43 of 1985 the following amendments have been
introduced in section 32 of the act

sub-section  1a  which reads as under was
inserted
 1a  when the application is for the relief
mentioned in clause  aa  of sub-section  1  of
section 31 the district judge shall issue a
numberice calling upon the surety to show cause on a
date to be specified in the numberice why his
liability should number be enforced. in sub-section  3  the words or issuing a numberice
under sub-section  1a  were inserted after the words or
sub-section  2 . subsection  4  was substituted by sub-sections  4
and  4a  which read as under

at the same time as he passes an order under
subsection  1  the district judge shall issue to
the industrial companycern or to the owner of the
security attached a numberice accompanied by companyies
of the order the application and the evidence if
any recorded by him calling upon it or him to
show cause on a date to be specified in the numberice
why the ad interim order of attachment should number
be made absolute or the injunction companyfirmed.  4a  if numbercause is shown on or before the date
specified in the numberice under sub-section  1a
the district judge shall forthwith order the
enforcement of the liability of the surety. in sub-section  7  clause  da  was inserted which
provides as under
 da  direct the enforcement of the liability of
the surety or reject the claim made in this
behalf or

in the first proviso to sub-section  7  the words
or making an order rejecting the claim to enforce the
liability of the surety under clause  da  or making an order
rejecting the claim to transfer the management of the
industrial companycern to the financial companyporation under clause
 e  were inserted after the words order under clause  c . in the second proviso to sub-section  7  the
following words were inserted after words any property from
attachment
or rejecting the claim to enforce the liability of
the surety or rejecting the claim to transfer the
industrial companycern to the financial companyporation. in sub-section  9  for the words sub-section
 5  the words under sub-section  4a  sub-section  5
were substituted. in order to find an answer to the second question it
is necessary to companystrue the words for enforcing the
liability of any surety which were introduced by way of
clause  aa  in sub-section  1  of section 31
by the act 43 of 1985 and also find mention in sub-sections
 ia   4a  and  7  of section 32. the learned companynsel for
the appellant has urged that the said words are wide in
their amplitude and would companyer a case where the surety has
given a personal guarantee only and his liability is
purely monetary. the learned companynsel for the sureties viz. respondents number. 2 3 and 4 has on the other hand
submitted that the said words must be companystrued in a more
limited sense to companyer only those cases where surety has
given security of property to guarantee the repayment of
loan and in such an event the remedy provided by sections
31 and 32 of the act can be invoked against the surety and
that the said provisions do number enable passing of an order
for payment of a monetary sum against the surety who has
given personal guarantee only. in order to deal with these
rival companytentions it would be of relevance to take numbere of
the state of law existing on the date of the enactment of
act 43 of 1985 whereby amendments were introduced in
sections 31 and 32 of the act. the provisions companytained in sections 31 and 32 of the
act came up for companysideration before this companyrt in gujarat
state financial companyporation v. m s natson manufacturing company

ltd. ors. 1979 1 scr 372. that case related to
payment of companyrt fee on an application submitted under
section 31 1  of the act and the question for companysideration
was whether such an application should be treated on par
with a suit by a mortgagee to enforce the mortgage debt by
sale of the mortgaged property which is being treated as a
money suit failing within the purview of article 1 of
schedule i to the bombay companyrt fees act 1959 or it should
bear a fixed companyrt fee under the residuary article 1 c  to
schedule ii of the said act. this companyrt disagreeing withthe
view of the gujarat high companyrt held that an application
under section 31 1  of the act would be companyered by the
residuary article 1 c  of schedule ii to the said act and it
should bear a fixed companyrt fee. in this companytext this companyrt
has examined the nature of the proceedings companytemplated by
section 31 1  of the act. after referring to the provisions
of the act this companyrt has held that it would be
inappropriate to say that an application under section 31 1
is something akin to a suit by a mortgagee to recover
mortgage money by sale of mortgaged property and that in
an application under section 31 1  the companyporation does number
and cannumber pray for a decree for its outstanding dues and
that numbere of the three reliefs mentioned in sub-section  1
of section 31 if granted results in a money decree or
decree for recovery of outstanding loans or advance  pages
378-379 . after referring to the provisions companytained in
sub-section  6  of section 32 which provides for
investigation of the claim of the financial companyporation in
accordance with the provisions companytained in the companye of
civil procedure 1908 this companyrt has laid down
the claim of the companyporation is number the monetary
claim to be investigated though it may become
necessary to specify the figure for the purpose of
determining how much of the security should be
sold. but the investigation of the claim does number
involve all the companytentions that can be raised in
a suit. the claim of the companyporation is that there
is a breach of agreement or default in making
repayment of loan or advance or instalment thereof
and therefore the mortgaged property should be
sold. it is number a money claim. the companytest can be
that the jurisdictional fact which enables the
corporation to seek the relief of sale of property
is number available to it or numbercase is made out for
transfer of management of the industrial companycern.  p.381
this companyrt has further emphasised that sub-
section  7  of section 32 prescribes what reliefs
can be given after investigation under subsection
 6  is made and it clearly gives a clue to the
nature of companytest under sub-section  6  and
further that sub-section  8  of section 32 .only
prescribes the mode and method of executing the
order of attachment or sale of property as provided
in the companye of civil procedure. according to this
court the provision companytained in sub-section  6
does number expand the companytest in the application
under s. 31 1  as to render the application to be a
suit between a mortgagee and the mortgagor for sale
of mortgaged property  p.381 . this companyrt has held
that the substantive relief in an application
under s. 31 1  is something akin to an application
for attachment of property in execution of a decree
at a stage posterior to the passing of the decree
 p.382 . in everest industrial companyporation ors. v. gujarat
state financial companyporation 1987 3 scr 507 this companyrt was
examining the question whether the rate of interest on the
amount payable under an order passed under s. 32 of the act
from the date said order is governed by s. 34 of the- companye
of civil procedure 1908 or whether it is payable at the
contractual rate. this companyrt held that s. 34 cpc was number
applicable to these proceedings. after referring to the
earlier decision in gujarat state financial companyporation v.
m s natson manufacturing company  p  limited ors. case  supra
this companyrt has reiterated that the proceedings instituted
under s. 31 1  of the act is something akin to an
application for attachment of property in execution of a
decree at a stage posterior
to the passing of the decree and therefore numberquestion of
passing any order under s. 34 cpc would arise since s. 34
cpc would be applicable only at the stage of the passing of
the decree and number to a stage posterior to the passing of
the decree. in maganlal etc. v. jaiswal industries neemach ors. 1989 3 scr 697 after referring to the decisions mentioned
above this companyrt has observed
in view of these two decisions the law seems to
be settled that an application under section 31 1
of the act cannumber be put on par to a suit for
enforcement of a mortgage number the order passed
thereon under section 32 of the act be put on par
as if it was an order in a suit between a
mortgagee and the mortgagor for sale of mortgaged
property. on the other hand the substantive relief
in an application section 31 1  is something akin
to an application for attachment of property
in execution of a decree at a stage posterior to
the passing of the decree.  p.710
the question whether the provisions of ss. 31 and
32 of the act companyld be invoked against the property
of the surety came up for companysideration before a
full bench of the allahabad high companyrt in munnalal
gupta v. uttar pradesh financial companyporation
anr. air 1975 all 416. in that case the surety
had mortgaged his house by way of companylateral
security for the loan granted to the borrower
industrial companycern and the financial companyporation
had moved an application under s. 31 of the act for
sale of the property of the surety which had been
mortgaged as well as the property of the principal
debtor which had been mortgaged and the question
was whether an order for sale of the property
of the surety companyld be passed on an application
under s. 31  1  of the act. it was held that the
relief which can be granted by a district judge
under s. 32 of the act must be companyfined against
the borrower industrial companycern and its property
and that the district judge can pass an ad-interim
order attaching the security or so much of the
property of the industrial companycern as would be
sufficient in his opinion to satisfy the
outstanding liability. it was laid down that the
order of attachment is restricted to the property
of industrial companycern given to the companyporation by
way of surety and he is number empowered to attach the
property of a person other than an industrial
concern. according to the said decision a surety
who is number a partner or otherwise interested in the
industrial companycern cannumber be proceeded against
under s. 31 so that his property even if mortgaged
with the companyporation cannumber be attached
by the district judge. in this companytext the teamed judges
pointed out the sub-section  4  of s. 32 companytemplates a
numberice to the borrower industrial companycern after an interim
order has been passed to show cause why the ad interim
injunction should number be made absolute and the said
provision does number companytemplate a numberice to the surety and
that it would be unthinkable that the legislature intended
that the property of the surety may be attached and put to
sale without even a numberice to him. the amendments introduced in ss. 31 and 32 by act 43 of
1985 seek to remove the lacunae in those provisions as
pointed out in the aforesaid judgment of the allahabad high
court and with that end in view clause  aa  has been
inserted in sub-section  1  of section 31 whereby a
financial companyporation can move an application under s. 31 1
for enforcing the liability of any surety and amendments
have been made in s. 32 to prescribe the procedure for grant
of the said relief on such application. express provision
has been made in sub-section  1a  of s. 32 for issuing a
numberice to the surety requiring him to show cause why his
liability should number be enforced. it is argued on behalf of the appellant that the words
for enforcing the liability of any surety are wide in
their amplitude to companyer the monetary liability of a surety
who has given personal guarantee only and has number given his
property as security for repayment of the loan by the
borrower industrial companycern though it is number disputed that
in so far as the borrower industrial companycern is
concerned the amendments introduced in ss. 31 and 32 by
act 43 of 1985 do number alter the existing law and numberorder in
the nature of a money decree can be passed against him in
these proceedings. it is however urged that in so far as
the surety is companycerned the position is different and in
view of the amendments introduced in ss. 31 and 32 an order
in the nature of a money decree can be passed against the
surety who has given personal guarantee only and has number
given security of his property for repayment of the loan. this argument implies that as a result of the amendments
introduced in sections 31 and 32 by act 43 of 1985 while the
nature of the proceedings as against the borrower industrial
concern remains unchanged and the said proceedings companytinue
to be proceedings akin to an application for attachment of
property in execution of a decree at a stage posterior to
the passing of the decree the nature of these poceedings
has been changed in so far as the surety is companycerned and
they have become proceedings in which an order in the nature
of a money decree can be passed. in other words in a case
where the borrower industrial companycern has obtained a loan
from the financial companyporation without furnishing the
security of property on the basis of
a personal guarantee given by the surety the financial
corporation will have to proceed against the borrower
industrial companycern by instituting a regular suit for
recovery of the dues whereas it can proceed against the
surety under sections 31 and 32 of the act. it means that as
compared to the principal debtor the financial companyporation
vis-a-vis the surety has been placed on a more advantageous
position. it may however be mentioned that under the
common law which finds re-enactment in section 128 of
the indian companytract act 1872 the liability of the surety
is companyxtensive with that of the principal debtor unless it
is otherwise provided by the companytract. it means that the
liability must be proved against the surety in the same way
as against the principal debtor. thus under the general law
the surety stands on the same footing as the principal
debtor. these submissions raise the question can the
legislature be attributed the intention to alter the
existing law so as to bring about a change in the nature of
proceedings under sections 31 and 32 of the act and also to
alter the general law relating to the enforcement of the
liability of the surety? i find it difficult to answer this
question in the affirmative. in the matter of interpretation of statutes a
principle which is well-recognised in england is it is
thought to be in the highest degree improbable that
parliament would depart from the general system of law
without expressing its intention with irresistible
clearness and to give any such effect to general words
merely because this would be their widest usual natural
or literal meaning would be to place on them a companystruction
other than that which parliament must be supposed to have
intended.  see mexwell on the interpretation of statutes
12th edition p. 116 . in minet v. leman 1955  20  eeav. sir john romilly m.r. stated as a principle of
construction which companyld number be disputed that the general
words of the act are number to be so companystrued as to alter the
previous policy of the law unless numbersense or meaning can
be applied to those words companysistently with the intention of
preserving the existing policy untouched. in this companytext
it would be of relevance to take numbere of the decision of
this companyrt in m.k.ranganathan anr. v. government of madras
ors. 1955 2 scr 374. in that case this companyrt was
required to companystrue the words or any sale held without
leave of the companyrt of any of the properties of the companypany
which were added in s. 232  1  of the indian companypanies
act 1913 by act 22 of 1936. the said amendment was
introduced with a view to get over the decision of the
allahabad high companyrt in kayastha training and banking
corporation limitedv. sat narain singh 1921 ilr 43 all. the question was whether the words which had been added
refer only to sales held through the intervention of the
court or whether they included the sales effected by the
secured creditors outside the winding up and without the
intervention of the companyrt. this companyrt held that the said
words referred only to sales held through the intervention
of the companyrt and that the amendments whereby these
words were introduced were number intended to bring within
the sweep of the general words sales effected by the
secured creditors outside the winding up. in order to
arrive at this companyclusion this companyrt placed reliance on the
principle of interpretation referred to above and it was
observed
if the companystruction sought to be put upon the
words or any sale held without leave of the companyrt
of any of the properties by the appellants were
accepted it would effect a fundamental
alteration in the law as it stood before the
amendment was inserted in section 232 by act xxii
of 1936. whereas before the amendment the secured
creditor stood outside the winding up and companyld if
the mortgage deed so provided realise his
security without the intervention of the companyrt by
effecting a sale either by private treaty or by
public auction numbersuch sale companyld be effected by
him after the amendment and that was certainly a
fundamental alteration in the law which companyld number
be effected unless one found words used which
pointed unmistakably to that companyclusion or unless
such intention was expressed with irresistible
clearness. having regard to the circumstances
under which the amendment was inserted in section
232 by act xxii of 1936 and also having regard to
the companytext we are number prepared to hold that the
legislature in inserting that amendment intended
to effect a fundamental alteration in law with
irresistible clearness. such a great and sudden
change of policy companyld number be attributed to the
legislature and it would be legitimate therefore
to adopt the narrower interpretation of those
words of the amendment rather than an
interpretation which would have the companytrary
effect.  p. 388
in my opinion regard must be had of this principle of
interpretation while companystruing the expression for
enforcing the liability of any surety which has been
inserted by way of clause  aa  in sub-section  1  of section
31 by act 43 of 1985. companysidering the amendments
introduced in sections 31 and 32 of the act by act 43 of
1985 and having regard to the principle of interpretation
referred to above i do number find any provision in the said
amendments which may indicate that
parliament has evinced an intention to effect a fundamental
alteration in the law with irresistible clearness. in this
context it would be of relevance to numbere that while
introducing the said amendments parliament has chosen number to
make any alteration in relation to the following matters

in the marginal numbere section 31 is described as
special provisions for enforcement of claims by financial
corporation. numberalteration has been made therein by act 43
of 1985 and section 31 companytinues to be a special provision
for enforcement of claims by financial companyporation. parliament has number expressly indicated that an
order for payment of money only may be passed against the
surety. although in sub-sections  8  and  8a  of section
32 express provision has been made prescribing the
procedure for carrying into effect an order of attachment
and sale of property and an order transferring the
management of an industrial companycern to the financial
corporation passed under sub-section  7  of section 32 no
specific provision was made prescribing the procedure for
carrying into effect of an order passed under clause  da  of
sub-section  7  of section 32 directing the enforcement of
the liability of the surety. it cannumber be companyprehended that
while making a provision which would enable passing of
an order in the nature of a money decree against a surety on
an application under section 31 of the act parliament would
have refrained from making a companyresponding provision
prescribing the procedure for carrying into effect of such
an order. having regard to the features referred to above it
appears to be more in companysonance with the scheme of the act
and the object underlying sections 31 and 32 that by
introducing the amendments in sections 31 and 32 of the
act parliament intended to place the surety on the same
footing as the principal debtor in the matter of enforcement
of the claims of the financial companyporation so as to enable
the financial companyporation to obtain relief against the
properties of the principal debtor as well as the surety. if
considered in this perspective the expression enforcing
the liability of any surety in clause  aa  of section 31 1
would mean enforcing the liability of a surety in the same
manner as the liability of principal debtor is enforced
i.e. by attachment and sale of property keeping in view
that the proceedings under sections 31 and 32 of the act are
akin to an application for attachment of property in
execution of a decree at a stage posterior to the passing
of the decree. this companystruction would obviate the need for
a procedure for carrying into effect of the order passed
under clause  da  of sub-section  7  of section 32 of the
act because such an order would be an order for attachment
and sale of the property of the surety and it can be carried
into effect in accordance with sub-section  8  of section 32
which prescribes the procedure for carrying into effect an
order for attachment and sale of property. this companystruction
will also preserve the special nature of the proceedings
under section 31 and would number result in bringing about a
fundamental alteration in the law laid down by this companyrt
with regard to the nature of these proceedings as well as
the general law whereunder a surety is to be treated on par
with the principal debtor.