petitioners1. Tirupathi stone pvt. ltd.

2. Amitabh Poddar
3. Shobha Devi Poddar
4. Vinay Ku.Poddar
5. Vibha Bhagat

Respondents- Karnatka State Financial Corp.

The respondents filed a petition under section 31(1)(aa) of the State Financial
Corporation Act. for recovery of Rs. 2 Crores from the petitioners.

Petitioner 1 took financial assistance from the respondent and petitioners 2-5
offered guarantees for the same.

The respondents,during the pendency of the petition transferred the case from
the Bangalore court to the Mangalore court.

The said transfer was done following the ratio of the Supreme Court in the
case of Karnataka State Industrial investment and Development Corp
v.S.K.K Kulkarni 2009 vol.2 SCC 236.

The respondents sold the property belonging to the petitioners in exercise of

the powers vested on them by virtue of section 29 of the State Financial Corp.
Act.

The respondents contented that the proceedings under section 29 of the Act
were initiated and completed hence all properties situated in Mangalore were
sold.

All the properties attached in the petition is situated in Bangalore.

All deeds of Guarantee were executed in either Bangalore or Culcutta.

The petitioners and respondents both live in Bangalore.

On these grounds the petitioners filed an objection seeking to havethe petition
returned for the want of jurisdiction.

The petition got dismissed in the District Court as well as High Court.

The decision of the high court has now been challenged in the Supreme Court of
India on the following grounds.
The courts have relied on the judgement Karnataka State Industrial investment
and Development Corp v.S.K.K Kulkarni which needs to be revisited on the
following grounds.

1. Section 31(1) of the State financial Corp. Act (SFCA)states that a petition can
be filed before the District Judge within the limits of jurisdiction the industrial
concern carries on the whole or substantial part of its business. This is a
special statute and is distinguishable from section 16-20 of CPC. The
provisions of CPC permits the filing of a petition in a court where even a
infinitesimal part of cause of action were to arise. Hence there arise a huge
distinction between CPC and SFCA.
2. Karnataka State Industrial investment and Development Corp v.S.K.K
Kulkarni brings a situation where under the financial corporation has not yet
commenced the proceedings under section 29 have not yet been commenced
and where the activity is continuing in relation to the properties amenable to
the provisions of section 29 are available, then the petition could be before the
court where the industrial concern is located.
In the present case the entire industrial concern was sold under section 29
and there was no property within the jurisdiction of the courts of Mangalore.

3. Para 8 of the Karnataka State Industrial investment and Development

Corp v.S.K.K Kulkarni says that the proceedings under Section 31 and 32 of
the SFC Act is in realm of the execution proceedings.
4. At para10 it states that it is to obtain a remedy to attach the property sought to
be sold while recovering the debt.
In this particular case, both the properties which are sought to be attached are
situated in Bangalore and not Mangalore
Hence, the above mentioned judgement cannot be applied to all cases relating
to section 31 of the State Financial Corporation Act.