GUJARAT STATE FINANCIAL CORPORATION versus M/S. NATSON MANUFACTURING CO. (P) LTD. & ORS.

Citation: [1979] 1 S.C.R. 372 · Decided: 29-08-1978 · Supreme Court of India · Bench: V.R. KRISHNA IYER · Disposal: Appeal(s) allowed
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Judgment (excerpt)

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372 
GUJARAT STATE FINANCIAL CORPORA'ITON 
v. 
M/s. NATSON MANUFACTURING CO. (P) LTD. & ORS. 
August 29, 1978 
[V. R. KRISHNA !YER, D. A. DESAI AND 0. CH!NNAPPA REDDY, JJ.] 
State Financial Corporations Act (Act LXIll), 1951-Nature of proceedings 
under Sections 31 and 32-Court Fee payable on an application that may Oe 
made under Section 31(1) of the Act-Whether governed by Article 1 or 7 of 
Schedule I or by Article l(c) of Schedule fl of Bombay Court Fees Act, 1959. 
The appellant Corpora·tion, \vhich grants or guarantees the loan to be raised 
by industrial concerns either from the scheduled banks or state Cooperative Bfuks 
or those floated in public market, is entitled to make, for one or more of the 
reliefs set out in Section 31(1) of the State Financial Corporation Act, an 
application to the District Judge within the limits of whose jurisdiction the indus-
trial concern carries on the whole or substa•ntial part of its business, when any 
such concern defaults in repayment of loan or fails to comply with the terms 
of the agreement. The CorporatiOn made several applications purporting to be 
under Section 31(1) of the Act ini various district courts in the State of Gujarat. 
A question was raised in the District Courts about the proper court fee payable 
on snch applications. The Corporation contended that the application would 
be governed by Article l(c) of Schedule II of the Bombay Court Fees Act, 
1959 ·and a fixed court fee in the amount of 65 paise would be payable in 
respect of the application. But the. State contended thait the application would 
be governed either by Article 1 of Schedule I or at any rate Article 7 of 
Schedule I and the court fee payable would be ad-valore1n on the amount of 
value of the subject matter in dispute or on the amount of the monetary gain 
or loss to be prevented according to the scales prescribed under Article 1 of 
Schedule I. All the district courts except Broaieh accepted. the contention of the 
State; but the Broach district court opined that the application under Section 
31(1) was in the nature of an execution application and it would be governed 
by Article I (c) of Schedule II. 
Both the Corporation ond State of Gujarat 
went in revision before the High Court. The High Court by a common judg-
ment held that an application under Section 31(1) should bear an ad valorem 
court fee. 
In reaching this conclusion, the High Court treated the application 
under Section 31 ( 1) of the Act 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 falling within the purview of Article 1 of Schedule I. Alter-
natively, it '"'as held thait even if the application under Section 31(1) is not a 
plaint \Vithin the meaning of Article I of Schedule I it '"'onld fall within the 
purview of Article 7 of Schedule I. 
Allowing the appeal, by special leave the Court 
HELD : 1. Thci form of the application, the nature of the relief, the compul-
sion to make interim order, the limited enquiry contemplated by sub-section (6) 
of Section 32 and the nature of relief that can be granted 3'11d the manner of 
execution clearly' show that the application under Section 31 ( 1) is neither a 
plaint as contemplated by Artkle 1 of Schedule I nor an appJica.tion in the 
nature of a plaint as contemplated by Article 7 of the Court-Fees Act, 1870. 
[382 B-Cl 
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' ' G. s. F. ·c .. v. KATSON JliANU. co. 
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373 
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Oiice Article 7 of the Schedule I of the Court-Fees Act is excluded there 
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was (and could be) no dispute that an application under Section 31(1) of the 
Act would be covered by the residuary Article I ( c) of Schedule II of the Court 
Fees Act and it should bear a :fii.ed court fee in the sum of 65 paise. [382 D] 
2. Section 31 ( 1) of the Act prescribes a special procedure for enforcement 
of the claims of the Financial · Corporation. The Corporation is to make an 
application f0i- the reliefs set out in Section 31(1). The reliefs that a Court 
can grant are the sale of the property mortgaged etc. to a Financial Corporation 
as sectiritY for the loan or advaince; transfer of the management Of the industrial 
concern-to thC-Financial Corporation; or restraining the industrial concern from 
transferring or removing itS machinecy or plant or equipment from the industrial 
concern without the permission of the Board of the· Financial Corporation. An
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