SCA/5935/1989 1/5 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 5935 of 1989 with CIVIL APPLICATION No.3818 of 1997 For Approval and Signature: HONOURABLE MR.JUSTICE AKIL KURESHI ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= CHANASMA TALUKA COTTON SALES PURCHASE GINNING & 6 - Petitioner(s) Versus STATE OF GUJARAT & 2 - Respondent(s) ========================================================= Appearance : MS PRERNA R VAKHARIA for Petitioner(s) : 1 - 7. NOTICE SERVED for Respondent(s) : 1, MR SANJAY A MEHTA for Respondent(s) : 2, MR AJ PATEL for Respondent(s) : 3, MR MK VAKHARIA for Respondent(s) : 3, ========================================================= CORAM : HONOURABLE MR.JUSTICE AKIL KURESHI Date : 22/10/2008 ORAL JUDGMENT At the outset, learned advocate Mr.Mehul Vakharia stated that SCA/5935/1989 2/5 JUDGMENT they are not pressing for relief prayed under clause 10(BB) challenging constitutional validity of Section 29 of the Gujarat State Financial Corporation Act. Considering the submissions, the prayer stands deleted. The petition is filed seeking the following substantive relief. “(A) A writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction may kindly be issued for quashing and setting aside the decision of the 2nd respondent to sell the property premises including the plants, machineries etc. belonging to the first petitioner society to the 3rd respondent at the price of Rs.2 lakhs. (B) A writ of of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction may kindly be issued directing the respondent No.2 their agents and servants to sell the property belonging to the petitioner society at the market price only after following the proper procedure in accordance with law. (BB) Declare Section 29 of the State Financial Corporation Act as unconstitutional and void. (C) Pending admission and final hearing of this petition, as interim injunction restraining the 2nd respondent, its agents and servants to recover any amount fro the present petitioners. SCA/5935/1989 3/5 JUDGMENT (D) Pending admission and final hearing of this petition, an interim injunction restraining the 3rd respondent, his agents and servants from transferring by lease, sale, gift or by any method the property viz. Ginning Factory (including land, building, plant, machineries etc. ) situated at Bahecharaji, Taluka Chansama, District Mehsana to any other person or persons may kindly be granted. (E) Any other appropriate order an/or relief that may be deemed fit by this Hon'ble Court in the nature and circumstances of the case may kindly be granted.” The petitioner – Chanasma Taluka Cotton Sales Purchase Ginning and Pressing Co-operative Society Ltd.. Its one of the lenders is Mehsana District Central Co-operative Bank Ltd., has filed Civil Application No.3818 of 1997 contending inter-alia that the said applicant has been appointed as Liquidator of the petitioner – co-operative society. In the the Civil Application, prayer therefore has been made to substitute – Mehsana District Central Co-Op Bank as petitioner No.1. It appears that since 1997 the said Civil Application has not been granted and the same is pending. Be that as it may. By virtue of certain developments taken place during the pendency of the petition, it is necessary to take up this issue. Apparently, the petition was filed challenging the action of the respondent No.2 – GSFC in selling the property of the petitioner No.1 co-operative society, that too at throw away price. The applicant of Civil Application No.3818 of 1997 – Mehsana District Central Co-operative Bank Ltd. is also contending that the GSFC do not have unilateral rights SCA/5935/1989 4/5 JUDGMENT to sell the property or to appropriate the proceeds thereof. On 14.06.2001, the learned Single Judge of this Court taking cognizance of the averments made in the petition as well as Civil Application No.3818 of 1997 and the averments made on behalf of the Gujarat State Financial Corporation that the property of the petitioner No.1 – co-operative society was subsequently sold for sum of Rs.68,51,111/- which has not been challenged and therefore, there could not be any impediment for finalizing the sale in favour of the purchaser M/s P.K.Enterprise for the consideration of Rs.68,51,111/-. Learned Judge permitted the Corporation to complete the sale in favour of M/s P.K.Enterprise for sale consideration of Rs.68,51,111/- but clarified that sale price shall be retained by the Corporation without making any disbursement for the present. It would thus appear that the earlier apprehension of the petitioner that the GSFC is selling away the property at throw away price of Rs.2 lakhs has been substantially redressed and this Court has during the pendency of the petition permitted finalization of the sale of the property for Rs.68,51,111/-. The only question now remains is the grievance of the Mehsana District Central Co-operative Bank Ltd that GSFC cannot appropriate the entire sale proceeds and share the sale proceeds with the other secured creditors pari pasu of their respective claims. Though this aspect has not been directly brought on record, learned advocate Mr.Mehul Vakhariya for the Liquidator of the Bank has submitted that the Bank has to take appropriate legal steps to seek its share from the sale proceeds. SCA/5935/1989 5/5 JUDGMENT Under the circumstances, no further order is required to be passed in this petition except for providing that the interim direction issued by this Court by the order dated 14.06.2001 permitting the GSFC to sell the property is made absolute. However, the directions against the GSFC making any disbursement of the said amount would continue till 31st December, 2008 to enable the parties to take such legal recourse as may be available. It is also made clear that all the legal contentions of the applicant are kept open. With the aforesaid observations and directions, the Special Civil Application and the Civil Application stand disposed of. Rule stands discharged. Directions accordingly. Direct Service is permitted to the applicant – bank. ( Akil Kureshi, J. ) kailash, p.s.