- (1.) R. R. K. Trivedi, J. Petitioner Pradeep Kumar Mittal, is sole proprietor of the unit M/s Aroma Chemicals. Thus, petitioner is common in both petitions. The questions of law and fact involved in both petitions are common and thus both peti tions can be decided by a common order against which parties also have no objec tion. Writ Petition No. 5119 of 1987 shall be the leading case.
(2.) FACTS giving rise to writ petition No. 5119 of 1987 are that, petitioner took a loan of Rs. 1,70,000 in the year 1971 from U. P. Financial Corporation," Civil Lines, Kanpur. (hereinafter referred to as the Corpora tion ). As the loan was not paid by the petitioner in accordance with schedule provided in agreement a recovery certificate dated 14th July, 1980 was issued by the Cor poration for realisation of amount of Rs. 2,01,245. 42 as land revenue arrears from petitioner. Petitioner by his letter dated 3rd February, 1981 proposed that he has 1. 2 acres land in spare with him which is not used for industrial purposes and has already been mortgaged to Corporation. Petitioner proposed that this land if sold, can fetch Rs. 1,00,000. Petitioner requested Corporation to accord sanction and the manner in which it will execute or arrange to execute the saledeeds. It appears thai, petitioner also deposited Rs. 19,000 with the Corporation. The Corporation vide letter dated 6th March, 1981 requested the Collector to keep the recovery in abeyance for a period of 2 months provided the petitioner pays the collection charges. It was expected that during this period of 2 months the proposal submitted by the petitioner shall be finalised. A copy of this letter has been filed as Annexure-2 to the writ petition. Finally a letter was written on 27th March, 1981 (an-nexure-3 to the writ petition) by the Cor poration to Collector, Moradabad to treat the recovery certificate dated 14th July, 1980 as withdrawn provided the patty pays the collection charges. In this letter it was also mentioned that party has deposited fur ther an amount of Rs 11,000 and the proposal for the payment of balance dues is under active consideration. A copy of this letter was sent to petitioner with the advice to deposit the collection charges with the Collector and follow the instruct'ons con veyed vide letter dated 6th March, 1981. It shall be relevant to reproduce here the in structions given in the letter dated 6th March, 1981: "copy to M/s Aroma Chemicals, Moradabad Road, Chandausi with the advice to remit the collection charges to the Collector. They are further advised to deposit a further sum of Rs. 11,000 by 15-3- 81. They are also advised to bring the boiler and chimney back to the site and instal the same within this month. We also advise you that we agree in principle to allow you to dispose of the excess land measuring 1. 02 acres ap proximately for which you are required to submit. a concrete proposal within this month stating the name of the party who is interested in purchasing the same and the price agreed upon. They are also advised to make payments @ Rs. 5,000 p. m. from April, 1981 onwards till final arrangements. " Thereafter letter dated 3rd April, 1981 (annexure No. 4 to the writ petition) was written by petitioner to Corporation appreciating the withdrawal of the recovery certificate. In this letter various other facts were also mentioned as to how the unit of petitioner could not make profits. By this letter again a proposal was made to sell the land and machinery. Finally it was stated, that the petitioner has land, machinery and building worth Rs. 2. 5 lacs in addition to those listed above which can be offered as security and after the repayment of this amount he requested to grant facility of rephasing of instalments and additional loan etc. Again a request was made to ac cord necessary permission for the disposal of the spare machinery. It appears that, some proposals for the sale of the land were forwarded to the Corporation. Consequent ly, Corporation, vide letter dated 2nd May, 1987, asked the petitioner to visit the office so that discussion may be made to finalise the proposals. Then petitioner wrote a let ter dated 30th May, 1981 that he has sold the land to 7 parties and received Rs. 35,500. from the purchasers. It was also intimated that remaining plots could not be sold in absence of the permission of the Corpora tion. The rate at which the land was sold was mentioned Rs. 27 per sq. metres and Rs. 20 per sq. metres, according to the situation of the plots. Thereafter correspondence be tween petitioner and respondent continued. On 24th April, 1985 petitioner was re quested to clear overdues as he failed to pay them in spite of the promise made. It is also mentioned if dues are not paid action against petitioner under Section 29 of the State Financial Corporations Act (hereinafter referred to as the Act), may be taken. On 17th June, 1985 a letter was writ ten by the Corporation to the petitioner that it's two officers inspected the Unit on 12th June, 1985 and on inspection it was found that some machinery parts have been removed from the unit. Generator and mortgaged land has been sold. It was stated that on verification it was further found that Generator which was alleged to have been handed over to M/s Rahul Enterprises for repair, does not exist and in spite of best efforts the existence of such firm could not be ascertained. The petitioner was asked to restore the machinery in the unit. In his reply dated 27th June, 1985 petitioner as serted that the land has been sold with the permission of the Corporation. Some ex planation was also given about the missing machinery parts. On 19th April, 1986 Cor poration wrote a letter to petitioner requir ing him to pay the entire overdues within 10 days, failing which the action under Section 29 of the Act shall be taken. It was also mentioned that sufficient time has already been given. Thereafter as the dues were not paid the possession of the unit was taken by the Corporation under Section 29 of the Act on llth September, 1986 and thereafter tenders were invited from willing pur chasers and the unit was sold in favour of respondent No. 3 on 3rd February, 1987 for a consideration of Rs. 1,15,000. Aggrieved by the aforesaid sale petitioner filed this writ petition on 13th March, 1987. The writ petition was entertained and an interim order was passed directing respondent No. 3 not to alienate the machinery of the unit concerned. By means of this petition petitioner has sought relief to quash the sale of the unit in favour of respondent No. 3 in pursuance of the advertisement dated 21st October, 1986, Writ Petition No. 1742 of 1988 has been filed by the petitioner challenging the recovery of the amount of Rs. 3,21,155 from petitioner as land revenue arrears. It ap pears that after the sale of the unit the aforesaid balance amount was left unpaid, therefore, proceedings were started to recover the amount as land revenue arrears and a citation dated 6th January, 1988 was served on the petitioner to pay the aforesaid amount. By this petition petitioner has chal lenged the citation (annexure-1 to the writ petition ).
(3.) PARTIES have exchanged counter and rejoinder affidavits in the first writ petition. However, in second writ petition in spite of the time granted counter affidavit has not been filed by the respondents including Corporation. We have heard learned counsel for the parties. Learned counsel for the petitioner, challenged the sale of the unit in favour of respondent No. 3 on the ground that the possession of the unit was taken by the Corporation under Section 29 without giving any information to petitioner, during the period steps for rehabilitation of his sick unit were in progress. The property worth Rs. 5,00,000 has been sold for a considera tion of Rs. 1,15,000 and thus a tremendous loss has been caused to the petitioner. The action on the part of the Corporation was arbitrary and mala fide. The advertisement inviting tenders was published on 21st Oc tober, 1986 and last date for submitting tenders was 23rd October, 1986. It has been submitted that the time given was wholly insufficient to attract intending purchasers and the adequate price could not be fetched on account of the short notice. Reliance has been placed by the learned counsel for the petitioner in case of Mahesh Chandra v. U. P. Financial Corporation and others, AIR 1993 SC935.;