Karnataka High Court
Karnataka State Financial Corporation vs M/S Gualbarga Steels(O) Ltd on 18 December, 2025
Author: M.G.S.Kamal
Bench: M.G.S.Kamal
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R
IN THE HIGH COURT OF KARNATAKA
KALABURAGI BENCH
DATED THIS THE 18TH DAY OF DECEMBER, 2025
BEFORE
THE HON'BLE MR. JUSTICE M.G.S.KAMAL
CIVIL REVISION PETITION NO.200041 OF 2017 (EX)
BETWEEN:
KARNATAKA STATE FINANCIAL CORPORATION
HAVING ITS CORPORATE OFFICE
AT NO.1/1 THIMMAIAH ROAD,
BANGALORE-560052,
HAVING ITS BRANCH OFFICE AT GULBARGA
REPRESENTED BY ITS BRANCH MANAGER,
SRI. B. DHANRAJ S/O LATE B.SOMAPPA,
AGE: 59 YEARS,
GOVERNMENT HOSPITAL ROAD,
Digitally
signed by KALABURAGI. NOW PRESENTLY
SUMA B N REP. BY, ASSISTANT GENERAL MANAGER,
Location:
HIGH COURT KARNATAKA STATE FINANCIAL CORPORATION,
OF BRANCH OFFICE KALABURAGI,
KARNATAKA
SRI. B.S. MOIUDDIN.
...PETITIONER
(BY SRI. AJAYKUMAR A. K., ADVOCATE)
AND:
1. M/S GUALBARGA STEELS(O) LTD.,
NO.114, SUPER MARKET,
GULBARGA-585101, AND ALSO AT
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M/S GULBARGA STEELS (P) LTD.,
NO.39/1, KRISHNA, 6TH CROSS,
CHAMARAJPET,
BANGALORE-560018.
2. SRI. SHANKAR M.KONDAD
S/O MAILARAPPA KONDAD,
AGE: 52 YEARS,
OCC: MANAGING DIRECTOR
OF M/S GULBARGA, STEELS (P) LTD.,
R/O NO.250, GODUTAI NAGAR,
KALABURAGI-585103.
3. SMT. SHAKUNTALA S.KONDAD
W/O SRI. SHANKAR M.KONDAD,
AGE: 43 YEARS, OCC: HOUSEHOLD,
R/O NO.250, GODUTAI NAGAR,
KALABURAGI-585103.
4. SMT. SHAILAJA SHIVANAND PATIL
W/O SHIVANAND PATIL,
AGE: 48 YEARS, OCC: HOUSEHOLD,
R/O NO.34, VISHWESHWARAIAH NAGAR,
UNIVERSITY ROAD,
KALABURAGI-585105.
5. SRI. SRN MURTHY
S/O DR.S.RAGHVENDRA RAO,
AGE: 48 YEARS, OCC: BUSINESS,
R/O NO.39/1, 6TH MAIN ROAD,
CHAMARJPETH,
BANGALORE-560018.
6. SMT. SAVITHA HIREMATH
W/O G.S. HIREMATH,
AGE: 47 YEARS, OCC: HOUSEHOLD,
R/O.NO.50, BHAGAWANTH HOUSE,
GODBOLEMALA, MULASAVALAGI,
SINDHAGI, TQ. SINDHAGI,
DIST. VIJAYAPUR-586101.
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7. SMT. RAJASHREE S.PATIL W/O S.PATIL,
AGE: 44 YEARS, OCC: HOUSEHOLD,
R/O NO.250, GODUTAI NAGAR,
KALABURAGI-585103.
8. SRI.M.R. GUGWAD
AGE: 55 YEARS, OCC: BUSINESS,
R/O ALMEL, TQ. INDI,
DIST. VIJAYAPUR-586103.
9. SRI. VITHAL RAO SEDAMKAR
AGE: 51 YEARS, OCC: BUSINESS,
R/O VENKATESH NAGAR,
KALABURAGI-585102.
10. SMT. C.S. KONDAD
W/O SRIMANTH RAO KONDAD,
AGE: 45 YEARS, OCC: HOUSEHOLD,
R/O NO.114, SUPER MARKET,
KALABURAGI-585102
...RESPONDENTS
(V/O DATED 11.12.2025 BY SRI D.P. AMBEKAR, AS
AMICUS CURIE, FOR R2
PARTY IN PERSON
R1 TO R5, AND R7 ARE SERVED)
THIS CIVIL REVISION PETITION IS FILED UNDER
SECTION 115 R/W 44 RULE 1 OF THE CPC, PRAYING TO SET
ASIDE ORDER DATED-27.06.2017 PASSED IN E.P.NO.16/2015
BY THE LEARNED I ADDL. DISTRICT JUDGE, KALABURAGI,
VIDE ANNEXURE-G AND CONSEQUENTLY ALLOW THE
EXECUTION PETITION FILED BY THE REVISION PETITIONER.
THIS PETITION, COMING ON FOR FURTHER HEARING,
THIS DAY, ORDER WAS MADE THEREIN AS UNDER:
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CORAM: HON'BLE MR. JUSTICE M.G.S.KAMAL
ORAL ORDER
This Civil Revision Petition by the petitioner- Karnataka State Financial Corporation (hereinafter referred to as 'Corporation' for short) aggrieved by the order dated 27.06.2017 passed by the I Additional District Judge, Kalaburagi (hereinafter referred to as 'the District Judge') dismissing the Execution Petition No.16/2015, which was filed by the Corporation under Order 21 Rule 11 of Code of Civil Procedure (hereinafter referred to as 'the CPC') seeking execution of order dated 07.06.2006 passed under Sections 31(1), 31(1)(aa) and 32 of the State Financial Corporations Act, 1951 (for short, 'the Act, 1951') in Misc.No.1/2002.
2. Brief facts leading up to filing of the present petition are that Corporation had filed an application under Sections 31(1), 31(1)(aa) and 32 of the Act, 1951 in Misc.No.1/2002 before the District Judge, for recovery of a sum of Rs.80,63,148/- together with interest thereon against the respondents herein. On contest, said application came to be -5- NC: 2025:KHC-K:7888 CRP No. 200041 of 2017 HC-KAR allowed with costs. Consequent thereof a certificate for recovery of money was also issued.
3. Appeals against the said order were filed by the respondents in MFA No.8081/2006 connected with MFA No.11482/2006 before this Court, which were dismissed by order dated 15.03.2010 by the Division Bench of this Court confirming the order passed in said Misc.No.1/2002 by the District Judge.
4. Corporation thereafter filed a petition under Order 21 Rule 11 of CPC in the above Execution Petition No.16/2015 seeking assistance of the District Judge to recover the amount due. Objections to the said petition were raised by the respondents herein by filing an applications under Section 151 of CPC (IA No.1) as well as under Order XII Rule 6 r/w Section 151 of CPC (IA No.2) seeking rejection of the same contending inter alia, (i) that the proceedings so initiated seeking execution of the order dated 07.06.2006 passed under the provisions of the Act, 1951 was barred under Article 137 of the Limitation Act; (ii) that the application under Section 31(1)(aa) is not a suit; (iii) that the order obtained under Section 32(7)(da) of the -6- NC: 2025:KHC-K:7888 CRP No. 200041 of 2017 HC-KAR Act, 1951 is not a decree passed in a suit; (iv) that the proceedings under Section 32(8) of the Act, 1951 does not provide for execution of any decree or order as defined under Section 2(2) of CPC.
5. Accepting the said objections and relying upon the judgment of the Apex Court in the case of Maharashtra State Financial vs. Ashok K. Agarwal and others in Civil Appeal No.3727/1999 dated 30.03.2016, the District Judge at paragraph 18 has held as under:
"18. While coming to the facts and circumstances involved in this case, the Certificate in Misc. No. 1/2002 dated 7.6.2006 issued by the Prl. District Judge, Kalaburagi is confirmed by the Hon'ble High Court in the Judgment passed in MFA No.11482/2006 dated 15.3.2010. As per the above principles of the case law of the Hon'ble Supreme Court, Article 137 is applicable to enforce the certificate issued by the District Judge Kalaburagi and Article 136 is not applicable. Because, the certificate issued by the District Judge, Gulbarga and confirmed by Hon'ble High Court in MFA No.11482/2006 is not a decree or order. But it is only a certificate entitling the D.Hr. Corporation to execute and recover the amount u/o 21 rule 11 CPC. But the procedure is separately provided for recovery U/sec. 32(8)(8A) of the KSFC Act. Thus, after passing and attaining the finality of the order u/sec.31 and 32(7), the D.Hr. Corporation may wait till 3 years, for initiating the execution proceedings u/sec.32 (8) (8A) of the KSFC Act for which, Article 137 of Limitation Act is applicable. But, in this case, the Hon'ble High Court has passed order in MFA No. 11482/2006 dated 15.3.2010. After passing of the MFA order, the D.Hr./KSFC ought to had filed the execution petition on or before 15.3.2013. Whereas, actually the EP is filed after lapse of 5 years 9 days after passing of the judgment in MFA No. 11482/2006 dated 15.3.2010. This fact is evident from the case file that this EP is registered in this court on 24.3.2015. Factually, it ought to have been presented before this Court on or before 15.3.2013. Thus the present petition filed u/o 21 -7- NC: 2025:KHC-K:7888 CRP No. 200041 of 2017 HC-KAR rule 11 CPC beyond the period of limitation of stipulated 3 years is barred under Article 137 of the Limitation Act. Hence, point No.2 raised for consideration is held in the negative".
6. The District Judge having held as above passed the impugned order dismissing the execution petition.
7. Heard Sri. Ajay Kumar A.K., learned counsel for the petitioner-Corporation. Sri. Shankar M. Konded the respondent No.2/party-in-person appeared and argued the matter for sometime for himself and on behalf of the respondents. This Court having found the assistance rendered by the respondent No.2/party-in-person being inadequate, requested Sri.D.P.Ambekar, learned advocate to assist the Court and appointed him as the amicus curiae in the matter in the presence of the party-in-person.
8. On hearing learned counsel for petitioner- Corporation and party-in-person and amicus curiae, following points arise for consideration:
1) Whether proceeding initiated under sub-Section (8) of Section 32 is a continuation of proceedings under Sections 31 and 32 of the State Financial Corporations Act, 1951 or it amounts to a separate proceeding seeking execution of a "decree" as contemplated under Order 21 of Code of Civil Procedure?-8-
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2) Whether as held by the District Judge the period of 3 years limitation contemplated under Article 137 of the Limitation Act would apply in seeking enforcement of the orders passed under Sections 31 and 32 of the State Financial Corporations Act, 1951?
Regarding point No.1:
9. Since the points raised above revolve around the provisions of Sections 31 and 32 of the Act, 1951 same are extracted as under:
"31. Special provisions for enforcement of claims by Financial Corporation.--(1) Where an industrial concern, in breach of any agreement, makes any default in repayment of any loan or advance or any installment thereof 1[or in meeting its obligations in relation to any guarantee given by the Corporation] or otherwise fails to comply with the terms of its agreement with the Financial Corporation or where the Financial Corporation requires an industrial concern to make immediate repayment of any loan or advance under section 30 and the industrial concern fails to make such repayment, 2[then, without prejudice to the provisions of section 29 of this Act and of section 69 of the Transfer of Property Act, 1882 (4 of 1882)] any officer of the Financial Corporation, generally or specially authorized by the Board in this behalf, may apply to the district judge within the limits of whose jurisdiction the industrial concern carries on the whole or a substantial part of its business for one or more of the following reliefs, namely:--
(a) for an order for the sale of the property pledged, mortgaged, hypothecated or assigned to the 3 [Financial Corporation] as security for the loan or advance; or (aa) for enforcing the liability of any surety; or
(b) for transferring the management of the industrial concern to the Financial Corporation; or
(c) for an ad interim injunction restraining the industrial concern from transferring or removing its -9- NC: 2025:KHC-K:7888 CRP No. 200041 of 2017 HC-KAR machinery or plant or equipment from the premises of the industrial concern without the permission of the Board, where such removal is apprehended.
(2) An application under sub-section (1) shall state the nature and extent of the liability of the industrial concern to the Financial Corporation, the ground on which it is made and such other particulars as may be prescribed.
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 of 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[(1A) 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 (1A)] the district judge may, if he thinks fit, examine the officer making the application.
2[(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
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NC: 2025:KHC-K:7888 CRP No. 200041 of 2017 HC-KAR ad interim order of attachment should not be made absolute or the injunction confirmed.
(4A) If no cause is shown on or before the date specified in the notice under sub-section (1A) the district judge shall forthwith order the enforcement of the liability of the surety.] (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) in so far 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; 3*** [(da) direct the enforcement of the liability of the surety or reject the claim made in this behalf; or]
(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) 1[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)], the district judge may make such further orders as he thinks necessary to protect the interests of the Financial
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NC: 2025:KHC-K:7888 CRP No. 200041 of 2017 HC-KAR 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 1[or rejecting the claim to enforce the liability of the surety or rejecting the claim to transfer the industrial concern to the Financial Corporation], 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.
(8A) 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 degree, as if the Financial Corporation were the decree-holder.] (9) Any party aggrieved by an order 1[under sub-section (4A), sub-section (5)] 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
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(b) elsewhere, also by an additional district judge 3[or by any judge of the principal court of civil jurisdiction].
(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.
10. A plain reading of aforesaid provisions would indicate that the same are brought in, to provide self contained seamless mechanism for enforcement of the claim by the Financial Corporation without subjecting for cumbersome procedural impediments.
11. Adverting to the scope of the aforesaid provisions and the proceedings contemplated thereunder, Hon'ble Apex Court in the case of MAGANLAL VS. JAISWAL INDUSTRIES NEEMACH & ORS. reported in 1989 AIR 2113, while dealing with the purpose and object of enacting Sections 31 and 32 of the Act, 1951 it has been held as under:
"The purpose of enacting Sections 31 and 32 of the Act was apparently to provide for a speedy remedy for recovery of the dues of the Financial Corporation. This purpose however was, in cases covered by clause (a) of Sub-section (1) of Section 31 confined to the stage of obtaining an Order akin to a decree in a suit, in execution whereof "the property pledged, mortgaged, hypothecated or assigned to the Financial Corporation as security for the loan or advance" could be sold. Sections 31 and 32 of the Act cut across and dispense
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NC: 2025:KHC-K:7888 CRP No. 200041 of 2017 HC-KAR with the provisions of the Code from the stage of filing a suit to the stage of obtaining a decree in execution whereof such properties as are referred to in clause (a) of Sub-section (1) of Section 31 could be sold. After this stage was reached sale in execution of an Order under Section 32 of the Act was for purposes 'of execution put at par with sale in execution of a decree obtained in a suit, by enacting Sub-section (8) of Section 32 of the Act. This Sub- section as noted earlier provides that 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 for the attachment or sale of property in execution of a decree as if the Financial Corporation were the decree holder.
Expressions "as far as practicable" and "in execution of a decree as if the Financial Corporation were the decree- holder" are the only expressions which qualify the "manner provided" for "sale of property in execution of a decree", as contained not only in some specific provision of the Code e.g. Order 21 thereof but "in the Code of Civil Procedure, 1908"
namely, all the provisions in the Code in this regard ' wherever they may be.
If in its anxiety to ensure speedy recovery of the dues of the Financial Corporation Parliament had intended also to cut across and dispense with the procedure contained in the Code-for execution of a decree for sale of such properties as are referred to in clause (a) of Sub-section (1) of Section 31 of the Act, it would have made some provision analogous to provisions contained in the enactments for revenue recovery. But that was not done. Instead, Sub-section (8) was incorporated in Section 32 of the Act. It is in this background that the question whether provisions of Order 34 Rule 5 of the Code will be attracted or not to the facts of the instant case has to be considered. Relying on a decision of the Karnataka High Court in M/s Hotel Natraj v. Karnataka State Financial Corporation, A.I.R. 1989 Karnataka 90 it was urged by learned counsel for Maganlal that in view of sub- section (8) of section 32 of the Act the applicability of the provisions of Order 34 Rule 5 of the Code cannot be denied to the facts of the instant case. Learned counsel for the purchasers on the other hand urged that section 32(8) of the Act made the manner provided in the Code Applicable only "as far as practicable" and there was neither a decree nor was the Financial Corporation as decree holder in a suit for sale but was only deemed to be a decree holder by legal fiction
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NC: 2025:KHC-K:7888 CRP No. 200041 of 2017 HC-KAR because of the expression in execution of a decree as if the Financial Corporation were the decree-holder.
(Emphasis added)
12. From the above enunciation of law by the Apex Court it emanates that the State Financial Corporation, as intended by the Parliament, is to operate on its own as a complete code, without being compelled to have recourse to the cumbersome proceedings of recovery of its dues as provided under the CPC. The expression "as far as practical", as found in Sub-Section (8) of Section 32 of the Act, 1951 has to be read to mean only a "deemed decree" and not the "decree" in its strict sense.
13. The next aspect of the matter is whether a separate proceedings is required to be initiated to enforce the orders passed under Sections 31 and 32 of the Act, 1951 in the nature of initiating execution proceedings as done in the instant case?
14. As seen above, Section 32 of the Act, 1951 lays down procedure to be followed by the District Judge upon filing of the application under Section 31 of the Act, 1951. Sub- section (1) of Section 32 of the Act provides for passing of ad-
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NC: 2025:KHC-K:7888 CRP No. 200041 of 2017 HC-KAR interim orders considering the reliefs mentioned in clauses (a) and (c) of Sub-section (1) of Section 31 of the Act, 1951; Sub- section (1A) of Section 32 provides for issuance of notice to the surety while granting reliefs mentioned in clause-(aa) of Sub- section (1) of Section 31; Sub-section (2) of Section 32 provides for passing of ad-interim order restraining the industrial concern from transferring or removing its machinery etc., and for issuance of show cause notice before passing orders for transferring the management of the industrial concern; Sub-section (3) of Section 32 provides for issuance of notice before passing of any order under Sub-section (1) or 9(2) or issuing notice under Sub-section (1A) for examination of the officer making application; Sub-Section (4) contemplate issuance of notice calling upon the industrial concern or the owner of the security attached to show cause as to why the ad- interim order of attachment should not be made absolute or the injunction be confirmed; Sub-section (4A) of Section 32 provides for the District Judge to pass orders forthwith to enforce the liability of the surety if no cause is shown to the notice issued under Sub-section (1A); Similarly, if no cause is shown to the notice issued under Sub-sections (2) and (4), Sub-section (5) of Section 32 provides for making the ad-
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NC: 2025:KHC-K:7888 CRP No. 200041 of 2017 HC-KAR interim order absolute and directing the sale of the attached property or transfer the management of the industrial concern to the financial corporation or confirm the injunction; Sub- section (6) provides for the District Judge to investigate the claim of the corporation, if the cause is shown; Sub-section (7) of Section 32 provides for series of orders to be passed by the District Judge as contemplated under clause (a) to (e) of the said Sub-section.
15. As rightly pointed out by learned Amicus Curiae Sri. D.P.Ambekar, the second proviso to Sub-Section (7) of Section 32 of the Act, 1951 would clarify the position, in that, the only break in the continuity of the proceedings till realization of the amount is when the Financial Corporation intimates the District Judge, its intention of preferring an appeal against any order releasing any property from the 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, it shall not give effect to until expiry period fixed under sub-section (9) of Section 32 of the Act, 1951 within which an appeal may be preferred or if an
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NC: 2025:KHC-K:7888 CRP No. 200041 of 2017 HC-KAR appeal preferred unless the High Court otherwise directs until appeal is disposed of.
16. In other words, if these intervening circumstances as provided under second proviso to Sub-section (7) of Section 32 of the Act, 1951 are taken out, the order passed under Sections 31 and 32 of the Act, 1951 shall be carried to its logical end seamlessly and given effect to in terms of Sub- Sections (8) and (8A) of Section 32 of the Act, 1951. It is necessary at this juncture to note that there is no period of limitation provided for proceedings under Sub-Sections (8) and (8A) of Section 32 of the Act, 1951.
17. Thus, the District Judge under the scheme of the Act, 1951 is required to ensure that the orders passed by him under Sections 31 and 32 of the Act, 1951 are given effect to and the recovery certificate issued by him is enforced and satisfied in the manner known to law.
18. Now adverting to the facts of case at hand wherein the order dated 07.06.2006 passed under Sections 31(1), 31(1)(aa) and 32 of the Act, 1951 in Misc. No.1/2002 by the
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NC: 2025:KHC-K:7888 CRP No. 200041 of 2017 HC-KAR District Judge having attained finality upon the dismissal of Miscellaneous First Appeals filed by the respondents, filing of an application by the petitioner-corporation, though innocuously showing it as "execution petition", as rightly submitted by learned Amicus curiae may have to be read as a "reminder" to the District Judge to continue the process contemplated under Sub - Section (8) of Section 32 of the Act, 1951 and not to be construed as an execution proceedings as strictly sought to be read as such by the District Judge.
19. Therefore, the proceedings before the District Judge though referred to as "execution proceedings", cannot be termed as a separate proceedings, as they are the proceedings in continuation of the orders passed under Sections 31 and 32 of Act, 1951 seeking recovery of the amount and no period of limitation would apply.
20. A similar analogy can be drawn from a preliminary decree passed in a suit for partition and steps to be taken to give effect to the preliminary decree by initiating the final decree proceedings. As no limitation for initiating the final
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NC: 2025:KHC-K:7888 CRP No. 200041 of 2017 HC-KAR decree proceedings is contemplated, in the normal course, the Court passing the preliminary decree is required to list the matter for final decree proceedings. This position is clarified by the Apex Court in the case of KATTUKANDI EDATHIL KRISHNAN AND ANOTHER VS. KATTUKANDI EDATHIL VALSAN AND OTHERS reported in (2022) 16 SCC 71 wherein at paragraph 32, 33, 34 and 35 has held as under;
"32. It is clear from the above that a preliminary decree declares the rights or shares of the parties to the partition. Once the shares have been declared and a further inquiry still remains to be done for actually partitioning the property and placing the parties in separate possession of the divided property, then such inquiry shall be held and pursuant to the result of further inquiry, a final decree shall be passed. Thus, fundamentally, the distinction between preliminary and final decree is that : a preliminary decree merely declares the rights and shares of the parties and leaves room for some further inquiry to be held and conducted pursuant to the directions made in preliminary decree and after the inquiry having been conducted and rights of the parties being finally determined, a final decree incorporating such determination needs to be drawn up.
33. Final decree proceedings can be initiated at any point of time. There is no limitation for initiating final decree proceedings. Either of the parties to the suit can move an application for preparation of a final decree and, any of the defendants can also move application for the purpose. By mere passing of a preliminary decree the suit is not disposed of. (See : Shub Karan Bubna v. Sita Saran Bubna [Shub Karan Bubna v. Sita Saran Bubna, (2009) 9 SCC 689 : (2009) 3 SCC (Civ) 820] ; Bimal Kumar v. Shakuntala Debi [Bimal Kumar v. Shakuntala Debi, (2012) 3 SCC 548 : (2012) 2 SCC (Civ) 312] .)
34. Since there is no limitation for initiating final decree proceedings, the litigants tend to take their own sweet time for initiating final decree proceedings. In some States, the courts after passing a preliminary decree adjourn the suit
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NC: 2025:KHC-K:7888 CRP No. 200041 of 2017 HC-KAR sine die with liberty to the parties for applying for final decree proceedings like the present case. In some other States, a fresh final decree proceedings have to be initiated under Order 20 Rule 18. However, this practice is to be discouraged as there is no point in declaring the rights of the parties in one proceedings and requiring initiation of separate proceedings for quantification and ascertainment of the relief. This will only delay the realisation of the fruits of the decree. This Court, in Shub Karan Bubna [Shub Karan Bubna v. Sita Saran Bubna, (2009) 9 SCC 689 :
(2009) 3 SCC (Civ) 820] , had pointed out the defects in the procedure in this regard and suggested for appropriate amendment to CPC. The discussion of this Court is in paras 23 to 29 which are as under : (SCC pp. 698-700)
35. We are of the view that once a preliminary decree is passed by the trial court, the court should proceed with the case for drawing up the final decree suo motu. After passing of the preliminary decree, the trial court has to list the matter for taking steps under Order 20 Rule 18CPC. The courts should not adjourn the matter sine die, as has been done in the instant case. There is also no need to file a separate final decree proceedings. In the same suit, the court should allow the party concerned to file an appropriate application for drawing up the final decree.
Needless to state that the suit comes to an end only when a final decree is drawn. Therefore, we direct the trial courts to list the matter for taking steps under Order 20 Rule 18CPC soon after passing of the preliminary decree for partition and separate possession of the property, suo motu and without requiring initiation of any separate proceedings."
21. Thus, from the above it is clear that proceedings initiated under Sub-section (8) of Section 32 of the Act, 1951 is a continuation of the proceedings initiated under Section 31 of the Act, 1951 and is not a separate and distinct, as contemplated under Code of Civil Procedure seeking execution of ''decree''.
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NC: 2025:KHC-K:7888 CRP No. 200041 of 2017 HC-KAR Regarding point No.2:
22. The District Judge has dismissed the execution petition holding the same as having barred by limitation as provided under Article 137 of the Limitation Act.
23. Learned counsel for the petitioner on the other hand contended that the period of limitation seeking enforcement of a money decree is 12 years as provided under Article 136 of the Limitation Act, as such, the District Judge erred in dismissing the same.
24. Article 136 and 137 of the Limitation Act are extracted hereunder for immediate perusal:
Time from which Article Description Period of limitation period begins to run [When] the decree or order becomes enforceable or where the decree or any subsequent order directs any payment For the execution of money or the of any decree (other than delivery of any a decree granting a Twelve Years property to be made mandatory injunction) or at a certain date or order of any civil court.
at recurring periods,
136. when default in making the payment or delivery in respect of which execution is sought,
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NC: 2025:KHC-K:7888 CRP No. 200041 of 2017 HC-KAR takes place:
Provided that an
application for the
enforcement or
execution of a
decree granting a
perpetual injunction
shall not be subject
to any period of
limitation.
137. Any other
application for which no
When the right to
period of limitation is Twelve Years
apply accrues.
provided elsewhere in
this Division.
25. The District Judge has relied upon the judgment of the Apex Court in the case of Maharashtra State Financial Vs. Ashok K Agarwal in Civil Appeal No.3727/1999 decided on 30.03.2016 to hold that Article 137 of the Limitation Act is applicable. Necessary to note that in the facts involved in the said judgment of the Apex Court, Corporation therein had filed an application under Sections 31 and 32 of the Act, 1951 against the borrowers therein on 25.10.1983, when the liability of the sureties had crystallized by then. Amendment of Section 31 of the Act, 1951 providing for action to be taken enforcing the liability against the sureties was brought about in the year 1985 by insertion of clause (aa) to Sub-section (1) of Section 31 of the Act, 1951. That even after such amendment, the Corporation therein had not taken steps
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NC: 2025:KHC-K:7888 CRP No. 200041 of 2017 HC-KAR against the sureties and the notice thereunder was issued on 07.12.1991 and application for enforcement of the liability against the sureties was filed on 02.01.1992. It is under these circumstances, the Hon'ble Apex Court applying Article 137 of the Limitation Act had held that the application filed by the Corporation therein was barred by limitation.
26. The facts at hand as already noted are completely different and distinct, in that the application in Misc. No.1/2002 filed by the Corporation under Sections 31(1), 31(1)(aa) and 32 of the Act, 1951 has been allowed by order dated 07.06.2006 by the District Judge which is confirmed by the Division Bench of this Court by order dated 15.03.2010 passed in M.F.A.No.8081/2006 C/w M.F.A.No.11482/2006 filed by the respondents. Thus, there is no question of claim made by the Corporation having barred under Article 137 of the Limitation Act.
27. As already held by this Court while answering point No.1, application filed by the Corporation under Order 21 Rule 11 of CPC in Execution No.16/2015 only have to be read as an
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NC: 2025:KHC-K:7888 CRP No. 200041 of 2017 HC-KAR application under Sub-section (8) of Section 32 of the Act, 1951 which is continuation of the proceedings under Sections 31 and 32 of the Act, 1951 and not the separate proceedings. Therefore, the District Judge in the considered view of this Court has erred in holding that the said application is barred under Article 137 of the Limitation Act.
28. Yet another aspect which requires consideration is that Article 136 of the Limitation Act has two parts. The first part provides for period of limitation of twelve years for execution of a ''decree'' (other than a decree granting a mandatory injunction). The second part equally provides for a period of twelve years of limitation for execution of ''an order'' of any Civil Court.
29. Though, the order passed under Sections 31 and 32 of the Act, 1951 is not a ''decree'' in stricto senso, the same can be termed as "an order" passed by a Civil Court as contemplated under the second part of Article 136 of the Limitation Act. This view is fortified by the fact that jurisdiction to pass the orders under Sections 31 and 32 of the Act, 1951 is exclusively conferred on District Judge. In the case of
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NC: 2025:KHC-K:7888 CRP No. 200041 of 2017 HC-KAR MAHARASHTRA STATE FINANCIAL CORPORATION VS. JAYCEE DRUGS AND PHARMACEUTICALS PVT. LTD. AND OTHERS, reported in (1991) 2 SCC 637, dealing with the term, "District Judge", the Apex Court at paragraph 26 has held as under:
"26. We may now state our reasons for holding that even if Section 46-B of the Act was not there the provisions of the Code for the execution of a decree against a surety who had given only personal guarantee would, in the absence of any provision to the contrary in the Act, be applicable. In view of the decision of this Court in Central Talkies Ltd., Kanpur v. Dwarka Prasad, where it was held that a persona designata is a person selected as an individual in his private capacity, and not in his capacity as filling a particular character or office, since the term used in Section 31(1) of the Act is "District Judge" it cannot be doubted that the District Judge is not a persona designata but a court of ordinary civil jurisdiction while exercising jurisdiction under Sections 31 and 32 of the Act.
30. Clearly, the term "District Judge" used under the provision of Section 31 of the Act, 1951 is not a "persona designata", but a "Court of ordinary Civil Jurisdiction".
31. Therefore, even from this angle, the second part of Article 136 of the Limitation Act, providing for twelve years period for execution of "orders of any Civil Court" would squarely apply to the orders passed under Sections 31 and 32 of the Act, 1951.
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NC: 2025:KHC-K:7888 CRP No. 200041 of 2017 HC-KAR
32. The aforesaid meaning and interpretation also lends credence to the very object and purpose of the Act, which is to ensure recovery of the public money by avoiding cumbersome procedure. The purposive interpretation of the provision has to be given keeping in mind the object of the Act, lest the very purpose would stand defeated. In the absence of any specific period of limitation provided under the Act, to file an application under Sub-Section (8) of Section 32 of the Act, 1951 and in the light of order passed under Section 32 of the Act, being an order passed by the Civil Court covering the period of limitation as read above, the District Judge in the considered view of this Court has clearly erred in dismissing the execution petition.
33. As held by the Apex Court in the case of Kattukandi (Supra), directing the trial Courts to list the matter for taking steps under Order 20 Rule 18 of CPC in the cases where preliminary decree is passed, without there being any need for filing a separate final decree proceedings, a necessary direction also required to be issued to the District Courts in the cases involving the orders passed under Sections 31 and 32 of the Act, 1951. In that, once the orders is/are passed under Sections 31 and 32 of the Act, 1951 the matters be taken up
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NC: 2025:KHC-K:7888 CRP No. 200041 of 2017 HC-KAR for giving effect to such orders as contemplated under Sub- sections (8) and (8A) of the Act, 1951 without requiring filing of separate applications in that regard. This is subject, however to the intervening circumstances contemplated under second proviso to Sub-section (7) and Sub-sections (9) and (10) of Section 32 of the Act, 1951.
34. Thus, the proceedings under Sub-Section(8) of Section 32 are continuation of proceedings under Sections 31 and 32 of the Act, 1951 and no period of limitation would apply except as stated above. Points raised are answered accordingly.
For the aforesaid reasons and analysis, the following:
ORDER I. Civil revision petition is allowed.
II. Impugned order dated 27.06.2017 passed by the I Additional District Judge, Kalaburagi in Execution Petition No.16/2015 is set aside. The matter is restored.
III. The District Judge shall proceed in accordance with law to enforce the order dated 07.06.2006 passed in Misc.No.1/2002 considering the application as filed under Sub-section (8) of Section 32 of the Act, 1951 though the
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NC: 2025:KHC-K:7888 CRP No. 200041 of 2017 HC-KAR same is termed as execution petition filed under Order 21 Rule 11 CPC.
The assistance rendered by Sri.D.P.Ambekar, learned advocate as Amicus Curie, is appreciated and placed on record.
Registry is directed to circulate this order to all the District Court which are vested with the jurisdiction to deal with the matters under the State Financial Corporations Act, 1951.
Sd/-
(M.G.S.KAMAL) JUDGE SDU,KJJ LIST NO.: 1 SL NO.: 10 CT:PK