IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) TUESDAY, THE THIRTIETH DAY OF DECEMBER TWO THOUSAND AND EIGHT PRESENT THE HON'BLE SRI JUSTICE C.V.RAMULU WRIT PETITION No.28733 of 2008 Between: M/s. Parameswara Industries, rep. by its Managing Director Parameswara Reddy, S/o. Late Chinna Sai Reddy, Mahammadapur Village, Pangal Mandal, Mahaboobnagar District. ..... PETITIONER AND 1 The Andhra Pradesh State Financial Corporation, Mahaboobnagar Branch, rep. by its Branch Manger 1-7-57, Ayyapa Complex, Opp. Police Head Quarters, Mahaboobnagar-509001. 2 S. Vanaja Kumari D/o. S.N. Raju R/o. D.No.25/632, Srinivasanagar Colony, Nandyal, Kurnool District. 3 S. Nagasaraswathi W/o. S.N. Raju R/o. D.No.25/632, Srinivasanagar Colony, Nandyal, Kurnool District. .....RESPONDENTS Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court may be pleased to issue writ, order or direction more particularly one in the nature of Writ of Mandamus declaring the action of the 1st respondent in issuing the tender-cum-bid dated 15.12.2008 which was published on 16.12.2008 for the sale of collateral security property of the petitioner without proceeding against primary security and principle borrower as illegal and void and consequently set aside the tender-cum- bid for the sale of petitioner's property i.e., Land and Buildings of Rice Mill in Sy.No.22 & 23, Pangal Village & Mandal, Mahaboobnagar District. Counsel for the Petitioner: MR.BOKKA SATYANARAYANA. Counsel for Respondent No.1: MR.M.S.RAMACHANDRA RAO The Court made the following: THE HONOURABLE SRI JUSTICE C.V. RAMULU WRIT PETITION No.28733 OF 2008 ORDER: Heard both sides. In this writ petition, the petitioner is aggrieved by the action of the 1st respondent Corporation in issuing the impugned notification dated 15.12.2008, which was published on 16.12.2008, inviting sealed tenders-cum-bids for sale of the property of the petitioner, which was offered as collateral security to the loan obtained by respondents 2 and 3 from the 1st respondent Corporation, in view of the failure of the principal borrowers to repay the loan amount. The petitioner contends that the 1st respondent is not justified in seeking to sell its property offered as collateral security, by invoking the provisions under Section 29 of the State Financial Corporation Act, 1951 (for short ‘the S.F.C. Act’), without proceeding against the principal borrowers and primary security offered. There is no necessity of going into all the details. Learned counsel appearing for the 1st respondent Corporation has fairly conceded that the 1st respondent Corporation ought not to have proceeded under Section 29 of the S.F.C. Act to sell the property of the petitioner offered as collateral security, without proceeding against the principal borrowers. In the circumstances, the impugned notification dated 15.12.2008, published on 16.12.2008, issued by the 1st respondent is set aside so far as the property of the petitioner shown at item No.11 is concerned. However, it is made clear that this order does not preclude the 1st respondent Corporation from proceeding against the petitioner in accordance with law. The writ petition is accordingly allowed. No order as to costs. ___________________ JUSTICE C.V. RAMULU 30th December, 2008 Note: Issue C.C. in four days. BO IBL