JUDGMENT
P.K. Mohanty, J.
1. In all the three writ petitions common question of law and fact being involved, on the prayer and with the consent of the learned Counsel for the parties, they have been taken up together for hearing and are being disposed of by this common order.
2. One Manu Tandan, Director of M/s. Ashoka Health Care (P) Ltd. is the writ petitioner in O.J.C. No. 11116 of 1999 with a prayer to quash the seizure of the Industrial Unit by the State Financial Corporation and for a direction to release the same in favour of the petitioner’s company. The writ petitioner claims that M/s. Ashoka Health Care (P) Ltd. had set up a hospital at Bhubaneswar availing a term loan from opposite party No. 1, the State Financial Corporation. On default of payment of the loan dues, said unit was seized by the Corporation on 8-2-1999 but no notice as prescribed under the Rules had been served on the petitioner and the seizure was done behind his back. While admitting default in payment of the instalments, default has been explained on the ground that the project being new, there was loss which led to nonpayment of the dues of the Corporation. However, the petitioner has admitted receipt of the letter dated 19-8-1999, in which it was informed that the assets of the Company are being sold at a price of Rs. 60 lakhs at a down payment of Rs. 15 lakhs in favour of opposite party No. 2. The main grievance of the writ petitioner is that the unit has been seized and is being sold without giving an opportunity to the petitioner to release the Unit on the terms and conditions fixed by the Corporation. Opposite party No. 1 has however disputed and denied the allegations with regard to issuance of notice and affording of reasonable opportunity to the petitioner to make repayment of the loan to the Corporation. It is, therefore, the specific case that M/s. Ashoka Health Care Pvt. Ltd. having failed to make payment of the dues of the Corporation to the tune of Rs. 2.55 crores including interest and having violated the terms by removing some of the machinery without prior permission, the Corporation had no other alternative than to exercise its power under Section 29 of the State Financial Corporations Act. It is stated that prior to the seizure of the Unit, the loan recall notice was issued on 12-3-1998 and after seizure of the Unit, a notice was issued on 22-7-1999 to all the Directors of the Company including the petitioner for settlement of the loan dues and release of the Unit by attending the D.A.C. meeting of the Corporation scheduled to be held on 31-7-1999. It is further submitted that due to consistent default, demand notice was issued on 22-1-1998 and loan recall notice was issued on 12-3-1998 by Regd. Post with A.D., but the petitioner having not taken any steps, action under Section 29 of the State Financial Corporations Act has been taken. However, it has been stated in Para 5 that the possession of the assets of the Unit was taken over on 8-2-1999 in presence of the representatives of the petitioner-Company and it was found that about 25 numbers of hypothecated machinery/assets were missing from the Unit. On enquiry, the representatives of the Company informed the officials of the Corporation that these assets have been shifted to their Corporate office at Hyderabad. The removal of assets was found to be unauthorized and without permission of the Corporation, for which the Corporation lodged an F.I.R. on 16-2-1999 in Nayapalli Police Station, Bhubaneswar for taking necessary action. The recall notice dated 12-3-1998, F.I.R. for removal of assets dated 12-2-1999 and intimation for appearing in person or through his authorized representative before the D.A.C. Meeting scheduled to be held on 31 -7-1999 have been annexed as Annexures A, B and C respectively. It has, however, been stated that M/s. Ashoka Health Care Pvt. Ltd. entered into an agreement with M/s. CDR Medical Industries Ltd., which nominated Sri Jaganmohan Rao and Dr. Manu Tandan, the present petitioner, as Directors of M/s. Ashoka Health Care Pvt. Ltd. in addition to the two promoter Directors. However, it is noteworthy that the loanee-company M/s. Ashoka Health Care (P) Ltd. has not filed any writ petition challenging the seizure and sale of its unit.
3. O.J.C. No. 6758 of 1999 has been filed by M/s. Southern Medical Specialities Ltd., a company registered under the Companies Act having its Registered Office at Afzal Gunj, Hyderabad against the State Financial Corporation as opposite party No. 1, M/s. CDR Medical Industries Ltd. as opposite party No. 2 and M/s. Ashoka Health Care (P) Ltd. as opposite party No. 3. The petitioner company claims to have supplied a CT-Scan machine on hire-purchase agreement for a sum of Rs. 40,50,000/- with interest and other charges to opposite party No. 2, who had started a Health Care Unit in association with opposite party No. 3 at Bhubaneswar. The petitioner challenges the action of opposite party No. 1, the State Financial Corporation in inviting offer for sale of the machinery, which according to the petitioner, is neither financed nor hypothecated or mortgaged to it. According to the petitioner, opp. party No. 2 M/s. CDR Medical Industries Ltd., Hyderabad imported a “Whole Body CT Scanner” Model SOMUTEM CR from USA with finance made available to it by the petitioner on execution of a hire purchase agreement. The machine was installed at Bhubaneswar in the premises of opposite party No. 3-M/s. Ashoka Health Care Pvt. Ltd., with which opposite party No. 2 had entered into a joint venture agreement. A copy of the agreement between the petitioner M/s. Southern Medical Specialities Ltd. and M/s. CDR Medical Industries Ltd. Hyderabad is annexed as Annexure-1. Opp. party No. 1, the Corporation in exercise of power conferred under Section 29 of the State Financial Corporation Act seized the Unit M/s. Ashoka Health Care (P) Ltd. for non-payment of loan advanced to it by the Corporation to the tune of more than Rs. 2.55 Crores and advertised the same for sale. The petitioner asserts that the opp. party No. 1 -Corporation has no charge or lien over the aforesaid machine as it was not purchased with its finance, but instead it has seized the Unit including the machinery belonging to the petitioner and advertised for sale. The petitioner therefore claims that since the machinery has neither been pledged, mortgaged, hypothecated or assigned to the Financial Corporation it is not authorized either to seize or sale the same. Orissa State Financial Corporation in its counter affidavit has denied to have seized any such machinery like Whole Body City Scanner Model SOMUTEM CR from the premises of M/s. Ashoka Health Care Ltd. It is the case of the Corporation that M/s. Ashoka Health Care (P) Ltd., a Company incorporated under the Companies Act, promoted by Ashok Kumar Agarwal and Om Prakash Chhapolia wanted to set up a Diagnostic Centre-cum-Hospital and entered into a joint venture agreement with opp. party No. 2, who agreed to contribute 50% of the equity and the rest by the promoters of the set up company. Opp. party No. 3 also entered into a management agreement with opp. party No. 2 who had agreed to look after the day to day management and run the hospital. It also entered into a turnkey agreement for supply of machinery etc. with opp. party No. 2. However, opposite party No. 3 M/s. Ashoka Health Care (P) Ltd. also entered into a loan agreement with the State Financial Corporation on 22-5-1996 after offering due security for setting up of the hospital and it having failed on its part in paying the agreed outstanding instalments making huge default to the tune of Rs. 2.55 crores including interest and having violated the conditions of the agreement by removing some machinery without prior approval of the Corporation, after serving due notice, the Corporation took over possession of the Industrial Unit from opp. party No. 3 on 8-2-1999 under Section 29 of the State Financial Corporation Act. After due advertisement, the unit was agreed to be sold in favour of one Sahu Trust for a consideration of Rs. 60 lakhs with a down payment of Rs. 15 lakhs, but however, the same could not be completed since one of the Directors representing opp. party No. 2 filed a writ application bearing O.J.C. No. 11116 of 1999 and obtained an order of stay. The State Financial Corporation has taken the plea that it is not aware of supply of any CT Scan Machine on hire purchase basis by the petitioner to opp. party No. 2 nor it is a party to Annexure-1, the hire purchase agreement entered into between the petitioner and opposite party No. 2. However, the Corporation has taken the specific stand that it has not seized any machinery like the City Scan Machine as claimed by the petitioner and therefore, the question of releasing such machine does not arise. Opposite party No. 3 M/s. Ashoka Health Care (P) Ltd., through its Director Om Prakash Chhapolia, in the counter affidavit has stated that the petitioner is an imposter set up by opp. party No. 2 to defraud both O.S.F.C. and opp. party No. 3. According to opp. party No. 3, it has invested Rs. 26,04,546/-, even though in terms of the agreement it was required to invest Rs. 25 lakhs only. Submission is made that the opp. party No. 2 had not contributed a single farthing but misappropriated a huge amount by removing expensive medical apparatus from the premises of the opposite party, for which the O.S.F.C. has lodged an F.I.R. against opp. party No. 2 in Nayapalli Police Station. Opp. party No. 3 further has taken the stand that the City Scanner in question is claimed to have been purchased with the amount of Rs. 14 lakhs paid by opp. party No. 3 in November and December, 1995. The petitioner and opp. party No. 2 being sister concerns they are hands in gloves with each other and as such finding, they intend to defraud this opp. party and O.S.F.C.
4. The writ petition in O.J.C. No. 6835 of 1999 is filed by M/s. G.E. Capital Services India against same set of opposite parties as in O.J.C. No. 6758 of 1999 claiming that it had provided finance to opposite party No. 2 M/s. CDR Medical Industries Ltd. for purchasing a Doppler Ultrasound/Logiq 500 Style G++V2.2 ASIX under a written agreement dated 25th September, 1996, a copy of which is Annexure 3. It is claimed that under the said agreement, the machine was hypothecated in favour of the petitioner as a Collateral Security and, as such, the State Financial Corporation is not authorized to seize or sell the same in exercise of power under Section 29 of the Act. The State Financial Corporation has reiterated the stand taken in the earlier writ petition O.J.C. No. 6758 of 1999. The Corporation has taken the specific stand that the machinery said to have been installed by them in the premises of opposite party No. 3 was neither available nor has been seized by it. The machine seized by the Corporation as per the inventory list is not the machine claimed by the petitioner. In Paragraph 6 it has been asserted that the State Financial Corporation has not seized any such machine claimed by the petitioner. In Paragraph 8, it has been submitted that opp. party No. 2 had without any authority and permission from the Corporation shifted some machinery and equipments from the industrial premises of opp. party No. 3 to Hyderabad and is yet to restore the same to the Corporation in spite of repeated letters dated 1-3-1999 and 11-3-1999. Opp. party No. 2, in its counter affidavit, has taken the stand that the machine has neither been hypothecated nor any charge has been created over the same and the Finance Corporation is to release the same in favour of opp. party No. 2. In effect, the opp. party No. 2 supports the claim of the writ petition.
5. In view of the pleadings of the parties and the submissions made at the Bar, the undisputed facts are that the Orissa State Financial Corporation had advanced a term loan of Rs. 150 lakhs in favour of M/s. Ashoka Health Care (P) Ltd., a company incorporated under the Companies Act for setting up of a Diagnostic Centre and Hospital and, in turn, opp. party No. 3 entered into the loan agreement with opp. party on 22-5-1996. The loan amount having not been repaid, it accumulated to the tune of Rs. 2.55 crores including interest and some of the machinery having been removed from the premises of the unit, the Corporation lodged an F.I.R. in Nayapalli Police Station. However it is shocking to note that the Financial Corporation has not spelt out either in the counter affidavit or during the submissions made by its counsel as to what happened to the F.I.R. lodged and as to whether the machinery was recovered. M/s. Ashoka Health Care (P) Ltd. having not repaid the loan, the Corporation issued notices dated 12-3-1998 recalling the entire liability and took over possession of the Unit on 8-2-1999 on as is where is basis in exercise of powers under Section 29 of the S.F.C. Act with a right to sell the same for realization of the outstanding dues as on 31-12-1998 to the tune of Rs. 2,24,55,599.05 paise. On 22-7-1999 after the seizure, an opportunity was given to the loanee M/s. Ashoka Health Care (P) Ltd. but no payment was made and for that, the property was advertised for sale vide Sale Notice under Annexure-B. The petitioner was also given an opportunity vide Annexure-C to take part in the auction or to arrange a buyer to match the highest offer, but even then the loanee Company did not take any step. The assertion of the Corporation that the defaulter company M/s. Ashoka Health Care (P) Ltd. was given adequate opportunity to repay the loan and was ultimately given a notice for participating in the DAC meeting and giving matching offer, has not been disputed nor denied by filing any rejoinder affidavit and, therefore, the assertions are to be accepted. The loanee company M/s. Ashoka Health Care (P) Ltd., having been given adequate opportunity to pay back the outstanding loan to the tune of more than Rs. 2.55 crores, no fault can be found with the State Financial Corporation for its action under Section 29 of the State Financial Corporation Act in seizing the Unit or advertising it for sale.
6. Now coming to the claim of M/s. Southern Medical Specialities Ltd. the writ petitioner in J.C. No. 6758 of 1999 and the claim of M/s. CDR Medical Industries Ltd., Hyderabad with regard to the agreement entered into between the private parties and the amount advanced, if any, for purchase of Whole Body CT Scanner Model SMUTEM CR and a Doppler Ultrasound/Logiq 500 Style G++V2.2 ASIX, it appears that these are disputes between the parties with regard to the claim of advance made, agreement entered into and hypothecation of machinery, if any. The State Financial Corporation admittedly is not a party to the so-called agreements. If the petitioners or either of them is claiming the machinery under an agreement entered into, they have to agitate their claim in an appropriate forum and not in the present writ petition. The claims made by either of the petitioners for release of the Whole Body CT Scanner Model SMUTEM CR and a Doppler Ultrasound/Logiq 500 Style G++V2.2 ASIX are otherwise not tenable since the State Financial Corporation in the counter filed has taken a positive stand that it has not seized in exercise of powers conferred under Section 29 of the State Financial Corporation Act any such machine as claimed by the writ petitioner.
7. In such view of the matter, the writ petition No. 6758 of 1999 filed by M/s. Southern Medical Specialities Ltd. and O.J.C. No. 6835 of 1999 filed by M/s. G.E. Capital Services India are misconceived in law and facts and are devoid of any merit.
In the result, all the three writ petitions are dismissed being devoid of any merit. The interim orders passed by this Court stand vacated. However, in the fact situation of the case, there shall be no order as to costs.
J.P. Mishra, J.
8. I agree.