- (1.) THIS petition is filed questioning the action of the first respondent-A. P. State Financial Corporation (Corporation) in publishing a notice proposing to auction the property of the petitioner given as collateral security for the amount due to it from the principal debtor.
(2.) THE case of the petitioner is that he and one Bairi Sadaiah together established M/s. Bhagyalaxmi Mini Modern Rice Mill at a cost of about Rs. 4. 5 lakhs after securing a loan of Rs. 2,36,500/- from the respondent-Corporation, but the respondent-Corporation released only Rs. 1,12,840/- towards the first instalment and did not sanction the second and final instalments and so he and his partner had obtained a loan elsewhere, completed the construction and installation of the Mill and paid an amount of Rs. 90,000/- towards loan amount to the respondent-Corporation and as disputes cropped between him and his partner Sadaiah, he filed a suit in the Court of II Additional Senior Civil judge, Warangal for dissolution of partnership. While things stood thus, through a registered notice dated 12-10-2001 he informed the respondent-Corporation that Sadaiah is mismanaging the Mill, Machinery and requested it to close the account under one time settlement scheme, but without taking his request into consideration, the respondent-Corporation issued sale notice dated 31-03-2004 that it is going to auction the properties belonging to him and sadaiah under Section 29 of the State Financial Corporation Act, 1951 (for short 'the Act' ). Since the plots advertised for sale were offered as collateral security to the respondent-Corporation, the respondent- Corporation without proceeding to sell the primary security, put those properties to public auction. It came to his notice that in pursuance of the notice published by the respondent-Corporation, it received an offer to purchase 360 square yards for rs. 44,030/- and thereupon the respondent-Corporation pasted a notice dated 03-09-2004 informing that it is going to finalize the offer made by smt. B. Srilatha, if no tenders are received higher than the one made by her within one week from that notice and so the action of the respondent-Corporation in issuing sale notice dated 31-03-2004 for sale of his plot No. 34 admeasuring 360 square yards in Sy. No. 625 of Peddamagadda village is liable to be quashed.
(3.) ON behalf of the respondent-Corporation, the senior Branch Manager filed his counter affidavit inter alia stating that to its knowledge, petitioner is not the partner of M/s. Bhagyalaxmi Mini Modern Rice Mill to which loan was granted as the proprietary concern belonging to B. Sadaiah. No information was furnished by Sadaiah to the Corporation about his entering into a partnership with the petitioner. Though it sanctioned a term loan of Rs. 2,36,500/- to M/s. Bhagyalaxmi Mini Modern Rice Mill, only Rs. 1,42,090/- was released. The debtor paid only Rs. 90,000/- towards part of interest arrears. Petitioner offered his property as collateral security to the loan sanctioned to M/s. Bhagyalaxmi Mini modern Rice Mill by hypothecating the property which was advertised for sale in vaartha Daily News Paper on 31-03-2004 along with the land and buildings belonging to M/s. Bhagyalaxmi Mini modern Rice Mill as after seizing the unit on 24-06-2003 as per the power vested in it under Section 29 of the Act.;