STATE BANK OF INDIA Vs. JAIPUR UDYOG

JUDGEMENT

(1.) The plaintiff, State Bank of India, has brought a suit for the recovery of Rs. 5,45,37,042.73p against Jaipur Udyog Limited and others. Among other defendants there arc guarantors who have been sued on the basis of their guarantee, Jaipur Udyog Limited being the principal debtory Jaipur Udyog Ltd. is a company based in Rajasthan ( the Company). Their registered office is at Sawai Madhopur in Rajasthan. This company has been declared by the State of Rajasthan as a "Relief Undertaking" under section 3 of the Rajasthan Relief Undertakings (Special Provisions) Act, 1961. The Company will hereinafter be referred to as a "Relief Undertaking". The Rajasthan Relief. Undertakings (Special Provisions) Act, 1961 will be hereinafter referred to as the Rajasthan Act. Section 4 of the Act inter alia provides :

(2.) Basing themselves on this provision of the Rajasthan Act, the company and the guarantors claim that the suit is liable to be stayed against them. The real question is whether the Rajasthan Act and in particular section 3 of the Act has any extra-territorial force. The learned Judge (R. N. Aggarwal before whom this question arose noticed that, there was a conflict of judicial opinion on this point. The Allahabad High Court in M/s. Jaipur Udyog Ltd. vs. Star Paper Mills Ltd., 1981 All L. J. 121(1) has taken the view that the Act has no extra-territorial applicability. On the other hand, the Punjab and Haryana High Court in Jaipur Udyog Ltd. vs. The Punjab University and another, 1980 P.L.R. 597(2) has held to the contrary. The learned judge thought that the question being of general importance ought to be decided by a larger bench. He has referred to us two questions :

(3.) The issue to be decided is whether the Rajasthan Act has any applicability outside the territory of the State of Rajasthan. The answer to this question is contained in the Rajasthan Act itself. Section l(2) says that the Act "extends to the whole of the State of Rajasthan". This is an explicit declaration by the legislature which has passed the Act. The framers of the Act did not intend that it should have any extra territorial application.