TMI Blog2012 (10) TMI 295X X X X Extracts X X X X X X X X Extracts X X X X ..... ular paper and also in the "New India Express" a widely circulated English newspaper on 18.09.2010 and the Corporation had received nine offers and after protracting negotiations with all the bidders, the offer of the appellant was accepted being the highest. The Corporation before putting the appellant in possession again issued a notice dated 21.9.2010 to 1st respondent enquiring whether he would match the offer. 1st Respondent did not avail of that opportunity as well. It is under such circumstances that sale letter dated 1.10.2010 was issued to the appellant with a copy to all the Directors/Promoters/Guarantors of 1st respondent company. The appellant paid the balance consideration of ₹ 5,65,20,000 on 11.10.2010 and the Sale Memo was extended on that date and the property was also delivered. Thus no illegality in the procedure adopted by the Corporation, since 1st respondent had failed to comply with the directions issued by the co-ordinate Bench of the Orissa High Court which gave liberty to the Corporations to proceed in accordance with Section 29 of SFC Act - Section 29 of the State Financial Corporation Act, 1951 - Rights of Financial Corporation in case of default - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of 25 years with a renewable clause. There was default in repayment of the loan amount, which led OSFC issuing a demand notice to 1st respondent on 7.2.1991, followed by a recall notice dated 30.11.1991. The respondent was also served with a show cause notice dated 16.12.1994 followed by recall notices dated 4.1.1995 and 13.3.1996. 5. 1st respondent then filed a Writ Application No. 2513 of 1996 on 20.3.1996 before the High Court of Orissa to quash the recall notice dated 13.3.1996 and for rehabilitation. The High Court disposed of that writ application with a direction to respondents 2 and 5 (OSFC IPICOL) to consider the request of 1st respondent for rehabilitation package. On 9.3.2006, an OTS scheme was introduced by OSFC and 1st respondent applied for settlement of its loan account under that scheme. On 18.3.2006, the benefit of the scheme was extended to 1st respondent by OSFC and agreed in principle to settle the term loan account on payment of Rs. 1,16,21,200/- on or before 18.4.2006, subject to certain terms and conditions which were as follows: 1. The settlement amount shall either be paid in one lump sum on or before Dt. 18.04.06 (within 30 days of this settlemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment, IPICOL shall have the right of requital." 7. We notice that despite of waiver of Rs. 2,26,85,800 and Rs. 1,88,21,099 by OSFC and IPICOL respectively, 1st respondent did not comply with the terms and conditions of the OTS scheme, consequently, OSFC and IPICOL informed 1st respondent that they had withdrawn OTS offer. 8. We find, on 31.3.2007, yet another OTS scheme of 2007 was launched by OSFC and, again, an offer was made to 1st respondent to avail of the benefit of that scheme. OSFC, on 4.10.2007, requested 1st respondent to pay the settlement amount of Rs. 1,16,21,200 with delayed payment of interest within 10 days. 1st respondent did not comply with that request as well, consequently, OSFC, on 28.12.2007, withdrew the offer and advised 1st respondent to pay the entire dues as per the agreement, failing which 1st respondent was informed that recovery proceedings would be initiated for realization of the dues. Later, OSFC sent a demand notice dated 22.8.2008 stating that the total loan outstanding as on 31.12.2007 was Rs.4,52,94,691 and 1st respondent was called upon to pay the amount, failing which it was informed that recovery proceedings would be initiated. 9. 1st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led the same shall be considered on its own merit by both the Corporations either separately or jointly provided there is any scheme available for such settlement by the Corporations. In the event, the Petitioner fails to deposit the aforesaid amount by 20.6.2010, both the Corporations shall be at liberty to take such action as permissible under law under the State Financial Corporation Act." [Emphasis supplied] 11. 1st respondent did not comply with even the above mentioned order. OSFC then issued a registered notice dated 8.7.2010 to 1st respondent pointing that since it had failed to comply with the above mentioned order of the Court, OSFC would be at liability to initiate proceeding under the SFC Act. The 1st respondent was, therefore, asked to liquidate the entire outstanding amount as on 30.6.2010, failing which 1st respondent was informed that OSFC would be initiating action under Section 29 of SFC Act. Later, OSFC issued a seizure order dated 2.8.2010 of the property and that order was executed on 15.9.2010 and the possession of the unit was taken over "as is where is" basis. 12. OSFC, during seizure, got prepared a valuation report dated 17.09.2010 from its panel val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by DDAC on 29.9.2010 and the order was communicated to the 1st respondent. 14. DDAC, in pursuance to the auction notification in the newspapers, received altogether 9 bids and, after negotiations with the auctioneers, the offer of the appellant was found to be the highest at Rs. 774 lacs, which was accordingly accepted OSFC delivered the possession of the land, building and machinery/furniture and fixtures to the appellant vide possession letter dated 11.10.2010. 15. 1st respondent, as already stated, then approached the Orissa High Court and filed the present writ petition No. 17711 of 2010 to quash the cancellation of the OTS dated 28.12.2007, sale letter dated 1.10.2010 and also for other consequential reliefs, which were granted by the Division Bench of the Orissa High Court, the operative portion of which reads as follows: "For the reasons stated supra the writ petition is allowed. Rule issued. The letters dated 28.12.2007 and 1.10.2010 (Annexure-5 Annexure-8 series) cancelling the proposal for OTS and rejecting the representation dated 29.9.2010, the public sale notice dated 19.9.2010 (Annexure-6), the sale letter dated 1.10.2010 (Annexure-8 series), the sale agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot followed for the sale of the mortgaged properties. 19. We express our strong disapproval of the manner in which the Division Bench of the High Court has virtually sat in judgment over the judgment of another co-ordinate Bench. We are of the view that the Division Bench of the High Court overlooked some vital facts which have considerable bearing on the outcome of this dispute, consequently, reopened a lis which has attained finality, due to non-compliance of the various directions issued by the co-ordinate Bench of the High Court. Failure to comply with the various directions issued by the co-ordinate Bench in Writ Petition No. 13376 of 2008 and the order passed in Review Petition No. 99 of 2010 was completely overlooked by the Division Bench. Appreciation of Facts 20. Litigations in courts are won or lost mainly on facts more on law. Duty is cast on all the parties who appear in a court of law to place the correct facts so that the court can draw correct inferences which enable it reach a logical, reasonable and just conclusion. Wrong facts lead a Court to wrong reasoning and wrong conclusions. Duty is also cast on the Court to take note of the facts which are correctly p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled of all the benefits of the OTS scheme extended by the Corporation, consequently they had to cancel the said scheme. Further, it was also stated that in spite of public notification and their intimation and frequent requests, 1st respondent did not apply for the OTS 2007 Scheme. (6) When Writ Petition came up for hearing on 07.04.2010, the Court had enquired whether 1st respondent would be still willing to deposit the amount of Rs. 1 crore for consideration of their claim under OTS. The matter again came up for hearing before the Division Bench on 21.04.2010 on which the Court disposed of the writ petition directing 1st respondent to deposit Rs. 50,00,000/- each before each of the two Corporations by 20.6.2010, failing which it was ordered that the Corporations would be at liberty to take such action as permissible under law under the State Financial Corporation Act. (7) OSFC issued a loan recall notice to 1st respondent on 8.7.2011, since it did not comply with the directions in WP No. 13376 of 2008 with a request to pay the entire outstanding amounts within 30 days, failing which the 1st respondent was informed that action would be taken under Section 29 of SFC Act. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 repayments are not received as per the scheduled time frame, it will disturb the equilibrium of the financial arrangements of the Corporations. They do not have at their disposal unlimited funds. They have to cater to the needs of the intended borrowers with the available finance. Non-payment of the instalment by a defaulter may stand on the way of a deserving borrower getting financial assistance." 24. The Court again reminded of the fact that the fairness required of the Corporations could not be carried to the extent of disabling them from recovering what is due to them and held as follows: "13. .The Corporation is an independent autonomous statutory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9.2010 which was after the expiry of 30 days from the date of notice dated 08.07.2010. Therefore the guidelines laid down in the above referred judgment have also been complied with. Even otherwise, the guidelines issued by this Court in Vincent Paul's case (supra) would operate only prospectively and that too depends upon the facts and circumstances of each case. 27. We have found that the procedure laid down under Section 29 of SFC Act has been followed by the Corporations. The independent valuer submitted his report on 17.09.2010 and the off-set price of the unit was fixed after getting it valued by an independent valuer. It was based upon the valuation report that the off-set price of the unit was fixed at Rs. 1,77,45,000/- on 17.09.2010. Sale notice was published in the News Papers on 18.09.2010 and the auction was conducted on 29.09.2010. In our view, the High Court has committed an error in holding that off-set price of property was not valued before the conduct of auction and that there was no due publication of auction. Sale notice, it is seen, was published in the "Samaj" a vernacular paper and also in the "New India Express" a widely circulated English newspaper on 18. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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