Scope and Applicability

The judiciary has extensively clarified the scope and applicability of Section 32G.

Applicability to Industrial Concerns and Sureties: While the section explicitly refers to amounts due from an "industrial concern," the Supreme Court in Delhi Financial Corpn. and Another v. Rajiv Anand and Others^[1] held that Section 32G applies equally to principal debtors and their sureties. The Court reasoned that the legislative intent did not limit its scope solely to principal debtors, especially given the wide language of the provision and the absence of specific exclusionary wording, unlike amendments made to other sections concerning sureties.^[1] The Delhi High Court in Rajeev Anand v. Union Of India^[12] had earlier noted the wide ambit of Section 32G's language. The Karnataka High Court in S. Madhav v. State Of Karnataka^{[20], [22]} also affirmed that action under Section 32G can be initiated against guarantors.

Nature as an Additional Remedy: The clause "without prejudice to any other mode of recovery" has been consistently interpreted to mean that Section 32G provides an alternative or additional remedy to SFCs. It does not operate as an exclusive mechanism.^{[17], [19], [24]} The Kerala High Court in Amritha Cyber Park Pvt. Ltd. v. Kerala Financial Corpn. & Ors.^{[17], [23]} emphasized that it is optional for the financial institution to apply under Section 32G or proceed through any other available mode. This principle of non-exclusivity of remedies under the SFC Act was also discussed in the context of Sections 29 and 31 in A.P State Financial Corporation v. M/S Gar Re-Rolling Mills And Another.^[4]

Doctrine of Election: The doctrine of election, which generally prevents a party from pursuing multiple inconsistent remedies simultaneously, has a nuanced application here. The Delhi High Court in Pradeep Tyagi v. Delhi Financial Corporation & Ors^[24] held that invoking Section 29 of the SFC Act does not bar subsequent recourse to Section 32G for recovery of remaining dues. Citing A.P State Financial Corporation v. M/S Gar Re-Rolling Mills^[4], the court noted that the doctrine would not apply where the ambit and scope of the remedies are essentially different, and SFCs should be given full protection to recover their dues.

Procedural Requirements and Natural Justice

The procedure under Section 32G, though summary, is subject to certain safeguards.

Role of State Government/Specified Authority: An application must be made by the SFC to the State Government or an authority specified by it. This authority must be "satisfied" that the amount is due. The Supreme Court in Delhi Financial Corpn. v. Rajiv Anand^[1] upheld the appointment of Managing Directors of SFCs as such specified authorities, finding no inherent violation of legal principles. The issuance of a certificate by this authority is a mandatory prerequisite for the Collector to initiate recovery proceedings. The Karnataka High Court in VISHWANT NADAGOUDA v. KARNATAKA STATE FINANCIAL CORPORATION^[21] quashed recovery proceedings initiated under Section 32G precisely because the mandatory procedure, including the issuance of such a certificate, was not followed.

Nature of Inquiry and Satisfaction: The Supreme Court in Delhi Financial Corpn. v. Rajiv Anand^[1] clarified that the process under Section 32G is more akin to an execution-like provision involving administrative calculation and verification of dues, rather than an adjudicative judicial process. This contrasts with the "investigation" contemplated by a District Judge under Section 32(6) of the SFC Act.^[12] The Karnataka High Court in S. Madhav v. State of Karnataka^{[20], [22]} suggested that if the amount due is determinable from the accounts, a separate detailed adjudication akin to Section 31 proceedings might not be a prerequisite for invoking Section 32G.

Principles of Natural Justice: Despite its summary nature, the procedure under Section 32G must adhere to basic principles of natural justice. The Supreme Court in Delhi Financial Corpn. v. Rajiv Anand^[1] affirmed that the process, though not as elaborate as proceedings under Sections 31 and 32, encompasses procedural fairness, including notice and an opportunity to be heard.

Impartiality of the Authority: A key challenge in Delhi Financial Corpn. v. Rajiv Anand^[1] was whether the Managing Director of an SFC, being an interested party, could act as the authority under Section 32G without violating the doctrine of "no man can be a judge in his own cause" (nemo judex in causa sua). The Supreme Court held that the mere appointment of a high-ranking official like a Managing Director does not automatically invoke this doctrine unless there is evidence of personal bias or interest in a specific case, which was found absent.

Nature of Proceedings under Section 32G

Section 32G proceedings are distinct from other recovery mechanisms under the SFC Act.

Execution-like Provision: As established in Delhi Financial Corpn. v. Rajiv Anand,^[1] Section 32G is an execution-like provision designed for the speedy recovery of dues through administrative means.

Distinction from Section 29 and Section 31: Section 29 empowers the SFC to take over the management or possession of the defaulting industrial concern and sell its assets directly. Section 31 provides for an application to the District Judge for various reliefs, including sale of property, enforcement of surety liability, and injunctions, involving a more judicial process.^{[3], [4], [8]} Section 32G, in contrast, involves an administrative application to the State Government for recovery through the Collector as land revenue arrears. As held in Pradeep Tyagi v. DFC,^[24] recourse to Section 29 does not preclude later action under Section 32G for any outstanding balance.

Interplay with Other Laws

The operation of Section 32G often intersects with other statutes.

State Revenue Recovery Acts: Section 32G itself mandates recovery "in the same manner as an arrear of land revenue," inherently linking it to state-specific revenue recovery laws. The Kerala High Court in Amritha Cyber Park^{[17], [23]} elaborated that SFCs could either apply to the government under Section 32G for a certificate to the Collector or, if a notification under the relevant State Revenue Recovery Act (e.g., Section 71 of the Kerala Revenue Recovery Act) exists in their favor, they could directly approach the Collector. Similarly, the Andhra Pradesh High Court in A. Laxmipathi & Anr. v. Andhra Pradesh State Financial Corpn. Ltd.^[19] noted that Section 32G of the SFC Act, read with provisions like Section 52-A of the Andhra Pradesh Revenue Recovery Act, 1864, facilitates the recovery of SFC dues as arrears of land revenue.

Limitation Act, 1963: The applicability of the Limitation Act, 1963 to proceedings under Section 32G has been a subject of judicial consideration. In A.P State Financial Corporation, Ranga Reddy (East) Branch, Hyderabad v. Duvvuru Rajasekhar Reddy,^[18] the Andhra Pradesh High Court considered arguments that the Limitation Act might not apply to Section 32G proceedings due to the absence of an express provision in the SFC Act making it applicable, distinguishing it from other recovery proceedings where limitation might apply. However, this area may require further authoritative pronouncement from the Supreme Court for complete clarity.

Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (DRT Act): The DRT Act, 1993, provides a specialized mechanism for debt recovery for banks and financial institutions. However, Section 34(2) of the DRT Act clarifies that its provisions are in addition to, and not in derogation of, certain enactments, including the SFC Act.^{[17], [23]} Consequently, the remedies available to SFCs under the SFC Act, including Section 32G, remain preserved and are not ousted by the DRT Act.

Companies Act, 1956/2013 (Winding Up): While cases like International Coach Builders Ltd. v. Karnataka State Financial Corpn.^[11] primarily discuss the interplay of Section 29 of the SFC Act with the provisions for winding up under the Companies Act (particularly the pari passu charge of workmen under Sections 529 and 529-A), similar considerations regarding the priority of claims could potentially arise if recovery under Section 32G targets assets of a company in liquidation. The overriding statutory rights under the Companies Act might affect the extent of recovery through the Collector.