Jammu & Kashmir High Court - Srinagar Bench
Furqan Ahmad Rather & Ors vs J&K Ladakh Finacial Corporation & Ors on 28 October, 2025
Author: Sanjay Dhar
Bench: Sanjay Dhar
Sr. No.32
Regular List
IN THE HIGH COURT OF JAMMU & KASHMIR AND LADAKH AT
SRINAGAR
Pronounced on: 28.10.2025
Uploaded on: 30.10.2025
FAO No.13/2022
FURQAN AHMAD RATHER & ORS.
...PETITIONER/APPELLANT(S)
Through: - Mr. M. Sultan, Advocate.
Vs.
J&K LADAKH FINACIAL CORPORATION & ORS.
...RESPONDENT(S)
Through: - Mr. Allau-ud-din Ganai, AAG.
CORAM: HON'BLE Mr. SANJAY DHAR, JUDGE
JUDGMENT(ORAL)
1) The present appeal is directed against order dated
29.06.2022 passed by the learned District Judge, Srinagar,
whereby an order of attachment with respect of security
comprising land measuring 04 marlas and 167 sft. under
Khewat No.100, Khata No.489 along with house situated
thereon at Mouzah Kursoo Rajbagh District Srinagar, has
been made for realising the outstanding amount of
Rs.19,41,927/.
2) It seems that the respondent State Financial
Corporation had filed an application under Section 31 and 32
of the State Financial Corporation Act, 1951 (for short "the
Act") before the Court of learned Principal District and
Sessions Judge, Srinagar, inter alia, seeking an order for
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attachment and sale of aforesaid property which was offered
as security by the borrowers/appellants to the respondent-
Corporation. It seems that vide order dated 19.06.2019, the
learned District Judge sought a report from the Collector,
District Srinagar, with regard to present status of the
aforesaid property situated at Kursoo Rajbagh. A show cause
notice was also issued to the appellants/borrowers asking
them to show cause as to why the aforesaid property should
not be attached in terms of Section 31 and 32 of the Act.
3) When the appellants/borrowers appeared before the
court below, some negotiations with regard to settlement
came to take place between the parties and ultimately the
matter was placed before the Lok Adalat on 14.05.2022.
However, the settlement could not be reached, whereafter the
matter was posted to 29.06.2022. On the said date, the
learned trial court, after recording that the appellants herein
were not present before the court, proceeded exparte against
them and passed the impugned order directing attachment of
the aforesaid property.
4) The appellants have challenged the impugned order,
primarily, on the ground that the same has been passed
without adherence to the procedure prescribed under Section
32 of the Act.
FAO No.13/2022 2|Page
5) Heard and considered.
6) Section 31 of the Act makes special provision for
enforcement of claims of Financial Corporation. Clause (a) of
sub-section (1) of Section 31 of the Act provides that Financial
Corporation may apply to the District Judge concerned for
certain reliefs which includes the relief pertaining to an order
for sale of the property pledged, mortgaged, hypothecated or
assigned to the Financial Corporation as security for the loan
or advance.
7) Section 32 of the Act provides the procedure to be
followed by the District Judge in respect of applications under
Section 31. Sub-Sections (1) to (6) of Section 32, which are
relevant to the present controversy, are reproduced as under:
(1) When the application is for the reliefs
mentioned in clauses (a) and (c) of sub-section
(1) of section 31, the district judge shall pass an
ad interim order attaching the security, or so
much of the property of the industrial concern
as would on being sold realise in his estimate an
amount equivalent in value of the outstanding
liability of the industrial concern to the Financial
Corporation, together with the costs of the
proceedings taken under section 31, with or
without an ad interim injunction restraining the
industrial concern from transferring or
removing its machinery, plant or equipment.
(1-A) When the application is for the relief
mentioned in clause (aa) of sub-section (1) of
section 31, the district judge shall issue a notice
calling upon the surety to show cause on a date
to be specified in the notice why his liability
should not be enforced.
(2) When the application is for the relief mentioned
in clause (b) of sub-section (1) of section 31, the
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district judge shall grant an ad interim
injunction restraining the industrial concern
from transferring or removing its machinery,
plant or equipment and issue a notice calling
upon the industrial concern to show cause, on a
date to be specified in the notice, why the
management of the industrial concern should
not be transferred to the Financial Corporation.
(3) Before passing any order under sub-section (1)
or sub-section (2) 1[or issuing a notice under
sub-section (1A) the district judge may, if he
thinks fit, examine the officer making the
application.
(4) At the same time as he passes an order under
sub-section (1), the district judge shall issue to
the industrial concern or to the owner of the
security attached a notice accompanied by
copies of the order, the application and the
evidence, if any, recorded by him calling upon it
or him to show cause on a date to be specified
in the notice why the ad interim order of
attachment should not be made absolute or the
injunction confirmed.
(4A) If no cause is shown on or before the date
specified in the notice under sub-section (1A)
the district judge shall forthwith order the
enforcement of the liability of the surety.
(5) If no cause is shown on or before the date
specified in the notice under sub-sections (2)
and (4), the district Judge shall forthwith make
the ad interim order absolute and direct the sale
of the attached property or transfer the
management of the industrial concern to the
Financial Corporation or confirm the injunction.
(6) If cause is shown, the district judge shall
proceed to investigate the claim of the Financial
Corporation in accordance with the provisions
contained in the Code of Civil Procedure, 1908,
(5 of 1908) in so far as such provisions may be
applied thereto.
8) From a perusal of sub-section (1) quoted above, it is
clear that when an application is made by the Financial
Corporation for the relief mentioned in clause (a) of sub-
section (1) of Section 31, the District Judge has to pass an ad-
FAO No.13/2022 4|Page
interim order attaching the security. As per sub-section (3)
quoted above, before passing any order under sub-section (1),
the District Judge may, if he thinks fit, examine the officer
making the application.
9) Sub-section (4) of Section 32 of the Act provides that at
the time of passing an order under sub-section (1), the
District Judge has to issue to the owner of the security
attached a notice accompanied by copies of the order, the
application and the evidence, if any, recorded by him calling
upon him to show cause on a date to be specified in the notice
why the ad interim order of attachment should not be made
absolute. As per sub-section (5) quoted above, if no cause is
shown, the District Judge has to make the ad interim order
absolute and direct the sale of the attached property.
10) Now coming to the facts of the present case, the learned
District Judge, while passing the attachment order dated
29.06.2022, has not adhered to the provisions contained in
sub-section (4) of Section 32 of the Act and he has straightway
proceeded to pass an absolute order of attachment of the
security without first passing an ad-interim order of
attachment calling upon the owner of the attached property
to show cause against the ad interim order of attachment.
Thus, the impugned order of attachment passed by the
learned District Judge is contrary to the procedure prescribed
FAO No.13/2022 5|Page
under sub-sections (1), (4) and (5) of Section 32 of the Act,
hence the same is not sustainable in law.
11) In view of what has been discussed hereinabove, the
appeal is allowed and order dated 29.06.2022 passed by the
learned District Judge, Srinagar, is set aside. The learned
District Judge is directed to proceed further in the matter
after strictly adhering to the procedure prescribed under
Section 32 of the Act.
12) Trial court record along with a copy of this order be sent
back.
(SANJAY DHAR)
JUDGE
Srinagar
28.10.2025
"Bhat Altaf"
Whether the judgment is reportable: Yes/No
FAO No.13/2022 6|Page
