1. Shri Satish Chaturvedi appears for the appellant and Shri P. K. Singhal appears for the respondent. They are heard.
2. This is a first appeal from the order dated September 20, 1995, whereby the trial court in exercise of its jurisdiction under Order XXXIX, Rules 1 and 2 of the Code of Civil Procedure, 1908, granted injunction in favour of the plaintiff-respondent, A. S. Solvent Extraction Pvt. Ltd. restraining the U. P. Financial Corporation (hereinafter referred to as 'the Corporation') from executing the notice issued under Section 29 of the State Financial Corporations Act (hereinafter referred to as 'the Act').
3. The brief facts leading to this appeal are as under :
The respondent-plaintiff, A. S. Solvent Extraction Pvt. Ltd., has brought an action against the appellant-Corporation for permanent injunction seeking relief that the appellant-Corporation be restrained from executing the notice under Section 29 of the Act for making any payment of the loan amount or in lieu thereof dispossessing the plaintiff-respondent. During the pendency of the suit an application under Order XXXIX, Rules 1 and 2 of the Code of Civil Procedure is also filed and the trial court after hearing the parties has granted the impugned order dated September 20, 1995, restraining the Corporation from executing the notice issued under Section 29 of the Act.
4. No doubt the learned trial court while passing the order considered the requirements for grant of temporary injunction, i.e., prima facie case, balance of convenience and irreparable injury, and, thereafter, passed theimpugned order. For the brevity of the case, it is necessary to reproduce the provisions of Section 29 of the Act.
'29. Rights of financial corporation in case of default-(1) Where any industrial concern, which is under a liability to the financial corporation under an 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 corporation) or otherwise fails to comply with the terms of its agreement with the financial corporation, the financial corporation shall have the (right to take over the management or possession or both of the industrial concern), as well as the (right to transfer by way of lease or sale) and realise the property pledged, mortgaged, hypothecated or assigned to the financial corporation.
(2) Any transfer of property made by the financial corporation, in exercise of its powers under Sub-section (1), shall vest in the transferee all rights in or to the property transferred (as if the transfer) had been made by the owner of the property.
(3) The financial corporation shall have the same rights and powers with respect to goods manufactured or produced wholly or partly from goods forming part of the security held by it as it had with respect to the original goods.
(4) (Where any action has been taken against an industrial concern) under the provisions of Sub-section (1), all costs, (charges and expenses which in the opinion of the financial corporation have been properly incurred) by it (as incidental thereto) shall be recoverable from the industrial concern and the money which is received by it shall, in the absence of any contract to the contrary, be held by it in trust to be applied firstly, in payment of such costs, charges and expenses and, secondly, in discharge of the debt due to the financial corporation, and the residue of the money so received shall be paid to the person entitled thereto.
(5) (Where the financial corporation has taken any action against an industrial concern) under the provisions of Sub-section (1), the financial corporation shall be deemed to be the owner of such concern, for the purposes of suits by or against the concern, and shall sue and be sued in the name of (the concern).'
5. A bare reading of Section 29 of the Act postulates that in default of payment in accordance with the agreement arrived at between the parties the corporation shall have the right to take over the management or the possession of the unit and realise the sum advanced to the unit whichis pledged, mortgaged, hypothecated or assigned to the corporation. This statutory mandate issued under Section 29 of the Act cannot be interfered with by issuing any temporary injunction. We may further observe that by executing various documents in favour of the Corporation the corporation is in constructive possession of the unit and on its behalf the unit is being looked after by the respondent-plaintiff A. S, Solvent Extraction Pvt. Ltd. Therefore, the requirements for the grant of temporary injunction, i.e., prima facie case and balance of convenience are not made out. Besides this the notice under Section 29 of the Act being a statutory one the question of any irreparable loss in the event of its execution does not arise. In equity also the respondent-plaintiff has no case for seeking any injunction. No doubt this court is aware of the legal position that once injunction is granted the appellate court should be slow in interfering with the same except where patent illegality or irregularity is pointed out.
6. As discussed above, the statutory operation of Section 29 of the Act has been stayed which is beyond the scope of Order XXXIX, Rules 1 and 2 of the Code of Civil Procedure. Therefore, we are of the opinion that the order impugned suffers from illegal and irregular exercise of jurisdiction by the trial court and the same cannot be allowed to stand in appeal.
7. Consequently, from the aforesaid discussion the impugned order is set aside and the appeal is allowed and the application as framed and filed for grant of temporary injunction is rejected.