IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) THURSDAY, THE SIXTEENTH DAY OF JULY TWO THOUSAND AND NINE PRESENT HON'BLE SRI JUSTICE R.SUBHASH REDDY WRIT PETITION No.15047 of 2003 Between : M. Kishore Reddy, s/o M. Vidyasagar Reddy, R/o Flat No. 102, Subhodaya Apartments, Shalivahananagar Road, Gaddi- Annaram, Dilsukhnagar, Hyderabad. ..... PETITIONER AND 1 The General Manager, Andhra Pradesh State Financial Corporation, Chirag-ali lane, Abids, Hyderabad. 2 P. Mohan Reddy S/o late Sathi Reddy, R/o House No. 2-5, Chaitanyapuri, Stayanarayanapuram, Hyderabad. .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to issue a Writ more in the nature of Writ of Mandamus directing to the respondent No.1 to implement the sale letter No. AFC/SM/OP-II/2002-2003 dated 5-5-2003 and 21-5-2003, and declare the order of the respondent No.1 passed in AFC/GM/OP-II/2003- 2004/008292 as null and void, in the interest of justice. Counsel for the Petitioner : MR.M.GOVIND REDDY Counsel for the Respondent No.1 : MR.J.PARTHASARATHY Counsel for the Respondent No.2 : MR.P.VENUGOPAL RAO The Court made the following : ORDER : In this writ petition, the petitioner has questioned the letter, dated 19th July 2003, issued in reference No.AFC/GM/OP-II/2003-04/008292, by the 1st respondent- General Manager of A.P. State Financial Corporation. By the aforesaid order, the respondents have cancelled the sale confirmation letter, issued in favouir of the petitioner, in letter No.AFC/SM/OP-II/2002-2003/003657, dated 21.05.2003. 2. The 1st respondent-Andhra Pradesh State Financial Corporation, which is a Statutory body constituted under the State Financial Corporation Act, 1951, has sanctioned a sum of Rs.17.70 lakhs in favour of M/s.Karshak Hydraulic Drillers, by way of loan, to its Proprietor Sri P.Sathi Reddy. The said loan was secured by hypothecation of machinery and also by mortgaging the land belonging to the surety, admeasuring 2359.50 square yards, situated at Kothapet in Uppal Mandal of Ranga Reddy District. In view of the default committed by the loanee, proceedings were initiated by the 1st respondent-Corporation under Section 29 of the State Financial Corporation Act, and they have proceeded against the collateral security. The petitioner herein has offered to purchase the said collateral security for a consideration of Rs.31.50 lakhs and he has remitted an amount of Rs.7.62 lakhs by way of Earnest Money Deposit (EMD). On accepting the offer of the petitioner, initially, sale confirmation letter was issued vide letter, dated 5th May 2003, issued in Letter No.AFC/SM/OP-II/2002- 2003/002336, but on further representation made by the petitioner for modification of certain conditions, further orders are issued on 21st of May 2003 in letter No.AFC/SM/OP-II/2002-2003/003657, with a condition to deposit the entire sale consideration amount of Rs.31.50 lakhs, including the EMD, within a period of 30 days. Pursuant to the same, the petitioner has delivered a cheque for the balance sale consideration on 19.06.2003, for which, a printed receipt, dated 19.06.2003, was issued to the petitioner, subject to realization of amount. It is stated that the said amount was credited to the account of the Corporation on 21.06.2003, but in the meanwhile, on 20.06.2003, the 2nd respondent has deposited the entire sale consideration amount, and in view of the same, respondents have issued the impugned letter, cancelling the sale confirmed in favour of the petitioner, by returning the total sum of Rs.31.50 lakhs vide Cheque No.577312, dated 19.07.2003. It is also to be noticed at this stage that pursuant to return of the total amount by the Corporation by way of cheque, the petitioner has received and encashed the same in the year 2003. 3. In this writ petition, the impugned letter of cancellation is questioned mainly on the ground that having accepted the amount of balance sale consideration from the petitioner, there is no reason for the Corporation to cancel the sale confirmed in favour of the petitioner. 4. In the counter affidavit filed by the 1st respondent, while denying the allegation of the petitioner, it is stated that in the letter, dated 21.05.2003, the 1st respondent- Corporation has specifically mentioned that the petitioner was required to remit the amount within a period of thirty days. It is further stated that when the cheque was delivered to the 1st respondent towards payment of balance consideration amount on 19.06.2003, a receipt was issued to the petitioner, subject to realization. It is stated in the counter affidavit that the 2nd respondent has deposited the Demand Draft on 20.06.2003 towards the total outstanding dues payable i.e. a sum of Rs.21.30 lakhs as on the said date. It is submitted that in view of the payment made by the 2nd respondent, the impugned orders are passed, cancelling the sale confirmed in favour of the petitioner. 5. Heard Sri M.Govind Reddy, learned counsel for petitioner, Sri J.Parthasarathy, learned Standing Counsel appearing for the 1st respondent-Corporation, and Sri P. Venugopal Rao, learned counsel appearing for the 2nd respondent. 6. In this case, it is to be noted that while accepting the offer of the petitioner to purchase the subject property for Rs.31.50 lakhs, he was intimated vide letter, dated 21.05.2003, that he shall deposit the remaining consideration within a period of 30 days. From the impugned order, it is clear that the sale confirmation was cancelled on the ground that the petitioner has not deposited the balance consideration within a period of 30 days. It is also not in dispute that the balance amount is paid by way of cheque, which he has delivered on 19.06.2003, and which is credited to the account of the 1st respondent-Corporation only on 21.06.2003. In the meanwhile, the 2nd respondent has already deposited the entire amount due to the 1st respondent-Corporation by way of Demand Draft, on 20.06.2003. In that view of the matter, having not paid the amount and having issued the cheque dated 19.06.2003, which was realized on 21.06.2003 by the 1st respondent-Corporation, it is doubtful whether the petitioner has paid the amount within the time stipulated under Condition No.1 of the confirmation letter, dated 21st May 2003. Further, it is also to be noted that while passing the impugned order, the entire amount of Rs.35.50 lakhs paid by the petitioner, was refunded to him by way of a cheque, and it is also not in dispute that he has already encashed it. Having encashed the said amount in the year 2003 itself, petitioner cannot seek any directions to annul the impugned cancellation. 7. The learned Standing Counsel appearing for the 1st respondent-Corporation has placed reliance on the judgment of Supreme Court in the case of Karnataka State Financial Corporation v. N.Narasimahaiah[1]. In the aforesaid judgment, the Hon’ble Supreme Court, while interpreting the scope of provisions under Sections 29 and 31 of the State Financial Corporations Act, 1951, has clearly held that Section 29 empowers the Corporation to proceed with the property of the industrial concern, and Section 31 takes within its sweep, both the properties of the industrial concern as well as the surety. In the instant case, it is not in dispute that the property is of the surety, and the sale is pursuant to the proceedings initiated under Section 29. In that view of the matter, more particularly, having not deposited the money within the stipulated period of 30 days and having taken back the amount refunded by the Corporation without any prejudice, the petitioner is not entitled to any relief in this writ petition. 8. For the aforesaid reasons, the writ petition is devoid of merit and it is accordingly dismissed. No order as to costs. _____________________ R.SUBHASH REDDY, J 16th July 2009 ajr [1] AIR 2008 SC 1797