1996 (6) TMI 353 - SC - Indian Laws

Summary

Issues:
- Compliance with directions in Mahesh Chandra v. Regional Manager judgment
- Evaluation and acceptance of offers for the sale of the unit
- Judicial review of the State Financial Corporation's actions

Compliance with directions in Mahesh Chandra v. Regional Manager judgment:
The Karnataka State Financial Corporation extended financial assistance to a company for a rubber manufacturing unit. The company defaulted on loan repayments, leading to the Corporation taking possession of the unit. The High Court directed the Corporation to follow specific guidelines from the Mahesh Chandra case. The Corporation argued that it had substantially complied with these directions by issuing multiple sale advertisements and considering various offers. The Court found that the Corporation had informed the unit holder of valuations and offers, providing opportunities for higher bids. It concluded that the Corporation had met the guidelines adequately.

Evaluation and acceptance of offers for the sale of the unit:
The Corporation received multiple offers for the unit, including from M/s Prime Inputs (India) Ltd., M/s Shakti Rubbers, and respondent No. 2. The Corporation rejected the offer from respondent No. 2 in favor of the offers from M/s Prime Inputs (India) Ltd. and M/s Shakti Rubbers. The rejection was based on reasons such as differences in payment terms, down payments, and earnest money. The Court upheld the Corporation's decision, stating that the rejection was not unfair or unreasonable. It highlighted that the Corporation had the authority to make such decisions, and judicial review was limited to statutory violations or unfair acts.

Judicial review of the State Financial Corporation's actions:
The Court emphasized that judicial review of the State Financial Corporation's actions under Section 29 of the Act was limited to instances of statutory violations or unfairness. It clarified that the High Court could not act as an appellate authority over the Corporation's decisions. In this case, the Court found no statutory violation in the Corporation's acceptance of offers from M/s Prime Inputs (India) Ltd. and M/s Shakti Rubbers over respondent No. 2. The Court held that the High Court was unjustified in interfering with the Corporation's decision and dismissed the writ petition filed by the concerned parties.

Conclusion:
The Supreme Court allowed the appeal, setting aside the judgments of the High Court and dismissing the writ petition. The Court upheld the Karnataka State Financial Corporation's actions in evaluating and accepting offers for the sale of the unit, emphasizing that the Corporation had acted within its authority and in compliance with relevant guidelines.