IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) TUESDAY, THE TWENTY THIRD DAY OF DECEMBER TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE L.NARASIMHA REDDY WRIT PETITION NO : 25578 of 2005 Between: 1 Koya Appanna, S/o.Late Sattenna, R/o.Kaulawada Village, Bhogapuram Mandal, Vizianagaram District. 2 Poodi Narsamma, W/o.Late Appanna, R/o.Tudem Village, Bhogapuram Mandal, Vizianagaram District. 3 Poodi Nooka Raju, W/o.Late Appanna, R/o.Tudem Village, Bhogapuram Mandal, Vizianagaram District. 4 Poodi Ramu, S/o.Late Appanna, R/o.Tudem Village, Bhogapuram Mandal, Vizianagaram District. 5 Poodi Gurumurthy, S/o.Late Appanna, R/o.Tudem Village, Bhogapuram Mandal, Vizianagaram District. 6 Poodi Abaddam, S/o.Late Appanna, A.S.C.Regiment, Assam State. ..... PETITIONER(S) AND 1 The A.P.State Financial Corporation Ltd., 5-9-194, Chiragali Lane, Hyderabad, Rep by its Chairman and Managing Director. 2 The Branch Manager, A.P.State Financial Corporation, D.No.8-12-5, 2nd Floor, P.S.N.Estate Complex, Opp: Hotel Mayuri, Vizianagaram-535 003. .....RESPONDENT(S) 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 to issue an appropriate writ or order or direction more particularly one in the nature of Writ of Mandamus declaring the action of the respondents in proposing to sell the property of the petitioners in Sy.No.3, Corresponding No.70/6, 0.80 cents of Tudem Village and 0.50 cents in Sy.No.54/9 corresponding No.54/4 of Basavapalem by issuing sale notice dated 8-9-2005 by the 2nd respondent, which was published in Eenadu daily on 14-9-2005 as illegal arbitrary and violative of principles of natural nustice and consequently set aside the sale notice dated 8-9-2005 published in "Eenadu" daily dated 14-9-2005 in so far as it is relating to the petitioners properties in Sl.No.1 of the sale notice dated 8-9-2005, and to pass such other order or orders. Counsel for the Petitioner:MR.K.SITA RAM Counsel for the Respondent No.: SRI SREEMANNARAYANA VATTIKUTI (SC for SFC) THE HON'BLE MR JUSTICE L.NARASIMHA REDDY WRIT PETITION No.25578 of 2005 ORDER: The petitioners stood as sureties for repayment of loan borrowed by M/s.Kaliyuga Daiva Modern Rice Mill, Kovulawada Village represented by its proprietor B.Chinna Narayana Murthy (for short ‘the mill’) from the A.P. State Financial Corporation Limited (for short ‘the Corporation’). Since the mill committed default in repayment of loan, the unit itself was seized in exercise of powers under Section 29 of the State Financial Corporation Act, 1951 (for short ‘the Act’). On the ground that the sale proceeds of the mill are not adequate to liquidate the loan, the Corporation intended to sell the properties owned by the petitioners herein, which were mentioned in the surety documents, by invoking Section 29 of the Act. The petitioners contend that the Corporation has no authority or power or jurisdiction to proceed against their properties under Section 29 of the Act. Certain other grounds are also urged. On behalf of the Corporation, a counter affidavit is filed. It is stated that the petitioners are equally liable to pay the amount due since the principal borrower committed default. Heard Sri K.Sitaram, learned counsel for the petitioners and Sri Sreemannarayana Vattikuti, learned standing counsel for the Corporation. It is not in dispute that the Corporation invoked its power under Section 29 vis-à-vis the properties of the petitioners. This Court would not have entertained the plea of the petitioners had it been a case where the properties that are proposed to be sold are primary assets. Admittedly, they are the properties owned by the sureties i.e. petitioners herein. I n Karnataka State Financial Corporation v. N.Narasimahaiah[1], the Supreme Court held that the State Financial Corporation does not have the power to invoke Section 29 against the properties owned by sureties. On this short ground, the writ petition deserves to be allowed. While admitting the writ petition, this Court granted interim stay. The validity of the impugned notification was for 90 days and by operation of the interim stay, the notification has lapsed. The writ petition is allowed and the impugned notification is set aside. It is, however, made clear that it shall be open to the Corporation to proceed, against the properties concerned, in accordance with law. __________________________ L.NARASIMHA REDDY,J Dt:23-12-2008 usd [1] 2008(5) SCC 176