SHANTI SARUP Vs. STATE OF PUNJAB

JUDGEMENT

(1.) The present writ petition has been filed under Articles 226/227 of the Constitution of India seeking a writ in the nature of Certiorari for quashing the proceedings initiated by respondents no.2 and 3 Punjab Financial Corporation (hereinafter referred to as "Corporation') under Section 29 of the State Financial Corporation Act, 1951 (hereinafter referred to as "the Act") in respect of the residential property belonging to the petitioner bearing No.2709/2719 situated in Ward No.8, Sirhind Mandi, District Fatehgarh Sahib and for issuance of a writ in the nature of Mandamus directing the release of the said property.

(2.) The case of the petitioner as pleaded is that son of the petitioner Rupinder Kumar Sharma was the sole proprietor of industrial concern M/s Aditi Agro Mills, Fatehgarh Sahib which had obtained a term loan of Rs.40 lacs from the Corporation vide mortgage deed dated 31.3.1993. The house in question bearing No.2709/2719 situated in Ward No.8, Sirhind Mandi, District Fatehgarh Sahib was the absolute ownership of Ved Parkash Sharma, father-in-law of the present petitioner and said Ved Parkash Sharma being the maternal grandfather of Rupinder Kumar Sharma in his capacity as surety/guarantor offered the said house as collateral security with respondent no.2 for the purpose of raising loan and the same was, thus, mortgaged with the Corporation as per mortgage deed dated 31.3.1993. The properties belonging to the industrial concern measuring 1 kanals 14 marlas as well as the factory building alongwith the machinery was also mortgaged. The said industrial concern M/s Aditi Agro Mills, Fatehgarh Sahib started committing default from 15.3.1994 and accordingly, the Corporation took over the property under Section 29 of the Act. The father-in-law of the petitioner Ved Parkash Sharma passed away on 4.2.2008 executing a will dated 13.11.2006 whereby he bequeathed the said residential house in favour of his son-in-law, on the basis of which the present petitioner has become owner of the property. The Corporation purportedly exercising its powers under Section 29 of the Act has taken over the deemed possession of the house on 17.10.2002 in order to enforce the liability of the guarantor/surety. It is further pleaded that an FIR was also lodged against the son of the petitioner under Section 406 IPC at Police Station, Sirhind and he was convicted vide judgment dated 2.11.2007 and the son of the petitioner lost his mental equilibrium and left his house and thereafter the son of the petitioner was found with great efforts and till today he needs constant supervision and medical care having been rendered mentally unfit. It is further pleaded that proceedings under Section 29 of the Act could not be invoked against the guarantor and the Corporation had a right under Section 31(aa) for enforcing the liability of any surety and the claim of the Corporation was also time barred as default in repayment of loan was on 15.3.1994 and the last payment was due against the industrial concern on 15.3.2001. The Corporation had also written to the Nagar Council, Sirhind, District Fatehgarh Sahib that the house was mortgaged with the Corporation and, therefore, the ownership of the house should not be changed in the name of any other person vide letter dated 6.11.2009. It is further pleaded that the Corporation had no such right as the house could always be transferred to any person subject to the mortgage in favour of the Corporation. The property of industrial concern had also been sold away by the Corporation at throw away price of Rs.12,18,100/- and also the machinery for Rs.3,50,000/- whereas the Corporation had raised a demand of Rs.2,69,82,610/- as per letter dated 10.12.2010 in response to a RTI query.

(3.) The petition was contested on the ground that the will had not been probated and the petitioner did not have any right and the writ petition suffers from delay and latches as the possession of the house in question was taken on 17.10.2002 and the petition has been filed after a lapse of 9 years whereas the dues against the loan advanced has accumulated beyond Rs.2.69 crores. It is averred that the suit property being under mortgage with the special stipulation that the Corporation has a right to sell the property without court intervention, the writ petition was not maintainable. It was pleaded that the liability of the principal debtor and the surety was co-extensive and the value of the property was highly insufficient to discharge the liability and since the principal debtor has committed default in not paying the amount so advanced with stipulated interest, the Corporation was justified in taking action under Section 29 of the Act for recovery of the loan with interest by taking over possession of the residential house. It was further averred that Ved Parkash Sharma the original owner of the house was signatory to the mortgage deed dated 31.3.1993 and the mortgage agreement itself provided the power to sell the mortgaged properties without intervention of the court. The value of the house was stated to be Rs.12 lacs which was highly inadequate for recovery of loan and there was no other way to recover the same except by way of sale of the property. The provisions of Section 31 of the Act were supplemental and not in derogation of Section 29 of the Act and, therefore, this case was fully covered by A.P.State Financial Corporation Vs. M/s GAR Re-rolling Mills and another, 1994 2 SCC 647. It is further pleaded that the Act being a special Act, the general provisions of Limitation Act are not applicable and the interest of the State exchequer was involved. It is alleged that the son of the petitioner Rupinder Kumar Sharma had sold the machinery and he had been convicted by the Additional Chief Judicial Magistrate, Fatehgarh Sahib and the Corporation is yet to recover Rs.2.69 crores with further interest and the house was still to be put to auction.