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of <h1>Petitioner can pursue remedies sequentially under State Financial Corporations Act</h1> <h3>Delhi Financial Corporation Versus Harish Chander Gulati</h3> Delhi Financial Corporation Versus Harish Chander Gulati - [2004] 55 SCL 11 (DELHI) Issues Involved:1. Whether the petitioner, Delhi Financial Corporation, can resort to both remedies available under sections 31 and 32G of the State Financial Corporations Act, 1951, for recovery of any loan or advance outstanding against the industrial concern.2. The applicability and interpretation of sections 29, 31, and 32G of the State Financial Corporations Act, 1951.3. The enforceability of the liability of sureties under the provisions of the Act.4. The procedural requirements and limitations under section 32G for issuing a recovery certificate.5. The impact of previous legal proceedings and judgments on the current recovery process.Detailed Analysis:1. Resorting to Both Remedies under Sections 31 and 32G:The primary issue addressed is whether the Delhi Financial Corporation can use both sections 31 and 32G for recovering outstanding loans. The court held that the remedies available under sections 31 and 32G are not mutually exclusive. The corporation can take recourse to section 32G even after pursuing remedies under section 31 if the order remains unexecuted. The court emphasized that the legislature did not intend to restrict the corporation to a single remedy, allowing it to adopt multiple modes of recovery sequentially if necessary.2. Applicability and Interpretation of Sections 29, 31, and 32G:The judgment detailed the provisions of sections 29, 31, and 32G, explaining their distinct remedies for recovery:- Section 29: Allows the corporation to take over management or possession of the defaulting industrial concern and realize the property pledged or mortgaged.- Section 31: Empowers the corporation to apply to the District Judge for the sale of the property or transfer of management. Post-1985 amendment, it includes enforcing the liability of sureties.- Section 32G: Provides for recovery of amounts due as arrears of land revenue through a certificate issued by the State Government or specified authority.The court clarified that these sections provide independent remedies that can be invoked one after the other but not simultaneously for the same relief.3. Enforceability of Liability of Sureties:The court noted that the provision to enforce the liability of sureties under section 31 was introduced in the 1985 amendment. Before this amendment, the District Judge could not enforce surety liability under section 31. The court held that section 32G, being broader in scope, allows recovery from sureties as well, and this provision is not limited to industrial concerns alone.4. Procedural Requirements and Limitations under Section 32G:The court emphasized that section 32G requires the State Government or specified authority to determine the amount due in a summary proceeding, ensuring principles of natural justice are followed. The procedure involves:- The corporation making an application to the State Government for recovery.- The State Government or specified authority determining the amount due.- Issuing a recovery certificate to the Collector for recovery as land revenue.The court upheld that section 32G provides an additional and expedited mode of recovery without prejudice to other remedies.5. Impact of Previous Legal Proceedings:The court addressed the effect of previous legal proceedings, particularly the order dated 16-2-1983 by the Additional District Judge, which dismissed the application against the sureties due to the lack of power under the then-existing section 31. The court held that this dismissal did not determine the liability of the surety on merits and did not preclude the corporation from seeking recovery under section 32G subsequently. The court also rejected the argument that the corporation's settlement with the principal debtor amounted to abandoning claims against the surety.Conclusion:The court concluded that the provisions of sections 31 and 32G are not mutually exclusive, and the corporation can sequentially resort to different remedies provided under the Act for recovering outstanding dues. The judgment set aside the order of the Additional District Judge dated 14-2-1996, allowing the corporation to proceed with recovery under section 32G. The appeal was allowed, and the parties were left to bear their costs.
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