B.D. Agarwal, J. - (1.) Under agreement dated November 12, 1976, the UP Electronic Cot:- proration Ltd., a Government company (hereinafter described as UPLC) and M/s Anand Electronics (a partnership firm) (petitioner No 2) joined to float a company in the joint sector under the name and style of Uptron Anand Ltd. (petitioner no. 1) (hereinafter referred to as the 'Company') for the manufacture of black and white television picture tubes. The shareholding of the UPLC in the venture is 26 %, the partners in the petitioner no. 2 the partnership firm, held shares to the extent of 25% and the rest is held by members of the public. Under the articles of association of the company there were to be six directors nominated by the UPLC and five by the petitioner no 2. The managing director was to be a nominee of the petitioner no 2 with the approval of the UPLC from among its directors, the Chairman was to be a nominee of the UPLC from among its six nominee directors. The unit is located on plot no 8, Block No A, Panki Industrial Estate, Kanpur, covering an area of nearly 7 acres and has imported machinery. It was registered on May 30, 1977, and went into production in 1981.
(2.) Due primarily, it appears, to discord in the internal management between the two sets of promotes, the company came under cloud. The production ceased in or about December, 1984. The UP Financial Corporation, a statutory body created under the State Financial Corporations Act, 1951 (respondent no 1) (hereinafter referred to as the Act) had on November 20, 1979, and December 18, 1980, sanctioned loan of Rs. 30 Iakhs to the company of which Rs. 29,28,800 had been actually advanced in terms of the agreement accompanied with the hypothecation deeds. Due to the persistent default on the part of the company, the petitioner no. I to abide by its commitment in regard to the payment of interest, the UP Financial Corportation (for short, UPFC) issued notice dated February 23, 1985, under section 29 of the Act raising claim of Rs. 34,68,743.59 comprising of Rs. 29,29,800 as principal and Rs. 5,39,943.59 as interest (upto December 31, 1984) (Annexure 6). The petitioner No. I was called upon to pay this amount within 45 days from the date of notice, in addition to interest till the date of payment. The operative part of the notice reads as follows : "That if you fail to make payment of the aforesaid amount within the specified time as mentioned in para 3 above, the Corporation in exercise of the power vested in it under section 29 of the SFC's Act (No 63 of 1951) (Central Act) shall take over the physical possession of M/s Uptron Anand Ltd. Plot no 8, Block 'A', Uptron Estate, Panki Industrial Estate Kanpur, and take further action for the transfer of the assets of the unit mortgaged to the Corporation."
(3.) The payment not being made, the UPFC, entered into physical possession of the Company on April 8, 1985, Notice dated April, 22, 1985, was published thereafter by the UPFC in some leading newspapers of the country on April 25, and May 2, 1985, inviting tenders upto May 10, 1985 accompanied with earnest money of Rs. 25,000 for the transfer of the assets of the unit subject to the statutory liabilities (Annexure 9). The company is not specifically named in this notice, but from the other description and details given, there could be no mistake as to the identity and giving the name is claimed to have been avoided lest the good will be adversely affected.;