G.S. Sandhawalia, J. - (1.) CHALLENGE in the present writ petition is to the action of the respondent Corporation putting to auction the industrial unit of the petitioner and for quashing the consequential sale dated 10.03.1992 in favor of respondent No. 2 (Now represented by legal representatives).
(2.) THE case of the petitioner is that M/s Hari Ram Oil and General Mills and Industrial concern of which they were partners was sanctioned loan of Rs. 3.00 lacs and financial assistance against entitlement of central subsidy by respondent No. 1 of Rs..55 lacs was given and in pursuance of same, mortgage deed dated 09.07.1987 was executed. The said loan was repayable within eight years in 15 equal installments of Rs. 23,000/ -on half yearly basis. The loan was being paid as per schedule from 15.07.1988 to 15.01.1991. Due to the illness of Hari Ram on 15.07.1991, there was a default towards the installment due on 15.07.1991. the petitioner then received notice on 04.09.1991 asking them to deposit Rs..49 lacs by 11.09.1991 otherwise action under Section 29 of the State Financial Corporation Act, 1951 (hereinafter referred to as "The Act") would be taken. The Corporation was informed about the difficulties which the unit was facing due to the illness of Hari Ram and informed them that the petitioners had never defaulted in the repayment of installments and that they had already paid back Rs. 1.39 lacs out of Rs. 3.00 lacs as advanced to them. On 08.11.1991, another notice was issued, wherein, the Corporation asked for a payment sum of Rs. 60,081.76 after adding the interest from 15.01.1991 to 14.11.1991. The petitioners alleged that they again met respondent No. 1 and requested them as since Hari Ram was fighting for the life therefore, time be granted to repay the loan. Hari Ram died on 28.12.1991 and the respondent -Corporation put a lock on the Industrial Unit on 05.01.1992 without giving any notice under Section 29 of the Act. It was thereafter that they sold the Industrial Unit and other assets on 10.03.1992 just for Rs. 3.75 lacs whereas, the property was worth Rs. 15 lacs and the transaction in favor of respondent No. 2 was challenged on the ground that they had paid Rs. 1.20 lacs and rest of the amount was to be paid in installments. Accordingly, it was alleged that this sale deed is at a throwaway price and is patently malafide, illegal and is in gross violation of Section 32 of the State Financial Corporation Act, 1951; since undue haste was shown by respondent No. 1 by selling the Industrial Unit of the petitioner. It is alleged that the unit holder could be informed of the sale and he could bring a third party to give a higher offer after appropriate evaluation. In the grounds of the writ petition, recalling of the loan and action under Section 29 was also challenged apart from the auction. In defense, the respondent -Corporation in written statement alleged that the petitioner committed default in payment of Rs. 1,000/ - which was interest due on 15.05.1991 and payment of installment of principal amount of Rs. 24,000/ -due on 15.07.1991. In view of this, notice dated 04.09.1991 was issued by respondent -Corporation calling upon the industrial concern to pay the default amount by 11.09.1991, failing which, action under Section 29 would be taken. Reference was also made to the reminder dated 08.11.1991 for default payment, which was not paid. It was also pleaded that they received information from the local Mandi that the unit had been abandoned by the partners who had declared themselves bankrupt and there was no chances of recovery. Therefore, there was apprehension that the Corporation would not recover its loan. The said action under Section 29 was taken on 01.01.1992 since another installment of interest was due on 15.11.1991 which was also not paid and no objection was taken by the partners of the firm of the Industrial unit when the possession of the unit was taken by the Corporation. Thereafter, pursuant to advertisement dated 29.02.1992 and 02.03.1992, the unit was sold to respondent No. 2 being the highest offered and agreement dated 24.03.1992 was entered in his favor on payment of Rs. 1.50 lacs.
(3.) IT was alleged that the offer submitted in pursuance to the tenders were low however on negotiation respondent No. 2 had agreed to purchase the property in question for Rs. 3.70 lacs. The allegations of the illness of Hari Ram partner was denied for want of knowledge and the representation (Annexure P -8) was also denied as none had appeared on any date on behalf of the petitioners. It has been further alleged that after taking of the possession no representation had been made for release of property of the payment of outstanding dues. In fact it was alleged on 17.03.1992 that the petitioner concern had requested the Corporation to refund residual amount due to them after adjusting the amount due to the Corporation from the sale of the Industrial concern. Regarding the payment to be made by respondent No. 2, it was alleged that the installment had to be split over a period of two years and that the petitioners were free to join the corporation when the advertisement for sale of the property in question was issued but they never objected to the said sale. Therefore, they were stopped from their conduct from filing the present writ petition which was admitted vide order dated 13.01.1993 with the direction that the interim order would continue which was that further action in respect of the auction dated 10.03.1992 be stayed.;