M/S MICRO HOTEL P.LTD. Vs M/S HOTEL TORRENTO LIMITED .
Bench: K.S. RADHAKRISHNAN,DIPAK MISRA
Case number: C.A. No.-006347-006347 / 2012
Diary number: 37281 / 2011
Advocates: SURUCHII AGGARWAL Vs
NIRNIMESH DUBE
Page 1
1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 6347 OF 2012
[Arising out of SLP (Civil) No. 32610 of 2011]
M/s Micro Hotel P. Ltd. .. Appellant
Versus
M/s Hotel Torrento Limited & Ors. .. Respondents
WITH
CIVIL APPEAL NO. 6348 OF 2012 [Arising out of SLP (Civil) No. 1125 of 2012]
J U D G M E N T
K. S. RADHAKRISHNAN, J.
1. Leave granted.
2. Common questions arise for consideration in both these
appeals and hence we are disposing of both the appeals by a
common judgment.
Page 2
2
3. We are, in these appeals, called upon to consider the question
whether the Division Bench of the Orissa High Court was justified
in directing Orissa State Financial Corporation (OSFC) and
Industrial Promotion and Investment Corporation of Odisha Ltd.
(IPICOL) to offer afresh the benefit of One-Time Settlement Scheme
(OTS) to M/s Hotel Torrento Limited, 1st respondent herein, which
had earlier been offered vide communications’ dated 18.3.2006 and
3.4.2006, but was not availed off by complying with the terms and
conditions stipulated therein. The further question is whether the
High Court was right in ordering dispossession of the appellant
(auction purchaser) and put 1st respondent back in possession.
4. This case has a chequered history, therefore, it is necessary to
examine the facts at some length to appreciate the real controversy
between the parties and to reach a proper and just decision, on
facts as well as on law. OSFC, 2nd respondent herein, disbursed a
term loan of Rs.51,27,200/- and loan in lieu of subsidy of Rs.23.30
lakhs to 1st respondent for establishing a hotel project at Janugarji,
Balasore in the State of Odisha. The project was jointly financed by
OSFC and IPICOL, for which 1st respondent had entered into a loan
Page 3
3
agreement and mortgaged the title deeds and extended a registered
lease deed dated 8.2.1988. Lease was valid for a period of 25 years
with a renewable clause. There was default in repayment of the
loan amount, which led OSFC issuing a demand notice to 1st
respondent on 7.2.1991, followed by a recall notice dated
30.11.1991. The respondent was also served with a show cause
notice dated 16.12.1994 followed by recall notices dated 4.1.1995
and 13.3.1996.
5. 1st respondent then filed a Writ Application No. 2513 of 1996
on 20.3.1996 before the High Court of Orissa to quash the recall
notice dated 13.3.1996 and for rehabilitation. The High Court
disposed of that writ application with a direction to respondents 2
and 5 (OSFC & IPICOL) to consider the request of 1st respondent for
rehabilitation package. On 9.3.2006, an OTS scheme was
introduced by OSFC and 1st respondent applied for settlement of its
loan account under that scheme. On 18.3.2006, the benefit of the
scheme was extended to 1st respondent by OSFC and agreed in
principle to settle the term loan account on payment of
Page 4
4
Rs.1,16,21,200/- on or before 18.4.2006, subject to certain terms
and conditions which were as follows:
1. The settlement amount shall either be paid in one lump sum on or before Dt. 18.04.06 (within 30 days of this settlement order) with 3% discount on the settlement amount.
OR Installments as per the sequence mentioned below:
a) Up front payment of Rs.23,61,400.00 (Rupees twenty three lakh sixty one thousand four hundred only) (i.e.25% of settlement amount less initial deposit) shall be paid along with the acceptance letter (format enclosed herewith) on or before Dt. 16.04.06, within 30 days.
b) The balance settlement amount of Rs.87,15,900.00 (75%) shall be paid on or before Dt. 15.06.06.
2. Any other expenses chargeable/incurred/debited in the loan accounts towards misc. expenses on L/A with effect from Dt. 11.07.05 (date of application) till the final settlement of loan accounts shall be paid by you along with the settlement amount.
3. It may be noted that (NDC) can only be issued in your favour after liquidation of all the loans availed.
4. You shall have to submit the consent/decree/permission/withdrawal order (wherever applicable) before issue of No Due Certificate (NDC).
Page 5
5
In case of failure on payment of the aforesaid amount within the stipulated dates, the one time settlement of dues considered in your favour including relief and concession thereon shall be withdrawn without further reference to you.”
6. IPICOL also approved the request for OTS at Rs.45 lacs with
waiver of Rs.1,88,21,099 subject to certain terms and conditions,
which were as follows:
“(a) The OTS amount is Rs.45 lacs (Rupees forty-five lacs only) and the resultant sacrifice(s) by way of waiver is Rs.1,88,21,099 (Rupees one crore twelve lakhs seventeen thousand five hundred twenty nine only on account of funded interest and Rs.76,03,570/- (Rupees seventy six lakhs three thousand five hundred seventy only) on account of overdue interest.
(b) The OTS amount shall be paid within a period of 1 year from the date of this letter as per the schedule given below:
Rs.6,75,000 towards 25% of upfront payment (including initial payment made by you) within 30 days and balance 75% amounting to Rs.33,75,000/- within a period of 1 year in 4 quarterly installments, carrying simple interest @ 14% p.a. on reducing balance.
(c) The above OTS is subject to cancellation, if it is found that you have provided incorrect details and information or suppression of any material facts for getting the sanction of OTS. The decision of IPICOL is final in this regard.
Page 6
6
(d) In case of non payment, IPICOL shall have the right of requital.”
7. We notice that despite of waiver of Rs.2,26,85,800 and
Rs.1,88,21,099 by OSFC and IPICOL respectively, 1st respondent
did not comply with the terms and conditions of the OTS scheme,
consequently, OSFC and IPICOL informed 1st respondent that they
had withdrawn OTS offer.
8. We find, on 31.3.2007, yet another OTS scheme of 2007 was
launched by OSFC and, again, an offer was made to 1st respondent
to avail of the benefit of that scheme. OSFC, on 4.10.2007,
requested 1st respondent to pay the settlement amount of
Rs.1,16,21,200 with delayed payment of interest within 10 days. 1st
respondent did not comply with that request as well, consequently,
OSFC, on 28.12.2007, withdrew the offer and advised 1st
respondent to pay the entire dues as per the agreement, failing
which 1st respondent was informed that recovery proceedings would
be initiated for realization of the dues. Later, OSFC sent a demand
notice dated 22.8.2008 stating that the total loan outstanding as on
31.12.2007 was Rs.4,52,94,691 and 1st respondent was called upon
Page 7
7
to pay the amount, failing which it was informed that recovery
proceedings would be initiated.
9. 1st respondent then, on 10.09.2008, filed a Writ Petition No.
13376 of 2008 before the Orissa High Court to quash the demand
notice dated 22.08.2008 and for a direction to consider its claim
under the OTS scheme. On 31.10.2008, OSFC had, however,
issued a notice recalling the entire amount along with interest and
informed 1st respondent that in case of failure to make payment,
further action would be taken under Section 29 of the State
Financial Corporation Act (SFC Act). Writ Petition came up for
hearing before the Orissa High Court on 4.12.2008, and the Court
directed OSFC to maintain status-quo and on 7.4.2010, the Court
passed an ad-interim order directing 1st respondent to inform as to
whether they were willing to deposit the amount or Rs.1 Crore for
consideration of their claim under OTS. On 26.11.2008, IPICOL
also made a request to OSFC to initiate proceedings under Section
29 of SFC Act and to take over the assets of the unit.
10. Writ Petition No. 13376 of 2008 came up for final hearing on
21.4.2010, and the Court enquired whether 1st respondent was
Page 8
8
willing to pay Rs.1 Crore, as suggested by the Court on 4.12.2008.
The Court was informed that a petition had been filed on 21.4.2010
along with a bank draft of Rs.17,50,000 drawn in favour of the
Registrar, Orissa High Court. 1st respondent had also made a
request to the Court for time up to 26.2.1010 so as to pay the
amount of Rs.1 Crore. The Court ordered the return of the draft to
the 1st respondent since the amount was due to both OSFC and
IPICOL. The Court was informed by OSFC that 1st respondent had
not availed of the earlier proposal for OTS and no new OTS scheme
was available, still the Court passed the following order:
“The learned counsel for the Corporations submits that the earlier proposal for one-time settlement had been considered by both the Corporations and the matter had been settled. But the petitioner did not pay the amount for which it had to be cancelled and, at present there is no scheme for one-time settlement.
Be that as it may, the Petitioner having defaulted in payment of huge amount we dispose of the writ petition directing that the petitioner may deposit a sum of Rs.50,00,000/- (Rupees fifty lakhs) each before each of the two Corporations by 20.6.2010 and applications shall be filed before both the Corporation for settlement of the dues. If any such application is filed the same shall be considered on its own merit by both the Corporations either separately or jointly provided there is any scheme available for such settlement by the Corporations .
Page 9
9
In the event, the Petitioner fails to deposit the aforesaid amount by 20.6.2010, both the Corporations shall be at liberty to take such action as permissible under law under the State Financial Corporation Act .”
(emphasis added)
11. 1st respondent did not comply with even the above mentioned
order. OSFC then issued a registered notice dated 8.7.2010 to 1st
respondent pointing that since it had failed to comply with the
above mentioned order of the Court, OSFC would be at liability to
initiate proceeding under the SFC Act. The 1st respondent was,
therefore, asked to liquidate the entire outstanding amount as on
30.6.2010, failing which 1st respondent was informed that OSFC
would be initiating action under Section 29 of SFC Act. Later,
OSFC issued a seizure order dated 2.8.2010 of the property and
that order was executed on 15.9.2010 and the possession of the
unit was taken over “as is where is” basis.
12. OSFC, during seizure, got prepared a valuation report dated
17.09.2010 from its panel valuer. Based upon that valuation
report, off-set price of the unit was fixed at Rs.1,75,45,000. Later,
the sale notice was published in the Daily newspapers, Samaj and
Page 10
10
the New Indian Express on 18.9.2010. On 21.9.2010, again, OSFC
issued a notice to 1st respondent to clear the outstanding dues with
up to date interest of Rs.6,18,62,238/- collected up to 30.6.2010
before Default-cum-Disposal Advisory Committee (DDAC) on
29.9.2010 so also to get the assets released. 1st respondent was
informed of the sale notice published in the daily newspapers
requesting to clear up the dues before the DDAC meeting scheduled
to be held on 29.9.2010. 1st respondent was also informed that in
the event of non-payment of dues, it could still match or better the
highest bid price. 1st respondent, however, did not take any steps
to clear the outstanding dues, but preferred a Review Petition No.
99 of 2010 for reviewing the order passed by the Orissa High Court
on 21.4.2010 in Writ Petition No. 13376 of 2008. The Court rejected
the review petition on 22.9.2010. The Court, after noticing that 1st
respondent had not deposited any amount in pursuance to its order
dated 21.4.2010, held as follows:
“Apart from the above, from the conduct of the petitioner, we find that the petitioner did not pay any amount when the account was settled under the scheme earlier and waited for another demand notice. Even in the writ petition though the petitioner was directed to deposit Rs.50,00,000/- (Rupees fifty lakhs) each with the two Corporations, the same was not
Page 11
11
complied with. In course of hearing of this review petition, the petitioner has offered only Rs.40,00,000/- (Rupees forty lakhs) to be deposited with the two Corporations against the outstanding dues of more than seven crore. We are, therefore, of the view that the petitioner has no intention to clear the dues of the two Corporations which had financed for establishing a hotel. In the meantime possession of the said hotel has been taken by OSFC under section 29 of the State Financial Corporation Act and the same has been advertised for sale . The sale notice, a copy whereof was produced before us shows that the loanee can appear before the DDAC on the date fixed i.e. 29th of September, 2010 for the purpose of getting release the seized asset.”
(emphasis added)
13. 1st respondent then submitted a proposal to DDAC, which was
considered by DDAC on 29.9.2010 and the order was
communicated to the 1st respondent.
14. DDAC, in pursuance to the auction notification in the
newspapers, received altogether 9 bids and, after negotiations with
the auctioneers, the offer of the appellant was found to be the
highest at Rs.774 lacs, which was accordingly accepted OSFC
delivered the possession of the land, building and
machinery/furniture and fixtures to the appellant vide possession
letter dated 11.10.2010.
Page 12
12
15. 1st respondent, as already stated, then approached the Orissa
High Court and filed the present writ petition No. 17711 of 2010 to
quash the cancellation of the OTS dated 28.12.2007, sale letter
dated 1.10.2010 and also for other consequential reliefs, which
were granted by the Division Bench of the Orissa High Court, the
operative portion of which reads as follows:
“For the reasons stated supra the writ petition is allowed. Rule issued. The letters dated 28.12.2007 and 1.10.2010 (Annexure-5 & Annexure-8 series) cancelling the proposal for OTS and rejecting the representation dated 29.9.2010, the public sale notice dated 19.9.2010 (Annexure-6), the sale letter dated 1.10.2010 (Annexure-8 series), the sale agreement dated 11.10.2010 (Annexure-A/5) and the alleged delivery of possession are hereby quashed. The Orissa State Financial Corporation and IPICOL are directed to place fresh demand with the petitioner, within four weeks from the date of receipt of this order, with regard to the amount of OTS offered in the communications dated 18.3.2006 and 3.4.2006 of the OSFC and IPICOL along with interest at the rate of 9% on the said amount from that date till the date of payment or at the rate of interest, stipulated under the OTS Scheme, 2007 in case of similarly placed persons. The petitioner is directed to make payment within six weeks thereof. Thereafter the possession of the property shall be delivered to the petitioner within a reasonable time. If the petitioner fails to deposit the amount, as directed, the OSFC and IPICOL are at liberty to proceed in the matter in accordance with law.”
Page 13
13
16. Shri C.A. Sundram, learned senior counsel appearing for the
appellant (auction purchaser) submitted that the High Court has
completely misread and misunderstood the facts of the case which
resulted in incorrect reasoning, leading to wrong conclusions.
Learned senior counsel also submitted that the judgment in writ
petition No. 13376 of 2008 as well as the order in Review Petition
No. 99 of 2010 had attained finality and, consequently, the orders
dated 28.12.2007 and 01.10.2010 cancelling the proposal for OTS
cannot be questioned. Learned senior counsel also pointed out that
the conditions stipulated in the above mentioned orders were also
not complied with by 1st respondent, consequently, the only course
open to 1st respondent was to pay the entire amount demanded by
OSFC and IPICOL. The 1st respondent did not pay the amount
demanded, hence, Section 29 of SFC Act was rightly invoked.
17. Ms. Shubhranshu Padhi, learned counsel appearing for the
appellant in SLP(C) No. 1125 of 2012 fully supported the arguments
advanced by the learned senior counsel Shri C.A. Sundaram and
explained the various steps taken by OSFC which resulted in
invoking Section 29 of SFC Act.
Page 14
14
18. Shri Ashok Panigrahi, learned counsel appearing on behalf of
the respondent, however, supported the judgment of the Hon’ble
Court and submitted that there is no justification in interfering with
the judgment of the Hon’ble Court, since the conditions laid down
in OTS Scheme were onerous and that procedures were not followed
for the sale of the mortgaged properties.
19. We express our strong disapproval of the manner in which the
Division Bench of the High Court has virtually sat in judgment over
the judgment of another co-ordinate Bench. We are of the view
that the Division Bench of the High Court overlooked some vital
facts which have considerable bearing on the outcome of this
dispute, consequently, reopened a lis which has attained finality,
due to non-compliance of the various directions issued by the co-
ordinate Bench of the High Court. Failure to comply with the
various directions issued by the co-ordinate Bench in Writ Petition
No. 13376 of 2008 and the order passed in Review Petition No. 99
of 2010 was completely overlooked by the Division Bench.
Page 15
15
Appreciation of Facts
20. Litigations in courts are won or lost mainly on facts more on
law. Duty is cast on all the parties who appear in a court of law to
place the correct facts so that the court can draw correct inferences
which enable it reach a logical, reasonable and just conclusion.
Wrong facts lead a Court to wrong reasoning and wrong
conclusions. Duty is also cast on the Court to take note of the facts
which are correctly placed. Wrong appreciation of facts leads to
wrong reasoning and wrong conclusions and justice will be the
casualty. Deciding disputes involves, according to Dias on
Jurisprudence, knowing the facts, knowing the law applicable to
those facts and knowing the just way of applying the law to them.
If any of the above mentioned ingredients is not satisfied, one gets a
wrong verdict. A Judge has to reason out truth from falsehood,
good from evil which enables him to deduce inferences from facts or
propositions. Facts are correctly stated in the instant case but the
Division Bench wrongly understood those facts and wrongly applied
the law, consequently, wrong inferences were drawn and ultimately
reached wrong conclusions.
Page 16
16
21. Following are the facts and conclusions overlooked by the
Division Bench:
(1)OSFC introduced an OTS scheme in the year 2006 and 1st
respondent had applied for settlement of its loan account
under that scheme. On 18.03.2006, the benefit of the
scheme was extended to 1st respondent and OSFC agreed in
principle to settle the term loan account on payment of
Rs.1,16,21,200/-, subject to certain conditions. IPICOL
also approved the request of 1st respondent for OTS at Rs.45
lacs with waiver of Rs.1,88,21,099/-, subject to certain
conditions.
(2)OSFC and IPICOL, therefore, waived an amount of
Rs.2,26,85,800/- and Rs.1,88,21,099 and gave the benefit
of the OTS scheme to 1st respondent, subject to few other
conditions like period of payment, interest etc.
(3)The 1st respondent had failed to comply with those
conditions imposed, consequently, OSFC and IPICOL had to
withdraw the benefits extended under the OTS scheme.
(4)OSFC lodged another OTS scheme in the year 2007.
Opportunity was given to 1st respondent again to avail of the
Page 17
17
benefit of that scheme. OSFC on 04.10.2007 requested 1st
respondent to pay the settlement amount of
Rs.1,16,21,200/- with delayed payment of interest within
10 days. The benefit of the said scheme was not availed of
by 1st respondent, consequently OSFC on 28.12.2007
withdrew that offer as well and advised 1st respondent to
pay the entire dues as per the agreement, failing which it
was informed that recovery proceedings would be initiated.
(5)1st respondent filed a Writ Petition No.13376 of 2008 to
quash the demand notice dated 22.08.2008 where it was
pointed out by OSFC that 1st respondent had not availed of
all the benefits of the OTS scheme extended by the
Corporation, consequently they had to cancel the said
scheme. Further, it was also stated that in spite of public
notification and their intimation and frequent requests, 1st
respondent did not apply for the OTS 2007 Scheme.
(6)When Writ Petition came up for hearing on 07.04.2010, the
Court had enquired whether 1st respondent would be still
willing to deposit the amount of Rs. 1 crore for
consideration of their claim under OTS. The matter again
Page 18
18
came up for hearing before the Division Bench on
21.04.2010 on which the Court disposed of the writ petition
directing 1st respondent to deposit Rs.50,00,000/- each
before each of the two Corporations by 20.6.2010, failing
which it was ordered that the Corporations would be at
liberty to take such action as permissible under law under
the State Financial Corporation Act.
(7)OSFC issued a loan recall notice to 1st respondent on
8.7.2011, since it did not comply with the directions in WP
No. 13376 of 2008 with a request to pay the entire
outstanding amounts within 30 days, failing which the 1st
respondent was informed that action would be taken under
Section 29 of SFC Act.
(8)OSFC issued a seizure order on 02.08.2010 and during
seizure, a valuation report dated 17.09.2010 was prepared.
Based upon the valuation report, off- set price of the unit
was fixed at Rs.1,75,45,000/-. Sale notice was published in
the Daily newspapers “Samaj” and the “New Indian
Express” on 18.09.2010. On 21.09.2010, again OSFC
Page 19
19
issued a notice to 1st respondent to clear the outstanding
dues with up-to-date interest of Rs.6,18,62,238/-.
(9)Review Petition No. 99 of 2010 filed by 1st respondent in writ
petition No. 13376 of 2008 came up for hearing before the
Division Bench on 22.9.2010. While dismissing the Review
Petition, the Bench found that 1st respondent had no
intention to clear the dues of the Corporations which had
financed for establishing a hotel. The court also noticed
that the mortgaged properties were taken over by OSFC
invoking Section 29 of SFC Act and advertised for sale.
(10) 1st Respondent filed a representation before DDAC on
29.9.2010 which was rejected and the order of rejection was
communicated vide letter dated 1.10.2010 and 1st
respondent was informed that the assets were already taken
over under Section 29 of SFC Act on 15.9.2010 and was put
to public auction, with due intimation.
(11) Auction was concluded as per rules and ultimately, the
appellant was found to be the highest bidder at
Rs.774,00,000 which was accepted and sale letter dated
Page 20
20
1.10.2010 was issued to the appellant, who had paid the
entire amount by 11.10.2010.
(12) Sale Memo, Agreement to Sale was executed with the
appellant on 11.10.2010 and possession was handed over
to the appellant on that date.
(13) 1st respondent then on 11.10.2010 filed the present WRIT
Petition No. 17711 of 2010.
22. We are of the view that the above mentioned facts had
considerable bearing for rendering a just and proper judgment in
writ petition No. 17711 of 2010, but those vital facts were
completely overlooked by the Division Bench and it had also ignored
the binding judgment of the co-ordinate Bench rendered in writ
petition No. 13376 of 2008 and the order passed in Review Petition
No. 99 of 2010 and the steps taken by the Corporations as
permitted by the Division Bench.
23. A 3-Judge Bench of this Court in Haryana Financial
Corporation and Another v. Jagdamba Oil Mills and Another,
(2002) 3 SCC 496 while dealing with the scope of Section 29 of SFC
Act held as follows:
Page 21
21
“6. The Corporation as an instrumentality of the State deals with public money. There can be no doubt that the approach has to be public oriented. It can operate effectively if there is regular realization of the instalments. While the Corporation is expected to act fairly in the matter of disbursement of the loans, there is corresponding duty cast upon the borrowers to repay the instalments in time, unless prevented by unsurmountable difficulties. Regular payment is the rule and non-payment due to extenuating circumstances is the exception. If the repayments are not received as per the scheduled time frame, it will disturb the equilibrium of the financial arrangements of the Corporations. They do not have at their disposal unlimited funds. They have to cater to the needs of the intended borrowers with the available finance. Non-payment of the instalment by a defaulter may stand on the way of a deserving borrower getting financial assistance.”
24. The Court again reminded of the fact that the fairness
required of the Corporations could not be carried to the extent of
disabling them from recovering what is due to them and held as
follows:
“13. …….The Corporation is an independent autonomous statutory body having its own constitution and rules to abide by, and functions and obligations to discharge. As such in the discharge of its functions, it is free to act according to its own light. The views it forms and decisions it takes are on the basis of the information in its possession and the advice it receives and according to its own perspective and calculations. Unless its action is mala fide, even a wrong decision by it is not open to challenge. It is not
Page 22
22
for the courts or a third party to substitute its decision, however, more prudent, commercial or businesslike it may, for the decision of the Corporation…...”
25. The Court while explaining and over-ruling Mahesh Chandra
v. Regional Manager, U.P. Financial Corporation and Others,
(1993) 2 SCC 279 held as follows:
“Indulgence shown to chronic defaulter would amount to flogging a dead horse without any conceivable result being expected. As the facts in the present case show not even a minimal portion of the principal amount has been repaid. That is a factor which should not have been lost sight by the courts below.It is one thing to assist the borrower who has intention to repay, but is prevented by insurmountable difficulties in meeting the commitments. That has to be established by adducing material. In the case at hand factual aspects have not even been dealt with, and solely relying on the decision in Mahesh Chandra's cases (supra), the matter has been decided.”
26. We are of the view that the principles laid down by this Court
in the above judgments apply to the case on hand, if the facts are
properly appreciated. The Division Bench, in the impugned
judgment, took the view that the Corporations had not followed the
guidelines laid down by this Court in Kerala Financial
Corporation v. Vincent Paul and Another, (2011) 4 SCC 171. In
Page 23
23
our view, this is factually incorrect. This Court, in the above
judgment, indicated that the authority concerned should serve to
the borrower a notice of 30 days for sale of immovable assets. In
this case, Corporation had issued the recall notice dated
08.07.2010 with a request to pay the entire outstanding dues
within 30 days otherwise, failing which, it was stated that action
under section 29 of SFC Act would be initiated against the 1st
respondent. Seizure order was issued by the Corporation and the
entire assets of the unit were taken over under Section 29 of the Act
on 15.09.2010 which was after the expiry of 30 days from the date
of notice dated 08.07.2010. Therefore the guidelines laid down in
the above referred judgment have also been complied with. Even
otherwise, the guidelines issued by this Court in Vincent Paul case
would operate only prospectively and that too depends upon the
facts and circumstances of each case.
27. We have found that the procedure laid down under Section 29
of SFC Act has been followed by the Corporations. The independent
valuer submitted his report on 17.09.2010 and the off-set price of
the unit was fixed after getting it valued by an independent valuer.
Page 24
24
It was based upon the valuation report that the off-set price of the
unit was fixed at Rs.1,77,45,000/- on 17.09.2010. Sale notice was
published in the News Papers on 18.09.2010 and the auction was
conducted on 29.09.2010. In our view, the High Court has
committed an error in holding that off-set price of property was not
valued before the conduct of auction and that there was no due
publication of auction. Sale notice, it is seen, was published in the
“Samaj” a vernacular paper and also in the “New India Express” a
widely circulated English newspaper on 18.09.2010 and the
Corporation had received nine offers and after protracting
negotiations with all the bidders, the offer of the appellant was
accepted being the highest. The Corporation before putting the
appellant in possession again issued a notice dated 21.9.2010 to 1st
respondent enquiring whether he would match the offer. 1st
Respondent did not avail of that opportunity as well. It is under
such circumstances that sale letter dated 1.10.2010 was issued to
the appellant with a copy to all the
Directors/Promoters/Guarantors of 1st respondent company. The
appellant paid the balance consideration of Rs.5,65,20,000 on
Page 25
25
11.10.2010 and the Sale Memo was extended on that date and the
property was also delivered.
28. We find no illegality in the procedure adopted by the
Corporation, since 1st respondent had failed to comply with the
directions issued by the co-ordinate Bench of the Orissa High Court
in writ petition No. 13376 of 2008, which gave liberty to the
Corporations to proceed in accordance with Section 29 of SFC Act.
We are of the view that the Division Bench of the High Court had
overlooked those vital facts as well as the binding judgment of a co-
ordinate Bench in writ petition No. 13376 of 2008 and had wrongly
reopened a lis and issued wrong and illegal directions.
29. In the said circumstances, we are inclined to allow both the
appeals and set aside the judgment of the Division Bench of the
Orissa High Court. However, in the facts and circumstances of the
case, there will be no order as to costs.
……………….……………………..J. (K. S. RADHAKRISHNAN)
Page 26
26
………………………………….…..J. (DIPAK MISRA)
New Delhi September 6, 2012