Orissa High Court
Gulf Fishing & Co. vs Orissa State Financial Corporation And ... on 5 December, 1986
Equivalent citations: AIR1987ORI119, AIR 1987 ORISSA 119, (1987) 63 CUT LT 151
JUDGMENT H.L. Agrawal, C.J.
1. The short but intricate question that arises for our consideration in this case is as to whether the State Financial Corporation having taken recourse to a suit against its debtor for recovery of the loan can take recourse to the powers under Section 29 of the State Financial Corporations Act (hereinafter referred to as the 'Act').
2. The facts, briefly stated, are as follows :
The Orissa State Financial Corporation (O.P.No. 1) advanced a sum of Rs. 1,56,000/-in different instalments to the petitioner for advancing to different fishing industries sponsored by the Director of Industries, Orissa, for purchasing various equipments and materials required by the fishing industries. The loan was to be repaid within 5 years 6 months in 9 half-yearly instalments with interest at the rate of 151/2 per cent. The petitioner was not able to repay the entire loan, the Corporation instituted T.M.S. No. 255/83 in the Court of the First Subordinate Judge, Cuttack, for realisation of the outstanding loan with a prayer that on the failure to pay the decretal dues, a decree for sale of the hypothecated trawlers together with the accessories as given in Schedule "H" to the plaint be passed and the sale proceeds be adjusted towards payment of the decretal dues. The suit was decreed and the decree was put to execution.
3. In the meantime, one of the managing partners of the petitioner died in an accident and the Corporation and its director, purporting to exercise the power under Section 29 of the Act seized the trawlers to sell the same by auction. It is this action of the opposite parties which is challenged in this writ application inter alia on the ground that the opposite parties having chosen to take recourse to a regular civil suit, their remedy was to be confined to the process of execution of the said decree and that they were debarred from taking recourse to the statutory powers conferred upon them under Section 29.
4. It was submitted on behalf of the petitioner that the Civil Court decree which is in the nature of a mortgage decree specifically enjoins upon the decree-holder (Corporation) to realise the decretal dues by sale of the mortgaged properties through the process of the Court and that leaving the decree at that stage, and taking recourse to Section 29 of the Act would amount to prosecuting two remedies simultaneously and put the petitioner to the risk of "double jeopardy".
Mr. S. N. Sinha appearing for the Corporation fairly conceded that although the law is well settled that no person can be allowed to prosecute two remedies simultaneously, without putting the Civil Court decree to execution, or, for the matter of that, even if the decree was put to execution, the Corporation was entitled to withdraw the execution case and fall back upon the statutory powers conferred upon it under Section 29 of the Act. In other words, he submitted that in spite of availing the general remedy of a civil suit, there was no bar for the Corporation to retrieve from that position and proceed under the Act.
From a Bench decision of the Calcutta High Court in the case of Haridas Mundra v. National and Grindlays Bank Ltd., AIR 1963 Cal 132 where on the pawner's making default the right of the pawnee to sue upon the debt or promise was held not to exclude or destroy his right to sell the pawn and the pawnee's right to sue upon the debt or the promise or to sell the pawn was held to be concurrent and not alternative right, it was submitted that in spite of bringing the suit for recovery of the loan as such, the Corporation's right to sell the hypothecated articles offered as a collateral security was available.
I am sorry to observe that the reliance placed upon this decision by Mr. Sinha is entirely misplaced and misconceived. Rather, the decision goes contrary to his submissions, Bachawat, J. who delivered the leading judgment made the matter clear by indicating the three rights of the pawnee, namely, (1) he may bring a suit against the pawner upon the debt or promise; (2) he may retain the pawn as a collateral security; or (3) he may sell it on giving the pawner reasonable notice of the sale. The right to retain the pawn and the right to sell it were held to be alternative and not concurrent. As while the pawnee retains, he does not sell; and when he sells, he does not retain. All that was held in this decision, with which I find myself in respectful agreement, was that the pawnee has the right to sue on the debt or the promise concurrently with right to retain the pawn or to sell it. The foundation for this view was that the pawn was only a collateral security and, therefore, the exercise of one alternative right does not destroy all future recourse to the other alternatives, namely, the right to institute a suit on the debt or promise and the right of sale out of Court.
5. In the present case, the suit instituted by the Corporation, however, is not a suit based on the debt or loan as such, but was a mortgage suit seeking recovery of the loan by sale of the mortgaged property. In my considered opinion, therefore, once the Corporation took assistance of the Court under the general law for sale of the mortgaged property through due process of execution, then "the right xxxxxxxxxxx to realise the property mortgaged to the Financial Corporation was destroyed" as in that event the claim merged in the decree and the second action would expose the petitioner to double jeopardy.
6. In the case of Kempe Gowda v. Lakke Gowda, AIR 1952 Mys 99 it was observed that a party entitled to more than one relief cannot be allowed to shift his preference to one or the other from time to time in view of the principle that he cannot both approbate and reprobate. Such "volte-face" would be nothing short of what is termed as "blowing hot and cold".
Although on the facts of the present case it cannot be said to be a case of "approbate and reprobate", but it certainly is a case of shifting by the party his preference to the other remedy or forum after having already availed one.
Again, in the case of State Bank of India v. Darshan Kumar Jindal, (1979) 81 Pun LR 567 : (1980 Lab ICNOC 52), the Punjab and Haryana High Court while dealing with a case under Section 10 of the Industrial Disputes Act where the Government had refused to refer the dispute and thereupon a civil suit was filed by the party concerned, it was held that where the matter was taken up for reconsideration and upon its failure, recourse was taken to a reference and it was refused, it was held that the plaintiff having elected his remedy under the special Act, the remedy by way of a separate suit became barred (the remedy by way of a suit for reinstatement was assumed to be available to the plaintiff).
7. The case of a pawnee who under Section 176 of the Indian Contract Act has been given the right to institute a suit upon the debt and retain the pledged goods as a collateral security appears to me to be different than that of a mortgage decree-holder. The decree-holder for a mortgage decree for sale of the mortgaged property, its action would amount to giving up the right to sell the same under its, own authority conferred under Section 29 of the Act, and I feel myself inclined to hold that the Corporation cannot now resile from that situation and the doctrine of election will stand in its way.
8. Mr. Sinha also raised another argument which I would say, out of despair, that if the trawler lying in the custody of the Corporation is released, it would be lost to them since to attach it afresh through the process of an execution proceeding is time-taking and according to the petitioner's own allegations, the legal representatives of the deceased managing partner are bent upon to dispose of the same. He, therefore, submitted that interference by this Court may result in irreparable injury to the Corporation. This argument based on the ground of hardship is equally devoid of any merit. The right which is not available in law to a party cannot be approved by a Court.
The attachment of the trawler could have been secured through the due process of law by moving the executing Court. However, on the facts and in the circumstances mentioned above, the direction that I propose to issue to the Corporation for releasing the trawler may be complied with within a period of four weeks from today so that, if so advised, it may take appropriate action in the executing Court for securing attachment of the said machinery.
9. From the discussions made above, I come to the conclusion that this application must succeed and the petitioner should be granted the reliefs sought for from this Court.
10. The writ application is accordingly allowed, and the Corporation-opposite party No. 1 is directed to release the trawler from its seizure subject to the observation made above. In the peculiar circumstances of the case, however, I would leave the parties to bear their own costs.
L. Rath, J.
11. While concurring with my Lord the Chief Justice, I would like to state a few words in support of my conclusions. Section 29 of the State Financial Corporations Act, 1951 vests the power in the State Financial Corporation to take over the management or possession or both of the industrial concerns as well as the right to transfer by way of lease or sale and realise the property pledged, mortgaged, hypothecated or assigned to it. The right so vested is obviously besides the right already possessed at the common law to institute a suit. It is however a matter of logic and practical reasoning that when two remedies are available for the same relief, a person to whom the remedies are available has the option to elect either of them and cannot pursue the both simultaneously. Such simultaneous prosecution of different remedies may result in inconsistent results being achieved causing grave injustice to the person against whom they are pursued. Law is the hand-maid of the justice and hence has to be interpreted in a manner which subserves justice and not defeat it. If the remedy of a civil suit is pursued and a decree is passed, the claim of the plaintiff must be taken to have merged in the decree and cannot have any independent existence thereafter to be pursued again through the alternative mode. In law it must be taken that the claim has reached a finality of adjudication and nothing remains thereafter to be pursued through the alternative procedure. To assume the contrary would lead to untenable positions. Suppose by adjudication on merits before the Civil Court, the plaintiffs' claim is dismissed, can it be said that the plaintiffs can still have recourse to the alternative remedy and realise the claim against the defendant ? To me, the answer is No.
12. It is of course open to the claimant to withdraw the suit at any time, in accordance with law, and thereafter pursue the other remedy available to him. In AIR 1976 Andh Pra 93 (Srinivasa Kandasari Sugars, Nara-simhunipet v. Govt. of Andhra Pradesh) the question was whether the A. P. State Financial Corporation could pursue the remedy under Section 29 of the A.P. State Financial Corporation Act, 1951 while it had moved the District Judge under Section 31 of that Act for the sale of the properties and for other necessary reliefs. During the pendency of the Section 31 proceeding, an Advocate receiver had been appointed for the management of the properties. The Corporation filed an application for permission to withdraw the proceeding which was allowed on 27-8-1973 and on the next day the Corporation, exercising its powers under Section 29, sold the properties. It was held that since Section 29 is a valid provision of law and the Corporation had the choice, no objection could be taken to the sale effected by it after withdrawing the application under Section 31.
13, The citation of AIR 1963 Cal 132 (Haridas Mundra v. National and Grindlays Bank) by Mr. Sinha is also not appropriate. It was a case of Pawn whereas the present case is one of hypothecation. Their Lordships in that case held, on interpretation of Section 176 of the Contract Act, that a right of sale of the pawn out of the Court is not an alternative but is concurrent to the right to institute a suit on the debt or the promise and that even if they are held to be alternative, they are not mutually exclusive and the exercise of one alternative right does not destroy the future recourse to the other alternative. The decision is exclusively based on interpretation of Section 176 of the Contract Act, interpreting which it was held that the section itself contemplated the two alternatives to be concurrent and not exclusive of each other. Of course in AIR 1967 SC 1322 (Lallan Prasad v. Rahmat AH) it was decided that where a pawnee filed a suit for recovery of debt, though he is entitled to retain the goods, he is bound to return them' on payment of the debt. The right to sue on the debt assumes that he is in a position to redeliver the goods on payment of the debt. He can therefore sue on the debt retaining the goods pledged as collateral security, and if the debt is paid, he has to return the goods with or without the assistance of the Court. But however we are not called upon in this case for an interpretation of Section 176 of the Contract Act, and even on the authority of AIR 1963 Cal 132 it can be said that but for the wordings of the Section 176 of the Contract Act, the two alternative rights would have been mutually exclusive of each other and not concurrent. A hypothecation of goods differs from that of a pawn inasmuch as whereas in a pawn the goods pledged are delivered to the pawnee, in a hypothecation the goods are not actually delivered to the pledgee. The pledge there is made as a security for the debt without parting possession of the pledged goods. Since possession is not parted, the question of retention by the pledgee does not arise. The decision of the Calcutta High Court would have thus no application to the present case.
14. In this view of the matter, I would agree with my Lord, the Chief Justice, and hence should allow the writ application.