2003 (2) TMI 339 - HC - Companies Law

Summary

Issues involved:
1. Challenge to notice under section 29 of the Act of 1951 for taking over management and sale of mortgaged property.
2. Allegation of inadequate publicity and unfair sale process by the Corporation.
3. Dispute over negotiations and sale price with Dr. Saikia.
4. Failure to implead Dr. Saikia as a respondent in the writ petition.

Analysis:

Issue 1:
The petitioners challenged the notice under section 29 of the Act of 1951 for taking over management and sale of the mortgaged property. The Corporation invoked its powers to realize the outstanding amount by selling the mortgaged property through public auction. The Supreme Court precedent emphasized judicial review in cases of statutory violations or unfair actions by the Corporation. The Corporation's actions were found to be within the legal mandate.

Issue 2:
The petitioners alleged inadequate publicity and unfair sale process by the Corporation. The Court stressed the importance of wide publicity for public auctions to ensure maximum participation and fair play. The Corporation's decision to publish the sale notice in only one vernacular newspaper was deemed inconsistent with principles of natural justice, leading to the infringement of the petitioners' right to fair treatment.

Issue 3:
The dispute over negotiations and sale price with Dr. Saikia raised concerns about the Corporation's failure to secure the best price for the mortgaged property. The negotiation process and lack of transparency in the bidding raised doubts about the fairness of the sale. The Court intervened to compel the Corporation to act in compliance with legal observations to ensure a fair sale process.

Issue 4:
The argument regarding the failure to implead Dr. Saikia as a respondent in the writ petition was dismissed by the Court. The negotiations with Dr. Saikia and the subsequent settlement through private negotiation did not alter the nature of the case. The petitioners were entitled to protection under the law despite not including Dr. Saikia as a respondent.

In conclusion, the Court allowed the writ petition, setting aside the sale process initiated by the Corporation and directing a new sale process by public auction with proper publicity. The Court emphasized fair play and transparency in the sale process to protect the rights of the petitioners.