Calcutta High Court (Appellete Side)
M/S. Arun Chemicals vs West Bengal Financial Corporation & Ors on 13 March, 2012
Author: Jayanta Kumar Biswas
Bench: Jayanta Kumar Biswas
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In The High Court At Calcutta
Constitutional Writ Jurisdiction
Appellate Side.
Present:
The Hon'ble Mr.Justice Jayanta Kumar Biswas.
W.P.No.25089(W) of 2008
with
CAN No.7775 of 2011
M/s. Arun Chemicals
v.
West Bengal Financial Corporation & Ors.
Mr.Kishore Dutta
Ms.Sumita Shaw .. for the petitioner.
Mr.Gaurav Kumar Basu ..for the respondents
Heard on: March 13, 2012. Judgement on: March 13, 2012.
The Court:- The petitioner in this WP under art.226 dated September 19, 2008 is questioning a notice dated September 5, 2008 (at p.151) issued by the West Bengal Financial Corporation (in short WBFC).
The notice was issued regarding the following:
"Sale of the entire fixed assets comprising land, shed, building, other construction and plant and machinery of your unit situated at Old Jessore Road, Doltala, P.O. Madhyamgram, Dist. 24 Parganas (N)."
The petitioner, a registered firm, borrowed money from WBFC. It was in default on the loan. Consequently, WBFC took possession of its properties on July 13, 2005 under s.29(1) of the State Financial Corporations Act, 1951.
WBFC published sale notices. It mentioned in the notice dated September 5, 2008 that in response to a sale notice it received a Rs.96 lakh offer. It asked 2 the petitioner to offer equivalent amount or better the offer, and said that the petitioner's failure would entitle it to proceed with the sale.
Mr. Dutta appearing for the petitioner has submitted that the properties put out to sale were not valued following the principles laid down by the Supreme Court in Allahabad Bank v. Bengal Paper Mills Co. Ltd. & Ors., AIR 1999 SC 1715; and Gajraj Jain v. State of Bihar & Ors., (2004) 7 SCC 151; and that the principles now stated in Kerala Financial Corporation v. Vincent Paul & Anr., (2011) 4 SCC 171 should be followed Mr.Basu appearing for WBFC has submitted as follows. The properties are to be valued so that reserve price may be fixed and they can be sold at the best possible market price. Value is not to be determined according to any rules or laid down guidelines. It cannot be said that they have been valued following such principles as stated in Kerala Financial Corporation v. Vincent Paul & Anr., (2011) 4 SCC 171.
On these facts, I am of the view that the impugned notice cannot be sustained. The properties were to be valued for getting the best possible market price. In the absence of applicable rules or guidelines they were to be valued following the principles stated in the Supreme Court decisions in Bengal Paper Mills and Gajraj Jain. They were not followed.
Mr. Dutta has requested for keeping all other issues raised in the WP open for future determination, if necessary. Mr. Basu has said that the one time settlement benefit is not a matter of right, and that the petitioner should be directed to show its bona fide by bearing the expense for determination of value of the properties applying the principles stated in Kerala Financial Corporation v. Vincent Paul & Anr., (2011) 4 SCC 171.
The only issue that requires decision in this WP is whether the impugned notice dated September 5, 2008 can be sustained. No other issue requires any 3 decision. The question of offering one time settlement may arise only after the properties are valued applying the principles in question. If offer is made WBFC will be free to examine it according to law.
The petitioner in default on the loan and not resisting steps taken by WBFC for sale of the properties, in my opinion, should not be saddled with the expense for determination of value of the properties. WBFC initiating the sale process has to bear the expense.
For these reasons, I set aside the impugned notice dated September 5, 2008, allow the WP to this extent, dispose of the CAN and order as follows.
WBFC shall determine value of the properties applying the principles stated by the Supreme Court in Kerala Financial Corporation v. Vincent Paul & Anr., (2011) 4 SCC 171. After determining the value and fixing reserve price it shall inform the petitioner accordingly. If the petitioner offers one time settlement, it will be free to examine it. No costs. Certified xerox.
(Jayanta Kumar Biswas, J) sm.
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