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Issues: (i) Whether an application under Sections 31 and 32 of the State Financial Corporations Act, 1951, for enforcing the liability of a surety in a Presidency-town lies before the Bombay City Civil Court or the High Court, depending on the pecuniary extent of the liability; (ii) whether, after the 1985 amendment, proceedings under Sections 31 and 32 can be used to enforce the liability of a surety who has given only a personal guarantee.
Issue (i): Whether an application under Sections 31 and 32 of the State Financial Corporations Act, 1951, for enforcing the liability of a surety in a Presidency-town lies before the Bombay City Civil Court or the High Court, depending on the pecuniary extent of the liability.
Analysis: The expression requiring the application to be made before the district judge in a Presidency-town where there is a City Civil Court having jurisdiction was read with the City Civil Court Act, which limits that court to proceedings not exceeding its monetary jurisdiction. The statutory scheme also requires the applicant to state the extent of liability sought to be enforced. On that footing, the monetary value of the surety's liability determines the forum. If the amount is within the City Civil Court's pecuniary limit, that court is competent; if it exceeds that limit, the High Court becomes the forum in the absence of jurisdiction in the City Civil Court.
Conclusion: The High Court had jurisdiction to entertain the application because the liability claimed exceeded the City Civil Court's pecuniary limit.
Issue (ii): Whether, after the 1985 amendment, proceedings under Sections 31 and 32 can be used to enforce the liability of a surety who has given only a personal guarantee.
Analysis: The amendment inserted an express right to seek enforcement against "any surety" and provided procedural steps for notice, inquiry, and enforcement. The majority held that the words are wide enough to include a surety who has only furnished a personal guarantee, and that the special procedure under the Act can operate against such surety without converting the proceeding into an ordinary money suit. The liability is to be determined and then enforced within the statutory framework, read with the Act's overriding and supplementary provision preserving recourse to the Code where not inconsistent.
Conclusion: Enforcement against a surety who gave only a personal guarantee is maintainable under Sections 31 and 32 after the amendment.
Final Conclusion: The appeal succeeded, the contrary findings of the High Court were set aside, and the matter was sent back for decision in accordance with the statutory procedure.
Ratio Decidendi: Under the amended State Financial Corporations Act, the forum for an application to enforce a surety's liability in a Presidency-town depends on the monetary extent of that liability, and the phrase "any surety" includes a surety who has furnished only a personal guarantee.
Concurring Opinion: Agrawal, J. agreed on jurisdiction but held that the amendment did not authorise a money decree against a surety with only a personal guarantee. In that view, the expression "enforcing the liability of any surety" should be confined to enforcement against property in a manner consistent with the special procedure, not as a substantive money decree.
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