ORDER
Varghese Kalliath, J.
1. Respondents in a proceeding initiated before the District Judge by the Kerala Financial Corporation under Section 31 of the State Financial Corporations Act, 1951 are the revision petitioners before me.
2. In the proceedings before the learnedDistrict Judge the revision petitioners filed an application requesting the court to grant leave of the court to issue notice to third parties under Order VIIIA of the Civil P.C. The revision petitioners said that third parties are liable to contribute to liquidate the loan. The court below considered the question whether it has got jurisdiction to grant leave to the revision petitioners to issue notice to third parties under Order VIIIA of the Civil P.C.
3. After considering very ably the relevant aspects of the matter the court below held that the proceedings contemplated under Order VIIIA of the Civil P.C. are inapplicable to a proceeding initiated under Section 31 of the State Financial Corporations Act, 1951. The application filed by the revision petitioners was rejected.
4. They are aggrieved and they file this Civil Revision Petition. The only question that I should consider in this Civil Revision Petition is whether the District Judge, who is enjoined to make an investigation as per the provisions of Sections 31 and 32 of State Financial Corporations Act is empowered with the jurisdiction to allow the debtor to initiate proceedings under Order VIIIA of the Civil P.C. Certainly I have to examine first the relevant provisions of the State Financial Corporations Act. Provisions apposite are Sections 31 and 32. Relevant parts of Sections 31 and 32 of the Act read thus :
'31. Special provisions for enforcement of claims by Financial Corporation.-- (1) Where an industrial concern, 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 Corporation) or otherwise fails to comply with the terms of its agreement with the Financial Corporation or where the Financial Corporation 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, the provisions of Section 29 of this Act and of Section 69 this Act and of Section 69 of the T.P. Act 1882) any officer of the Financial Corporation, generally or specially authorized 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 property pledged, mortgaged' hypothecated or assigned to the (Financial Corporation) as security for the loan or advance; or
(b) for transferring the management of the industrial concern to the Financial Corporation; or
(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.
32. Procedure of District Judge in respect of applications under Section 31.-
(1) to (5) xxx
(6) 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 Civil P.C. 1908, in so far as such provisions may be applied thereto.
(7) After making an investigation under Sub-section (6), the District Judge may-
(a) confirm 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) confirm or dissolve the injunction; or
(2) transfer the management of the industrial concern to the Financial Corporation or reject the claim made in this behalf.
5. In a different context these sections came up for interpretation by the Supreme Court in Gujarat State Financial Corporation v. Natson ., AIR 1978 SC 1765. The question before the Supreme Court was whether in a proceeding under Section 31(1) of the State Financial Corporations Act the industrial concern is bound to pay ad valorem court-fee. The Supreme Court came to the conclusion thatthe proceedings before the District Judge under Section 31(1) is a special proceeding and is not a suit between a mortgagee and the mortgagor for sale of mortgaged property.
Further the Court observed that the scheme of the special provision made in the State Financial Corporations Act could not be styled as a substantive remedy for the relief of payment of mortgage money by sale of mortgaged property. It was also held that the proceedings cannot be treated as one to obtain a substantive relief capable of being valued in terms of monetary gain or prevention of monetary loss. The Supreme Court considered the form of the application, the nature of the relief, the compulsion to make interim order and the limited scope of the enquiry contemplated under Sub-section (6) of Section 32 and the manner in which and the nature of the relief that can be granted by the court and came to the conclusion that all those factors indicated that the proceedings under Section 31(1) is 'neither a plaint as contemplated by Article 1 of Schedule I nor an application in the nature of a plaint as contemplated by Article 7 of Schedule I of Bombay Court-fees Act.'
6. The counsel points out that Sub-clause (6) of Section 32 enjoins the District Judge with the obligation to investigate the claim of the Financial Corporation in accordance with the provisions contained in the Civil P.C 1908, in so far as such provisions may be applied thereto. Certainly the counsel for the petitioners relied very much on this subsection and submitted that the District Judge has to direct his investigation in accordance with the provisions of the Civil P.C. and the mandate in this provisions will clothe the District Judge with all the powers he can exercise under the Civil P.C. including the power to grant leave of the court to issue notice under Order VIIIA of the Civil P.C.
When stated in this fashion the counsel's submission has ostensive persuasiveness. But a closer examination of this provision with the other provisions in the Act would demonstrate the superficiality of this submission. Sub-section (7) of Section 32 makes it clear that the District Judge has got only the power 'to confirm the order of attachment and direct the sale of the attached property'. Of course, the District Judge has got powerto vary the order of attachment and direct the sale of the attached property. And the other powers granted to the District Judge under Clauses (c), (d) and (e) of Sub-section (7) also refer only to the attachment of the property and the injunction granted by the District Judge. A further power that is given to the District Judge is to order the transfer of the management of industrial concern to the Financial Corporation or reject the claim made in this behalf.
The question is whether the District Judge has got the power when he is exercising his jurisdiction under Section 32 of the State Financial Corporations Act to direct a third party to contribute or indemnify the respondents in an application under Section 31 of State Financial Corporations Act exercising power under Order VIIIA of the Civil P.C.
7. Order VIIIA, Civil P.C. is really a special provision whereby a defendant has been given the power to point out when a claim is made against him that he is not really liable to pay the amount claimed by the plaintiff saying that there is a third party who has got the liability to pay all the debts or to contribute towards the liquidation of the debt. He can also claim an indemnity against a person who is not a party to the litigation.
The policy behind this rule is that the defendant who has got a claim against the 3rd party need not be driven to a fresh suit against the third party to put the indemnity in his favour into operation or to establish his entitlement to contribution from the third party. The claims and rights inter se of the defendant and the third party have to be decided in a third party proceedings. This decision which has got the force of a decree can necessarily be after resorting to the entire procedure prescribed for a trial of a suit.
8. A determination of the rights and claims of the debtor against a third party is not at all contemplated by the legislature in prescribing a summary procedure for the realisation of a debt due to a Corporation coming within the State Financial Corporations Act. Certainly District Judge is not exercising his normal powers. He is exercising a special power under a special statute in a somewhat summary manner. My investigation as to the width of that power of the district Judge should be confined within the confines of the provisions of the Act. I should see the power explicit or implicit togrant leave to issue notice under Order VIIIA of the Civil P.C. in the provisions of the Act itself. His power is delineated in Sub-section (7) of Section 32 of State Financial Corporations Act. It is only a limited power that has been granted by this section to the District Judge.
Really speaking it is an ad hoc power since the creditor Corporation is retaining all the powers under the Civil P.C. and under the general law to realise the debt. Plainly speaking the creditor can file a suit for the realisation of the amount notwithstanding the provisions contained in State Financial Corporations Act. In view of these limitations I feel that the District Judge has no power to grant leave under Order VIIIA of the Civil P.C.
In these circumstances, I feel the learned District Judge rightly placed reliance on the decision reported in AIR 1978 SC 1765 and rejected the application properly. I see no merit in the Civil Revision Petition and it is accordingly dismissed.