M/S. Arisetty Satyanarayana Murty Sugars and Industries Vs. the Sub-collector and Others - Court Judgment

Excerpt:
property - repayment of loan - sections 52-a and 57-a of a.p. revenue recovery act, 1864, sections 29, 32g and 31 of state financial corporations act, 1951 and articles 226 and 143 of constitution of india - petitioner defaulted in repayment of loan taken from financial corporation - decree passed for sale of mortgaged property to realise amount of loan and property sold by auction - once right to recover amount is barred by obtaining decree proceedings under section 52-a are also barred - section 57-a not applicable as no notice of auction given to petitioner - held, petitioner has remedy under article 226 for damages - auction sale quashed. - motor vehicles act (59 of 1988)section 149 (2): [v. gopala gowda & jawad rahim, jj] insurers entitlement to defend the action joint appeal by insured and insurer - held, the language employed in enacting sub-section (2) of section 149 appears to be plain and simple and there is no ambiguity in it. it shows that when an insurer is impleaded and has been given notice of the case, it is entitled to defend the action only on grounds enumerated in sub-section (2) of section 149 of the act, and no other grounds are available to it. the insurer is not allowed to contest the claim of the injured or heirs of the deceased on other grounds, which are available to the insured. if insurer is permitted to contest the claim on other grounds it would mean adding more grounds of contest to the insurer and will be negation of the intention of the legislature and annihilate mandate of the provisions of sections 170 and 149 of the act. the insured can pursue appeal only after giving up the insurer as the appellant and not otherwise. in the instant case, the insurer has not withdrawn from party array but has remained prosecuting the appeal with the insured on the grounds which are available only to the insured. therefore, the joint appeal as filed by the insured and the insurer is not maintainable. section 166: [v. gopala gowda & jawad rahim, jj] claim for compensation accident due to mechanical defect in the vehicle held, it is not in dispute that the claimant suffered injuries in an accident, which occurred during the course of his employment, albeit due to his negligence but law does not render him remediless. statutory right is conferred on him, accruing by virtue of his employment under insured to claim compensation under workmens compensation act. the insurer is statutorily duty bound to discharge the liability of the owner of the vehicle, to pay such compensation to the employee, as mandated under the provisions of section 149 of the act. the right of an injured employee or his dependents as the case may be to be compensated, when injury is suffered or death occurs during his employment, is recognised not only under workmens compensation act, but also under benevolent provisions under section 166 and 167 of the m.v. act. the right of driver to seek compensation is not restricted only to the workmens compensation act, it has been enlarged to enable such person to seek just compensation (sections 166 and 168), conferring upon him the right of election engrafted under section 167 of the act to choose either of the two forum. the only defence which the insurer could take is limit of its liability as enumerated under section 147 of the act, leading to contest, inter alia, only between insured and insurer and does not impact claimants right to recover the compensation determined by the tribunal which crystallizes into enforceable right against both. in the instant case, the claimant/driver has exercised right of election under section 167 of the act to seek compensation under section 166 of the act resulting in award passed by the tribunal. therefore, the insured and the insurer have no escape but to discharge the said award as directed. undisputedly, in this case as deduced for proved facts, the vehicle in question was not properly maintained by the owner and despite faulty brake system, the claimant had undertaken the hazardous journey to his peril at the behest of and at the instruction of the owner. the owner is therefore, tortfeasor. section 168: [v. gopala gowda & jawad rahim, jj] insurers limit of liability - held, it is well settled that the liability of the insurance company for payment of compensation can be statutory or contractual. is for the insurance company to show that the insurance policy was a statutory policy and not a contractual policy to restrict its liability. that issue was neither raised before the tribunal nor is raised in this appeal requiring decision. thus, if at all the insurer has any valid ground to restrict its liability, it can proceed against the insured but firstly it has to discharge the award as required under section 149 (1) of the act. where the owner/insured has failed to maintain the vehicle as per prescribed safety standards and has caused the claimant to drive the vehicle with mechanical defects, the owner would be the tortfeasor and the claimant can maintain a petition seeking compensation under the provisions of the act, instead of seeking compensation under the workmens compensation act. on facts, held, the material evidence on record, particularly, with regard to the income of the claimant, his age, medical evidence and the evidence relating to pecuniary loss has not been considered by the tribunal in the correct perspective, which has resulted in passing of the impugned award, disproportionate to the pecuniary loss and the loss of future income of the victim. the settled principles governing determination of compensation has been given a go-bye. compensation of rs.4,15,150/- awarded by the tribunal was enhanced to rs.8,20,000/-. - 6. section 29 gives a right to the corporation to take over the management or possession or both of the industrial concern on default of re-payment of the loan or advance, as well as the right to transfer by way of lease or sale and realise property pledged, mortgaged, hypothecated or assigned to the financial corporation. 7-7-88 of the 2nd respondent addressed to the 3rd respondent-corporation, the mandal revenue officer clearly stated that notices under sections 5, 7 of the revenue recovery act, were not served on the petitioner for recovery of the out-standing dues to the a.order1. the petitioner-firm purchased a sick khandasari sugar factory from the 3rd respondent a.p. state financial corporation and obtained a loan from the 3rd respondent for that purpose. for various reasons, the petitioner committed default in making repayment of the loan resulting in the 3rd respondent resorting to s. 31 of the state financial corporations act, 1951 ('the act'),for short in filing o.p. no. 53/75 in the district court, srikakulam a decree dt. 21-6-78 was passed for sale of the mortgaged properties for realising the loan amount and interest, in favour of the 3rd respondent, and in execution of the said decree an execution petition was filed on 21-6-78. earlier, there was attachment before judgment of the properties of the petitioner-firm on 10-8-1977.2. the 3rd respondent, without executing the decree in o.p. no. 53/75, invoked the provisions of s. 52. a of the revenue recovery act, and the 2nd respondent brought the machinery of the petitioner-firm to sale and the sale was knocked down in favour of the 4th respondent for a sum of rs. 75,000/-.3. the petitioner assails the sale held by the 2nd respondent, firstly on the ground that once the third respondent invoked s. 31 of the act, the proceedings under the. revenue recovery act 1864, cannot be taken. the sale is also attacked on the ground that there was no notice to the petitioner and there was no notification of the sale, and hence the sale is vitiated, it is the further contention of the petitioner, that valuable properties of the petitioner-firm were sold for a meagre sum of rs.75,000/- where the machinery is worth more than rs. 2 lakhs,4. sri pratap reddy, learned counsel for the petitioner relied on k. subba reddy v. state financial corporation, : air1987ap119 and contended that having invoked s. 31 of the act, the 3rd respondent cannot invoke the provisions of s. 29 of the act. the learned standing counsel for the 3rd respondent submitted that it is open to the corporation to proceed under s. 32g of the act or under s. 52-a of the revenue recovery act, and the fact that civil court was approached in accordance with s. 31 of the act, did not bar the corporation from taking recourse to the revenue recovery act. the full bench in the subba reddy's case held that once the state financial corporation invokes the jurisdiction of the district court under s. 31 of the act, and obtained a decree, the corporation cannot invoke the provisions of s. 29 of the act. srisastry contended that the corporation filed an appeal against the full bench judgment in the supreme court in slp (civil) no.4181/87 and the same in now pending. he further submitted that the supreme court granted an ex parte stay in slp (civil) no. 13576/87 dt. 12-9-1988 against the judgment of a division bench of this court in w.a. no. 793/81 dt. 16-12-1986 which relied on the decision of the full bench referred to above (1 supra) and hence the ratio of the decision in the subba reddy's case is stayed by the supreme court and the same is not binding on this court. in m/s. gar re-rolling mills v. a.p. state financial corporation, 1982 (1) alt 93 held that a corporation can again take action under s. 31 of the act. reliance is also placed on a full bench decision of allahabad high court reported in m/s. krishna utensils rampur v. state financial corporation, : air1989all226 , holding that s. 22g of the act empowers the corporation to recover the amount due to it without prejudice to any other mode of recovery.5. though the appeal against the judgment of the full bench is pending in the supreme court, the judgment is not either suspended or stayed by the supreme court and is therefore, binding on this court. the question for consideration is whether the ratio of the full bench judgment applies when the corporation invokes s. 52.a of the a.p. revenue recovery act 1864. the full bench held that the corporation cannot proceed to take steps under s. 29 of the act once the proceedings in the civil court under s. 31 of the act were resorted to and a decree obtained.6. section 29 gives a right to the corporation to take over the management or possession or both of the industrial concern on default of re-payment of the loan or advance, as well as the right to transfer by way of lease or sale and realise property pledged, mortgaged, hypothecated or assigned to the financial corporation. s. 32g of the act enables the corporation to make an application to the state government for recovery of the amount due to it and the state govern-ment may issue a certificate for that amount to the collector and the collector shall proceed to recover the amount in the same manner as arrears of land revenue. section 52-a of the revenue recovery act provides for recovery of amount due to a corporation established by or under a central or provincial or state act or government company in the same manner as arrears of land revenue under the provisions of the said act.7. the right to recover the amount due to a corporation under s. 32g of the act or under s. 52a of the revenue recovery act, flows out of the right conferred on the corporation under s. 29 of the act. once the right to recover the amount due to the corporation is barred by the corporation obtaining a decree pursuant to proceedings in a civil court under s. 31 of the act, it follows that the proceedings under s. 52-a of the revenue recovery act, are also barred. it has therefore to be held that the auction-sale held by the 2nd respondent is not valid. no reliance can be placed on m/s. gar re-rolling mills' case, (1982) (1) alt 93 or m/s. krishna utensils' case, : air1989all226 , in view of the binding decision of the full bench of this court referred to above.8. sri sastry next contended that under s. 57-a of the revenue recovery act, a revision lies against the proceedings of the 2nd respondent and in view of the availability of an alternative remedy the writ petition should be dismissed. sri pratap reddy contended that the auction was held without notice to the petitioner and is therefore, void. in the letter rc. no. 13/86 dt. 7-7-88 of the 2nd respondent addressed to the 3rd respondent-corporation, the mandal revenue officer clearly stated that notices under sections 5, 7 of the revenue recovery act, were not served on the petitioner for recovery of the out-standing dues to the a.p. state financial corporation, and therefore, the auction conducted on 27-6-1988 is invalid. consequently, the auction was not confirmed. by another letter in rc. no. 13 / 86 dt. 5-8-88 the 2nd respondent reiterated that no notice was served on the petitioner and hence a fresh notice should be given before conduct-ing the auction. it is therefore clear that the auction was held without notice to the petitioner and is invalid, as it was conducted in violation of principles of natural justice and the provisions of the revenue recovery act. once the auction is held to be invalid, it is not necessary to drive the petitioner to approach the government under s. 57-a of the revenue recovery act.9. it is further contended by sri sastry that the petitioner filed o.s. no. 3/92 in the sub-court, parvathipuram, for recovery of damages and as such, this writ petition is not maintainable. the relief sought for in the suit is one for damages and it cannot stand in the way of petitioner seeking remedy under art. 226 of the constitution of india,10. it was lastly contended by sri sastry that the supreme court by the order dt. 2-12-88 in slp no. 12533/85 directed that the corporation may take steps to recover the dues under the financial corporations act or under the revenue recovery act, and therefore, the corporation is entitled to proceed under the revenue recovery act. according to the order of the supreme court, recovery can be made either under the financial corporation act or under the revenue recovery act. the first choice having been availed by the corporation, namely, by resorting to a civil court under s. 31 of the act and having obtained a decree, it is for the corporation to pursue the matter in execution of the decree. it is not denied that an execution petition was filed on 21-6-78 and it is pending. the 3rd respondent has to exhaust that remedy which was availed by it under s. 31 of the act before taking recourse to proceedings under the revenue recovery act.11. the writ petition is allowed and the auction sale held on 27-6-1988 by the 2nd respondent is quashed. the 1st and 2nd respondents are directed to refund the auction amount deposited by the 4th respondent immediately, within two weeks from the date of receipt of this order. no. costs.12. petition allowed.

Judgment:
ORDER

1. The petitioner-firm purchased a sick Khandasari sugar factory from the 3rd respondent A.P. State Financial Corporation and obtained a loan from the 3rd respondent for that purpose. For various reasons, the petitioner committed default in making repayment of the loan resulting in the 3rd respondent resorting to S. 31 of the State Financial Corporations Act, 1951 ('the Act'),for short in filing O.P. No. 53/75 in the District Court, Srikakulam A decree dt. 21-6-78 was passed for sale of the mortgaged properties for realising the loan amount and interest, in favour of the 3rd respondent, and in execution of the said decree an execution petition was filed on 21-6-78. Earlier, there was attachment before judgment of the properties of the petitioner-firm on 10-8-1977.

2. The 3rd respondent, without executing the decree in O.P. No. 53/75, invoked the provisions of S. 52. A of the Revenue Recovery Act, and the 2nd respondent brought the machinery of the petitioner-firm to sale and the sale was knocked down in favour of the 4th respondent for a sum of Rs. 75,000/-.

3. The petitioner assails the sale held by the 2nd respondent, firstly on the ground that once the third respondent invoked S. 31 of the Act, the proceedings under the. Revenue Recovery Act 1864, cannot be taken. The sale is also attacked on the ground that there was no notice to the petitioner and there was no notification of the sale, and hence the sale is vitiated, It is the further contention of the petitioner, that valuable properties of the petitioner-firm were sold for a meagre sum of Rs.75,000/- where the machinery is worth more than Rs. 2 lakhs,

4. Sri Pratap Reddy, learned counsel for the petitioner relied on K. Subba Reddy v. State Financial Corporation, : AIR1987AP119 and contended that having invoked S. 31 of the Act, the 3rd respondent cannot invoke the provisions of S. 29 of the Act. The learned Standing Counsel for the 3rd respondent submitted that it is open to the Corporation to proceed under S. 32G of the Act or under S. 52-A of the Revenue Recovery Act, and the fact that Civil Court was approached in accordance with S. 31 of the Act, did not bar the Corporation from taking recourse to the Revenue Recovery Act. The Full Bench in the Subba Reddy's case held that once the State Financial Corporation invokes the jurisdiction of the District Court under S. 31 of the Act, and obtained a decree, the corporation cannot invoke the provisions of S. 29 of the Act. SriSastry contended that the Corporation filed an appeal against the Full Bench Judgment in the Supreme Court in SLP (Civil) No.4181/87 and the same in now pending. He further submitted that the Supreme Court granted an ex parte stay in SLP (Civil) No. 13576/87 dt. 12-9-1988 against the Judgment of a Division Bench of this Court in W.A. No. 793/81 dt. 16-12-1986 which relied on the decision of the Full Bench referred to above (1 supra) and hence the ratio of the decision in the Subba Reddy's case is stayed by the Supreme Court and the same is not binding on this Court. In M/s. GAR Re-Rolling Mills v. A.P. State Financial Corporation, 1982 (1) ALT 93 held that a corporation can again take action under S. 31 of the Act. Reliance is also placed on a Full Bench decision of Allahabad High Court reported in M/s. Krishna Utensils Rampur v. State Financial Corporation, : AIR1989All226 , holding that S. 22G of the Act empowers the Corporation to recover the amount due to it without prejudice to any other mode of recovery.

5. Though the appeal against the Judgment of the Full Bench is pending in the Supreme Court, the Judgment is not either suspended or stayed by the Supreme Court and is therefore, binding on this Court. The question for consideration is whether the ratio of the Full Bench Judgment applies when the Corporation invokes S. 52.A of the A.P. Revenue Recovery Act 1864. The Full Bench held that the Corporation cannot proceed to take steps under S. 29 of the Act once the proceedings in the Civil Court under S. 31 of the Act were resorted to and a decree obtained.

6. Section 29 gives a right to the Corporation to take over the management or possession or both of the industrial concern on default of re-payment of the loan or advance, as well as the right to transfer by way of lease or sale and realise property pledged, mortgaged, hypothecated or assigned to the financial Corporation. S. 32G of the Act enables the Corporation to make an application to the State Government for recovery of the amount due to it and the State Govern-ment may issue a certificate for that amount to the Collector and the Collector shall proceed to recover the amount in the same manner as arrears of land revenue. Section 52-A of the Revenue Recovery Act provides for recovery of amount due to a corporation established by or under a Central or Provincial or State Act or Government Company in the same manner as arrears of land revenue under the provisions of the said Act.

7. The right to recover the amount due to a corporation under S. 32G of the Act or under S. 52A of the Revenue Recovery Act, flows out of the right conferred on the Corporation under S. 29 of the Act. Once the right to recover the amount due to the Corporation is barred by the Corporation obtaining a decree pursuant to proceedings in a Civil Court under S. 31 of the Act, it follows that the proceedings under S. 52-A of the Revenue Recovery Act, are also barred. It has therefore to be held that the auction-sale held by the 2nd respondent is not valid. No reliance can be placed on M/s. Gar Re-Rolling Mills' case, (1982) (1) ALT 93 or M/s. Krishna Utensils' case, : AIR1989All226 , in view of the binding decision of the Full Bench of this Court referred to above.

8. Sri Sastry next contended that under S. 57-A of the Revenue Recovery Act, a revision lies against the proceedings of the 2nd respondent and in view of the availability of an alternative remedy the writ petition should be dismissed. Sri Pratap Reddy contended that the auction was held without notice to the petitioner and is therefore, void. In the letter RC. No. 13/86 dt. 7-7-88 of the 2nd respondent addressed to the 3rd respondent-Corporation, the Mandal Revenue Officer clearly stated that notices under Sections 5, 7 of the Revenue Recovery Act, were not served on the petitioner for recovery of the out-standing dues to the A.P. State Financial Corporation, and therefore, the auction conducted on 27-6-1988 is invalid. Consequently, the auction was not confirmed. By another letter in RC. No. 13 / 86 dt. 5-8-88 the 2nd respondent reiterated that no notice was served on the petitioner and hence a fresh notice should be given before conduct-ing the auction. It is therefore clear that the auction was held without notice to the petitioner and is invalid, as it was conducted in violation of principles of natural justice and the provisions of the Revenue Recovery Act. Once the auction is held to be invalid, it is not necessary to drive the petitioner to approach the Government under S. 57-A of the Revenue Recovery Act.

9. It is further contended by Sri Sastry that the petitioner filed O.S. No. 3/92 in the Sub-Court, Parvathipuram, for recovery of damages and as such, this writ petition is not maintainable. The relief sought for in the suit is one for damages and it cannot stand in the way of petitioner seeking remedy under Art. 226 of the Constitution of India,

10. It was lastly contended by Sri Sastry that the Supreme Court by the order dt. 2-12-88 in SLP No. 12533/85 directed that the Corporation may take steps to recover the dues under the Financial Corporations Act or under the Revenue Recovery Act, and therefore, the Corporation is entitled to proceed under the Revenue Recovery Act. According to the order of the Supreme Court, recovery can be made either under the Financial Corporation Act or under the Revenue Recovery Act. The first choice having been availed by the Corporation, namely, by resorting to a Civil Court under S. 31 of the Act and having obtained a decree, it is for the corporation to pursue the matter in execution of the decree. It is not denied that an Execution petition was filed on 21-6-78 and it is pending. The 3rd respondent has to exhaust that remedy which was availed by it under S. 31 of the Act before taking recourse to proceedings under the Revenue Recovery Act.

11. The Writ petition is allowed and the auction sale held on 27-6-1988 by the 2nd respondent is quashed. The 1st and 2nd respondents are directed to refund the auction amount deposited by the 4th respondent immediately, within two weeks from the date of receipt of this order. No. costs.

12. Petition allowed.