Karnataka High Court
Shree Anand Life Sciences Ltd vs The Karnataka State Financial ... on 26 November, 2021
Author: G.Narendar
Bench: G.Narendar
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IN THE HIGH COURT OF KARNATAKA AT
DHARWAD BENCH
DATED THIS THE 26TH DAY OF NOVEMBER, 2021
PRESENT
THE HON'BLE MR.JUSTICE G.NARENDAR
AND
THE HON'BLE MR.JUSTICE M.I.ARUN
WRIT APPEAL NO.100018/2015
c/w
WRIT APPEAL NO.100023/2015
IN W.A.100018/2015
BETWEEN:
M/S. GAGAN INDUSTRIES,
REP. BY ITS PROPRIETOR: MALLANA
GOWDA D.PATIL, AGE: 45 YEARS
PLAT NO.63/B, SY.NO.536,
HONAGA INDUSTRIAL AREA,
BELGAUM-590001. ...APPELLANT
(BY SRI B.S.KAMATE, ADV.)
AND
1. SHREE ANAND LIFE SCIENCE LTD.,
318/3B, ROY ROAD,
1ST CROSS TILAKWADI,
BELGAUM-590006 (KARNATAKA),
REP. BY ITS MANAGING DIRECTOR,
SATISH M.GHARGE, S/O. MOHAN RAO,
AGED ABOUT 51 YEARS,
R/O. BELGAUM.
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2. KARNATAKA STATE FINANCIAL
CORPORATION (ESTABLISHED UNDER
THE STATE FINANCIAL CORPORATION
ACT, 1951), NO.1/1, THIMMAIAH ROAD,
CANTONMENT RAILWAY STATION,
BANGALORE-560052
REP. BY ITS MANAGING DIRECTOR.
3. KARNATAKA STATE FINANCIAL CORPORATION,
BELGAUM BRANCH,
NEAR HOTEL SANMAN, COLLEGE ROAD,
BELGAUM-590001,
REP. BY ITS ASSISTANT GENERAL MANAGER.
...RESPONDENTS
(BY SRI MANGAL BHANDARI AND
SRI G.K.HIREGOUDAR, ADV. FOR R1,
SRI SHARAD V.MAGADUM, ADV. FOR R2 & R3.)
THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF
THE KARNATAKA HIGH COURT ACT, 1961, PRAYING THAT
AFTER CALLING FOR THE RECORDS AND PROCEEDS OF THE
CASE THIS HON'BLE COURT BE PLEASED TO SET ASIDE THE
IMPUGNED ORDER DATED 15.12.2014 PASSED BY THE
LEARNED SINGLE JUDGE IN W.P.NO.200/2008 AND TO
DISMISS THE WRIT PETITION BY ALLOWING THIS WRIT
APPEAL.
IN W.A.100023/2015
BETWEEN:
SHREE ANAND LIFE SCIENCES LTD.,
318/3B, ROY ROAD 1ST CROSS,
TILAKWADI BELAGAVI 590006,
KARNATAKA, REP: BY ITS
MANAGING DIRECTOR,
SATISH M.GHARGE
S/O. MOHANRAOGHARGE
AGED ABOUT 55 YEARS;
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R/O. BELAGAVI. ...APPELLANT
(BY SRI MANGAL BHANDARI AND SRI PRATHAP SINHA AND
SRI G.K.HIREGOUDAR, ADVOCATES.)
AND
1. THE KARNATAKA STATE
FINANCIAL CORPORATION
(ESTABLISHED UNDER THE
STATE FINANCIAL CORPORATION ACT 1951)
NO.1/1 THIMMAIAH ROAD
CANTONMENT RAILWAY STATION
BANGALORE-560052.
REP BY ITS MANAGING DIRECTOR.
2. THE KARNATAKA STATE
FINANCIAL CORPORATION
BELGAUM BRANCH,
NEAR HOTEL SANMAN,
COLLEGE ROAD, BELGAUM 590001
REP BY ITS AGM.
3. M/S GAGAN INDUSTRIES
REP BY ITS PROPRIETOR
MALLANGOWDA D PATIL
PLOT NO.63/B. S NO 536
HONGA INDUSTRIAL AREA
BELGAUM - 591113. ...RESPONDENTS
(BY SRI SHARAD V.MAGADUM, ADV. FOR R1 & R2,
SRI B.S.KAMATE, ADV. FOR R3.)
THIS WRIT APPEAL IS FILED UNDER SECTION.4 OF
THE KARNATAKA HIGH COURT ACT, 1961, PRAYING TO, SET
ASIDE THE IMPUGNED ORDER (OPERATIVE ORDER) DATED
15.12.2014 PASSED BY LEARNED SINGLE JUDGE IN WP
NO.200/2008 (GM KSFC) AND TO ALLOW WRIT APPEAL BY
DIRECTING THE RESPONDENTS TO EXECUTE REGISTERED
SALE DEED PERTAINING TO MORTGAGED ASSETS UNIT AND
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LAND BEARING NO.62 B AND HANDING OVER THE
EXCLUSIVE POSSESSION OF THE SAME TO APPELLANT.
THESE WRIT APPEALS COMING ON FOR FURTHER
HEARING THIS DAY, G.NARENDAR J., DELIVERED THE
FOLLOWING:-
JUDGMENT
Heard Sri. B. S. Kamate, learned counsel for the appellant in W.A.No.100018/2015, Sri. Mangal Bhandari, learned counsel along with Sri. Prathap Sinha, learned counsel and Sri.G.K.Hiregoudar, learned counsel for the appellant in W.A.No.100023/2015 and Sri. Sharad V. Magadum, learned counsel for respondent - KSFC. Both the appeals arise out of the order rendered in W.P.No.200/2008 disposed of on 15.12.2014. W.A. No.100023/2015 is by the petitioner and the companion appeal W.A.No.100018/2015 is by 3rd respondent.
2. The parties are referred to by their nomenclature in the Writ petition.
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3. We have summoned the records relating to the auction and the OTS Scheme extended to 3rd respondent and also such developments prior to and post the auction sale.
4. The facts in a nut-shell are that the 2nd respondent (State Financial Corporation) had extended certain financial assistance to the 3rd respondent. The 3rd respondent availed a term loan of Rs.16,35,000/- on 17.09.1997 and a bridge loan of Rs.5,50,000/- on 07.03.2000. That the initial loan was sanctioned to 3rd respondent to aid his venture to set- up a Metal Pulverizing Unit in the industrial site allotted by the Karnataka Industrial Area Development Board (KIADB) in Honaga Industrial Estate, Belgaum, which is established on the outskirts of Belgaum city. That the petitioner had established the industry to execute works contract for M/s. Indal, an aluminum factory in Belgaum. That after a couple years of -6- establishment of the factory, the said Indal Company, installed and started its own pulverizing unit. That the said factory was the major source of business and the said customer having started its own unit, resulted in the 3rd respondent loosing a huge chunk of business and the consequential revenue. Consequently, the 3rd respondent factory endured hard times and consequently, started to default in the repayment of the loan.
5. The respondent - KSFC has filed its statement of objections and produced numerous documents and has also placed before the Court the Guidelines adopted by the KSFC in the matter of recovery of dues. The said Guidelines have been formulated as Operational Guidelines on Recovery Functions and issued under Circular No.812 dated 03.04.2002.
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6. It is the case of the respondent - KSFC that taking note of the default in repayment, it initiated action under Section 29 of the State Financial Corporation Act, 1951 and a Show-Cause Notice came to be issued on 18.10.2005. It is submitted that the said action was preceded and followed by meetings by the Default Review Committee under the Chairmanship of the Deputy General Manager. Meetings were held on 01.07.2004, 20.07.2005, 15.11.2006 and 20.06.2007 to discuss ways and means to ensure repayment of the dues. In fact, by communication dated 18.10.2005, the petitioner was called upon to clear the dues within eight days from the date of receipt of the letter. As the 3rd respondent debtor failed to clear the dues, the respondent - KSFC initiated action to seize the assets of the defaulter - 3rd respondent. In this regard, note was prepared by the Assistant General Manager on 17.10.2005 and -8- forwarded to the General Manager. A copy of the background note prepared by the Assistant General Manager and the covering letter are produced as Annexure-R5. The proceedings of the General Manager authorizing to take over is produced as Annexure-R6. The mahazar drawn by the Authorized Officer for taking possession is produced as Annexure- R7 and the request of the petitioner to permit his parents to continue the factory premises and not to deploy watch and ward of the seized unit is produced as Annexure-R8 and the letter dated 12.11.2005 addressed by the Assistant General Manager intimating the 3rd Respondent to pay a sum of Rs.14,93,694/- if he desires to seek release of the assets, is produced as Anneuxre-R9. The copies of the paper publications inviting bids published in various newspapers, namely, Vijaya Karnataka (25.12.2005), Taruna Bharat (25.12.2005), Kannadamma -9- (01.03.2006), Taruna Bharat (01.03.2006), Taruna Bharat (31.05.2006), Vijaya Karnataka (21.05.2006), Kannadamma (03.07.2006) and Taruna Bharat (03.07.2006) are produced as Annexures-R11 to R18. A copy of the minutes of the Sale Negotiation Meeting, a copy of the Circular No.779 are produced as Annexures R19 and R19A. The proceedings of 15th meeting of the Executive Committee of the KSFC held on 01.03.2007 is produced as Annexure-R21 and the agenda pertaining to discussion and resolution in respect of the 3rd respondent is at agenda level whereby the Executive Committee had accorded approval for settlement of the loan account for a sum of Rs.18.05 lakhs. It is also pertinent to note, at this stage itself, that the said sum was arrived at after calculating the value of the personal properties of the guarantor. The said decision of the Executive Committee was communicated to 3rd respondent by
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letter dated 14.03.2007, a copy of which is produced as Annexure-R22. The property was once again notified for sale by auction under the Sale Notification published in Vijaya Karnataka and dated 29.07.2007, produced as Annexure-R24. The total dues as notified was Rs.42,37,478/- and no reserve price was fixed. A Sale Negotiation Meeting was held on 18.08.2007. In the Sale negotiations, the petitioner increased its offer from Rs.10.35 lakhs to Rs.18.45 lakhs, a quantum jump. The Sale Negotiation Meeting was held under the Chairmanship of the Deputy General Manager and it was resolved to recommend the offer of the petitioner to the competent authority for approval. [emphasis by Court]
7. It is stated that, in the interregnum a Sale Negotiation Meeting held on 19.06.2006 and the petitioner had offered a sum Rs.5.25 lakhs and the same was rejected. That pursuant to the Sale
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Notification dated 03.07.2006 and Sale Negotiation Meeting dated 11.09.2006, the petitioner increased the offer to Rs.7.20 lakhs. That on 02.02.2007, a Circular came to be issued and modified or new OTS policy was formulated by the Board and one more opportunity was given to 3rd respondent to avail of the OTS facility. Pursuant to which, the 3rd respondent submitted a request for extending the OTS scheme and the proposal of the 3rd respondent was accepted by the executive committee in its meeting held on 01.03.2007 and the OTS amount was notified as 18.05 lakhs. The said decision has been communicated to 3rd respondent. That as 3rd respondent did not comply with the terms and conditions of the OTS offer, the offer was cancelled and the cancellation intimated to the borrower on 11.07.2007 and thereafter, a Auction Sale Notification was published on 29.07.2007 produced as Annexure-
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R24, and the petitioner, who had quoted Rs. 10 lakhs thereafter during the Sale Negotiation Meeting held on 18.08.2007, increased it to Rs.18.45 lakhs. The Sale Negotiation Committee accepted the offer and resolved to recommend the petitioner's offer to the competent authority for approval. [emphasis by Court].
8. Yet again, 3rd respondent made one more request on 07.09.2007, to consider extending the OTS Scheme and along with the representation submitted, he also made a payment of Rs. 1 lakh. In response, by letter dated 01.10.2007, the 3rd respondent was called upon to deposit the entire sum within 7 days along with interest calculated at the rate of 15% per annum (Annexures R26 and R27). Thereafter, the sale communication letter dated 17.10.2007 was addressed to the petitioner (Annexure - R28). That thereafter, the branch office received a note dated
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18.10.2007 from the Executive Director (Finance) directing the branch office to give 30 days time to the borrower, pursuant to which, a letter was also addressed to 3rd respondent. The said facility extended to 3rd respondent was also communicated to the petitioner, a copy of which is produced as Annexure-R31. By the said letter, the petitioner was informed that the competent authority has extended the time for availing OTS facility to close the loan account. In reply, the petitioner under reply dated 18.12.2007, demanded interest at the rate of 14% for the period of 60 days on account of delay in handing over possession and further sought for handing over possession of the land and building. A copy of the letter and debit note is produced as Annexure-R32.
9. That thereafter, 3rd respondent made a payment of Rs.6,05,000/- apart from the payments earlier made, and requested for closure of the loan
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account. The representation was kept pending and thereafter, by reply dated 29.02.2008, the 3rd respondent was called upon to deposit a further sum of Rs.10.05 lakhs for the closure of the loan account. The same are produced as Annexures-R33 and R34. In reply, 3rd respondent addressed a representation to the Executive Director (Finance), Bengaluru representing that despite the payment of entire amount of Rs. 18.05 lakhs as demanded earlier, the demand for further sum is unsustainable and offered to pay a sum of Rs. 4 lakhs in full and final settlement. It appears that the said representation has been forwarded to the General Manager (North Zone), who has endorsed on the same stating that the Managing Director had discussed the case and directed the collection of the OTS amount along with 100% delayed period interest and in the event of a failure on the part of 3rd respondent, to proceed with
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the sale without any further opportunity to 3rd respondent, a copy of which is produced as Annexure- R35. A copy of the delay condonation representation is produced as Annexure-R36 and the proceedings approving the refund of the amount to the petitioner is produced as Annexure-R37. Thereafter, by letter dated 08.04.2008, the petitioner was informed of the cancellation of the sale process.
10. It is the case of the petitioner that it is aggrieved by the in action of the respondent - KSFC in not complying with the tender proceedings. It is the case of the petitioner that it is a pharmaceutical company and involved in the manufacture of pharmaceutical formulations. That the unit was started at Bagalkot on the strength of the financial aid given by the respondent-KSFC. That on account of the new standards prescribed in the pharmaceutical industry under the Drugs and Cosmetic Act, it is
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required to upgrade its unit to international standards and hence, it had resolved to set-up a high-tech unit in Belgaum and that the plot of 3rd respondent was required for the expansion of project proposed at Belgaum and hence, the petitioner had submitted its bid pursuant to the Advertisement dated 29.07.2007 and that pursuant to the sale negotiations, it has paid the entire amount on the same day and that the respondent - KSFC colluding with 3rd respondent was extending undue and unwarranted concession to the 3rd respondent. That the petitioner had submitted the highest all time offer of Rs.18,45,000/- and having received the same and the bid having been accepted and offered to the petitioner and he having paid the amount on the same day and he having complied with condition No.2 in the offer-acceptance letter, there was no justification in not handing over possession of the unit to the petitioner. That the undue
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consideration extended to the 3rd respondent is unjustified. That the respondent - KSFC having initiated auction proceedings and having made the petitioner to alter its position by borrowing money at high rates of interests, the respondent - KSFC cannot turn around and seek to cancel the process. That the refusal to hand over possession is contrary to terms and conditions of sale. That having held out a promise to the successful bidder, it is not open for the respondent - KSFC to go back and leave the petitioner in the lurch and that the Managing Director of respondent -KSFC being the trustee of the public funds cannot be permitted to act fancifully and arbitrarily. In the background of above facts and grounds, the following reliefs were sought for:-
"a) Issue a writ in the nature of mandamus, or such other suitable writ, directing the respondents 1 and 2 herein; to forthwith hand over the possession of the property, sold under the tender acceptance as per
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'Annexure B', dated 17.10.2007 in no KSFC/BO/BGM/1969, to the petitioners herein in compliance of the conditions of the Tender proceedings, as per Annexure A, dated 29.07.2007; and in consideration of several representations as per 'Annexure -'C' to 'G'; further declaring the communication dated 12.12.2007 as per 'Annexure H' as illegal and un authorized and impermissible in law.
b) Issue a writ in the nature of mandamus, or such other suitable writ, directing the respondents 1 and 2 herein; to pay the interest liability of the petitioner, for the period of delay in handing over the possession of the properties, from the date of deposit by the petitioner, till the date of handing over the possession.
c) Issue a writ in the nature of mandamus, or such other suitable writ, directing the respondents 1 and 2 herein; to notify the offices of K.I.A.D.B. and the authorities of HESCOM of the sale proceedings so as to clear the statutory dues as per condition no 5 in the acceptance letter under Annexure B."
11. We have perused the pleadings and the original records summoned. The leaned Single Judge
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(as her Lordship was then was) has been pleased to hold that respondent No.2 extended concessions to the debtor i.e., respondent No.3. We are constrained to respectfully disagree with the same, in view of the facts and circumstances involved.
12. The learned counsel for the borrower has placed reliance on the following rulings:
1. Abraham Ezra Isaac Mansoor vs. Abdul Latif Usman (AIR 1944 BOM 156) (paragraph 5).
2. L K Trust vs. EDC Ltd., and Others (AIR 2011 SC 2060) (paragraphs 18, 21 and
22).
3. Gajaraj Jain vs. State of Bihar (LAWS (SC) 2004 - 05-29 (paragraphs 11 - 15).
4. Narandas Karsondar vs. S A Kamtam and others (AIR 1977 SC 774) (paragraph 37).
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5. Maganlal vs. M/s.Jaiswal Industries Neemach and others (AIR 1989 SC 2113) (paragraph 21).
6. Mathew Varghese vs. M Amritha Kumar (2014) 5 SCC 610) (paragraph 35).
7. New Kenilworth Hotels (P) Ltd., vs. Ashoka Industries Ltd., and others (1995) 1 SCC
161) (paragraph 4).
Rulings on behalf of Shree Anand Life Science Ltd.,:
1. S Balachandran vs. Tamil Nadu Industrial Investment Corporation, Rep. by its Managing Director and Others (paragraphs 7, 8, 17, 21, 22).
2. N Paramasivam vs. Tamil Nadu Industrial Investment Corporation Ltd., and others., (paragraphs 5-7, 18-26, 31, 33, 37, 38)
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3. Narandas Karsondas vs. S A Kamtam and another (equivalent citation AIR 1977 SC 774).
4. Thressiamma Varghese vs. Kerala State Financial Corporation (AIR 1986 Ker 222) (paragraph 12).
5. Pattam Khader Khan vs. Pattam Sardar Khan and another (1996) 5 SCC 48).
6. Nidhpal Sharma and others vs. Union of India (Uai) and others (equivalent citation AIR 1996 All 360) (paragraphs 35-39).
7. K Narayana Rao vs. Meenakshi Velu and others (equivalent citation (1973) 2 MLJ 467).
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8. Abraham Ezra Issac Mansoor vs. Abdul Latif Usman (1944) 46 BOMLR
159).
9. Alka Ceramics vs. Gujarat State Financial Corporation (1992 73 CompCas 209 Guj.) (paragraphs 1-5, 6-14, 22, 24-25, 28, 39, 42-50, 53-
55).
10. Bai Dosabai vs. Mathurdas Govinddas and others (1980 AIR 1334)
11. Hamzabi and others vs. Syed Karimuddin and others.
12. Shakeena and another vs. Bank of India and others.
13. The records reveal that the loan was specifically extended for the purpose of establishing a pulverizing unit and the main consumer being M/s. Indal Co., and that the said company had
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subsequently established its own pulverizing unit resulting in loss of the debtors' primary consumer and end user resulting in complete loss of business. These facts are a matter of record and borne out by the communication and note sheets maintained by the Finance Corporation wherein it has been stated that the debtor has fallen on hard times on account of loss of its business in view of the company namely Indal Co., establishing its own pulverizing unit. In all probability, it is probably this fact apart from the provisions of Section 60 of the Transfer of Property Act, 1882, which went into the learned Single Judge granting the limited relief to the borrower of depositing the entire dues and retain the unit and in the event of the failure by the borrower to pay the dues within the stipulated period to execute the sale deed in favour of the petitioner and hand over possession of the property. With regard to the first
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part of the direction holding that the borrower is liable to deposit the entire sum alongwith applicable interest for redemption of the property, we have no quarrel with the same and the learned Single Judge has rightly held so. In so far as the direction to execute the sale deed we disagree for the following reasons:
The bidder has not complied with the conditions stipulated under the auction notification. The bidder apart from depositing the bid amount has failed to deposit the other sums stipulated under the auction notification. The tender conditions mandated that apart from depositing the bid amount the bidder was also required to deposit the charges/statutory liabilities, satisfying the claim of various authorities, like the KIADB/KPTCL/ESI claims, stamp duty, sales tax/VAT, documentation charges, transfer charges. The successful bidder was also required to deposit stamp duty at the rate of 5% of the sale amount on
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the machinery and VAT at the rate of 12.5% of the sale amount and the bidder was required to take possession within fifteen days from the date of accept.
14. From a perusal of the records we have not found any material which evidences any effort been made by the bidder to either deposit the other sums due from it. In fact, we have perused all the communications and not in a single communication has the bidder ever demanded for execution of the sale deed much less attempted to deposit either the stamp duty or the registration charges etc., A perusal of the writ petition papers also does not disclose even a prayer in that direction. The entire endeavour by the bidder has been to obtain possession of the unit without executing a sale deed. Even after the same was pointed out to the learned counsel appearing on behalf of the bidder. The learned counsel was unable to satisfy this Court in this regard.
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15. Apart from the above the Tender cum Sale Offer Form (ink page 1147 of the original records) also incorporates a condition whereby the Corporation reserves the right to give an opportunity to the borrower to bring a better offer even after the offer of the bidder is accepted. Further it also incorporates another condition whereby the Corporation has reserved to itself the right to accept or reject any offer without assigning any reasons. The conditions 8 and 10 are reproduced herein below:
" 8. In case the offer is accepted by the Corporation, the Corporation has a procedure to give an opportunity to the borrower, to bring a better offer. If the borrower brings a better offer than the one received, the highest offerer would again be called for negotiation along with the new offerer.
9. Xxx
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10. The Corporation reserves the right to accept/reject any offer without assigning any reasons. The decision of the Corporation is FINAL and binding on all the intending purchaser."
16. It is pertinent to note that in the present case there has been no acceptance of the offer by the competent authority. Neither the bidder nor the Corporation have been able to place any material demonstrating the acceptance of the offer by the competent authority. Apart from the representations by the bidder and acceptance of the bid amount a detailed examination of the records has not revealed any document which can be termed as an acceptance of the offer by the competent authority. Neither the bidder nor the Corporation have been able to demonstrate that the tender inviting authority is the authority competent to accept the offer and order for transfer of the assets that have vested in the
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Corporation in terms of Section 29 of the State Financial Corporation Act, 1951. Thus, the undisputed position is that, though there was a requirement for the successful bidder to deposit the other charges and stamp duty there is no material nor even a plea by the bidder that the same has been complied with. In all probability the successful bidder did not demand the same as it was aware that there was no acceptance of its offer. In the absence of any acceptance of the offer the question of locus standi of the highest bidder to seek for transfer of possession becomes questionable. The said fact is further compounded by the absence of any prayer in the nature of direction to the Corporation to accept the highest offer. The petition neither includes a prayer for a direction to the Corporation to accept the highest offer nor a direction to the Corporation to receive the other statutory amounts and other charges nor a direction to execute
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a sale deed. On a pointed query neither the learned counsel for the bidder nor the learned counsel for the Corporation has been able to point out any provision which enables the Corporation to transfer possession of movable and immovable properties without the acceptance of the offer and formalisation of sale proceedings. The demand for possession in the absence of a sale certificate is premature.
17. The learned counsel for the bidder has argued in extenso with regard to the validity of the OTS scheme that have been extended to the borrower. In fact, the basis for the contention, even as per the learned counsel, to call in question the extension of the OTS scheme, is allegedly on the basis of the confirmation of sale. When the learned counsel for the bidder was repeatedly asked to point out the document which reflects the confirmation of sale in terms of the State Financial Corporation Act, 1951 or
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the proceeding under which the offer of the bidder has been accepted the learned counsel for the bidder is unable to point out the same. In fact, both the learned counsels, for the bidder and the Corporation have skirted the pointed queries pertaining to the authority competent to accept the offer and issue confirmation of sale. It is also not in dispute that no sale certificate has been issued confirming the sale in favour of the bidder. In the absence of a sale certificate or even proceedings confirming the sale the right of the bidder to question the extension of time under the OTS to deposit the amount is without foundation and has no legs to stand on.
18. Apart from the above we are also constrained to express our shock at the rate at which valuable property of the Corporation has been sought to be gifted away. The property in question is admittedly part of an industrial area lying on the
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outskirts of Belagavi city and situated on the National Highway leading to Pune-Bombay. It is not in dispute that the industrial layout is a well developed layout and with the availability of several amenities. Despite the same the initial bid for 1 acre of the land was a mere 5.5 lakh rupees. On a query it was informed by the learned counsel for the Corporation that the market value was fixed by the officials of the Corporation on the basis of the allotment price fixed by the KIADB which has developed the industrial layout and that no other sale transaction nor the existing market value has been looked into to arrive at the market value. In our considered opinion the Corporation has adopted an highly suspicious and erroneous approach to fix the market value. In our opinion the land value alone would have been, even at a throw away price, atleast five times the market value fixed for the land in question. The lands in and
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around Belagavi are all irrigated lands with high agricultural potential. In the case of the instant land there is no dispute that it possesses commercial potential also. Despite these facts the Corporation has contrived to fix the market value at a pittance.
19. In view of the above facts and circumstances, we conclude that there has been no acceptance of the offer or confirmation of the offer by a competent authority. In the absence of such confirmation of sale the right vested in the Corporation under the conditions noted supra are exercisable. Though several rulings have been relied upon, in our considered opinion the law laid down by the Hon'ble Apex Court in the case of Narandas Karsondas vs. S A Kamtam and another (AIR 1977 SC
774) is squarely applicable to the facts and circumstances of the case. The right to seek redemption not having been extinguished and in our
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considered opinion the sale price having been arbitrarily fixed, we are of the opinion that the direction in so far as it relates to the execution of the sale deed in favour of the petitioner is unsustainable and warrants interference. In that view of the matter, the following -
ORDER
1. W.A. No.100018/2015 filed by the debtor is partly allowed.
2. W.A. No.100023/2015 filed by the bidder is dismissed.
The order of the learned Single Judge in so far as it relates to payment of all dues by the debtor is upheld and a direction in the alternative to execute the sale deed in the event of failure is set aside. In the event of the amounts are not deposited by the appellant in W.A. No.100018/2015 within a period of three months, the second respondent Finance
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Corporation is entitled to invite bids for sale of the property by way of open auction.
With the above direction the appeals stand ordered accordingly.
(Sd/-) JUDGE (Sd/-) JUDGE ykl