1/6 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR S.B. CIVIL WRIT PETITION NO.1973/2005 (M/s. Subham Solvents Pvt. Ltd. Vs. R.F.C. & Ors.) DATE OF JUDGMENT : 30.10.2007 HON'BLE DR. VINEET KOTHARI,J. Mr. Sandeep Bhandawat, for the petitioner. Mr. D. S. Rajvi, for the respondents. BY THE COURT: 1. Heard learned counsel for the parties. 2. The facts giving rise to the present writ petition are rather curious. The respondent – RFC sold the industrial unit owned by the petitioner company for a sum of Rs. 20.25 lacs on 31.03.1995 in exercise of its power under Section 29 of the State Financial Corporation Act, 1951 (“the Act” for short) and after adjusting the dues of the petitioner company, an excess sum of Rs. 9,11,759/- was realised by the respondent – RFC from the purchasers of the assets of the petitioner company. The respondent - RFC did not refund the said amount to the petitioner company. 3. It so happened that another sister concern of the petitioner company M/s. Shubham Veg Oil Pvt. Ltd. also became 2/6 a defaulter in payment of loan of the respondent Corporation– RFC and the assets of the said sister concern were also taken over and sold by the respondent – RFC in exercise of powers under Section 29 of the Act but however, there was a deficit in that sale of the assets by the RFC and and some amount remained due from such sister concern M/s. Subham Veg Oil Pvt. Ltd. and the said amount deficit is said to be Rs. 12,73,479/-. 4. The petitioner company firstly vide Annex. 1 letter dated 29.01.2001 requested the respondent – RFC to refund the said excess amount to it but later on vide Annexure 2 letter dated 18.03.2002 requested respondent RFC to adjust the excess realisation on the sale of its assets with interest against the dues of the sister concern M/s. Subham Solvent Pvt. Ltd. and give refund of the balance amount. The Board resolution of the petitioner company authorising said dues of the sister concern M/s. Subham Veg Oil Pvt. Ltd. to be set off against excess realization to the case of the petitioner company M/s. Shubham Solvents Pvt. Ltd. was also submitted vide Annex. 3 letter dated 18.03.2002. The respondent – RFC however, did not adjust such excess amount, which was admittedly realised by the respondent – RFC for no valid rhyme or reason. Annexure 4 communication dated 24.01.2003 of RFC merely states that the request of the party to adjust the surplus amount of another 3/6 company and settlement of subsidy cannot be considered by the committee. No reason was assigned for that. 5. Therefore, the petitioner has approached this Court by way of present writ petition claiming the following reliefs: (i)respondent may kindly be directed to refund the amount due to petitioner firm along with interest @ 24% p.a. (ii)Respondents may kindly further be directed to settle the account of the petitioner's sister concern. (iii)Respondents may kindly be further be directed to drop the proceedings taken under Land Revenue Act against the sister concern of the petitioner firm. (iv)Any other appropriate writ order or directions which in the facts and circumstances of the warrants may kindly be issued in favour of the petitioner. (v)Award cost of the petition to the petitioner from the respondents. 6. Learned counsel for the petitioner Mr. Sandeep Bhandawat submitted that the respondent – RFC cannot act to the detriment of the petitioner or its sister concern on both the fronts. On the other hand, it has refused to adjust the excess realisation from sale of asset of one company and on the other, it has not even refunded the said excess amount to the petitioner company. He further submitted that not only the RFC realised the interest @ 17% and 20% respectively from the purchasers of the assets of the petitioner company namely M/s. 4/6 Suncity Synthetics Pvt. Ltd. and M/s. Indo Tovotronix Pvt. Ltd. and the realization of the said amount was completed by the respondent RFC on 15.05.2000 as given out in the reply of the respondent RFC but the respondent RFC did not credit or pay any interest on the excess amount realised by them on the sale of assets of the petitioner company amounting to Rs. 9,11,759/-. He thus submitted that by not taking a decision in the matter, and account of sheer inaction on the part of the RFC, a deficit amount of the sister concern of the petitioner company M/s. Subham Veg Oil Pvt. Ltd. has shot up. 7. Learned counsel for the respondent Corporation Mr. D.S. Rajvi submits that in the absence of any proper board resolution and communication by the petitioner company to the respondent RFC, the decision in this regard could not be taken and the excess amount could not be adjusted against the dues of another company. 8. Having heard learned counsels and upon perusal of the record, it appears that the respondent – RFC ought to have taken a quick decision in the matter upon the offer of the petitioner company and it sister concern to adjust the excess amount realised by them on the sale of assets of the petitioner company under Section 29 of the Act by adjusting the said 5/6 excess amount against the dues of the sister concern. The respondent Corporation is a Public Authority and a public body constituted under the State Financial Corporation Act, 1951 and is expected to act fairly and in a business like manner and as per mandate of Section 24 of the State Financial Corporation Act, 1951. Section 24 of the SFC Act clearly stipulates that the “Board in discharging its functions under this Act shall act on business principles due regard being had by it to the interests of industry, commerce and the general public.” 9. The facts narrated above clearly indicate that had the respondent – RFC adjusted the said amount after taking on record the proper authorization of the petitioner company though Board Resolution of petitioner company coupled with letter Annex. 2 dated 18.03.2002 should be sufficient for that purpose yet if they found any defect in the same, neither the petitioner nor its sister concern would have suffered on account of deficit realization on the sale of assets of the sister concern M/s. Subham Veg Oil Private Limited. RFC itself suffered as it has failed to recover the deficit amount from the said sister concern even by now. 10. Therefore, in the peculiar facts and circumstances of the case, this writ petition is disposed of by following directions 6/6 to the respondent Corporation: (i) That the respondent Corporation will adjust the excess amount of Rs. 9,11,759/- realised by them on the sale of assets of the petitioner company w.e.f. 01.04.2001 in pursuance of letter dated 18.03.2002 (Annex. 3). The requisite formalities at the end of the petitioner company as well as of the sister concern may be got completed in this regard. Learned counsel for the petitioner also undertakes that these two companies will co-operate with the respondent Corporation for completing the procedural formalities in this regard. (ii) The respondent – RFC shall adjust the said excess amount of Rs. 9,11,759/- after adding thereto simple interest @ 12% per annum w.e.f. 01.04.1995 i.e. the date of auction of assets of petitioner company till 31.03.2002. (iii) The respondent RFC shall complete this process before 31.12.2007. (iv) After the adjustment of the said excess amount with interest as aforesaid against the dues of the sister concern M/s. Shubham Veg Oil Private Limited, for recovery of the recomputed dues of the said company as on 01.04.2002, (the effective date of the aforesaid adjustment or set off), the respondent RFC shall be free to recover the same from the said sister concern in accordance with law. 11. Writ petition is accordingly disposed of No order as to costs. (Dr. VINEET KOTHARI) J. preety ITEM NO.