Section 32 in The State Financial Corporations Act, 1951
32. Procedure of District Judge in respect of applications under section 31.-
(1)When the application is for the reliefs mentioned in clauses (a) and (c) of sub-section (1) of section 31, the District Judge shall pass an ad interim order attaching the security, or so much of the property of the industrial concern as would on being sold realise in his estimate an amount equivalent in value to the outstanding liability of the industrial concern to the Financial Corporation, together with the costs of the proceedings taken under section 31, with or without an ad interim injunction restraining the industrial concern from transferring or removing its machinery, plant or equipment.[(1-A) When the application is for the relief mentioned in clause (aa) of sub-section (1) of section 31, the District Judge shall issue a notice calling upon the surety to show cause on a date to be specified in the notice why his liability should not be enforced.](2)When the application is for the relief mentioned in clause (b) of sub-section (1) of section 31, the District Judge shall grant an ad interim injunction restraining the industrial concern from transferring or removing its machinery, plant or equipment and issue a notice calling upon the industrial concern to show cause, on a date to be specified in the notice, why the management of the industrial concern should not be transferred to the Financial Corporation.(3)Before passing any order under sub-section (1) or sub-section (2) [or issuing a notice under sub-section (1-A),] [ Inserted by Act 43 of 1985, Section 20 (w.e.f. 21-8-1985).] the District Judge may, if he thinks fit, examine the officer making the application.(4)[ At the same time as he passes an order under sub-section (1), the District Judge shall issue to the industrial concern or to the owner of the security attached a notice accompanied by copies of the order, the application and the evidence, if any, recorded by him calling upon it or him to show cause on a date to be specified in the notice why the ad interim order of attachment should not be made absolute or the injunction confirmed.(4-A) If no cause is shown on or before the date specified in the notice under sub-section (1-A), the District Judge shall forthwith order the enforcement of the liability of the surety.] [ Substituted by Act 43 of 1985, Section 20, for Section 4 (w.e.f. 21-8-1985).](5)If no cause is shown on or before the date specified in the notice under sub-sections (2) and (4), the District Judge shall forthwith make the ad interim order absolute and direct the sale of the attached property or transfer the management of the industrial concern to the Financial Corporation or confirm the injunction.(6)If cause is shown, the District Judge shall proceed to investigate the claim of the Financial Corporation in accordance with the provisions contained in the Code of Civil Procedure, 1908 (5 of 1908), insofar as such provisions may be applied thereto.(7)After making an investigation under sub-section (6), the District Judge may-(a)confirm the order of attachment and direct the sale of the attached property;(b)vary the order of attachment so as to release a portion of the property from attachment and direct the sale of the remainder of the attached property;(c)release the property from attachment;(d)confirm or dissolve the injunction; [*] [ The word " or" omitted by Act 43 of 1985, Section 20 (w.e.f. 21-8-1985).](da)[ direct the enforcement of the liability of the surety or reject the claim made in this behalf; or] [ Inserted by Act 43 of 1985, Section 20 (w.e.f. 21-8-1985).](e)transfer the management of the industrial concern to the Financial Corporation or reject the claim made in this behalf:Provided that when making an order under clause (c) [or making an order rejecting the claim to enforce the liability of the surety under clause (da) or making an order rejecting the claim to transfer the management of the industrial concern to the Financial Corporation under clause (e)] [ Substituted by Act 43 of 1985, Section 20, for Section 4 (w.e.f. 21-8-1985).], the District Judge may make such further orders as he thinks necessary to protect the interests of the Financial Corporation and may apportion the costs of the proceedings in such manner as he thinks fit:Provided further that unless the Financial Corporation intimates to the District Judge that it will not appeal against any order releasing any property from attachment [or rejecting the claim to enforce the liability of the surety or rejecting the claim to transfer the industrial concern to the Financial Corporation] [Substituted by Act 43 of 1985, Section 20, for Section 4 (w.e.f. 21-8-1985). ], such order shall not be given effect to, until the expiry of the period fixed under sub-section (9) within which an appeal may be preferred or, if an appeal is preferred, unless the High Court otherwise directs until the appeal is disposed of.(8)An order of attachment or sale of property under this section shall be carried into effect as far as practicable in the manner provided in the Code of Civil Procedure, 1908 (5 of 1908) for the attachment or sale of property in execution of a decree, as if the Financial Corporation were the decree-holder.[(8-A) An order under this section transferring the management of an industrial concern to the Financial Corporation shall be carried into effect, as far as may be practicable, in the manner provided in the Code of Civil Procedure, 1908 (5 of 1908), for the possession of immovable property or the delivery of movable property in execution of a decree, as if the Financial Corporation were the decree-holder.] [ The word " or" omitted by Act 43 of 1985, Section 20 (w.e.f. 21-8-1985).](9)Any party aggrieved by an order [under sub-section (4-A), sub-section (5)] [ Inserted by Act 43 of 1985, Section 20 (w.e.f. 21-8-1985).] or sub-section (7) may, within thirty days from the date of the order, appeal to the High Court, and upon such appeal the High Court may, after hearing the parties, pass such orders thereon as it thinks proper.(10)Where proceedings for liquidation in respect of an industrial concern have commenced before an application is made under sub-section (1) of section 31, nothing in this section shall be construed as giving to the Financial Corporation any preference over the other creditors of the industrial concern not conferred on it by any other law.(11)[ The functions of a District Judge under this section shall be exercisable-(a)in a presidency town, where there is a city civil Court having jurisdiction, by a Judge of that Court and in the absence of such Court, by the High Court; and(b)elsewhere, also by an additional District Judge ][or by any Judge of the principal Court of civil jurisdiction] [ Inserted by Act 77 of 1972, Section 21, (w.e.f. 30-12-1972).].(12)[ For the removal of doubts it is hereby declared that any Court competent to grant an ad interim injunction under this section shall also have the power to appoint a Receiver and to exercise all the other powers incidental thereto.] [ Substituted by Act 43 of 1985, Section 20, for sub-Section (12) (w.e.f. 21-8-1985).][32-A. Power of Financial Corporation to appoint directors or administrators of an industrial concern when management is taken over.-(1)When the management of an industrial concern is taken over by the Financial Corporation, the Financial Corporation may, by order notified in the Official Gazette, appoint as many persons as it thinks fit,-(a)in any case in which the industrial concern is a company as defined in the Companies Act, 1956 (1 of 1956), to be directors of that industrial concern; or(b)in any other case, to be administrators of that industrial concern.(2)The power to appoint directors or administrators under this section includes the power to appoint any individual, firm or company to be the managing agent or manager of the industrial concern on such terms and conditions as the Financial Corporation may think fit.] [Substituted by Act 6 of 1962, Section 15, for sub-Section (11) (w.e.f. 16-4-1962). ](3)[ Nothing in the Companies Act, 1956 (1 of 1956) or in any other law for the time being in force or in any instrument relating to the industrial concern shall, insofar as it makes in relation to a director, any provision for the holding of any share qualification, age limit, restriction in the number of directorships, retirement by rotation or removal from office, apply to any director appointed by the Financial Corporation under this section.] [ Inserted by Act 6 of 1962, Section 16 (w.e.f. 16.4.1962).][32-B. Effect of notified order under section 32-A.-On the issue of a notified order under section 32-A,-(a)in any case in which the industrial concern is a company as defined in the Companies Act, 1956 (1 of 1956), all persons holding office as directors of the industrial concern and in any other case, all persons holding any office having the powers of superintendence, direction and control of the industrial concern, immediately before the issue of the notified order, shall be deemed to have vacated their offices as such;(b)any contract of management between the industrial concern and any managing agent or any director or manager thereof holding office as such immediately before the issue of the notified order shall be deemed to have terminated;(c)in the case of an industrial concern which is a company as defined in the Companies Act, 1956 (1 of 1956), the managing agent, if any, appointed under section 32-A shall be deemed to have been duly appointed in pursuance of the said Act and the memorandum and articles of association of the industrial concern and the provisions of the said Act and the memorandum and articles shall, subject to the other provisions contained in this Act, apply accordingly, but no such managing agent shall be removed from office except with the previous consent of the Financial Corporation;(d)the directors or the administrators appointed under section 32-A shall take such steps as may be necessary to take into their custody or under their control all the property, effects and actionable claims to which the industrial concern is, or appears to be, entitled, and all the property and effects of the industrial concern shall be deemed to be in the custody of the directors or administrators, as the case may be, as from the date of the notified order;(e)the directors appointed under section 32-A shall, for all purposes, be the directors of the industrial concern duly constituted under the Companies Act, 1956 (1 of 1956), and such directors, or as the case may be, the administrators appointed under section 32-A, shall alone be entitled to exercise all the powers of the directors or as the case may be, of the persons exercising powers of superintendence, direction and control, of the industrial concern, whether such powers are derived from the said Act or from the memorandum or articles of association of the industrial concern or from any other source whatsoever.
