TMI Blog2002 (1) TMI 1266X X X X Extracts X X X X X X X X Extracts X X X X ..... stand has always been different, and the Corporation opposes the prayer, we grant the prayer in the peculiar circumstances of the case. To test the bona fides of the respondents, we direct that the Corporation shall intimate the respondents within a month from to-day upto date amount due. Within six months from the date of such intimation, the respondents shall repay the amount in full. In case of failure to make the payment, it shall be open to the Corporation to dispose of the seized unit in accordance with law in such manner as would bring in the highest price. The appeal is allowed to the extent indicated above. - C.A. 607 OF 2002 - - - Dated:- 28-1-2002 - B.N. Kirpal, K.G. Balakrishnan and Arijit Pasayat, JJ. JUDGMENT Haryana Financial Corporation (hereinafter referred to as 'Corporation') assails judgment dated 6.10.2000 of the Punjab and Haryana High Court in regular second appeal No. 3801/2000 whereby judgment and decree in Civil Suit no. 86 of 1995 instituted before the Civil Judge (Senior Division), Ambala and judgment and decree in Civil Appeal no.37 of 1998 before the Addl. District Judge, Ambala affirming them were upheld. Respondents filed the suit seeking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f payments, respondent did not make any payment. Thereafter on 1.3.1995 an instalment of Rs.1,31,046/- fell due. As in the past, the respondent defaulted in making the payment of the said instalment. As the respondent no.1 was a chronic defaulter in making payment of the instalments action under Section 29 of The State Financial Corporation Act, 1951 (in short 'the Act') was taken, after recalling the loan under Section 30 of the Act. Possession of the unit of the respondents was taken by the Corporation. Respondents instituted Civil Suit no.86 of 1995 in the court of the Civil Judge (Senior Division), Ambala seeking a decree for permanent injunction restraining the Corporation and its functionaries from auctioning the unit which was seized. The said suit was decreed by the trial court. It was, inter alia, observed that since the defendants (meaning the Corporation and its functionaries) did not give breathing time to the unit and its possession was taken within the period of one year from the date of last instalment, the action cannot be sustained. Reliance was placed on the decision of this Court in Mahesh Chandra vs. Regional Manager, U.P. Financial Corporation and Ors. (1993 (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mercial banks. Several State Governments desired to set up in the States similar Corporations with a view to supplement the work of Industrial Financial Corporation. The intention was that the State Financial Corporations shall confine to the medium and small industrial units and as far as possible to such cases as are outside the scope of the Industrial Financial Corporation. Since the incorporation, regulation and winding up of such Corporations fall within the purview of Parliament by Entry No.43 of the Union List, request was made to the Government of India to enact necessary enabling legislation, and that is how the Act was enacted. The Corporation as an instrumentality of the State deals with public money. There can be no doubt that the approach has to be public oriented. It can operate effectively if there is regular realization of the instalments. While the Corporation is expected to act fairly in the matter of disbursement of the loans, there is corresponding duty cast upon the borrowers to repay the instalments in time, unless prevented by unsurmountable difficulties. Regular payment is the rule and non-payment due to extenuating circumstances is the exception. If the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... If tenders are invited then the highest price on which tender is to be accepted must be intimated to the unit holder. (4) (a) If unit holder is willing to offer the sale price, as the tenderer, then he should be offered same facility and unit should be transferred to him. And the arrears remaining thereafter should be rescheduled to be recovered in instalments with interest after the payment of last instalment fixed under the agreement entered into as a result of tendered amount. (b)If he brings third parties with higher offer it would be tested and may be accepted. (5) Sale by private negotiation should be permitted only in very large concerns where investments runs in very huge amount for which ordinary buyer may not be available or the industry itself may be of such nature that by (sic many) normal buyers may not be available. But before taking such steps there should be advertisements not only in daily newspapers but business magazines and papers. (6) Request of the unit holder to release any part of the property on which the concern is not standing of which he is the owner should normally be granted on condition that sale proceeds shall be deposited in loan account." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uote the classic passage from the judgment of Lord Greene M.R. in Associated Provincial Picture Houses Ltd. v. Wednesbury Corporation [1947 (2) ALL ER 680]: "It is true the discretion must be exercised reasonably. Now what does that mean? Lawyers familiar with the phraseology commonly used in relation to exercise of statutory discretions often use the word 'unreasonable' in a rather comprehensive sense. It has frequently been used and is frequently used as a general description of the things that must not be done. For instance, a person entrusted with the discretion must, so to speak, direct himself properly in law. He must call his own attention to the matters which he is bound to consider. He must exclude from his consideration matters which are irrelevant to what he has to consider. If he does not obey those rules, he may truly be said, and often is said, to be acting 'unreasonably'. Similarly, there may be something so absurd that no sensible person could ever dream that it lay within the powers of the authority." While this is not the occasion to examine the content and contours of the doctrine of fairness, it is enough to reiterate for the purpose of this case that the po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration is to secure the best price for the property to be sold. This can be achieved only when there is maximum public participation in the process of sale and everybody has an opportunity of making an offer. Public auction after adequate publicity ensures participation of every person who is interested in purchasing the property and generally secures the best price. But many times it may not be possible to secure the best price by public auction when the bidders join together so as to depress the bid or the nature of the property to be sold is such that suitable bid may not be received at public auction. In that event, any other suitable mode for selling of property can be by inviting tenders. In order to ensure that such sale by calling tenders does not escape attention of an intending participant, it is essential that every endeavour should be made to give wide publicity so as to get the maximum price. These are aspects which Corporations have to keep in view while dealing with disposal of seized units. The view in Mahesh Chandra's case (supra) appears to have been too widely expressed without taking note of ground realities and the intended objects of the statute. If the gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration contained in Section 29 of the Act by requiring the defaulting unit holder to be associated or consulted at every stage in the sale of the property. A person who has defaulted is hardly ever likely to cooperate in the sale of his assets. The procedure indicated in Mahesh Chandra's case will only lead to further delay in realization of the dues by the Corporation by sale of assets. It is always expected that the Corporation will try and realize the maximum sale price by selling the assets by following a procedure which is transparent and acceptable, after due publicity, wherever possible. The subsequent decisions of this Court in Gem Cap's (supra), Naini Oxygen (supra) and Micro Cast Rubber (supra) run counter to the view expressed in Mahesh Chandra's case. In our opinion, the issuance of the said guidelines in Mahesh Chandra's case are contrary to the letter and the intent of Section 29. In our view, the said observations in Mahesh Chandra's case do not lay down the correct law and the said decision is overruled. Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which relian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her case is not at all decisive." "Precedent should be followed only so far as it marks the path of justice, but you must cut the dead wood and trim off the side branches else you will find yourself lost in thickets and branches. My plea is to keep the path to justice clear of obstructions which could impede it." Learned counsel for the respondents during the course of hearing submitted that unit is in the possession of the Corporation. They will make effort to make payment of the amount due to the Corporation, if a reasonable time is granted. Though their stand has always been different, and the Corporation opposes the prayer, we grant the prayer in the peculiar circumstances of the case. To test the bona fides of the respondents, we direct that the Corporation shall intimate the respondents within a month from to-day upto date amount due. Within six months from the date of such intimation, the respondents shall repay the amount in full. In case of failure to make the payment, it shall be open to the Corporation to dispose of the seized unit in accordance with law in such manner as would bring in the highest price. The appeal is allowed to the extent indicated above. - - T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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