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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.

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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

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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

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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).

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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.

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(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

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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

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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  .

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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

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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

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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.

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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.”

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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.

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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.

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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.

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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

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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

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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

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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

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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:

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“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

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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

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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.

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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

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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)

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………………………………….…..J. (DIPAK MISRA)

New Delhi September 6, 2012