Karnataka State Financial Corporation vs N. Narasimahaiah & Others
decided on 13.03.08 by Supreme Court of India, Civil Appeal No – 610-612 of 2004
Judges – S.B. Sinha and Lokeshwar Singh Panta.
DRT Solutions
Citation –
DRTS-017-KSFC vs
Narasimahaih-2008
http://www.drtsolutions.com/KSFC-Narasimahaih.htm
We have now numbered the Judgments published on this web site as DRTS-00.
Accordingly all the judgments published so far have been numbered. The judgment
on this page is numbered as DRTS-017.
Comments by DRT Solutions
An Important Supreme Court Judgment of 2008 about Guarantor’s Property as
‘Constitutional and Human Rights’
Utility of this Judgment – Guarantors can get complete justice to save their
properties
Conclusion
If proper pleadings have been made including counter-claim, the guarantors can
get complete justice to save their properties. Since it will be difficult for
the DRTs to decide the whole matter, the case will have to be transferred to
civil courts which will take comparatively long time to decide the matter in
order to achieve complete justice.
Comments
The full text of
the judgment is given below with important portions marked in Red, which are
self explanatory:-
CASE NO.:
Appeal (civil) 610-612 of 2004
PETITIONER:
Karnataka
State Financial Corporation
RESPONDENT:
N.
Narasimahaiah & Ors
DATE OF
JUDGMENT: 13/03/2008
BENCH:
S.B. Sinha &
Lokeshwar Singh Panta
JUDGMENT:
CIVIL APPEAL
NOs. 610-612 OF 2004
S.B. SINHA,
J :
INTRODUCTION
1
Interpretation of Section 29 vis-`-vis Section 31 of the State Financial
Corporations Act, 1951 (for short "the Act") is in question in these appeals
which arise out of a judgment and order dated 26.03.2003 passed by a Division
Bench of the Karnataka High Court in Writ Petition Nos. 37209 & 37907 of 2000,
24452 of 2001, 13354 and 16614 of 2002.
FACTUAL
BACKDROP
2.
Respondents herein furnished sureties and/ or guarantees in respect of the loans
taken by the industrial concerns (Respondent Company)
3.
We may notice the fact of the matter from the case of AP Rocks Private Limited
(Writ Petition No. 37209 and 30907 of 2000) before the High Court.
AP Rocks Private Limited is an industrial concern. It approached the appellant
Corporation for grant of loan in the form of non-convertible debenture facility
to the extent of 100 lakhs to meet its working capital requirements.
Respondents who were Directors of Company executed deeds of guarantee dated
15.05.1996 and 9.08.1996 agreeing to guarantee repayment/redemption by the
Company to the Corporation of the said non-convertible debenture subscription
together with interest, etc. The said Company also executed a deed of
hypothecation on or about 9.08.1996 whereby and hereunder its plants and
machinery were hypothecated. A collateral security agreement was also executed
by Shri S.K. Rajan wherefor a property bearing No. 49, House List Khata No.
100-A, Hennarayanapalya, Hemlet of Cholanayakamahalli, Kasba Hobli, Bangalore
North Taluka was mortgaged as a security therefor.
Respondent No. 1 executed an agreement on 15.05.1996 in terms whereof his
property bearing Site No. 55 (old), New No. 59, Annammadevi Temple Extension,
Subedar Chatram Road, B.C. C. Division No. 22, Bangalore was given as a
collateral security. The 'Industrial Concern' allegedly committed defaults.
PROCEEDINGS
4.
Appellant Corporation on or about 20.11.2000 in exercise of its power under
Section 29 of the Act directed that the possession of the said two properties
of the guarantors be taken over. Respondent No. 1 and Shri S.K. Rajan filed
writ petitions before the Karnataka High Court on the premise that the appellant
corporation could not have proceeded against the guarantors under Section 29 of
the Act.
The High Court by reason of the impugned judgment while upholding the said
contention directed:
"(i)
The impugned orders passed by the Karnataka State Financial Corporation under
Section 29 of the State Financial Corporations Act authorizing its officers to
take possession of the properties of petitioners are quashed.
(ii)
The Karnataka State Financial Corporation is directed not to proceed against the
property of the surety, mortgaged/ hypothecated in its favour, under Section 29
of the State Financial Corporations Act.
(iii)
Parties to bear their respective costs."
Appellant is, thus, before us.
SUBMISSIONS
5.
Mr. K.K. Venugopal, learned senior counsel appearing on behalf of the appellant,
submitted:
(i)
the High
Court committed a serious error in passing the impugned judgment in so far as it
failed to take into consideration that the second part of Section 29 of the Act
being an independent provision and having not referred to an 'industrial
concern', it was within the jurisdiction of the appellant to take possession of
the said property also.
(ii)
Section 29 of the Act confers two independent rights, viz., taking over of the
mortgaged property and sale of the mortgaged, hypothecated and charged
property. Whereas first part of Section 29 of the Act covers taking over
possession and/ or management of the mortgaged property, the second part thereof
covers the case of sale of the property mortgaged, irrespective of the fact as
to whether the same belonged to the industrial concern or not.
(iii)
Section
29 having taken within its umbrage security and/ or guarantee, the legislative
intent being speedy recovery of the dues, the same includes the power to take
possession of the mortgaged property of the guarantor also, being incidental to
the main power and/ or implied power of the Corporation.
(iv)
Section 31 confers the same benefit to the Corporation with an additional
remedy, viz., to pray for an interlocutory order.
(v)
Section 69(c)
of the Transfer of Property Act also confers power upon the mortgagee to sale
the charged property privately wherefor taking over of possession being not a
pre-requisite, the High Court committed a serious error in coming to the
conclusion that before a property is to be sold, taking over possession thereof
is mandatory.
(vi)
Section 31 of the Act would be applicable only when the loan is called back in
terms of Section 30 of the Act.
(vii)
Special statutory power having been conferred on the Corporation so as to enable
it to recover its debts which serves a larger economic interest of the country,
Sections 29 and 31 of the Act should be interpreted in such a manner which would
help it to achieve the said purpose.
6.
Mr. Vikas Rojipura, learned counsel appearing on behalf of the respondents, on
the other hand, submitted:
(i)
It is wrong to contend that similar reliefs can be claimed both under Sections
29 and 31 of the Act as in that event it was not necessary for the Parliament to
enact two different provisions.
(ii)
Clause (aa) of Sub-section (1) of Section 31 of the Act, which was inserted by
Act No. 43 of 1985 with effect from 21.08.1985, clearly establishes that the
purport and object of two sections are absolutely distinct and separate.
(iii)
Sections 29 and 31 confer two different rights on the corporation which are
independent of each other. Whereas Section 29 provides for a limited remedy,
Section 31 provides for a composite remedy to the Corporation to realize the
dues both from the principal borrower as also from the guarantor.
(iv)
Remedy both under Sections 29 and 31 being equal, speedy and efficacious, it
would be wrong to contend that both the reliefs can be claimed simultaneously.
THE ACT
7.
The Act was enacted to provide for the establishment of State Financial
Corporations. Appellant is a Corporation established and incorporated under the
Act.
"Industrial concern" has been defined in Section 2(c) of the Act to mean any
concern engaged or to be engaged in any of the activities specified therein.
Section 29 of the Act provides for the rights of financial corporation to
realize its dues in case of default.
We may take notice of Sub-section (1) of Section 29 of the Act which reads as
under:
"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 installment 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 concerns, as
well as the right to transfer by way of lease or sale and realize the property
pledged, mortgaged, hypothecated or assigned to the Financial Corporation."
Section 30 of the Act inter alia provides for power to call for repayment
before the agreed period.
Section 31 provides for special provisions for enforcement of claims by
Financial Corporation. It reads as under:
"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 installment 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, without prejudice to the provisions of
Section 29 of this Act and of Section 69 of the Transfer of Property Act, 1882
(4 of 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 the property pledged, mortgaged, hypothecated or
assigned to the Financial Corporation 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 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.
(2) An
application under sub-section (1) shall state the nature and extent of the
liability of the industrial concern to the Financial Corporation, the ground on
which it is made and such other particulars as may be prescribed."
Section 32 of the Act provides for the procedure in respect of the proceedings
before the District Judge on applications under Section 31; sub-section (1A)
whereof reads as under:
"(1-A) When
the application is for the relief mentioned in clause ( aa ) of sub-section (1)
of Section 31, the District Judge shall issue a notice calling upon the surety
to show cause on a date to be specified in the notice why his liability should
not be enforced."
For enforcing a claim envisaged under clause (aa) of Sub-section (1) of Section
31 of the Act, a special procedure has been laid down in sub-section (4A) of
Section 32 which reads as under:
"(4A) If no
cause is shown on or before the date specified in the notice under Sub-section
(1A) the district judge shall forthwith order the enforcement of the liability
of the surety."
Section 32G of the Act, which was also inserted by Act No. 43
of 1985, provides for yet another additional remedy to a financial corporation
in the following terms:
"32G.
Recovery of amounts due to the Financial Corporation as an arrear of land
revenue Where any amount is due to the Financial Corporation in respect of any
accommodation granted by it to any industrial concern, the Financial Corporation
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 Collector shall proceed to
recover that amount in the same manner as an arrear of land revenue."
INTERPRETATION SECTION 29 ISSUE
8. A
lender of money under the common law has the remedy to file a suit for
realization of the amount lent if the borrower does not repay the same. The
Act, however, provides for a special remedy in favour of the Financial
Corporation constituted there under enabling it to exercise a statutory power of
either selling the property or take over the management or possession or both
belonging to the industrial concern.
9.
Section 29, therefore, confers an extraordinary power upon the 'Corporation'.
It, being a 'State' within the meaning of Article 12 of the Constitution of
India, is expected to exercise its statutory powers reasonably and bona fide.
10.
Apart from the said constitutional restrictions, the statute does not put any
embargo upon the corporation to exercise its power under Section 29 of the Act.
Indisputably, the said provision was enacted by the Parliament with a view to
see that the dues of the Corporation are realized expeditiously. When a
statutory power is conferred, it is a trite law that the same must be exercised
within the four corners of the Statute. Power of a lender to realize the amount
lent either by enforcing the charged and / or hypothecated or encumbrance
created on certain property and/ or proceeding simultaneously and/ or
independently against the surety/ guarantor is a statutory right. Different
statutes provide for different remedies. We may by way of example refer to
Pawan Kumar Jain v. Pradeshiya Industrial and Investment Corporation of U.P.
Ltd. and Others [(2004) 6 SCC 758] where a statutory mandate has been given to
realize the dues from sale of the mortgaged properties and then to sell other
properties of the borrower. We are, however, not concerned with such a
situation.
11.
Such a right can also indisputably be conferred by way of contract as has been
provided for under Section 69 of the Transfer of Property Act in terms whereof a
mortgagee is entitled to effect sale without the intervention of the court,
subject, of course, to the limitations prescribed therein.
12. If
special provisions are made in derogation to the general right of a citizen, the
statute, in our opinion, should receive strict construction. 'Industrial
concern' has been defined under the Act. For the purpose of enforcing a
liability of an industrial concern, recourse can be taken both under Sections 29
and 31 of the Act. Right of the corporation to file a suit or take recourse to
the provisions contained in Section 32G of the Act also exists.
13. The
heading of Section 29 of the Act states "Rights of financial corporation in case
of default". The default contemplated thereby is of the industrial concern.
Such default would create a liability on the industrial concern. Such a
liability would arise when the industrial concern makes any default in repayment
of any loan or advance or any instalment thereof under the agreement. It may
also arise when it fails to meet its obligation(s) in relation to any guarantee
given by the corporation. If it otherwise fails to comply with the terms of the
agreement with the financial corporation, also the same provisions would apply.
In the eventualities contemplated under Section 29 of the Act, the corporation
shall have the right to take over the management or possession or both of the
industrial concern. The provision does not stop there. It confers an
additional right as the words "as well as" is used which confers a right on the
corporation to transfer by way of lease or sale and realize the property
pledged, mortgaged, hypothetical or assigned to the corporation.
14.
Section 29 of the Act nowhere states that the corporation can proceed against
the surety even if some properties are mortgaged or hypothecated by it. The
right of the financial corporation in terms of Section 29 of the Act must be
exercised only on a defaulting party. There cannot be any default as is
envisaged in Section 29 by a surety or a guarantor. The liabilities of a surety
or the guarantor to repay the loan of the principal debtor arises only when a
default is made by the latter.
15.
The words "as well as" in our opinion play a significant role. It confers two
different rights but such rights are to be enforced against the same person,
viz., the industrial concern. Submission of the learned senior counsel that
the second part of Section 29 having not referred to 'industrial concern', any
property pledged, mortgaged, hypothecated or assigned to the financial
corporation can be sold, in our opinion cannot be accepted. It is true that
sub-section (1) of Section 29 speaks of guarantee. But such a guarantee is
meant to be furnished by the Corporation in favour of a third party for the
benefit of the industrial concern. It does not speak about a surety or
guarantee given in favour of the corporation for the benefit of the industrial
concern.
16. The
legislative object and intent becomes furthermore clear as in terms of
Sub-section (4) of Section 29 of the Act only when a property is sold, the
manner in which the sale proceeds is to be appropriated has categorically been
provided therein. It is significant to notice that sub-section (4) of Section 29
of the Act which lays down appropriation of the sale proceeds only refers to
'industrial concern' and not a 'surety' or 'guarantor'.
17. The
provisions of Section 128 of the Indian Contract Act must also be kept in mind.
It is only by reason thereof, subject of course to the contract by the parties
thereto, the liability of a surety is made coextensive with the liability of the
principal debtor.
18.
Banking practice may enable a financial corporation to
ask for a collateral security. Such security, we would assume, may be furnished
by the Directors of a Company but furnishing of such security or guarantee is
not confined to the Directors or employees or their close relatives. They may
be outsiders also. The rights and liabilities of a surety and the principal
borrower are different and distinct. Apart from the defences available to a
principal borrower under the provisions of the Indian Contract Act, a surety or
a guarantor is entitled to take additional defence. Such additional defence may
be taken by the guarantor not only against the corporation but also against the
principal debtor. He, in a given situation, would be entitled to show that the
contract of guarantee has come to a not. Ordinarily, therefore, when a
guarantee is sought to be enforced, the same must be done through a court having
appropriate jurisdiction. In the absence of any express provision in the
statute, a person being in lawful possession cannot be deprived thereof by
reason of default on the part of a principal borrower.
19.
Furthermore, construction of a statute would not depend
upon a contingency. A statute must be interpreted having regard to the
constitutional provisions as also human rights. We will deal with this aspect
of the matter a little later.
IMPLIED
POWER
20.
Reference to implied and/ or incidental power of the Corporation as was
contended by Mr. Venugopal deserves outright rejection.
21. Our
attention has been drawn to the following passage of 'Principles of Statutory
Interpretation' by Justice G.P. Singh, 9th edition, page 365 : 10th edition,
page 391:
"The rule of
implied prohibition is, however, subservient to the basic principle that the
Court must, as far as possible, adopt a construction which effectuates the
legislative intent and purpose"
We fail to see how the aforementioned statement of law comes to the aid to the
contention of the learned counsel.
Moreover Section 29 of the Act does not deal with a case where express and
implied conditions have been laid down in the matter of exercise of power
conferred upon a statutory authority under a Statute. Section 29 does not
envisage any prohibition at all either express or implied.
Let us consider the legal implication of the aforementioned statement of law in
the light of a decision of this Court.
In Jamal Uddin Ahmad v. Abu Saleh Najmuddin and Another [(2003) 4 SCC 257], this
Court stated the law, thus:
"11. Dealing
with "statutes conferring power; implied conditions, judicial review", Justice
G.P. Singh states in the Principles of Statutory Interpretation (8th Edn., 2001,
at pp. 333, 334) that a power conferred by a statute often contains express
conditions for its exercise and in the absence of or in addition to the express
conditions there are also implied conditions for exercise of the power. An
affirmative statute introductive of a new law directing a thing to be done in a
certain way mandates, even if there be no negative words, that the thing shall
not be done in any other way. This rule of implied prohibition is subservient to
the basic principle that the court must, as far as possible, attach a
construction which effectuates the legislative intent and purpose. Further, the
rule of implied prohibition does not negate the principle that an express grant
of statutory power carries with it by necessary implication the authority to use
all reasonable means to make such grant effective. To illustrate, an Act of
Parliament conferring jurisdiction over an offence implies a power in that
jurisdiction to make out a warrant and secure production of the person charged
with the offence; power conferred on the Magistrate to grant maintenance under
Section 125 of the Code of Criminal Procedure, 1973 to prevent vagrancy implies
a power to allow interim maintenance power conferred on a local authority to
issue licences for holding hats or fairs implies incidental power to fix days
therefor; power conferred to compel canegrowers to supply cane to sugar
factories implies an incidental power to ensure payment of price"
A statutory authority, thus, may have an implied
power to effectuate exercise of substantive power, but the same never means that
if a remedy is provided to take action against one in a particular manner, it
may not only be exercised against him but also against the other in the same
manner.
It is a trite law that the entire statute must be first read as a
whole then section by section, clause by clause, phrase by phrase and word by
word. [See Reserve Bank of India v. Peerless General Finance and Investment Co.
Ltd. and Others, (1987) 1 SCC 424, Deewan Singh & Ors. v. Rajendra Pd. Ardevi &
Ors. 2007 (1) SCALE 32 and Sarabjit Rick Singh v. Union of India, 2007 (14)
SCALE 263]
SECTION
31 – ISSUE
22.
Keeping the aforementioned legal principles in mind, we may notice the other
limb of the argument of Mr. Venugopal that Section 31 of the Act is to be taken
recourse to only when an interlocutory order is required to be sought for and
not otherwise.
Section 31 of the Act provides for a special provision. It, apart from the
default on the part of the industrial concern, can be invoked where the
financial corporation requires an industrial concern to make immediate repayment
of loan or advance in terms of Section 30 if and when such requirement is not
met. The aforementioned provision could be resorted to by the Corporation,
without prejudice, to its rights under the provisions of Section 29 as also
Section 69 of the Transfer of Property Act and for the said purpose it is
required to apply to the District Judge having appropriate jurisdiction.
Section 31 of the Act provides for the reliefs which may be sought for by the
Corporation strictly in terms thereof. Clause (aa) of sub-section (1) of
Section 31 of the Act provides for a final relief. It does not speak of any
interlocutory order. Clause (aa), as noticed hereinbefore, has been inserted by
Act No. 43 of 1985. Thus, prior thereto even Section 31 could not have been
taken recourse to against a surety.
23.
Such a relief, if prayed for, would also lead to grant of a final relief and not
an interlocutory one. Similarly, clause (b) of Sub-section (1) of Section 31 of
the Act also provides for a final relief. Only clause (c) of Sub-section (1) of
Section 31 of the Act empowers the District Judge in the event any application
is filed by the Corporation to pass an ad interim injunction. The very fact
that Section 31 uses the terminology "without prejudice" to the provisions of
Section 29 of the Act and/ or Section 69 of the Transfer of Property Act, it
clearly postulates an additional relief. What can be done by invoking Section
29 of the Act can inter alia be done by invoking Section 31 thereof also but
therefor a different procedure has to be adopted. Section 31 also provides for
a relief against a surety and not confined to the industrial concern alone.
Sub-section (2) of Section 31 also refers to industrial concern and not the
surety. The legislative intent, therefore, to our mind, is clear and
unambiguous.
SUBSEQUENT
AMENDMENT EFFECT
24.
Sub-section (1A) of Section 32 of the Act lays down a procedure when clause (aa)
of Sub-section (1) of Section 31 thereof is invoked. Sub-section (4A) of
Section 31 also empowers the court to forthwith order the enforcement of the
liability of the surety if no cause is shown on or before the date notified by
the parties. However, in the event, a cause is shown upon making an
investigation as provided for under Sub-section (6) of Section 32, a final order
can be passed in terms of Sub-section (7) thereof.
25.
Significantly, by Act No. 43 of 1985, Section 32G of the Act was also inserted.
It does not speak of an industrial concern. Section 32G, therefore, can be
resorted to both against the industrial concern as also the security. It is so
held by this Court in Delhi Financial Corpn. And Another v. Rajiv Anand and
Others [(2004) 11 SCC 625] in the following terms:
"Thus a
provision incorporated by the legislature with the intention to enable financial
corporations to speedily recover amounts due to them cannot be whittled down by
giving an interpretation which would render it nugatory."
26.
While interpreting the provisions of a statute, the court employs different
principles or canons. To interpret a statute in a reasonable manner, the court
must place itself in the chair of a reasonable legislator/ author. [See New
India Assurance Company Ltd. v. Nusli Neville Wadia and Anr. [JT 2008 (1) SC
31] Attempt on the part of the court while interpreting the provisions of a
statute should, therefore, be to pose a question as to why one provision has
been amended and the other was not? Why one terminology has been used while
inserting a statutory provision and a different clause in another? It is
well-known that casus omissus cannot be supplied. [See Ashok Lanka v. Rishi
Dixit (2005) 5 SCC 598 and J. Srinivasa Rao v. Govt. of A.P. & Anr 2006 (13)
SCALE 27 and Southern Petrochemical Industries Co. Ltd. v. Electricity Inspector
and E.T.I.O. and Ors. (2007) 5 SCC 447]
27. The
legislative intent, in our opinion, is manifest. The intention of the
Parliament in enacting Sections 29 and 31 of the Act was not similar. Whereas
Section 29 of the Act consists of the property of the industrial concern,
Section 31 takes within its sweep both the property of the industrial concern
and as that of the surety. None of the provisions control each other. The
Parliament intended to provide an additional remedy for recovery of the amount
in favour of the Corporation by proceeding against a surety only in terms of
Section 31 of the Act and not under Section 29 thereof.
THE
EFFECT OF
28. A
Corporation, after coming into force of Section 32G of the Act has four
remedies, viz.:
(i)
to file a suit
(ii)
to take recourse to Section 29;
(iii)
to take recourse to Section 31; and
(iv) to
take recourse to Section 32G of the Act.
29. In
A.P. State Financial Corporation v. M/s GAR Re-Rolling Mills and Another [(1994)
2 SCC 647], this Court held:
"19. The
right vested in the Corporation under Section 29 of the Act is besides the right
already possessed at common law to institute a suit or the right available to it
under Section 31 of the Act" Section 32G of the Act provides for an additional
remedy. It is, however, interesting to note that while upholding the right of
the Corporation to opt for either Section 29 or Section 31 of the Act, it was
opined:
"In our
opinion the Corporation can initially take recourse to Section 31 of the Act but
withdraw or abandon it at any stage and take recourse to the provisions of
Section 29 of the Act, which section deals with not only the rights but also
provides a self-contained remedy to the Corporation for recovery of its dues. If
the Corporation chooses to take recourse to the remedy available under Section
31 of the Act and pursues the same to the logical conclusion and obtains an
order or decree, it may thereafter execute the order or decree, in the manner
provided by Section 32(7) and (8) of the Act. The Corporation, however, may
withdraw or abandon the proceedings at that stage and take recourse to the
provisions of Section 29 of the Act"
30.
Right of property, although no longer a fundamental
right, is still a constitutional right. It is also human right. In absence of
any provision either expressly or by necessary implication, depriving a person
therefrom, the court shall not construe a provision leaning in favour of such
deprivation. Recently, this Court in P.T. Munichikkanna Reddy & Ors. v. Revamma
& Ors. [(2007) 6 SCC 59] dealing with adverse possession opined:
"Human rights have been historically considered in the realm of individual
rights such as, right to health, right to livelihood, right to shelter and
employment etc. but now human rights are gaining a multifaceted dimension. Right
to property is also considered very much a part of the new dimension. Therefore,
even claim of adverse possession has to be read in that context. The activist
approach of the English Courts is quite visible from the judgement of Beaulane
Properties Ltd. v. Palmer [2005 (3) WLR 554 : 2005 EWHC 817 (Ch.)] and JA Pye
(Oxford) Ltd v. United Kingdom [2005] ECHR 921 [2005] 49 ERG 90, [2005] ECHR
921],
The
court herein tried to read the Human Rights position in the context of adverse
possession. But what is commendable is that the dimension of human rights has
widened so much that now property dispute issues are also being raised within
the contours of human rights."
31.
A surety may be a Director of the Company. He also may
not be. Even if he is a close relative of the Director or the Managing Director
of the Company, the same is not relevant. A Director of the Company is not an
industrial concern. He in his capacity as a surety would certainly not be. A
juristic person is a separate legal entity. Its veil can be lifted or pierced
only in certain situations. [See Salomon v. Salomon and Co. [1897 AC 22], Dal
Chand and Others v. Commissioner of Income Tax, Punjab (1944) 12 ITR 458,
Juggilal Kamlapat vs. Commissioner of Income Tax, U.P. (1969) 1 SCR 988 = 1969
(73) ITR 702 and Kapila Hingorani v. State of Bihar (2003) 6 SCC 1]
32.
Interpretation of a statute would not depend upon a
contingency. It has to be interpreted on its own. It is a trite law that the
court would ordinarily take recourse to the golden rule of literal
interpretation. It is not a case where we are dealing with a defect in the
legislative drafting. We cannot presume any. In a case where a court has to
weigh between a right of recovery and protection of a right, it would also lean
in favour of the person who is going to be deprived therefrom. It would not be
the other way round. Only because a speedy remedy is provided for that would
itself lead to the conclusion that the provisions of the Act have to be extended
although the statute does not say so. The object of the Act would be a relevant
factor for interpretation only when the language is not clear and when two
meanings are possible and not in a case where the plain language leads to only
one conclusion.
33.
Even if the legislation is beneficient, the same by itself would not be held to
be extendable to a situation which the statute does not contemplate. [S.
Sundaram Pillai, etc. v. V.R. Pattabiraman AIR 1985 SC 582] In Attorney General
v. Milne [1914-15] All E.R. Rep. 1061], Lord Dunedin states:
"Now, prima
facie one would expect that the scope of the two sets of provisions would be the
same, i.e., in other words that the question must be answered as to those kinds
of property which are swept in by s.2, just as much as to those which fall under
s.1. Inasmuch, however, as this is a taxing statute, and the duty here is an
additional duty, I consider that it must be shown that the words would clearly
cover the individual case to which it is right to apply them."
34. It
is now well-settled that when more than one remedy is provided for an option is
given to a suiter to opt for one or the other remedy. Such a provision is not
ultra vires as has been held by this Court in Maganlal Chhaganlal (P) Ltd. v.
Municipal Corporation of Greater Bombay and Others [(1974) 2 SCC 402], Director
of Industries, U.P. and Others v. Deep Chand Agarwal [(1980) 2 SCC 332] Rajiv
Anand (supra).
CONCLUSION
35. For
the views we have taken, it is not necessary for us to consider the question as
to whether before a property is put to sale, possession is required to be taken.
36. For
the reasons aforementioned, there is no merit in these appeals which are
dismissed accordingly. Counsel's fee assessed at Rs. 50,000/- in each case.
