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TMI Blog2005 (11) TMI 250X X X X Extracts X X X X X X X X Extracts X X X X ..... IL APPEAL NO. 5502 OF 2004 - - - Dated:- 8-11-2005 - ASHOK BHAN AND ALTAMAS KABIR, JJ. Ashok A. Desai, Manish Pitale and Chandershekhar Ashri for the Appellant. Dushyant Dave, Jay Savla, Ms. Reena Bagga, Shekhar Napahade and Shivaji M. Jadhav for the Respondent. V.N. Rghupathy for State of Maharashtra. JUDGMENT Ashok 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. 153 of 2003 dismissing the writ petition filed by the appellant, is under challenge in the instant appeal. 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 SIICOM Limited (the first respondent herein). 2. The short question that arises for our consideration in this appeal is, whether SIICOM (the first respondent) is a State Financial Corporation within the meaning of and governed by the State Financial Corporations Act, 1951 (for short "the Act")? 3. To appreciate the question, it would be necessary to state the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t respondent, vide its letter dated 6th February, 2001, deferred the take over of the assets of the appellant-company to 20th February, 2001. 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 appellant issued 12 post-dated cheques amounting to Rs. 19.81 lakhs. On receipt of those cheques, the take over action was again deferred. Out of those 12 cheques issued in favour of the 1st respondent, four cheques were dishonoured on presentation. The appellant s 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 arrears were not cleared and finally owing to continued defaults on the part of the appellant-company, the first respond-ent 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. 7. In order to recover the arrears, it was decided to pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id not pay the balance purchase consideration. 9. 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. M/s. Karan Distilleries Pvt. Ltd., which offered the highest bid in response to the said advertisement, is the 2nd respondent in this appeal. It offered Rs. 225 lakhs which, after negotiations, was finally increased to Rs. 320 lakhs, which was accepted by the first respondent. The appellant and its promoter were given a chance to match/improve upon the offer made by the 2nd respondent. As there was no counter-offer received from the appellant despite giving them chance, the first respondent proceeded with the sale of the assets to recover its dues. On receipt of the entire consideration, the first respondent handed over the physical possession of the assets of the appellant to the 2nd respondent and also executed Deed of conveyance in their favour. 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. The High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s be a financial corporation covered under the Act. 13. Section 46 of the Act confers the power on the Central Government to extend the provisions of the Act "to any institution established by a State Government ". Section 46 of the Act reads as under: "46. Power to apply Act to certain financial institutions in existence at commencement of Act - (1) The Central Government may, by notification in the Official Gazette, direct that all or any of the provisions of this Act shall, subject to such exceptions and restrictions as may be specified, apply to any institution established by a State Government which has for its object the financing of industrial concerns, and on the issue of such notification, the institution shall be deemed to be a Financial Corporation established by the State Government for the State within the meaning of this Act and the provisions of this Act shall become applicable thereto according to the tenor of the notification : Provided that no notification shall be issued under this sub-section in respect of any institution unless a request is made in that behalf by the State Government concerned. (2) Any notification issued under sub-section (1) may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e deemed to be "a Financial Corporation" established by the Government within the meaning of the Act. It is not disputed that Respondent No. 1 had been established by the State Government with the object of financing industries and the Central Government had issued the notification under section 46 conferring the powers to be exercised under various sections of the Act including section 29. As a matter of fact, Annexure A, annexed with the additional affidavit filed by the appellant on 9-10-2003 itself suggests beyond doubt that respondent No. 1 was established in the year 1996 by the Government of Maharashtra as a 100 per cent Government owned company with the objective of industrialising of backward areas of the State of Maharashtra. Thus, respondent No. 1 would be covered by the expression "any institu-tion established by a State Government" offering range of services. This apart the Central Government in the year 2003, i.e., even subsequent to the disinvestment of equity up to 51 per cent held by the Government of Maharashtra, at the request of the Government of Maharashtra by virtue of its power under section 46(1) of the Act, has made the provisions of section 32G of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration. There is no material placed before us to substantiate these two contentions. The allegations made are vague, particularly when the appellant was afforded suitable opportunities to match the bid/offer and it did not turn up, and cannot be ascertained from any admitted data. The same are rejected. 22. It was admitted before the High Court that outstanding amount had been recovered from the sale of the appellant s property. In view of this, the High Court had permitted the appellant to withdraw the sum of Rs. 25 lakhs deposited by the appellant in pursuance to the interim order of the High Court. This direction of the High Court holds good and does not call for any interference. 23. Lastly, the counsel for the appellant contended that the first respondent be directed to return the balance amount, if any, after adjusting the outstanding amount due from the appellant. 24. The counsel for respondents, in all fairness, concedes that if there is any balance amount, the same shall be paid back to the appellant. The appellant would be at liberty to move appropriate application before the first respondent. If such an application is filed, the first respondent shall take a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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