- (1.) Special leave granted.
(2.) The Karnataka State Financial Corporation, appellant herein, is a State Financial Corporation established under the provisions of the State Financial Corporations Act, 1951 (hereinafter referred to as "the Act"). Respondent 1, a company registered under the Companies Act, set up a unit for the manufacture of rubber and like products. The appellant extended finance to the tune of Rs. 14.15 lakhs to Respondent 1 on 21/3/1981. In August 1981 the unit of Respondent 1 commenced production but from its very inceptionit continued to incur losses. In order to make the unit viable the appellant, on 14/12/1981, rescheduled the payment of the loan. A further sum of Rs. 1.65 lakhs was sanctioned in March 1984 for the purpose of purchasing a Diesel Generating Set. On 10/10/1986 the appellant extended rehabilitation assistance under the RSR Scheme of IDBI and treating the unit as a sick unit sanctioned a further amount of Rs. 3.93 lakhs. In spite of these facilities Respondent 1 continued to make default in payment of instalments for repayment of the loan. On 23/10/1990 the appellant took over the possession of the unit of Respondent 1 in exercise of the powers conferred on it under Section 29 of the Act. Thereafter the appellant took steps for sale of the unit and for that purpose a number of advertisements were issued inviting offers. No suitable offer was received in response to the first two advertisements. In response to the third advertisement issued in August 1991, five offers were received. Out of them the offer of Shri P. K. Joseph on behalf of M/s Chemtech Industries for a sum of Rs. 24 lakhs was the highest and the Board of the appellant approved the said offer and decided that the communication for acceptance of the offer should be sent only after 15/10/1991 so as to give an opportunity to Respondent 1 to bring any other offer for a higher amount. Respondent 1 did not bring any offer. But, in the meanwhile, Shri P. K. Joseph withdrew his offer on 30/11/1991. Thereafter Respondent 1 indicated that it would submit a proposal for the revival of the unit but it failed to come up with any concrete proposal. Therefore, a fresh advertisement for the sale of the unit was issued on 25/8/1992. In response to the said advertisement, three offers were received. One offer was of M/s Chemtech Industries for Rs. 23 lakhs for land, building and machinery. The second offer was of M/s Prime Inputs (India) Ltd. for a sum of Rs. 18 lakhs in respect of land and building only and the third offer was of M/s Shakti Rubbers for Rs. 6 lakhs for plant and machinery only. A joint meeting of the offerers was held on 28/9/1992. Respondent 1 was also invited. After considering the said offers, a tentative decision was taken to accept the offers submitted by M/s Prime Inputs (India) Ltd. and M/s Shakti Rubbers. Respondent 1 sent a letter dated 21/10/1992 seeking 15 days' time to make payment and submit a proposal for revival of the unit. By letter dated 12/11/1992, further time was sought by Respondent 1 till 15/12/1992. On 4/1/1993, an offer was submitted by Respondent 2 to purchase the entire unit including land, building, plants, furnishing and fixtures for Rs. 25 lakhs. The said proposal of Respondent 2 as well as the offers received earlier were considered by the Board of the appellant and it was decided to accept the offers of M/s Prime Inputs (India) Ltd. and M/s Shakti Rubbers. On 25/1/1993, agreement was entered for the sale of the entire unit to them. Thereafter, Respondents 1 and 2 filed the writ petition (CWC No. 3591 of 1993 in the Karnataka High court which has given rise to this appeal. The said writ petition of Respondents 1 and 2 was allowed by the learned Single Judge of the High court by judgment dated 11/8/1993 whereby all proceedings subsequent to receipt of tenders pursuant to public notice were quashed and the appellant was directed to observe directions 2, 3 and 4 contained in para 22 of thejudgment of this court in Mahesh Chandra v. Regional Manager, U. P. Financial Corpn. Writ Appeal No. 3279 of 1993 filed by the appellant against the said judgment of learned Single Judge was dismissed by the division bench of the High court by judgment dated 15/2/1994. Hence this appeal.
(3.) As indicated earlier, the learned Single Judge, while allowing the writ petition filed by Respondents 1 and 2, has directed the appellant to observe directions 2, 3 and 4 contained in para 22 in the judgment of Mahesh Chandra v. Regional Manager, U. P. Financial Corpn. The said directions are as follows "(2 Valuation of a unit for purposes of determining adequacy of offer or for determining if bid offered was adequate, should always be intimated to the unit holder to enable him to file objection if any as he is vitally interested in getting the maximum price. (3 If tenders are invited then the highest price on which tender is to be accepted must be intimated to the unit holder. (4 (A) If unit holder is willing to offer the sale price, as the tenderer, then he should be offered same facility and unit should be transferred to him. And the arrears remaining thereafter should be rescheduled to be recovered in instalments with interest after the payment of last instalment fixed under the agreement entered into as a result of tendered amount. (B) If he brings third parties with higher offer it would be tested and may be accepted. ";