Orissa High Court
Bhabagrahi Panigrahi And Anr. vs Union Of India (Uoi) And Ors. on 1 May, 1989
Equivalent citations: AIR1990ORI42, AIR 1990 ORISSA 42
Author: D.P. Mohapatra
Bench: D.P. Mohapatra
JUDGMENT V. Gopalaswamy, J.
1. The petitioner No. 1 Bhabagrahi Panigrahi is the Managing Director of M/s. Premier Industrial Salts and Chemicals (Pvt.) Limited (petitioner No. 2), a company incorporated under the Indian Companies Act, 1956 (hereinafter referred to as the Company') carrying on business in the manufacture and sale of Sodium Dichromate by establishing a plant at Jagatpur in Cuttack district. The petitioners Nos. 1 and 2 have filed this writ application Under Article 236 of the Constitution of India challenging the action of opposite party No. 2, the Orissa State Financial Corporation (hereinafter referred to as 'the Corporation'), in taking over the possession of the Industrial Concern of the petitioner-Company with the right to sell in exercise of its power under Section 29 of the State Financial-Corporation Act, 1951-(hereinafter referred to as 'the Act') in pursuance of the notice under Annexure-1 and handing over the possession of the same to the opposite party No. 3 Ms. Kalinga Chemicals, a partnership firm (hereinafter referred to as 'the Firm'), of which opposite party No. 4 S. K. Routray is a partner. Opposite party No. 1 is the Union of India.
2. According to the petitioners, the following chronology of events have ultimately driven them to file the present writ petition :
On 16-9-1971 the petitioner-Company applied to the Corporation (opposite party No. 2) for a loan of Rs. 10 lakhs and the loan was sanctioned by the Corporation of 5-6-1972. On 2-1-1973 petitioner No. 2 got lease of Government land masuring Ac.39.39 dec. in Mouza Khaira in Cuttack district for 99 years with a right to mortgage the same. On 5/6-1-1973 the petitioner No. 2 received the loan amount of Rs. 10 lakhs and executed and registered an English mortgage bond in favour of the Corporation mortgaging the said Ac.39.39 dec. of leasehold land agreeing to repay the principle sum of Rs. 10 lakhs, together with interest at the rate of 10 per cent per annum, with quarterly rests, in 9 annual instalments of equal value, the first instalment being payable on 31-3-1974 and the last instalment payable on 31-12-1982. On 30-4-1975 and 14-5-1975 the Corporation issued notice to the petitioner No. 2 making demands for the repayment of its dues, as the company committed default in the repayment of the same. The Corporation by its letter No. 8672 of the year 1975 intimated the petitioner No. 2 about its decision for filing a suit in the court of the District Judge for realisation of its dues. But subsequently at the request of the petitioner No. 2, on 29-5-1976 the Corporation sanctioned a further loan of Rs. 50,000/-. On 15-6-1976, after receiving a sum of Rs. 29,000/- out of the loan amount of Rs. 50,000/- thus sanctioned, the petitioner No. 2 created an Equitable Mortgage in respect the said Ac.39.39 dec. of land and agreed to repay the principal sum together with interest at the rate of 15 1/2 per cent per annum with quarterly rests, in 5 annual instalments commencing from 31-12-1978. Petitioner No. 2 did not avail of the balance loan amount of Rs. 21,000/-. On 8-1-1977 the Corporation sanctioned a further loan of Rs. 2 lakhs in favour of petitioner No. 2 and the terms of the loan were communicated to the petitioner No. 2 on 14-2-1977. By letter dated 13-9-1978, the Corporation intimated its objection to the petitioner No. 2 regarding its (petitioner No. 2's) proposal to lease out the Industrial Concern to M/s. Calcutta Colour Company and M/s. Oxford Chemicals Traders at a premium of Rs. 40,000/- per month. On 17-3-1979 the Board of Directors of the Corporation took a decision to take over the assets of the petitioner-Company in exercise of its powers under Section 29 of the Act and accordingly authorised its Managing Director to take the necessary steps in the matter. On 30-3-1979 the senior Consultant (Technical) of Orissa Industrial and Technical Consultancy Organisation Limited along with an officer of the Corporation inspected the plant for assessing the value of the property mortgaged. On 2-4-1979 the Corporation took possession of the Industrial Concern of the petitioner-Company in exercise of the powers under Section 29 of the Act and on that very date the Corporation, in its turn, delivered possession of the factory together with the premises extending over an area of Ac.39.39 decimals, to the firm opposite party No. 3 in pursuance of the agreement of sale (Annexure-B) dated 2-4-1979 entered into with it for a consideration of Rs. 19,01,000/-, out of which opposite party No. 3 paid a sum of Rs. 2,01,000/- only on the date of agreement and agreed to pay the balance sum of Rs. 17 lakhs, together with interest at 9 per cent per annum in 16 equal half-hearly instalments, commencing from 20-6-1979. Being aggrieved by the action of the Corporation in taking over the possession of the Industrial Concern of the petitioners on 2-4-1979 and delivering the same to opposite party No. 3 in pursuance of the agreement of sale, the petitioners filed this writ petition on 5-4-1979 challenging the said action.
3. Mr. B. K. Mohanty, the learned counsel for the petitioners, during the course of his arguments, raised two substantial points for consideration :
(1) As no notice was given to the petitioners by the Corporation (opposite party No. 2) before taking action under Section 29 of the Act there has been a flagrant violation of the -principles of natural justice and on that score alone the action of taking over of the Industrial Concern of the petitioners is vitiated.
(2) The background of facts under which the Corporation had taken over the Industrial Concern of the petitioners and delivered possession of the same to opposite party No. 3, purporting to be in exercise of its powers under Section 29, would reveal that the Corporation's action of taking over was actuated by bad faith and prompted by the extraneous consideration of bestowing undue favours 'on opposite' party No. 3 and therefore, the impugned action of taking over it otherwise also bad in law.
4. Mr. S. N. Sinha. the learned counsel pleading for the Corporation, strongly urged that there is no basis for holding that the Corporation had acted arbitrarily or without bona fides and with the motive of conferring undue favour on opposite party No. 3, when it took over the petitioners' Industrial Concern and delivered possession of the same to opposite party No. 3 on 3-4-1979. He further submitted that it was only when the petitioner No. 2 committed default in the repayment of the loan amount in instalments, despite repeated notices from the Corporation demanding of it to make such payments, that action was taken by the Corporation in due exercise of its powers under Section 29 of the Act. Mr. Sinha contended that there is nothing in the provisions of Section 29 of the Act to suggest that the issuance of notice to the affected part) is mandatory before taking action under that section. He further contended that even if such a notice is considered necessary before taking action under Section 29, the registered notice dated 9/14-8-1978 given by the Corporation to the petitioners requesting them to pay a sizeable amount of dues, failing which they were warned that necessary action will be taken, should be deemed to be the notice informing them that action under Section 29 of the Act was contemplated. He submitted that as the offer given by opposite party No. 2 (sic, 3?) firm was found to be the best of all the offers received by the Corporation, it sold the Industrial Concern to opposite party No. 3 for Rs. 19,01,000/- and by such sale it had not shown any favour to opposite party No. 3.
5. The learned counsel for opposite parties Nos. 3 and 4 Mr. A. Mohapatra, while supporting the contentions of the learned counsel for opposite party No. 2, submitted that sufficient time and opportunity were given to the petitioner Company for repayment of the loan and as the Company committed default in the payment of instalments despite notices from, the Corporation, it was fully justified in taking action under Section 29 of the Act. On behalf of opposite parties Nos. 3 and 4 it was further urged that when the petitioners failed to repay the loan amount in spite of repeated demands from the Corporation for repayment of the same, the petitioners were fully aware that action under Section 29 of the Act was bound to be taken and, therefore, no separate notice informing the petitioners specifically that action would be taken under Section 29 of the Act was at all necessary in the facts and circumstances of the case.
6. From the arguments advanced by the parties the main point that arises for consideration is whether, in the facts of the case, the Corporation was bound to give a notice to the petitioners that the Corporation was going to take over the Industrial Concern under Section 29 of the Act. The question whether the provisions of Section 29 of the Act contemplates issuance of a notice to the affected party, and whether the principles of natural justice would apply in the case of the takeover proceedings under Section 29 also, came up for consideration before this Court in M s. Kharavela Industries Pvt. Ltd. v. Orissa State Financial Corporation AIR 1985 Orissa 153. The relevant facts of that case are : The Financial Corporation before passing the earlier order of taking over dated 6-1-1984 afforded sufficient opportunity to the petitioner-Company in that the Corporation gave due notice to the petitioner as to the default position and further its decision to take over possession on failure of the petitioner to pay the instalments. Subsequently the petitioner made some payments and the said order dated 6-1-1984 was not given effect to. But subsequently the Corporation issued orders under Section 29 of the Act and took over possession of the Industrial Concern on 27-2-2984 without giving further notice to the petitioner-Company though in the meantime there had been some payments made by it as earlier stated.
In view of the facts stated above, this Court, finding that the Corporation failed in its duty it, give reasonable lime and notice to the petitioner that the Corporation was going to take over the Industrial Concern under Section 29 of the Act, and that no minimum opportunity was given to the petitioner to put forth its case before the Corporation, held that the order under Section 29 of the Act dated 27-1-1984 was bad in law not having complied with the principles of natural justice and was therefore, liable to be set aside.
7. In the case of Kharavela Industries Pvt.
Ltd. (AIR 1985 Orissa 153) (supra), this Court relied on the majority view of the Supreme Court in the case of Swadcsh Cotton Mills v. Union of India, AIR 1981 SC 818, as indicated by the folio wing observations of the Supreme Court (para 42):
"In short, the general principle -- as distinguished from an absolute rule of uniform application 'seems to be that where a statute does not in terms exclude this rule of prior hearing but contemplates a post decisional hearing amounting to a full review of the original order on merits, then such a statute would be construed as excluding the audi alterm partem rule at the pre-decisional stage. Conversely, if the statute conferring the power is silent with regard to the giving of a pre-decisional hearing to the person affected and the administrative decision taken by the authority involves civil consequences of a grave nature, and no full review or appeal on merits against that decision is provided, courts will be extremely reluctant to construe such a statute as excluding the duty of affording even a minimal hearing shorn of all its formal trappings and dilatory features at the pre-decisional stage, unless, viewed pragmatically, it would paralyse the administrative process or frustrate the need for utmost promptitude. In short, this rule of fair play 'must not be jettisoned save in very exceptional circumstances where compulsive necessity so demands'. The court must make every effort to salvage this cardinal rule to the maximum extent possible, with situational modifications. But, to recall the words of Bhagwati, J., the core of it must, however, remain, namely, that the person affected must have reasonable opportunity of being heard and the hearing must be a genuine, hearing and not an empty public relations exercise."
Relying on the above quoted observations of the Supreme Court, this Court in the Khara-vela Industries Pvt. Ltd. case (AIR 1985 Orissa 153 at p. 161) (supra) observed thus :
"Keeping these principles in view, if we, examine the provisions of the State Financial Corporations Act, more particularly Section 29 thereof, we find that the Act is intended to regulate the activities of the Financial Corporation and the main object of such Corporation is to finance medium and small-scale industries. With the rising tempo of industrialisation of the country, it become necessary to enlarge the field of operation of the State Financial Corporation and to meet the growing needs of industries to offer financial assistance to augment the resources sufficiently, the Act has been amended to enable the Corporation to transact new kindsi of business like guarantee loan raised by the industrial concern from scheduled banks and guarantee default payment due from the industrial concern in connection with its purchase of goods within India. With those as primary object the Corporation has also been conferred the power to take over the industrial concern when the said concern makes any default in repayment of loan: There is no provision for appeal or review against the said decision of taking over and there cannot be any manner of doubt that the decision to take over involves civil consequences of a grave nature. A reading of Section 29 of the Act, in our opinion, does not in terms exclude the application of the principles of natural justice. In our view, therefore the said rules must be complied with before the corporation takes action under Section 29 of the Act, But whether in a given case, the said rules have been complied with or not depends upon the facts and circumstances of that case."
8. The learned counsel for the petitioners relied on the decision Olga Tellis v. Bombay Municipal Corporation, AIR 1986 SC 180, and contended that issuance of a notice by the Corporation to the petitioners was mandatory before the Corporation took action under Section 29 of the Act. This decision deals with the case of pavement dwellers, in that; case the issue raised was whether the pavement dwellers who are using the pavement for an unauthorised purpose can be denied the opportunity of hearing on the ground that they are trespassers. Section 312 of the. Bombay Municipal Corporation Act 1888 deals with the prohibition structures or fixtures which cause obstruction in streets. Section 313 of that Act deals with the prohi-bition of deposit etc. of things in streets. The material portion of Section 314 of the Act is quoted below for convenience of reference :
"314. Power to remove without notice anything erected deposited or hawked in contravention of Section 3, 12, 323 or 329A.
The Commissioner may without notice cause to be removed--
(a) any well fence, rail, post, stop, booth or other structure or fixture which shall be erected or set up in or upon any street of upon or over any open channel drain well or tank contrary to the provisions of Sub-section (1) of Section 312."
(The underlining is mine).
The provisions of Section 314, of the Act empower the Municipal Commissioner to cause to be removed encroachments on foot-paths or pavements over which the public have a right of passage or access. While, considering the scope of Section 314 of the Act the Supreme Court in the case of Olga Tellis (AIR 1986 SC 180) observed thus (Paras 44, 45 and 47) :
".......Section 314 is in the nature of an enabling provision and not of a compulsive character. It enables the Commissioner, in appropriate cases, to dispense with previous notice to persons who are likely to be affected by the proposed action. It does not require and, cannot be read to mean that, in total disregard of the relevant circumstances pertaining to a given situation, the Commissioner must cause the removal of an encroachment without issuing previous notice. The primary rule of construction is that the language of the law must receive its plain and natural meaning. What Section 314 provides is that the Commissioner may, without notice, cause an encroachment to be removed. It does not command that the Commissioner shall, without notice, cause an encroachment to be removed. Putting it differently, Section 314 confers on the Commissioner the discretion to cause an encroachment to be removed with or without notice. That discretion has to be exercised in a reasonable manner so as to comply with the constitutional mandate that the procedure accompanying the performance of a public act must be, fair and reasonable. We must lean in favour of this interpretation because it helps sustain the validity of the law. Reading Section 314 as containing a command not to issue notice before the removal of an encroachment will make the law invalid.
It must further be presumed that, while vesting in the Commissioner the power to act without notice, the Legislature intended that the power should be exercised sparingly and in cases of urgency which brook no delay. In all other cases, no departure from the audi alteram partem rule ('Hear the other side') could be presumed to have been intended. Section 314 is so designed as to exclude the principles of natural justice "by way of exception and not as a general rule. There are situations which demand the exclusion of the rules of natural justice by reason of diverse factors like time, place, the apprehended danger and so on. The ordinary rule which regulates all procedure is that persons who are likely to be affected by the proposed action must be afforded an opportunity of being heard as to why that action should not be taken. The hearing may be given individually or collectively, depending upon the facts of each situation. A departure from this fundamental rule of natural justice may be presumed to have been intended by the Legislature only in circumstances which warrant it. Such circumstances must be shown to exist, when so required, the burden being upon those who affirm their existence.
xx xx xx xx xx The proposition that notice need not be given of a proposed action because, there can possibly be no answer to it, is contrary to the well-recognized understanding of the real import of the rule of hearing. That proposition overlooks that justice must not only, be done but must manifestly be seen to be done and confuses one for the other. The appearance of injustice is the denial of justice....."
In the case of Olga Tellis, the Supreme Court held that the following observations made by it, in S. L. Kapoor v. Jagmohan, AIR 1981 SC 136 at p. 147, sum up the true legal position regarding the purport and implications of the right of hearing.
"In our view the principles of natural justice know of no exclusionary rule dependant (sic) whether, it would have made any difference if natural justice had been observed. The non- observance of natural justice is itself prejudice to any man and proof of prejudice independently of proof, of denial of natural justice is unnecessary: It ill comes from a person who, has denied justice that the person who has been denied justice is not prejudiced."
The importance of the case of Olga Telli is that though the procedure 'prescribed by Section 314 of the Bombay Municipal Corporation Act for the removal of the encroachments from pavements does not provide for the giving of a notice before the removal of an encroachment and on the other hand it expressly provides that the Municipal Commissioner may cause the encroachment to be removed "without notice", yet the Supreme Court held that the Municipal Commissioner ought to have afforded an opportunity to the petitioners to show why the encroachments committed by them on pavements or footpaths should not be removed.
9. Hence relying on the case of Kharavela Industries Pvt. Ltd. (AIR 1985 Orissa 153) (supra) of this Court and the decisions of the Supreme Court in Swadeshi Cotten Mills' case (AIR 1981 SC 818), Section L. Kapoor's case (AIR 1981 SC136) and Olga Teliis' case (AIR 1986 SC 180) (supra), we hold that in accordance with the principles of natural justice it was obligatory on the part of the Corporation to give reasonable time and notice to the petitioners that the Corporation was going to take over the Industrial Concern under Section 29 of the Act so that the petitioners could have had the opportunity to put forth their case before the Corporation.
10. This is the appropriate stage for considering the factual aspect whether at all the Corporation had given due notice to the petitioners of the proposed action under Section 29 of the Act. The petitioners in paras 4, 5, 8, 10(f) and 10(g) of the writ petition have repeatedly asserted that the Corporation had not given a notice, nor an opportunity of hearing, to the petitioners before taking over their Industrial Concern under Section 29 of the Act. In the counter affidavit filed by the Corporation on 7-4-1979, the allegation, that the petitioners were neither given a notice nor an opportunity of being heard before their Industrial Concern was taken over by the Corporation, was not denied by it. On the other hand, the Corporation had taken the plea in its counter that the question of intimating the petitioners regarding the action proposed to be taken under Section 29 of the Act does not arise for consideration in the facts and circumstances of the case, for the reason that if any such intmation were to be given, the important machineries and other items might have been removed by the petitioners. From the material placed on record, it is seen that there is no basis for the apprehension of the Corporation that on receipt of the intimation regarding the proposed action under Section 29, the petitioners would have removed the machineries etc. from the plant. Even otherwise also, the Corporation could have very easily taken the appropriate steps to see that nothing of value was removed from the premises of the Industrial Concern after the issuance of the notice to the petitioners. Considering the facts and circumstances of the case, we find that there is no justification for the Corporation to take over the Industrial Concern under Section 29 of the Act, without prior notice to the petitioners.
11. On 30-4-1975 and 14-5-1975 the Corporation had issued letters to the petitioners demanding of them to repay the principal and interest due to it by that date. In the very same year 1975, by letter No. 5672, the petitioner No. 2 was intimated that the Corporation proposed to take action against the petitioners by filing a suit in the court of the District Judge. The learned counsel for the petitioners contended that the above referred letters were sent in a routine fashion and were never meant to be taken too seriously, is evident from the fact that subsequently on 29-5-76, a further loan of Rs. 50,000 - was sanctioned in favour of the petitioner-Company by the Corporation and in fact an amount of Rs. 29,000 - from out of the sanctioned loan was disbursed to the Company on 15-6-76. On 8-1-1977 the Corporation had again sanctioned a loan of Rs. 2 lakhs and intimated about it to the petitioners on 14-2-77, though no part of the sanctioned loan amount was disbursed to the petitioners. On 9/14-8-1978 the Corporation gave a registered notice to the petitioner-Company requesting it to pay "a sizeable amount "of the dues, failing which, the Company was warned that necessary action, would be taken against it. It is not clear regarding the actual amount payable when the Corporation requested the petitioners to pay "a sizeable amount" of the dues, Likewise there was no clear indication in the notice regarding the, nature of the proposed action to be taken by the Corporation when it threatened to take "necessary action". In view of the background of events that preceded the registered notice dated 9 14-8-78, the petitioners cannot be found fault with for not taking the notice seriously and in not apprehending a follow up action in pursuance of that letter. In any event, there was nothing in the said registered notice to suggest that the take-over action under Section 29 of the Act was in contemplation. The letter of the Corporation addressed to the petitioner No, 2 on 13-9-1978 objecting to the under invoicing of Sodium Dichromate discloses that the Company was in fact manufacturing Sodium Dichromate by that date and the product so manufactured was having a good market. On 13-9-1978 the Corporation addressed a letter to the petitioner No. 2, objecting to its proposal to lease out the Industrial Concern to the firms at Calcutta at a premium of Rs. 40,000/- per month (vide Annexure-A). Admittedly a creditors' meeting was subsequently held on 26-9-1978 in the office of the petitioner No. 2, wherein opposite party No. 2 was also present and it was suggested in the said meeting that the unit should be taken up either by the Orissa State Financial Corporation (opposite party No. 2) or by the I.D.C. Limited, with a view to run it by themselves, or through some Government institutions, or private parties, for the benefit of all the creditors. The Managing Director of the petitioner No. 2 was authorised to invite proposals from the State Government institutions and other private parties for the running of the unit and to examine their proposals and to put the same at the next meeting of the Board of Directors. The above circumstances fully support the contention of the petitioners that they could never anticipate that a proceeding under Section 29 of the Act was in the offing. Considering the admitted background of facts it was all the more necessary that the Corporation should have given a notice and opportunity of hearing to the petitioners before taking action under Section 29 of the Act. As observed by this Court in M/s. Kharavala Industries Pvt. Ltd. (AIR 1985 Orissa 153) (supra) there cannot be any manner of doubt that the power given to the Corporation under Section 29 of the Act is an extraordinary power and it should not be hastily resorted to. In the facts and circumstances of the case, when the Corporation had taken over the possession of the Industrial Concern of the petitioners without giving them due notice and without giving them an opportunity of hearing, the same is in flagrant violation of the principles of natural justice and on that score alone the order of the Corporation dated 2-4-1979 taking over the Industrial Concern of the petitioners under Section 29 of the Act is hound to be set aside.
12. As the order of the Corporation directing the taking over the Industrial Concern of the petitioners under Annexure-1 is to be set aside on the ground that it was passed in violation of the principles of natural justice, the other points raised by the parties do not merit detailed consideration.
13. Had the notice under Section 29 of the Act been given by the Corporation to the petitioner-Company, it is very likely that the petitioners would have attempted to take the necessary steps for preventing the taking over of the Industrial Concern and it is a different question whether they would have succeeded in their attempts or not. At any rate the petitioners would have tried their best to see that their Industrial Concern would secure as high a price as possible. The petitioners allege that the Corporation had exercised its extraordinary power under Section 29 with a view to confer undue favours on the firm opposite party No. 3. According to the Corporation, on 17-3-1979 its Board of Directors took a decision to exercise its powers under Section 29 of the Act. Just after a fortnight thereafter, on 2-4-1979, the Corporation implemented the said decision and took over the Industrial Concern of the petitioners under Section 29. On that very day the Industrial Concern was sold to M/s. Kalinga Chemicals (opposite party No. 3) for Rs. 19.01 lakhs and the possession of the same was delivered to opposite party No. 3. Admittedly the Industrial Concern was sold to opposite party No. 3 as a result of private negotiations entered into between opposite parties Nos. 2 and 3. There is no. acceptable explanation from the side of the Corporation as to why at all the Corporation did not choose to sell the Industrial Concern in public auction by inviting tenders from the public. The facts placed on record do not disclose any such grounds so as to justify the sale of the Industrial Concern to opposite party No. 3 through negotiations and so the course adopted by the Corporation deserves to be deprecated in view of the following; observations of the Supreme Court in Hajij T.M. Hassan Rawther v. Kerala Financial Corporation, AIR 1988 SC 157 (para 14) :-
"The public property owned by the State or by any instrumentality of the State should be generally sold by public auction or by inviting tenders. This Court has been insisting upon that rule, not only to get the highest price for the property but also to ensure fairness in the activities of the State and public authorities. They should undoubtedly act fairly. Their actions should be legitimate, Their dealings should be above board. Their transactions should be without aversion or affection. Nothing should be suggestive of discrimination. Nothing should be done by them which gives an impression of bias, favouritism or nepotism. Ordinarily these factors would be absent if the matter is brought to public auction or sale by tenders. That is why the Court repeatedly stated and reiterated that the State owned properties are required to be disposed of publicly. But that is not the only rule. As O. Chinnappa Reddy, J. observed 'that though that is the ordinary rule, it is not an invariable rule'. There may be situations necessitating departure from the rule, but then such instances must be justified by compulsions and not by compromise. It must be justified by compelling reasons and not by just convenience."
In this context it is relevant to remember the following caution administered by the Supreme Court in Chenchu Rami Reddy v. Govt. of A.P., AIR 1986 SC 1158, while dealing with the sale of land belonging to a charitable endowment (Para 6) :--
"Those who are willing to purchase by private negotiations can also bid at a public auction. Why would they feel shy or be deterred from bidding at a public auction? Why then permit sale by private negotiations which will not be visible to the public eye and may even give rise to public suspicion unless there are special reasons to justify doing so? And care must be taken to fix a reserve price after ascertaining the market value for the sake of safeguarding the interest of the endowment."
14. The deal entered into with opposite party No. 3 by the Corporation has other interesting features as well. The assertion of the petitioners in para 3(xvii) that the partner-ship firm opposite party No. 3 came into existence only a few days prior to 2-4-79 was not denied by the opposite parties Nos. 2 to 4. The take-over of the Industrial Concern by the Corporation was on 2-4-79 and the delivery of the Industrial concern to opposite party No. 3 was also on 2-4-79. Though possession of the Industrial Concern was delivered to opposite party No. 3 on 2-4-79 in pursuance of an agreement for sale for, Rs. 19,01,000/-, on that day what the Corporation received was only the cash sum of Rs. 2,01,000/-. Under the terms of the agreement (Annexure-D) the balance sum of Rs. 17 lakhs was to be paid by opposite party No. 3 in 16 equal half-yearly instalments commencing from 30-6-1979 and the said balance amount carried interest at the rate of 9 per cent simple. In this context it is relevant to remember that the sum of Rs. 29,000/- disbursed to the petitioners on 15-6-76 carried an interest of 151/2 percent per annum. Admittedly after the firm opposite party No. 3 took over possession of the Industrial Concern, not even a gram of sodium dichromate was manufactured. The Corporation has been set up with the avowed object of promoting industries in the State and it is not understood as to how that object was achieved when it delivered possession of the Industrial Concern to opposite party No. 3. From the above circumstances, and more particularly the indecent haste exhibited in delivering possession of the Industrial Concern to the opposite party No. 3, it is evident that the petitioners' allegation that the Corporation took action under Section 29 of the Act against them with the ulterior motive of conferring undue favour on opposite party No. 3 cannot be said to be without basis.
15. In conclusion, on a careful analysis of the relevant material on record, as discussed earlier, we hold that the taking over of the Industrial Concern of the petitioners on 2-4-1979 under Section 29 of the Act, by the Corporation in pursuance of the order Annexure-I, without giving notice to the petitioners and without giving them an opportunity of being heard, in violation of the principles of natural justice, cannot be legally sustained and therefore, the impugned order Annexure-1 dated 2-4-1979 passed by the Corporation (opposite party No. 2) is hereby quashed. Accordingly the writ petition is allowed, but in the circumstance's of the case, without costs.
D.P. Mohapatra, J.
16. I agree.