Madras High Court
M/S.Krishna Industrial Corporation ... vs M/S.Andhra State Finance Corporation on 25 June, 2019
Author: G.Jayachandran
Bench: G.Jayachandran
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IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 21.06.2019
PRONOUNCED ON : 25.06.2019
CORAM
THE HONOURABLE DR.JUSTICE G.JAYACHANDRAN
Writ Petition SR No.51737 of 2019
M/s.Krishna Industrial Corporation Ltd.,
Represented by its Managing Director,
Dr.S.R.K.Prasad,
Ramakrishna Buildings,
239, Anna Salai,
Chennai – 600 006. ... Petitioner
Vs
M/s.Andhra State Finance Corporation,
27-3-24/1, Opposite to S.P's Office,
Narasimharaopet, West Godavari District,
Eluru, Andhra Pradesh – 534 002. ... Respondent
Prayer :- This Writ Petition is filed under Article 226 of the Constitution of
India for a writ of Certiorarified Mandamus calling for the records of the
respondent pertaining to its Demand Notice u/s 29 of the State Financial
Corporations Act, 1951 bearing reference AFC/ELR Br./73 8413/MR&R/2018-
19/2295, dated 23.01.2019 and the consequential demand letters dated
25.03.2019 and 08.04.2019 bearing No.AFC/ELR Br./73 8413/MR&R/2018-
19/2734 and reference No.AFC/ELR Br./73 8413/MR&R/201920 respectively,
http://www.judis.nic.in
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and to quash the same and consequentially direct the respondent to grant
sufficient time and opportunity to the petitioner to pay the balance
outstanding loan amount due to the respondent.
For petitioner : Mr.Silambanan, Senior Counsel
for M/s.G.K.Muthukumar
ORDER
Heard the learned counsel for the petitioner and also perused the records carefully.
2.The petitioner company is having its registered office at Chennai, Tamilnadu and its Fertilizers and Chemical Division at West Godavari District, Andra Pradesh. It has availed Medium Term loans from the Andhra State Finance Corporation at Andhra Pradesh which is outside the territorial jurisdiction of this Court. The petitioner has mortgaged its immovable properties at Andhra Pradesh for availing the loans. For the petitioner default in making re-payment, the respondent has issued demand notices under Section 29 of the State Financial Corporation Act , 1951 calling upon the petitioner to repay the loan amount or else, it will proceed against the assets of the petitioner mentioned in the notice. Challenging the said demand notices issued on different dates, the present writ petition is filed. http://www.judis.nic.in 3
3.Today, the matter is listed under the caption “for maintainability”.
4.The learned counsel for the petitioner submitted that, though the loan transaction took place at Andhra Pradesh, the registered office of the petitioner is at Chennai, Tamilnadu and hence, the writ petition is maintainable. To buttress his submission, he relies upon the following judgments.
i)In Union of India and others v. Oswal Woollen Mills Ltd., (1984(2) SCC 646), the Hon'ble Supreme Court has held as follows:-
“ M/S. O s w a l W o o l l e n M i ll s Li m it e d havin g its regist e r e d offic e at Lu d h i a n a in the State of Pu nj a b and a bra n c h office at C a l c u t t a , and N a r a y a n D a s Jain, Secr et a r y of the C o m p a n y have filed a writ petitio n in the C a l c u t t a H i g h C o u r t seekin g vario u s reliefs again st the U n i o n of India (thr o u g h the Secr et a r y , M i n i s t r y of C o m m e r c e , N e w D e l h i ), the C h i e f C o n t r o l l e r of Imp o r t s and Ex p o r t s , N e w D e l h i, the D e p u t y C h i e f C o n t r o l l e r of Imp o r t s and Ex p o r t s , A m r its a r , the C o l l e c t o r of C u s t o m s , C a l c u t t a and the State Tra d i n g C o r p o r a t i o n of India, N e w D e l h i. The prim a r y pray e r in the writ petitio n is to prev e n t or to quas h an appr e h e n d e d or purp o r t e d actio n unde r clau s e 8- B of the Imp o r t C o n t r o l O r d e r . All the othe r reliefs sou g ht in the writ petitio n rev olv e roun d the prin ci p a l relief reg a r d i n g clau s e 8- B of the Imp o r t C o n t r o l O r d e r . The other pray e r s are eithe r ancilla r y or http://www.judis.nic.in 4 incid e nt a l to the prin ci p a l pray e r or are of an interl o c u t o r y char a c t e r . H a v i n g rega r d to the fact that the regist e r e d office of the co m p a n y is at Lu d h i a n a and the prin ci p a l resp o n d e n t s again st wh o m the pri m a r y relief is sou g h t are at N e w D e l h i, one wo ul d have expe ct e d the writ petitio n to be filed either in the H i g h C o u r t of P u n j a b and H a r y a n a or in the D e l h i H i g h C o u r t . The writ petitio n e r s ho w e v e r have cho s e n the C a l c u t t a H i g h C o u r t as the foru m per h a p s bec a u s e one of the interl o c u t o r y reliefs whic h is sou g ht is in resp e c t of a con si g n m e n t of beef tallo w whic h has arriv e d at the C a l c u t t a P o rt. An inevita b l e result of the filing of writ petitio n s else w h e r e than at the pla ce whe r e the con c e r n e d offic e s and the relev a n t rec o r d s are locat e d is to delay pro m p t retur n and conte st s We do not desir e to pro b e furthe r into the questi o n whet h e r the writ petitio n was filed by desig n or acci d e n t in the C a l c u t t a H i g h C o u r t whe n the offic e of the C o m p a n y is in the State of Pu nj a b and all the princi p a l resp o n d e n t s are in D e l h i. But we do feel distur b e d that such writ petitio n s are often delib e r a t e l y filed in dista nt H i g h C o u r t s , as part of a man o e u v r e in a legal battle, so as to rend e r it difficu lt for the offici al s at D e l h i to mov e applic a ti o n s to vacat e stay wher e it bec o m e s nece s s a r y to file such appli c a t i o n s . ”
ii)In HV Jayaram –vs- Industrial Credit and Investment Corporation of India Ltd., (2000(1) CTC 168), the Hon'ble Supreme Court has held as follows:-
“ In H. P . G u p t a v. H i r a l a l {19 7 0 ( 1 ) S C C 437}, the C o u r t http://www.judis.nic.in 5 consi d e r e d a simila r pro vi si o n of Sectio n 20 7 of the C o m p a n i e s A ct, whic h pro vid e s for pay m e n t of divid e n d within 42- days of its decla r a t i o n by a co m p a n y and its non pay m e n t within stipul at e d perio d is punis h a b l e . Secti o n inter alia provi d e s that wher e divid e n d is decl a r e d by the co m p a n y but has not bee n paid, or war r a n t in resp e c t of there o f has not bee n poste d within 42- days fro m the date of its decl a r a t i o n , to any shar e h o l d e r entitle d to the pay m e n t of divid e n d , then it wo ul d be an offen c e punis h a b l e unde r Sectio n 20 7 . In that case, C o u r t also consi d e r e d Secti o n 20 5 ( 5 ) ( b ) , whic h is simil a r to Secti o n 53 , whic h inter alia pro vid e s that any divid e n d paya b l e may be paid by cash or a cheq u e or a war r a n t sent by post dire ct e d to the regist e r e d addr e s s of the shar e h o l d e r entitle d to the pay m e n t of the divid e n d . The C o u r t held that whe n the co m p a n y posts the divid e n d war r a n t at the regist e r e d addr e s s of the shar e h o l d e r , the post office bec o m e s the agent of the shar e h o l d e r and the loss of a divid e n d war r a n t durin g the transit there a ft e r is at the risk of the shar e h o l d e r . The C o u r t furth e r held that the plac e whe r e the divid e n d war r a n t wo ul d be poste d is the plac e wher e the co m p a n y has its regist e r e d office and the offen c e und e r Secti o n 20 7 of the Act wo ul d also occu r at the plac e wher e the failur e to disc h a r g e that oblig a ti o n arise s, na m e l y, the failur e to post the divid e n d war r a n t within 42- days. In the facts of that case, the C o u r t obs e r v e d thus : -
The venu e of the offen c e , theref o r e , wo ul d be D e l h i and not M e e r u t , and the C o u r t co m p e t e n t to try the offen c e wo ul d be that C o u r t within wh o s e jurisd i c ti o n the offen c e takes pla c e, i.e., D e l h i. This sho ul d be so both in law and co m m o n - sense, for, if held othe r w i s e , the dire ct o r s of co m p a n i e s can be pros e c u t e d at http://www.judis.nic.in 6 hun d r e d s of pla c e s on an alleg a ti o n by shar e h o l d e r s that they have not receiv e d the warr a n t. That can n o t be the intenti o n of the Le g i s l a t u r e whe n it ena ct e d Secti o n 20 7 and ma d e failur e to pay or post a divid e n d war r a n t within 42 days fro m the decl a r a t i o n of the divid e n d an offen c e .
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H o w e v e r , learn e d cou n s e l for the appe ll a n t relie d upo n the decisi o n of Raj a st h a n H i g h C o u r t in Ra n b a x y La b o r a t o r i e s Ltd. v. Smt. Indr a K al a {(19 9 7 ) 24 C L A 203 (Ra j.)}. In the said case, co m p l a i n t was filed befo r e the Judi ci a l M a g i s t r a t e at Jaip u r in Raja st h a n for the offen c e s punis h a b l e und e r Sectio n 11 3 of the A ct agai n st the dire ct o r s and office r s of the co m p a n y alle gi n g that the co m p l a i n a n t had pur c h a s e d 20 0 shar e s of the C o m p a n y and had duly sent such sha r e s to the hea d office of the co m p a n y for registr a ti o n of the transf e r in its bo o ks, but desp it e repe at e d req u e st s, remi n d e r s and effort s mad e by her, the C o m p a n y did not regist e r the transf e r of the shar e s in her na m e. Re gi st e r e d offic e of the co m p a n y was at D e l h i. The Hi g h Court neg ativ e d the conte nt i o n of the co m p a n y that Judici a l M a g i s t r a t e at Jaip u r did not have juris di ct i o n to deal with the case by holdi n g thus: - C o m p a n y colle ct s mo n e y fro m the public at larg e by sellin g its shar e s and trans a ct i o n s of sale and purc h a s e are gove r n e d by the provisi o n s of the C o m p a n i e s Act . Re gi st r a ti o n of the transf e r r e d shar e s is one of the duties of the co m p a n y in the cou r s e of con d u c t i n g its busin e s s acc o r d i n g to the pro visi o n s of law. The r e f o r e , the inter e st of the me m b e r s of the publi c trans a c t i n g such busin e s s cann o t be allo w e d to be defeat e d on the plea that http://www.judis.nic.in 7 relief to the agg r i e v e d pers o n s can be gra nt e d only at the plac e wher e the offic e of the co m p a n y is locat e d .
In our view, it app e a r s that the attenti o n of the learn e d Jud g e was not dra w n to the decisi o n rend e r e d by this C o u r t in H. P . G u p t a v. H i r a l a l {19 7 0 ( 1 ) S C C 437} and also to Sectio n 11 3 of the A ct, whic h inter alia pro vid e s that co m p a n y shall deliv e r the do cu m e n t s , such as, certific a t e s of shar e s, debe nt u r e s and certifi c a t e s of debe nt u r e stocks allotte d or transf e r r e d in acc o r d a n c e with the pro c e d u r e laid do w n in Secti o n 53 . Secti o n 53 presc r i b e s the mo d e of delive r y inter alia by sendi n g the doc u m e n t by post at registe r e d addr e s s and sub- secti o n (2) is the dee m i n g provisi o n for delive r y of such letter. In U p e n d r a K u m a r Jos hi v. M a n i k Lal C h a t t e r j e e and other s , {19 8 2 (V o l. 5 2 ) C o m p a n y C a s e s 17 7 (Pat n a ) }, the Pat n a H i g h C o u r t has follo w e d the decisi o n rend e r e d by this C o u r t in the case of H. P . G u p t a (Sup r a ) and has rightly arriv e d at the con cl u s i o n that the caus e of actio n wo ul d arise at the pla ce wher e regist e r e d office of the co m p a n y is situat e d . ”
5.To decide the issue 'whether the present writ petition is maintainable before the High Court of Madras or not, it is necessary to extract Article 226 of the Constitution of India and the same is extracted below:-
“226. (1) Notwithstanding anything in article 32 every High Court shall have power, throughout the territories in relation to which it exercises jurisdiction, to issue to any http://www.judis.nic.in 8 person or authority, including in appropriate cases, any Government, within those territories directions orders or writs, including 1[writs in the nature of hab e a s cor p u s, man d a m u s , prohibition, quo war r a n t o and certio r a r i , or any of them, for the enforcement of any of the rights conferred by Part III and for any other purpose.] (2) The power conferred by clause (1) to issue directions, orders or writs to any Government, authority or person may also be exercised by any High Court exercising jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises for the exercise of such power, notwithstanding that the seat of such Government or authority or the residence of such person is not within those territories.”
6.The constitutional provision has thus made it clear in an unambiguous term that the writ petition may also be entertained by such High Court notwithstanding the fact that the seat of the respondent is not within its territorial jurisdiction, if the cause of action wholly or partly arise.
(emphasis added)
7.In this case, loan was advanced by the Andhra State Finance Corporation at Andhra Pradesh. The Loan availed by the petitioner company was for the purpose of developing its Fertilizers and Chemical Division at West Godavari, Andhra Pradesh. Assets of the petitioner company located at Andhra Pradesh State. These assets are under mortgage/hypothecation to http://www.judis.nic.in 9 the respondent. The demand notice is for recovery of the said loan and in case of failure, the demand notice says that, the management will exercise the powers under Section 29 of the State Financial Corporation's Act, 1951 agaisnt the assets under mortgage / hypothecation of the petitioner.
8.'When the respondent seat is not within the territorial limits of this Court' and 'when no 'cause of action' arise within the jurisdiction of this Court', just for the reason and fact that the petitioner's registered office being located at Chennai, this Court cannot entertain the Writ Petition. If this Writ Petition is entertained, then, it will be against the Constitution and also against the spirit of the Hon’ble Supreme court observation in Oswal woollen Mills case (cited supra), that, “ an inevitable result of the filing of writ petitions elsewhere than at the place where the concerned offices and relevant records are located is to delay prompt return and contest”.
9.For the reasons stated above, this Courts finds that the Writ Petition is not maintainable and the same is dismissed at the SR stage itself. As a result, the Registry is hereby directed to return the papers to the petitioner so as to enable him to move before the appropriate Court having territorial jurisdiction. No costs.
http://www.judis.nic.in 10 25.06.2019 jbm Index: Yes Speaking order/non speaking order http://www.judis.nic.in 11 To M/s.Andhra State Finance Corporation, 27-3-24/1, Opposite to S.P's Office, Narasimharaopet, West Godavari District, Eluru, Andhra Pradesh – 534 002.
http://www.judis.nic.in 12 G.JAYACHANDRAN.J., jbm Pre delivery Order made in W.P.SR No.51737 of 2019 25.06.2019 http://www.judis.nic.in