CIVIL WRIT JURISDICTION CASE No.13789 OF 2002 (In the matter of an application under Article 226 of the Constitution of India.) REALTORS PRIVATE LIMITED----------------------------Petitioner Versus THE BIHAR STATE FINANCIAL CORPORATION, PATNA & ORS--Respondents For The Petitioner : Mr. Chitranjan Sinha, Senior Advocate, M/S Siddhartha Prasad & Md. Faiz Ahmed, Advocates. For The Respondent : Mr. P.K.Shahi, Senior Advocate. (B.S.F.C.) Mr. Mukesh Kumar Thakur For the Intervener : Mr. S.S.Dwivedi, Senior Advocate. ========= P R E S E N T THE HON'BLE MR. JUSTICE V.N. SINHA V.N.Sinha,J. This writ application has been filed by M/S Realtors Private Limited (hereinafter referred to as “the Company”) for quashing the sale order dated 27.05.1998, Annexure-3 issued by the Managing Director of the Bihar State Financial Corporation (hereinafter referred to as “the Corporation”), whereunder mortgaged assets of M/s Patliputra Rubber Industries Private Limited, Patna, the promoter, Respondent No.-3 was directed to be sold in favour of the Company with further prayer in the writ - 2 - application to declare the consequential steps taken in the light of the said sale order to be illegal and then to direct the Corporation to refund the amount of Rs. 40 lacs with 12 per cent interest received by it in lieu of the sale order from the petitioner-Company. 2. In support of the prayer made in this writ application learned counsel for the petitioner has submitted that the promoter, Respondent No.3 had taken 4 Bigha one Katha and 12 Dhurs of land bearing plot nos. 330, 338, 334 and 333 appertaining to Khata Nos. 158, 131 and 128 of Tauzi Nos. 5281, 5171 and 5271 respectively on lease for 30 years from Lady Anis Imam vide lease deed dated 7.9.1967, Annexure-1 and having obtained the aforesaid lands on lease the promoter, Respondent No.3 mortgaged the lease hold lands in favour of the Corporation for raising a loan of Rs. 5 lacs for establishing a cycle tyre factory over the mortgaged lands vide mortgage deed dated 28.02.1968, as contained in Annexure-2 to this application. 3. It appears the promoter, Respondent No.3 having taken the loan in terms of the mortgage deed dated 28.02.1968 established the cycle tyre factory over the lease - 3 - hold lands but before the promoter could liquidate the loan the Unit became sick and was taken over by the Corporation in terms of the powers contained in Sections 30 and 29 of the State Financial Corporations Act, 1951 (hereinafter referred to as “the Act”). The Corporation having taken over possession of the Unit notified the Unit for sale in the newspaper “The Hindustan Times”, Patna edition dated 19.03.1995 and 22.4.1996 in response whereto petitioner Company and others submitted their offer. The Board of Directors of the Corporation having considered the offers accepted the offer of the petitioner Company in its meeting held on 28.03.1998 whereafter the impugned sale order dated 27.05.1998, Annexure-3 was issued stating that the petitioner-Company has already deposited 15 per cent of the consideration money of Rs. 5 lac 25 thousand (including the earnest money of Rs. 20,000/-) and it should deposit the balance amount of Rs. 29,75,000/- converted into loan repayable within five years in 20 quarterly equal instalments each of Rs. 1,48,750/- by 30.4.2003. After issue of the sale order by the Corporation petitioner and the Corporation formalized the terms of the sale order by executing - 4 - agreement for sale-cum-payment of balance loan, which is dated 13.07.1998 and is contained in Annexure-4 to this application. Perusal of the sale order dated 27.05.1998, Annexure-3 and the agreement for sale-cum-payment of balance loan dated 13.07.1998, Annexure-4 would indicate that out of the total mortgaged lands measuring 4 Bigha, 1 Katha and 12 Dhurs, 20 Kathas of land was in possession of the Corporation which was offered to be sold on “As is Where is” basis. It appears, petitioner failed to make payment in terms of agreement for sale-cum-payment of balance loan dated 13.07.1998 whereafter the Corporation issued notice dated 21.07.2000, Annexure-5 under Sections 30 and 29 of the Act calling upon the petitioner to pay the principal amount of Rs. 29,75,000/- with up-to-date interest within three months from the date of the notice, failing which the Corporation will be at liberty to proceed under Section 29 of the Act as also to take steps for recovery of the amount by resorting to the provisions contained in Public Demand Recovery Act, 1914. 4. Petitioner having received the notice dated 21.07.2000, Annexure-5 to pay the balance amount in terms - 5 - of agreement for sale-cum-payment of balance loan dated 13.07.1998, Annexure-4 filed the writ application on 10.12.2002 praying inter alia to quash the sale order dated 27.05.1998, Annexure-3 as the Corporation being the mortgagee of the lease hold lands pursuant to lease deed dated 7.09.1967, Annexure-1 for a period of 30 years which expired on 06.07.1997 could not have offered for sale of the 20 Kathas of land as Corporation had no title over those lands and the original lessor/her legal heirs and representatives had already resumed possession in terms of the Clause of the lease deed itself and with reference to these facts it is submitted that the sale order dated 27.05.1998, Annexure-3 be quashed and Corporation be directed to refund the money received pursuant to the sale order, Annexure-3. In support of such plea learned counsel for the petitioner has relied on the judgment of the Hon’ble Supreme Court in the case of ABL International Ltd. and another Vs. Export Credit Guarantee Corporation of India Ltd and others, reported in (2004)3 SCC 553, paragraph 27, the case of Century Spinning & Manufacturing Co. Ltd and another Vs. The Ulhasnagar Municipal Council and another, - 6 - reported in AIR 1971 Supreme Court 1021, paragraphs 11 to 13 as also over the case of Treasurer of Charitable Endowments Versus S.F.B. Tyabji, reported in A.I.R.(35) 1948 Bombay 349 and with reference to the ratio decidendi of the three cases it is submitted that as the Corporation had no title over the lands-in-question it could not have issued the sale order as regards the lands which were the subject matter of the lease/mortgage deed and this Court should quash such sale order and direct for refund of the amount received in lieu of the sale order, Annexure-3. 5. By filing counter affidavit the Corporation has placed on record two sale notice dated 19.03.1995 and 22.04.1996, as contained in Annexure-A and with reference to the statements made therein it is submitted that the sale of the assets of the promoter, Respondent No.3 was notified on “As is Where is” basis with further stipulation that the Unit- in-question of the promoter is situate on lease hold lands measuring 2.18 acres. It is further submitted in this regard with reference to the letter of M.Ahsan Shahbuddin, one of the Director of the petitioner Company, dated 13.08.1997, Annexure-B that the Company was aware about the fact that - 7 - the lands over which the Unit-in-question was situate belonged to Lady Anis Imam who had leased out the lands- in-question in favour of the promoter which lease stood terminated on account of the failure of the lessee to pay the rental agreed upon and that after the death of Lady Anis Imam the Company also had interest in the leased property and in order to avoid future litigation Company offered Rs. 35 lacs to purchase the Unit-in-question which offer was accepted by the Board of Directors of the Corporation in their meeting held on 28.03.1998 whereafter the impugned sale order dated 27.05.1998, Annexure-3 was issued directing the petitioner to deposit the remaining sale consideration of Rs. 29,75,000/- converted into loan payable within five years by way of 20 quarterly equal instalments and the sale order was formalized between the petitioner and the Corporation by executing agreement for sale-cum- payment of balance loan dated 13.07.1998, Annexure-4 whereafter on 14.07.1998 petitioner Company was handed over possession of the Unit-in-question, which fact is even admitted by the petitioner Company in the letter of its Director M. Ahsan Shahbuddin dated 15.07.1998, contained - 8 - in Annexure-E to the counter affidavit. With reference to the sale notice dated 19.3.1995 and 22.4.1996, Annexure-A and the letter dated 15.07.1998, Annexure-E as also the letter dated 13.08.1997, Annexure-B of the Director of the petitioner Company it is submitted that the Company had entered into agreement for sale-cum-payment of balance loan dated 13.07.1998, Annexure-4 for purchase of the assets of the promoter and took possession thereof on 14th July, 1998 with full knowledge that the Unit-in-question is situate over lease hold lands and the lease has already expired and in order to avoid future litigation Company offered a sum of Rs. 35 lacs as sale consideration for purchase of the assets of the Unit-in-question and having entered into agreement for sale-cum-payment of balance loan dated 13.07.1998, Annexure-4 and having taken possession of the Unit-in-question on 14.7.1998, as is evident from the letter of the Director of the petitioner Company dated 15.07.1998, Annexure-E the petitioner Company cannot be allowed to assail the sale order and the agreement for sale by filing the present writ application. Petitioner’s case of misrepresentation against the - 9 - Corporation should be established by taking proceedings in the Civil Court of competent jurisdiction and prayer for refund of the amount paid in lieu of the sale order/agreement for sale should also be made in the said suit and the present writ application is wholly de void of any merit and should be dismissed. In support of such plea learned counsel for the Corporation relied on the judgment of the Hon’ble Supreme Court in the case of Karnataka State Industrial Investment & Development Corpn. Ltd. Vs. Cavalet India Ltd. and Others, reported in (2005) 4 SCC 456 paragraphs 19 and 20 and with reference to the said judgment it was submitted that this Court should not exercise its writ jurisdiction in favour of the petitioner as Corporation has all along been acting with all fairness and has notified to the world at large that the Unit of the promoter was situate over lease hold lands which fact was even otherwise known to the petitioner from before, as is evident from the letter of its own Director dated 13.08.1997, Annexure-B. As such, this Court should not investigate the submission of the petitioner that he has been duped to enter into agreement for sale-cum-payment of - 10 - balance loan dated 13.07.1998, Annexure-4 with the Corporation. 6. During the pendency of this writ application one Intervention Application has been filed on behalf of Mrs. Tazeen Salim, daughter of late Mr. Justice Syed Naqui Imam claiming that she is one of the heirs of Lady Anis Imam, the original lessor who died on 14.06.1979 and after expiry of the lease period on 07.09.1997 the intervener has taken possession of the vacant lands measuring 24 Kathas of plot no. 330 and has not only raised boundary wall over the said land but has also executed 14 sale deeds out of which 10 transferees have already constructed brick built house over the transferred lands. It has been further stated in the Intervention Application that the other plots of the lease deed, namely, plot nos. 338, 334 and 333 have already been acquired by the State Government for raising a housing colony for the police officers vide Land Acquisition Proceeding No. 12/1977-78. Learned counsel for the intervener with reference to the aforesaid facts submitted that this Court should not pass any order which should have adverse effect over the interest of the intervener and her 14 - 11 - vendees as having resumed possession she has conveyed valid title in favour of her 14 vendees. 7. Having heard counsel for the parties and having perused the pleadings filed by them as also the Annexures appended therewith it is evident that in response to the tender notice dated 19.3.1995 and 22.4.1996, as contained in Annexure-A to the counter affidavit of the Corporation for sale of the mortgaged assets of the promoter situate over the lease hold lands of Lady Anis Imam petitioner Company in order to protect its interest as also to avoid future litigation submitted its offer to purchase the mortgaged assets of the promoter through Director M. Ahsan Shahbuddin which is dated 13.08.1997, as contained in Annexure-B to the counter affidavit and the Corporation having appreciated the contents of the offer accepted the same in the meeting of the Board of Directors held on 28.03.1998 on the terms enumerated in the sale order which is dated 27.05.1998, Annexure-3, whereunder it was provided that the petitioner having already paid 15 per cent of the consideration money of Rs. 5 lac 25 thousand (including the earnest money of Rs. 20,000/-) has further agreed to pay the balance amount of - 12 - Rs. 29,75,000/- converted into loan repayable within a period of five years by way of 20 quarterly equal instalments each of Rs. 1,48,750/-, first instalment whereof became due on 30.07.1998 and the last instalment was payable by 30.4.2003. Terms and conditions of the aforesaid sale order was formulized between the petitioner and the Corporation by executing agreement for sale cum payment of balance loan which is dated 13.07.1998 and is contained in Annexure-4 to this application. After execution of the agreement for sale cum payment of balance loan dated 13.7.1998 petitioner was even handed over possession of the Unit in-question on 14.07.1998, as is admitted by its Director M. Ahsan Shahbuddin in his letter dated 15.07.1998 contained in Annexure-E to the counter affidavit. Having obtained possession of the assets of the promoter petitioner Company dealt with the same in the manner they liked until dispute arose between the petitioner and the Corporation. From perusal of the sale order dated 27.05.1998, Annexure-3 and the agreement for sale-cum- payment of balance loan dated 13.07.1998, Annexure-4 it is evident that the Corporation had agreed to transfer 20 - 13 - Kathas out of the total area of 4 Bigha, 1 Katha and 12 Dhurs of land which was leased out by Lady Anis Imam in favour of the promoter to the petitioner on “As is Where is” basis. Aforesaid sale order and the agreement for sale-cum- payment of balance loan were issued and executed in response to the offer of the petitioner dated 13.08.1997, contained in Annexure-B to the counter affidavit submitted through its Director M. Ahsan Shahbuddin wherefrom it is absolutely clear that the petitioner was aware throughout that the Unit of the promoter is situate over the lease hold lands of Lady Anis Imam in which petitioner also had interest and in order to avoid future litigation they had submitted their offer to purchase the mortgaged assets of the promoter. In view of the contents of the sale notice dated 19.3.1995 and 22.4.1996, Annexure- A to the counter affidavit as also the contents of the offer submitted by the petitioner through its Director M. Ahsan Shahbuddin dated 13.08.1997, as contained in Annexure-B to the counter affidavit there is no difficulty in concluding that petitioner was all along aware of the fact that the Unit of the promoter is situate over the lease hold land of Lady Anis Imam which - 14 - lease stood terminated and only with a view to protect the interest in the mortgaged assets of the promoter the Company had submitted its offer and thus, the claim raised by the petitioner Company that it was misled to submit its offer for purchasing lease hold property after the lease had already expired is wholly misconceived and there is no merit in the contentions raised in this writ application, which is, accordingly, dismissed. Patna High Court, Patna The 29 day of July, 2008. A.F.R./P.K.P. (V.N.Sinha,J.)