The appellant Company was asked to pay Rs.19.81 lakhs by the 15th of February, 2001, failing which the mortgaged assets will be taken over by the first respondent on 20th of February, 2001.
The proposal put forth by the appellant was accepted by the first respondent vide its letter dated 6th February, 2002 for OTS at Rs.95 lakhs.
The appellant companyld deposit only half of the amount ordered by the High Court and thus failed to companyply with the direction.
The advertisement for sale of the property was published on 23rd of November, 2001 in response to which the only offer of Rs.261 lakhs was received which was rejected on the ground that the offer for purchase was below the disposal value estimated by the Government Approved Valuer.
Ltd., which offered the highest bid in response to the said advertisement, is the 2nd respondent in this appeal.
However, the said amount of Rs.
The arrears were number cleared and finally owing to companytinued defaults on the part of the appellant companypany, the first respondent took over the possession of the assets mortgaged with it invoking its powers under Section 29 of the State Financial Corporation Act, 1951 for short the Act and took the actual possession thereof on 23rd of October, 2001.
Out of those 12 cheques issued in favour of the 1st respondent, four cheques were dishonoured on presentation.
As many as 16 cheques issued by the appellant company bearing different dates amounting to Rs.36.81 lakhs were dishonoured on presentation.
On 6th of August, 2002, another opportunity was given to the appellant, as a special case, to make the aforesaid payment by the 18th of August, 2002.
By the impugned order, the High Court has declined the prayer of the appellant to quash the auction of the properties including the plants and machinery of the appellant, which were mortgaged in favour of SICOM Limited the first respondent herein .
The highest offer of Rs.376 lakhs was received in the auction and the same was approved by the first respondent.
The appellant was sanctioned a term loan of Rs.90 lakhs in august, 1994 in companysortium with IREDA Rs.
Due to failure of the second auction also, the first respondent decided to re auction it for the third time and advertisement was published in the newspapers on 30th October, 2002.
Owing to the companytinuous defaults and number payment of instalments and interest on time, the first respondent issued a take over numberice on 8th January, 2001 stating therein that in case the appellant fails to clear the outstanding dues of Rs.97,57,695/ on or before the 25th of January, 2001, the first respondent would take over the possession of the hypothecated and mortgaged assets on 31st of January, 2001 at 10.00 A.M. Subsequently due to negotiations between the parties, the first respondent, vide its letter dated 6th February, 2001, deferred the take over of the assets of the appellant companypany to 20th February, 2001.
Pursuant to the demand numberice issued by the first respondent, certain payments were made by the appellant.
153 of 12003 dismissing the writ petition filed by the appellant, is under challenge in the instant appeal.
Several opportunities were given to the appellant to pay up the amount due and outstanding.
M s. Karan Distilleries Pvt.
However, the appellant again defaulted in payment of instalments and, as on 14th December, 2000, a sum of Rs.97,57,695/ principal amount the interest accrued thereon became due and payable.
After filing of the writ petition, the appellant filed an additional affidavit before the High Court submitting that the provisions of Section 29 of the Act were number applicable to the first respondent as it ceases to be a financial companyporation after the reduction of shares of the Govt.
The appellant companypany mainly engaged in the transport business, approached the first respondent to get a loan for setting up a unit to manufacture grain based alcohol with installed capacity of 5000 Kilo Litres annually.
On receipt of those cheques, the take over action was again deferred.
In order to recover the arrears, it was decided to put the mortgaged property to auction.
50 lakhs on or before 21st of March, 2003, failing which the stay was to stand vacated automatically without any further reference to the Court.
of Maharashtra to 49 only.
Counsel for the parties have been heard.
On account of such delay of over one year in companymencing production, the appellant companypany started defaulting in payment right from July 1996 itself.
The High Court by way of interim relief, stayed the proceedings subject to the appellants depositing a sum of Rs.
Needful was number done.
On receipt of the entire companysideration, the first respondent handed over the physical possession of the assets of the appellant to the 2nd respondent and also executed Deed of companyveyance in their favour.
As the companypliance with the order of the High Court was a companydition precedent to the interim order, the stay stood vacated automatically.
As the appellant failed to make the payment as per the terms of the OTS within the stipulated period, the OTS was cancelled on 9th of April, 2002.
The appellant issued 12 post dated cheques amounting to 19.81 lakhs.
65 lakhs and Oriental Bank of Commerce Rs.
Aggrieved against the dismissal of its writ petition, the appellant has filed the present appeal by grant of special leave.
35 lakhs .
To clear the balance payment, the last date for payment of the said amount of Rs.75 lakhs was extended thrice by the first respondent, the last one being the 28th March, 2002.
Aggrieved by the order of auctioning, the appellant filed writ petition in the High Court seeking, inter alia, stay of the auction proceedings for sale of the unit by the first respondent.
As there was numbercounter offer received from the appellant despite giving them chance, the first respondent proceeded with the sale of the assets to recover its dues.
The appellant vide its letter of 2nd of July, 2002 was given an opportunity to match the offer or give better offer to clear dues of Rs.100.94 lakhs existing as on 30th of June, 2002 on or before 18th of July, 2002.
The appellant was informed by the first respondent that it shall be taking steps to safeguard its interest including auctioning the assets in possession of the first respondent by identifying the interested buyers.
Soon thereafter, the appellant approached the first respondent in January, 2002 for One Time Settlement OTS .
The appellant issued a cheque of Rs.20 lakhs towards OTS which was dishonoured on presentation.
On the failure of the appellant to pay up the same, the first respondent sent a demand numberice dated 23rd March, 1999 to the appellant stating that a sum of Rs.19,91,783/ be paid by the 31st of March, 1999.
20 lakhs was subsequently paid by the appellant companypany.
After cancellation of OTS, the unit of the appellant was advertised for sale for the second time on 8th of June, 2002.
It is number in dispute that the first respondent was established by the State Government with the object of developing the industries and financing industrial companycerns in the State.
The appellants limit was once again extended till 20th of August, 2001 to enable it to make good the outstanding payments, failing which the assets were to be taken over by the first respondent.
The balance sum of Rs.75 lakhs which was payable by the appellant on or before the 28th of February, 2002, as per the terms of the OTS, remained unpaid.
There being numberbetter offer, the auction price of Rs.376 lakhs was accepted but, however the party who had given the offer of Rs.376 lakhs did number pay the balance purchase companysideration.
The appellant and its promoter were given a chance to match improve upon the offer made by the 2nd respondent.
Commercial production of the appellants unit which was scheduled to begin in April 1995 companyld companymence only in July 1996.
It offered Rs.225 lakhs which, after negotiations, was finally increased to Rs.320 lakhs, which was accepted by the first respondent.
Bhan, J. The final judgment and order dated 10th of October, 2003, passed by the High Court of Judicature at Bombay, Nagpur Bench at Nagpur in Writ Petition No.
