Apex Law Journal
Apex Law Journal
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Neha Goel, Advocate

Advisory Board

S.C. Khunger, Advocate

Rohit Bansal, Advocate

Varinder Singh Kanwar, Advocate

Hittan Nehra, Advocate

Judgments on State Financial Corporations Act, 1951

Sunday, June 15, 2008
State Financial Corporations Act, 1951

State Financial Corporations Act, 1951 — Section 29 — The right to sell the property by the Corporation, held, must be exercised only in respect of the mortgaged property and not the one which is not the subject matter thereof.

State Financial Corporations Act, 1951

State Financial Corporations Act, 1951 — Section 29 — Held, for the purpose of invoking Section 29 of the Act, the borrower must have a liability to the Corporation under an agreement. It must make a default in repayment of any loan or advance, etc. — The Corporation in such a situation shall inter alia have the right to take over the management or possession or both of the industrial concerns — This power is in addition to the power of the right to transfer by way of lease or sale and realize the property pledged, mortgaged, hypothecated or assigned to the Corporation — The right to transfer by way of lease or sale, however, is not an independent right — Only in case of default, such a right can be exercised — We must keep in mind that the powers contained in two parts of Section 29 of the Act are separate and distinct — The power to take over the management is ordinarily exercised when the concern is an ongoing one — But, when a power is conferred to sell the property unilaterally, the same must have a nexus with the mortgaged property — The power to sale cannot be read in isolation — It can also realize the mortgaged property which would mean that when a property had been sold, only the mortgaged property can be realized and not any other property which was not the subject matter of mortgage — What can be transferred by the mortgagee even in terms of the provisions of the Transfer of Property Act is the property which was the subject matter of mortgage and not any other — A power to take over the management or possession is a statutory power — As and when the debt is realized, the Corporation would be bound to handover the management or possession of the property, as the case may be, back to the industrial establishment.

Thursday, July 20, 2006
State Financial Corporations Act, 1951

State Financial Corporations Act, 1951 — Sections 31 and 32 — Limitation Act, 1963, Articles 136 & 137 — Application under Sections 31 and 32 of the State Financial Corporations Act is not by way of execution of a decree or order of any Civil Court — Article 136 of Limitation Act, 1963, therefore, held, has no application — To such an application Article 137 of Limitation Act, 1963 would apply — Appeal dismissed.

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