IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No.2851 of 1998 YADUVIR MISHRA, SON OF LATE KAPLESHWAR MISHRA, RESIDENT OF VILLAGE SOHRAI, POLICE STATION SAKRI(MADHUBANI) DISTRICT-MADHUBANI, PROPRIETOR OF M/S SHIV ENAMEL WORKS, INDUSTRIAL AREA, PANDAUL, DISTRICT-MADHUBANI…..PETITIONER VERSUS 1. THE STATE OF BIHAR 2. BIHAR STATE FINANCIAL CORPORATION THROUGH ITS CHAIRMAN, FRAZER ROAD, PATNA-800001. 3. THE MANAGING DIRECTOR, BIHAR STATE FINANCIAL CORPORATION THROUGH ITS CHAIRMAN, FRAZER ROAD,PATNA. 4. REGIONAL MANAGER, BIHAR STATE FINANCIAL CORPORATION, FRAZER ROAD, PATNA-800001. 5. ASSISTANT GENERAL MANAGER (II), BIHAR STATE FINANCIAL CORPORATION, FRAZER ROAD, PATNA. 6. DY. MANAGER, BIHAR STATE FINANCIAL CORPORATION, FRAZER ROAD, PATNA-800001. 7. BRANCH MANAGER, BIHAR STATE FINANCIAL CORPORATION MITHILA BRANCH, NEW INDUSTRIAL ESTATE, BELA, DISTRICT- DARBHANGA. 8. BRANCH MANAGER, BIHAR STATE FINANCIAL CORPORATION, MADHUBANI BRANCH, AT MADHUBANI, POLICE STATION- MADHUBANI, DISTRICT-MADHUBANI RESP0NDENTS IST SET. 9. SRI D.K.PATHAK, M/S AMIN METAL MACHINE WORKS, WALI-BASAI, DISTRICT THANE (MAHARASTRA)… ..RESPPONDENT 2ND SET..RESPONDENTS ----------- For the petitioner :- Mr. Ajay Kr. Thakur Mr. Gajendra Kumar Jha. For the respondent B.S.F.C. :- Mr. Y.V. Giri,Senior Advocate Mr. Ashish Giri, Advocate Mr. Jyoti Saran, Advocate. For the respondent No.9. None. 14 17.11.08. Petitioner is the proprietor and promoter of one M/S Shiv Enamel Works located in the Industrial Area of Pandaul in the District of Madhubani. He has appeared before the High Court challenging the action of respondents Bihar State Financial Corporation in taking possession of his plant and machinery as also auction of some of the machineries located in the unit which is evident from Annexure 13 of the writ application. Challenge is also being made to the order dated 2 3. 12. 1997 which is the notice for sale as contained in Annexure 14 and order dated 29.12.97 as contained in Annexure 15 which is order passed under Section 29 of the State Financial Corporation Act, 1951(hereinafter referred to as the Act). The petitioner was supposed to be unemployed educated youth who wanted to start the unit in enamel works and for which he made application before the State Financial Authorities way back in the year 1979. The application of the petitioner was processed and certain loan amounting to the tune of Rs. 12,00,000/- (Twelve lakhs) was sanctioned by the Financial Corporation. This contributions was supposed to be part of the corpus for the purpose of setting up the unit in question. No doubt, efforts had been made by him to set up the factory and even machinery was purchased in this regard, but from the assertions of the facts, there is no dispute that despite so called efforts made by the petitioner, the unit never became functional rights upto the year 1994-1995. From the materials on record it would show that the respondent Financial Corporation was not impressed by the effort of the entrepreneur in setting up of the unit. The outstanding loan and interest thereon kept mounting on the part of the petitioner. Respondents were forced to issue notice to the petitioner either to take corrective steps or repay the loan which was sanctioned to him in this regard. The communication after 1994 was carried on but nothing substantive came out of the same. The authorities decided to take action against the petitioner by exercising power under Sections 30 and 29 of the Act. 3 Subsequently, its seems that a public notice for sale of mortgage property including the unit of the petitioner was published in the Hindustan Times of Patna Edition on Friday, October 10, 1997. In addition to that, sale notice was also issued against the petitioner which has been brought on record as Annexure 14 which is dated 3.12.97. The order contained in Annexure 14 was also communicated to the petitioner as would be evident from perusal of the copy of order which has been brought on record as Annexure B/1 in the counter affidavit filed on behalf of respondent Corporation. It seems that no positive step was taken by the petitioner and subsequently the Respondents passed order dated 29.12.97 as contained in Annexure 15. Certain plant and machinery was auction sold and possession was given to one Mr. D. K. Pathak, the Proprietor of M/S Amin Metal Machines Works, Worli, Maharastra. In this situation, petitioner has filed the present writ application challenging the decisions of the respondent Corporation to be arbitrary and illegal and in breach of statutory provisions. Submission of the learned counsel appearing on behalf of the petitioner is that no open notice was issued to the petitioner, more so under Section 29 of the Act. Annexure 2/1 is the proposal given by B.S.F.C., the Sanctioning Authority, regarding terms and conditions of the loan for setting up the plant. Learned counsel for the petitioner also tried to take prevail and impress upon the Court that some kind of interpolation had been made in the dates which was incorporated in Annexure-13 for 4 delivery of possession of machinery indicated therein and it was pre- planned move by certain vested interest to create the present situation. Averment has also been made that notice with regard to Annexure 13 was issued on 1. 1. 1998 and on 1.1.1998, the machinery in question was taken possession of in favour of Respondent No.9, in a pre-planned manner. Petitioner got copy of notice on January 3rd, 1998, when possession had already been given to Respondent No. 9. A detailed counter-affidavit has been filed on behalf of Respondent- Financial Corporation. Though, notice was issued to private Respondent No. 9, but there is no representation on their behalf and they have chosen not to appear. Learned Counsel representing the Financial Corporation submits that there is no wrong doing on the part of the respondents and their action is in conformity with the law. Corporation has been monitoring the activities of the unit till 1994, . There was no indication from the inspection of the site to show that this unit will ever see production. The authorities decided to take back the loan amount in terms of Section 30 of the Act. They gave some more time to the petitioner in this regard but having failed they insisted to repay the loan amount with interest. They took follow up action for recovering the amount outstanding against the petitioner under Section 29 of the Act. In this regard public notice dated 10.10.97 was published in Newspaper (Annexure –C) and subsequent decisions were taken which are Annexures 14, 15. Corresponding sale and possession of order is Annexure 13. Even prima facie explanation 5 submitted by the petitioner does not appear to be true that the petitioner had no option on the point of repayment or re-possession. In this connection, many correspondences have been made before the consequential action as contained in Annexure-13 was taken against the petitioner Though, relief has been sought by the petitioner on two decisions of Hon’ble Supreme Court in case of Mahesh Chandra, Vrs. Regional Manager, U.P. Financial Corporation and others, A.I.R. 1993, S.C. 935, and in case of The State Financial Corporation and another, Vrs. M/S Jagdamba Oil Mills and another, A.I.R. 2002, S.C. 834, but keeping in mind the decision of Hon’ble Apex Court in case of Karnataka State Industrial Investment & Development Corpn. Ltd. Vrs. Cavalet India Ltd and others reported in (2005) 4 S.C.C. 456, it is difficult to accept the position. Hon’ble Supreme Court in para 19 of the decisions lays down the legal principles as under. (i) The High Court while exercising its jurisdiction under Article 226 of the Constitution does not sit as an appellate authority over the acts and deeds of the Financial Corporation and seek to correct them. The doctrine of fairness does not convert the writ courts into appellate authorities over administrative authorities. (ii) In a matter between the Corporation and its debtor, a writ court has no say except in two situations: (a) there is a statutory violation on the part of the Corporation, or 6 (b) where the Corporation acts unfairly i.e. unreasonably. (iii) In commercial matters, the courts should not risk their judgments for the judgments of the bodies to which that task is assigned. (iv) Unless the action of the Financial Corporation is mala fide, even a wrong decision taken by it is not open to challenge. It is not for the courts or a third party to substitute its decision, however, more prudent, commercial or business like it may be, for the decision of the Financial Corporation. Hence, whatever the wisdom (or the lack of it) of the conduct of the Corporation, the same cannot be assailed for making the Corporation liable. (v) In the matter of sale of public property, the dominant consideration is to secure the best price for the property to be sold and this could be achieved only when there is maximum public participation in the process of sale and everybody has an opportunity of making an offer. (vi) Public auction is not the only mode to secure the best price by inviting maximum public participation, tender and negotiation could also be adopted. (vii) The Financial Corporation is always expected to try and realise the maximum sale price by selling the assets by following a procedure which is transparent and acceptable, after due publicity, wherever possible and if any reason is indicated or cause shown for the default, the same has to be considered in its proper 7 m.p. perspective and a conscious decision has to be taken as to whether action under Section 29 of the Act is called for. Thereafter, the modalities for disposal of the seized unit have to be worked out. (viii) Fairness cannot be a one-way street. The fairness required of the Financial Corporations cannot be carried to the extent of disabling them from recovering what is due to them. While not insisting upon the borrower to honour the commitments undertaken by him, the Financial Corporation alone cannot be shackled hand and foot in the name of fairness. (ix) Reasonableness is to be tested against the dominant consideration to secure the best price. With the above settled position by the Apex Court, the Court is in agreement with the submissions of learned counsel for the respondent-Corporation that there is no scope for this Court to do reappraisal of the action of the Corporation which was taken in the interest of the Corporation. It is certified that the action taken by the respondents against the petitioner is a creation of his own doing. If the Corporation is vested with the power under Sections 30 and 29 of the Act in absence of any wrong doing this Court is not inclined to interfere with the impugned orders. The writ application is dismissed accordingly. (Ajay Kumar Tripathi, J.) 8 m.p.