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Issues: (i) Whether the plaintiff corporation was to be treated as a public financial institution so as to oust the jurisdiction of the civil court under the debt recovery regime. (ii) Whether an additional issue was required to be framed on the basis of the law governing compound interest.
Issue (i): Whether the plaintiff corporation was to be treated as a public financial institution so as to oust the jurisdiction of the civil court under the debt recovery regime.
Analysis: The notification issued under section 46(1) of the State Financial Corporations Act, 1951 made the plaintiff a deemed financial corporation only for the specified provisions applied by that notification. The court held that this did not automatically make the plaintiff a public financial institution within section 2(h) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 read with section 4A of the Companies Act, 1956. The reasoning was reinforced by the scheme of section 4A, under which public financial institutions are those expressly specified by the Central Government, and by the earlier decision relied upon which had already held that the plaintiff was not one of the notified public financial institutions.
Conclusion: The plaintiff was not shown to be a public financial institution for the purpose of ousting civil court jurisdiction, and the objection was rejected.
Issue (ii): Whether an additional issue was required to be framed on the basis of the law governing compound interest.
Analysis: The court noted that the statement of accounts had been filed and that, on the plaintiff's showing, the suit amount had been calculated on a simple interest basis for the purpose of the suit, with compound interest waived. In any event, the matter was held to be one for evidence and did not justify framing a separate issue merely on the basis of the Supreme Court decision cited.
Conclusion: No additional issue was required to be framed on the question of compound interest.
Final Conclusion: The application for framing additional issues was found to be without merit and was dismissed in entirety.
Ratio Decidendi: A deemed financial corporation under a statutory notification does not, by that fact alone, become a public financial institution for the purpose of divesting civil court jurisdiction unless it is expressly brought within the relevant statutory notification framework.
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