IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) THURSDAY, THE TWENTY EIGHTH DAY OF FEBRUARY TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE GODA RAGHURAM WRIT PETITION NO : 21607 of 2006 Between: C.V. Chary S/o. Late Nagacharyulu, R/o. H.No. 309061, Sharada Nagar Colony, Ramanthapur, Hyderabad. ..... PETITIONER AND 1 The A.P. State Financial Corporation, Rep. by its Chairman, Chirag Ali Lane, Abids, Hyderabad. 2 The Senior Branch Manager, A.P.S.F.C., Warangal Branch, Warangal. 3 Dr. Ramya W/o. Sri K. Anil Kumar R/o. HNo. 5-11-578, Vidyaranyapuri, Hanumkonda, Warangal District. 4 G. Srinivas S/o. Kasanna R/o. Plot No. 6-6-46/2, Babureddy Nagar, Katedan, R.R. District. 5 N. Purnachader rao S/o. N. Seshaiah R/o. Dwarakanagar Colony, Dargha, Hyderabad. 6 Maheshwar S/o. Not known to the petitioner, R/o.H.No. 106, J.P. Paradise, Street No.1, Ashoknagar, Hyderabad. .....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 a writ order or direction more particularly one in the nature of writ of Mandamus declaring the auction said to have been conducted by the Respondents No.1 and 2 in respect of the petitioner property bearing H.No. 3-9-61, Sharada Nagar Colony, Ramanthapur, Hyderabad Under section 29 of State Financial Corporation Act as illegal, arbitrary, unlawful and violative of principles of natural justice and Art. 14, 21 and 300-A of Constitution of India and consequently directing the respondents not to forcible evict the petitioner from the petition schedule property without the due process of law in the interst of justice and to pass such other order or orders which this Hon'ble Court deem just and proper under the circumstances of this case. Counsel for the Petitioner:MR.SHARAD SANGHI Counsel for the Respondents: MR.DURGA REDDY THIMMAYYAGIRI The Court made the following : ORAL ORDER: The petitioner impeaches the auction of the property in premises bearing H.No.3-9-61, Sharada Nagar Colony, Ramanthapur, Hyderabad, conducted by the Respondents 1 and 2, pursuant to powers available under Section 29 of the State Financial Corporations Act, 1951 (for short ‘the Act’). The 3rd respondent obtained from the 1st respondent a loan, to which the petitioner and the Respondents 4 and 5 stood guarantors and also hypothecated their properties towards collateral security for the loan. On the admitted factual scenario, the 3rd respondent defaulted and proceedings were initiated by the 1st respondent against the petitioner’s property. By a paper notification dated 31.1.2005, the property of the petitioner was notified for sale by auction along with properties belonging to the other sureties-Respondents 4 and 5. According to the petitioner, he contacted the 3rd respondent-the Principal borrower and was assured that the 3rd respondent would settle the loan. Lulled into complacency by such assurances, the petitioner took no steps to avert the consequences of the paper notification dated 31.1.2005. Apparently, the auction did not take place, pursuant to the notification dated 31.1.2005 as there were no bidders. Another notification was issued on 25.8.2005 and yet another on 21.3.2006. Two notices dated 25.3.2006 and 26.4.2006 addressed by the first respondent to the petitioner are admitted to have been received by the petitioner on 27.4.2006. By these communications, the petitioner was informed that on account of the default by the principal borrower, the collateral security offered by the petitioner was seized and advertised for sale by the paper notification dated 21.3.2006; the advertisement is valid for a period of 90 days, during which period the first respondent would accept offers i.e., up to 19.6.2006; that as the loan account was accumulating, should there be no response from the petitioner in securing a buyer, the first respondent would be at liberty to finalize the sale at the highest price received and for the balance outstanding, the first respondent might proceed against the petitioner. By the second of these communications dated 26.4.2006, the petitioner was called upon to vacate the premises as the sale notified on 21.3.2006 was under process and vacant possession of the premises should be handed over to the successful bidder. The petitioner took no steps either towards paying up the loan outstanding nor for procuring any bidder for the auction of his property, notified by the 1st respondent. According to the 1st respondent qua the counter affidavit dated 22.10.2006, the first respondent accepted the offer of the 6th respondent to purchase the petitioner’s property for a total consideration of Rs.27 lakhs on 100% down payment basis and had also addressed a letter dated 23.5.2006 accepting the 6th respondent’s offer. It is further asserted that despite the dismissal of the earlier Writ Petition No.17212 of 2006 (filed by the petitioner, challenging the sale), the petitioner adopted recidivist and obstructionist measures and denied possession of the property to the 6th respondent, who had paid up the entire bid amount. It is further pleaded by the respondents that not only is the sale confirmed in favour of the 6th respondent, but the sale deed was also executed on 30.10.2006. Thus, there is a divestiture of the title in favour of the 6th respondent. Sri Sharad Sanghi, the learned counsel for the petitioner, urges only two contentions: (a) That under Section 29 of the Act, a State Financial Corporation is not empowered to bring the property of a surety to sale and only the property of the principal borrower could be brought to sale; and (b) That the property was sold for a nominal amount by an arbitrary and clandestine process. A learned Single Judge of this Court in the judgment reported in SRI DEVI HOTELS PRIVATE LIMITED V. A.P. STATE FINANCIAL CORPORATION ([1]) considered the very issue, i.e., whether a surety’s property could be brought to sale, in exercise of the powers of a State Financial Corporation under Section 29 of the Act. It was held that the right conferred under Section 29 to a Financial Corporation is of wide amplitude and includes the property of a surety and in the context of the provisions of the Act as a whole and its legislative evolutionary history, no restrictive interpretation is warranted. On behalf of the first respondent, Sri Durga Reddy, the learned counsel, also placed reliance on the decision of a Full Bench of the Kerala High Court reported in A.N. PONNAPPAN V. KERALA FINANCIAL CORPORATION ([2]), wherein dissenting from the judgment of the Karnataka High Court reported in N. NARASIMHAIAH V. KARNATAKA STATE FINANCIAL CORPORATION (AIR 2004 KARNATAKA 46), the Kerala Full Bench (2 supra), held that Section 29 process is available against the property of the surety, as well. It is the conjoint submission on behalf of the learned counsel for the petitioner and Sri Durga Reddy, learned counsel for the 1st respondent, that the judgment reported in 1 supra, though appealed and pending consideration before a Division Bench, is still operative and has not been suspended or stayed by any appellate order. In view of the ratio in SRI DEVI HOTELS (1 supra), the first contention on behalf of the petitioner must fail and is accordingly rejected. Regarding the other contention, that the property was sold for an abysmally low price and arbitrarily, in the counter affidavit the first respondent has brought out how the property was notified for auction on three occasions and how, pursuant to the last of the notifications for sale dated 21.3.2006, bids were received and the bid of the 6th respondent for Rs.27 lakhs being the highest was accepted and finalized by the 1st respondent-Corporation. The counter affidavit of the 1st respondent also states that despite the first respondent’s notices dated 25.3.2006 and 26.4.2006, admittedly received by the petitioner on 27.4.2006, no effort was made by the petitioner to bring any competitive bids. The implication in the counter affidavit is that the petitioner should have no legitimate grouse in the circumstances. In view of the fact that the 1st respondent is a Statutory public authority and has issued a public notification published in the daily press for auction of the property, it must be presumed that the 1st respondent had acted bona fide and transparently in obtaining the best price for the property. The burden is therefore upon the petitioner to establish the contrary. Except a bald allegation, the petitioner has not discharged this burden. The petitioner’s inaction despite receipt of the two notices by the 1st respondent would buttress the presumption in favour of the 1st respondent. For the above reasons, the second contention must also fail. On the analysis above, there are no merits in the writ petition. The writ petition fails and is accordingly dismissed. There shall be no order as to costs. GODA RAGHURAM, J Date: 28.2.2008 cvm To 1.2CCs to 2.2CD copies Form-NIC-OGS/WP{VSMI} [1] . AIR 2007 A.P. 182 [2] . AIR 2007 KERALA F.B. 234