- (1.) JUDGEMENT This appeal is directed against an order restraining the appellant from selling the cold-storage in question by inviting tenders and setting out certain other terms for repayment of the loan advanced to the respondent.
(2.) FROM the facts as they emerged on the record it appears that a loan of Rupees 25,00,000/- was sanctioned to the plaintiff for the construction of a cold-storage against which only a sum of Rs. 14,60,300/- had been advanced to the plaintiff by 31st March, 1989. Up to 30th Sept., 89 a sum of Rs. 8,02,208/-and odd had also become due by way of interest. On being approached by the plaintiff the repayment of the outstanding loan was re-scheduled by the appellant vide its letter dated 13-7-1988 according to which interest amounting to 4.50 lacs was repayable in four instalments. The first two instalments were due in Feb., 1989 and August, 1989 but the plaintiff failed to pay them. The plaintiff does not deny having taken the loan of Rs. 14.30 and admittedly he has also not complied with the conditions of reschedulement permitted by the appellant. It is also obvious from the record that he did not comply with the conditions subject to which temporary injunction was granted on 14-1-1990. The order ultimately stood vacated due to non-compliance of its condition. The application playing for temporary injunction by the plaintiff was founded on two main grounds. Firstly, it was alleged that the defendant Corporation cannot realise its dues by sale of plaintiffs property by inviting offers through tender and can do so only by sale through public auction. Secondly it was urged that the entire loan amount had not been advanced to the plaintiff and, therefore, the repayment instalment fixed under the original agreement had become irrelevant and unenforceable. To allow the plaintiff to pay back the loan, the instalments had to be fixed again in accordance with the amount of loan actually advanced. Both these grounds have found acceptance by the trial Court.
(3.) HAVING heard learned counsel for the parties we are unable to agree with the trial court on any of these points. On the first question the trial court appears to have based its opinion on several decisions of the Supreme Court and one decision of this Court but it appears to us that the learned Judge failed to understand the ratio of their decision. In fact all the Supreme Court decisions referred to by the trial court have been considered in 1989 ALJ 834 : (AIR 1989 All 96), Durgesh Cold Storage v. U.P. Financial Corporation. Most of these cases dealt with arbitrary state action and most of them had nothing to do with sale of public property or rights therein by inviting tenders. In Durgesh Cold Storage the debtors property had been sold by the Financial Corporation for recovery of its debts by public auction. The sale was set aside because it had been held very hastily without making any proper publicity of it to public. The Court, therefore, held (at page 100): "On the facts of the present case we find that the tender offered by respondent No. 3 was the sole tender which does not ensure that the offer of the highest or best price was received after due publicity but on the contrary it indicates that the public had not been given proper notice of the sale of the property inviting them to participate in an open auction and the sale has been made by negotiation and inviting tender for a price which according to the petitioner, is far below the price that could be expected for such a valuable property. Hence when the intention is to get the best price the sale of property ought to take place publicly and in an open auction where large number of people could offer their bids for the unit in an open auction. Hence we are of the opinion that the circumstances of the present case do not inspire confidence that the sale had been conducted in a fair manner publicly ensuring best price for the cold-storage." In AIR 1988 SC 157, Haji T. M. Bassan Rawther v. Kerala Financial Corporation, it was observed that generally the property owned by State should be sold by public auction or by inviting tenders because by adopting these methods the property can fetch highest price and will also ensure fairness in the State activity. According to the view expressed by the Supreme Court, State and its instrumentality should act fairly. Their action should be legitimate, dealings above board, transaction entered into without aversion or affection, discrimination should be absent and should not give an impression of bias, favouritism or nepotism. It was further observed that "ordinarily these factors would absent if the matter is brought to public auction or sale by tenders but these rules can be departed from if justified by acquisition of circumstances. The relevant part of the decision is as under (at page 161): "The State Financial Corporation invited tenders for the sale of the disputed property under notification. The appellant submitted highest tender in response to the said notification. He was given all concessions for payment of the tender amount. But he did not. He negotiated with the Managing Director of the Corporation for facilities for payment by instalments. That was also granted to him. There again he failed. Thereupon the property was offerred to one J who was next in order i.e. the person who had submitted the second highest tender and was sold to the firm in which J was partner. Held that the auction of the Corporation in offering the property to J and selling the same at his request to the firm of which J was the partner was perfectly justified and could not be found fault with". ;