Y.K. Sabharwal, J. - (1.) The question that arises for consideration in these matters is whether Karnataka State Industrial Investment and Development Corporation (for short, KSIIDC) acted in a bona fide manner in sale of the properties of the borrower exercising its right under Section 29 of State Financial Corporation Act, 1951 (for short, the Act).
(2.) The appeals have been preferred by KSIIDC as well as M/S Vinpack Investments Pvt Ltd., the purchaser (for short Vinpack) against the judgment and order of the Division Bench of the Karnataka High Court directing KSIIDC to undertake the entire sale process once again and give opportunity to respondent No. 1 to bring better offer for the properties.
(3.) Respondent No. 1, M/S Cavalet Industries Ltd. (for short, the borrower) borrowed a sum of Rs. 116.30 lakhs from KSIIDC as per the sanction letter dated 22nd April, 1991. The borrower committed defaults in payment of the installments and, therefore, KSIIDC on 30th March, 1995 passed an order under Section 29 of the Act for taking over the unit of the borrower for recovery of its dues. However, KSIIDC did not implement that order. There was considerable correspondence between KSIIDC and the borrower, in regard to the offers of some third parties, who were proposing either to purchase the unit or enter into some working arrangement with the borrower to run the unit. The efforts of the borrower to enter in to arrangement with third parties to work the unit did not yield any result. The borrower also did not clear the dues and, therefore, KSIIDC passed another order dated 30th October, 1996 under Section 29 of the Act for taking over the unit to recover a sum of Rs. 98,36,636 which was due as on 24th May, 1996 and in pursuance of the order, possession of the unit was taken over on 14th November, 1996.;