9911796707
TMI Blog2003 (2) TMI 400X X X X Extracts X X X X X X X X Extracts X X X X ..... st should be repaid in half- yearly instalments. The petitioner committed default in payment of instalments. However, upon the request of the petitioner, the loan payment was restructured in the year 1992, subject to certain conditions. Again the petitioner committed default. According to the petitioner, one of the reasons for committing default in repayment of loan, was that he could not get sufficient finances from the banks and as such he could not start the commercial production. However, as the petitioner committed default, the respondent-corporation issued recall-cum-sale notice dated 31-8-1993 intimating that for recovering the outstanding amounts, action under section 29 of the State Financial Corporation Act (for short the Act ) would be taken. In the said notice it was further indicated that if the petitioner pays the arrears on or before 11-9-1993, the proposed action would be dropped. As there was no response from the petitioner, seizure of the petitioner s unit was effected on 5-3-1994 and three months thereafter, paper advertisement was given on 1-6-1994 for sale of the petitioner s unit and accordingly the tenders were finalized and possession was also given to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the payment of loan structure was rescheduled two times and in spite of which, the petitioner committed default. Further there was never any adherence to the terms and conditions imposed and hence it became imperative for the respondent-Corporation to invoke section 29 of the Act and accordingly following the procedure prescribed under the said provision, the petitioner s unit was sold and handed over to the successful auction purchaser on 15-9-1994. He further submitted that after everything was over by 15-9-1994, the petitioner filed the writ petition on 5-11-1994. He submitted that the only thing that now remained is adjustment of the amount fetched in the auction, towards the loan account of the petitioner and even after this, if the petitioner is found due any amount, the same has to be recovered from the petitioner by invoking the other provisions under the Act, or proceeding under the Revenue Reco-very Act. 7. Further in order to substantiate the above contentions, the learned Standing Counsel for the respondent-Corporation relied on the judgment of the Apex Court in State Financial Corpn. v. Jagadamba Oil Mills AIR 2002 SC 834. He submitted that the Apex Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice. Hence, I do not find any reason to disbelieve the version of the respondent-Corporation with regard to issuance of the recall-cum-sale notice dated 31-8-1993. 11. At this juncture it is to be noted that the petitioner is only challenging the seizure and sale, without challenging either the paper advertisement, or the sale notice dated 31-8-1993. He also did not file any objection to the said sale notice and, therefore, the unit of the petitioner was seized on 5-3-1993 as per the procedure. The specific case of the petitioner is that he made representation on 2-3-1994, but the same was not considered. Here it is to be noted that the Corporation gave the newspaper advertisement on 1-6-1994 calling for the tenders for the sale of the petitioner s unit. That means by necessary implication, it has to be presumed that the Corporation has rejected the representation of the petitioner. It is not in dispute that the Act also does not provide for any such facility of making a representation. 12. The advertisement for the sale of the petitioner s unit was given in two widely circulated newspapers i.e., in Enadu (Telugu daily) and in Deccan Chroncile (English daily) on 1-6-1994 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same has to be applied and further since the judgment of the Apex Court in Jagadamba Oil Mills case ( supra ) is subsequent to the filing of the writ petition, it will have only prospective effect and the same cannot be applied to the case of the petitioner. This alternative contention cannot be appreciated. It is well-settled that under Article 141 of the Constitution of India, the judgment of the Apex Court is the law and binding on all the courts and further when the justice demands, Apex Court has power to overrule its earlier judgments. When a judgment is overruled, the law laid down in the overruled judgment ceases to operate and the new law laid down in the overruling judgment will come into force and all the matters pending as on that date or any future matters, will come under the fold of that new law. Further the general rule is that the overruling of an earlier decision will always have retrospective effect, except as regards the matters that are res judicata; or that accounts have been settled in the meanwhile; or that the effect of the overruling judgment is specifically made prospective. That is not the situation in the case on hand. 18. Further the Hon ble A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Financial Corporation, or ( b ) where the State Financial Corporation acts unfairly i.e., unreasonably. While exercising its jurisdiction under Article 226 of the Constitution of India, 1950 (in short the Constitution ), the High Court does not sit as an appellate authority over the acts and deeds of the Corporation. Similarly, the Courts other than the High Courts are not to interfere with action under section 29 of the Act unless the aforesaid two situations exist." 23. Therefore from a conjoint reading of the above two judgments - U.P. Financial Corpn. s case ( supra ) and Karnataka State Financial Corpn. s case ( supra ) it is clear that in normal course, the court shall not interfere with the commercial matters and in case of imperativeness, the interference would be only under two circumstances viz., (1) statutory violation and (2) unreasonableness. 24. In the case on hand no material is produced in order to show that the respondent-Corporation has committed any statutory violation or that its action is unreasonable. On the other hand, the material on record establishes that the respondent-Corporation has complied with the statutory provisions and also su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Apex Court made the following observations at paragraph Nos. 15 and 17 as under: "15. The view in Mahesh Chandra s case ( supra ) appears to have been too widely expressed without taking note of ground realities and the intended objects of the statute. If the guidelines as indicated are to be strictly followed, it would be giving premium to a dishonest borrower. It would not further interest of any Corporation and consequently of the industrial undertakings intending to avail financial assistance. It would only provide an unwarranted opportunity to the defaulter (in most cases chronic and deliberate) to stall recovery proceedings... ****** 17. The aforesaid guidelines issued in Mahesh Chandra s case place unnecessary restrictions on the exercise of power by the Financial Corporation contained in section 29 of the Act by requiring the defaulting unit-holder to be associated or consulted at every stage in the sale of the property. A person who has defaulted is hardly ever likely to co-operate in the sale of his assets. The procedure indicated in Mahesh Chandra s case will only lead to further delay in realization of the dues by the Corporation by sale of assets. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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