LexKARNATAKA STATE FINANCIAL CORPORATION versus N. NARASIMAHAIAH AND ORS.
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. ...,, ( [2008] 4 S.C.R. 853 KARNATAKA STATE FINANCIAL CORPORATION II. N. NARASIMAHAIAH AND ORS. (Civil Appeal Nos. 610-612 of 2004) · MARCH 13, 2008 · [S.8. SINHA AND LOKESHWA~ SINGH PANTA, JJ.] A B ·~ State Financial Corporations Act, 1951: s.29 - Jurisdiction of Corporation to proceed against surety/guarantors under s. 29 - Held: Corporation cannot C proceed against the surety under s. 29 - Right of Corporation in terms of s. 29 must be exercised only on a defaulting party - There cannot be any default as is envisaged in s.29 by a surety or a guarantor- Liability of surety or guarantor to repay the loan of the principal debtor arises only when a default is D made by the latter. s. 29 - Object of - Held: Is to expeditiously realize the dues of the Corporation - s. 29 confers extraordinary power upon Corporation - Transfer of Property Act - s. 69 - Contract Act- s.128. • E ss.29 and 31 - Interpretation of- [)istinctiori between - Intention of Parliament in enacting s. 29 and s.31 was not similar- Whereas s. 29 talks about the property of the industrial concern, s. 31 takes within its sweep the property of industrial F concern and also of surety - None of the ... provisions control each other - Parliament intended to provide an additional· remedy for recovery of the amount in favour of Corporation by . proceeding against a surety only in terms of s. 31 and not under s. 29· thereof. Interpretation of statutes: Strict construction - Special provisions made in derogation to the general right of a qitizen - Held: Such G 853 H 854 SUPREME COURT REPORTS [2008] 4 S.C.R. " A provisions to be strictly construed. Reading statute as a whole - Entire statute must be first read as a whole then section by section, clause by clause, phrase by phrase and word by word - To interpret a statute in a reasonable manner, the court must place itself in the chair 8 of a reasonable legislator/ author - Casus Omissus cannot be supplied. Ambiguity in the statute - When the language of statute is not clear and two meanings are possible, the object of the c statute would he a relevant factor for interpretation. When more than one remedy is provided or an option is given to a suitor then such provision is not ultra vires - Constitution of India, 1950 -Article 14 -Alternative remedies. 0 The questions for consideration in these appeals are whether the appellant-Corporation can proceed against the guarantors under s.29 of the State Financial Corporations Act, 1951 and regarding interpretation of s.29 vis-a-vis s.31 of the Act. E Dismissing the appeals, the Court HELD: 1.1. 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 State Financial Corporations Act, however, provides for a F special remedy in favour of the Financial Corporation constituted thereunder 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. S.29, therefore, confers an G 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. [Paras 8, 9] [869-C-E] H 1.2. Apart from. the constitutional restrictions, the Y-·' '" \ \ ).._ '· . I e KARNATAKA STATE FINANCIAL CORPORATION v. 855 N. NARASIMAHAIAH AND ORS. -Y statute does not put any embargo upon the corporation A to exercise its power under s.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, the same must be exercised within the four corners of the 8 Statute. Power of a lender to realize the amount lent either by enforcing the charged and I 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 c provide for different remedies. Such a right can also indisputably be conferred by way of contract as has been provided for under s.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, D to the limitations prescribed the
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