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Hotel Babadham And Ors. vs Bihar State Financial … on 31 March, 1993

Patna High Court
Hotel Babadham And Ors. vs Bihar State Financial … on 31 March, 1993
Equivalent citations: AIR 1994 Pat 114, 1994 (42) BLJR 351, 1995 84 CompCas 774 Patna
Author: S Sinha
Bench: S Sinha, O Prakash


JUDGMENT

S.B. Sinha, J.

1. In this application the petitioner have prayed for issuance of an appropriate writ for quashing the order dated 16-12-1992 whereby the mortgaged assets of petitioner No. 1 had been sold to respondent No. 3 in purported exercise of its power under Section 29 of the State Financial Corporation Act, 1951 (hereinafter referred to as the said Act.)

2. The fact of the matter is as follows :

The petitioner No. 1 is a partnership firm and the petitioners Nos. 2 and 3 are its partners.

3. The petitioner applied for grant of
advance from the respondent-Corporation. A
sum of Rs. 8 lacs was sanctioned in the year
1981. A term loan of Rs. 1.88 lacs was
sanctioned in the year 1984 and another term
loan of Rs. 2.45 lacs was sanctioned in the
year 1985. The final term loan of Rs. 7.1 lacs
was sanctioned the year 1988. Thus the total
amount sanctioned to the petitioners was
Rs.1952 lacs. The aforementioned amount
was paid to the petitioners by the respondent-

Corporation in between the period 16-11-1981 to 30-3-1988.

4. The petitioners have contended they have also invested a huge amount.

According to the petitioners various difficulties were faced by them in running and managing the said hotel and the same all along been brought to the notice of the respondent Corporation but despite the same on 16-7-1990 the petitioners were asked by the respondent to deposit a total sum of Rs. 23,13,923.42 paise. Allegedly the petitioners paid a sum of Rs. 1,80,113.15 paise in between the period 27-7-1990 and 24-8-1991.

5. Allegedly the rehabilitation proposal of the petitioners was accepted by the Corporation and they were directed to pay a sum of Rs. 1, lakh by March, 1992.

6. A sale notice, however, was published in daily Nav Bharat Times on 22-11-1992 and an advertisement was also published in the Hindi daily ‘Hindustan’ dated 2-1-1992 in terms of Section 29 of the said Act.

7. The petitioners filed a writ application in this court being CWJC No. 2807 of 1992 which was disposed of with certain directions.

8. However, allegedly an offer of sale was made by the respondent No. 3 by (to?) the respondent Corporation by an order dated 16-12-1992. The petitioners have contended that the said purported sale is contrary to the provisions of the said Act.

9. In a supplementary affidavit filed by the petitioners on 22-2-1993 an offer had been made to deposit Rs. 10 lacs i.e. about 33% of the consideration amount of Rs. 31 lakhs.

10. Two counter affidavits have been filed in this case; one on behalf of the respondents Nos. 1 and 2 and another on behalf of respondent No. 3.

11. In the counter affidavit filed on behalf of the respondent No. 3 it has been contended that the petitioners had earlier filed a suit in the court of Subordinate Judge, Deoghar, when the advertisement for sale was issued being Title Suit No. 1 of 1992 wherein an

interim order of injunction was passed on 16-1-1992.

12. It was further stated that the respondent-Corporation filed a rejoinder to the injunction petition and upon hearing the parties the said interim order of injunction was vacated by an order dated 14-2-1992. On 24-3-1992 the petitioners filed a short application praying for withdrawal of the suit on the ground of alleged formal defects in the suit and before any order was passed, a writ petition was filed in this Court being CWJC No. 2807 of 1992.

13. It has been stated that the petitioners handed over two cheques in the month of March, 1992 for a sum of Rs. 7.01 lakhs and 1 lakh respectively when the tenderers had offered to pay 30% of the total outstanding of Rs. 30 lacs approximately. The petitioners also promised to make payment of Rupees 50,000/- in the month of May, 1992. On the basis of the aforementioned representation of the petitioners, further steps for selling the properties on auction was deferred, but later on both the cheques of the petitioners were dishonoured and the same was returned to the Corporation on 4-5-1992 for want of sufficient fund.

14. Thereafter a notice was issued to the petitioners in terms of Section 138 of the Negotiable Instruments Act and as despite the same the petitioners did not pay any amount, a First Information Report being Deoghar PS. Case No. 356/92 dated 23-8-1992 was lodged.

15. It has further been contended that the petitioners have also not complied with directions of this court as contained in order dated 4-9-1992 passed in CWJC No. 2807 of 1992. It has further been stated as follows:

“That, ostensibly the petitioners neither paid the amount which had been offered by the auction purchaser nor did they filed any representation before the Managing Director. of the respondent Corporation. On the contrary he filed another Title Suit in the court of the Subordinate Judge, Deoghar. praying for the same reliefs for which he had filed the ealier Title Suit bearing No. 1 of 1992 and the writ petition bearing CWJC No. 2807 of 1992. This Title Suit was numbered as T.S. No. 92 of 1992. In the meantime, the respondent Corporation wrote another letter to the petitioners on 16-10-1992 advising them to pay Rs. 8.10 lakhs within a fortnight falling which the mortgaged assets were to be taken over and sold away. The petitioners did not a respond to this letter and neither did they pay up.”

16. In this situtation, the respondents have contended that the unit was again advertised for sale on 22-11-1992 and in pursuant thereto the respondent No. 3 offered Rs. 31 lacs which was accepted by the Corporation.

17. Mr. Chandra Mouli Prasad, the learned counsel appearing on behalf of the petitioner has raised a short question in
support of this application.

The learned counsel submitted that the respondent-Corporation committed an illegality in accepting the offer of respondent No. 3 in so far as it failed to follow the direction of the Supreme Court in Mahesh Chandra v. Regional Manager, U.P. Financial Copro-ration reported in 1992 BBCJ 220 (SC) : (AIR 1993 SC 935).

18. The learned counsel brought to our notice the following observations to the Supreme Court in the aformentioned case (at p. 945 of AIR):

“If unit holder is willing to offer the sale price, as the tenderer, then he should be offered same facility and unit should be transferred to him. And the arrears remaining thereafter should be rescheduled to be recovered in instalments with interest after the payment of last instalment fixed under the agreement entered into as a result of tendered amount.”

19. Mr. Prasad, further submitted that
the contention of the respondent to the effect that the petitioners filed a suit questioning the auction sale dated 16-2-1992 is incorrect.

20. Mr. Arshad Alam, the learned counsel appearing on behalf of the respondents Nos. 1 and 2 and Mr. Sunil Kumar learned counsel appearing on behalf of the repson-dcnt No. 3, however, submitted that the petitioners have disentitled themselves from obtaining any equitable order from this court in view of their conduct. It has been submitted that it is evident that the petitioners have

suppressed the fact of institution of the suits and on this ground along this court should not exercise its discretion in favour of the petitioners.

21. It was further submitted that in any event as the petitioners have failed to carry out directions of this Court as contained in its order dated 4-9-1992 passed in CWJC No. 2807 of 1992, this court should not exercise its jurisdiction under Article 226 of the Constitution.

22. In this case, the following facts stand admitted:

(a) The petitioners have defaulted in payment of instalments to the respondent-Corporation.

(b) On 2-1-1992 an advertisement was issued for sale of the petitioners’ unit. Thereafter the petitioners filed a suit being Title Suit No. 1 of 1992 and obtained an interim order of injunction on 16-1-1992.

On 14-2-1992 the order of injunction was vacated and application for withdrawl of the suit was filed on 24-2-1992.

(c) The petitioners, however, filed a writ petition in this court being CWJC No. 2807 of
1992 on 27-3-1993.

On 4-9-1992 a bench of this court passed the following order in the aforementioned writ application which is as follows :

“Heard learned counsel for the petitioner and the learned counsel for the Corporation.”

In view of the decision of the Supreme Court in the case of Mahesh Chandra v. Regional Manager, U.P. Financial Corporation, reported in JT 1992 (2) SC 326 : (AIR
1993 SC 935), we dispose of this application by directing the petitioners to file a representation before the Managing Director of the respondent Corporation within two weeks from today, which shall be disposed of by the Corporation within a period of one month from the date of receipt of the representation. The petitioners in their representation shall give a proposal for payment of the entire dues. At the time of consideration of the representation, the Managing Director of the respondent-Corporation shall keep in view the decision of the Supreme Court in the case of Mahesh Chandra (supra).

Mr. Alam, appearing for the Corporation

has submmitted that the property has already been put an auction sale. If that be the situation then the petitioners along with their representation must deposit the amount which has been offered and/or deposited by the auction purchaser.

This application is disposed of with the aforementioned observations.

(d) Admittedly, the petitioners did not file any representation in terms of the aforementioned order and although the unit had been put on auction, they did not deposit the amount which had been offered and/or deposited by auction purchaser.

(e) The petitioners on 31st March, 1992 made an offer to pay Rs. 8.01 lacs and further offered to pay a sum of Rs. 50,000/- in the month of May, 1992. The respondent-Corporation accepted the offer of payment and deferred taking any further steps pursuant to the notice issued under Section 29 of the Act.

(f) The Cheques issued by the petitioners were, however, dishonoured. The petitioners also did not deposit a sum of Rs. 50,000/- by May, 1992.

(g) Despite the same another opportunity was given to the petitioners by the respondent-Corporation to pay the amount, on 16-12-1992, but they did not avail the said opportunity.

(h) In this situation, the respondent-Corporation issued another advertiment and unit was put on auction on 22-11-1992.

(i) In the meanwhile, the petitioners have again filed a suit being Title Suit No. 93 of 1992 in the court of Subordinate Judge, Deoghar, but injunction was not passsed in their favour.

(j) The Unit was put on auction on 22-11-1992. According to the respondent No. 3 he has deposited Rs. 10.23 lakhs by selling his lands.

23. Admittely, the petitioners in this writ application suppressed the fact about filing of the earlier suits.

Even in the earlier writ application being CWJC No. 2807 of 1992 the petitioners had not mentioned about the institution of the Title Suit No. I of 1992.

Admittedly the petitioners also did not

comply with the directions of this court as contained in its order dated 4-9-1992.

24. It is true that in Mahesh Chandra’s case (AIR 1993 SC 935) (supra) it has been held that if unit is willing to offer the sale price should be offered the same facility and the unit should be transferred to him.

25. The decision of the Supreme Court in Mahesh Chandra’s case (AIR 1993 SC 935) (supra), however, in our opinion, should not be applied in a case where the borrower fails to avail the offers made in his favour.

26. The petitioner’s offer in the month of March, 1992 to deposit the sale price as offered by the tenderer had been accepted. But the cheques deposited by the petitioners were returned as they did not have any sufficient amount. Again in October, 1992 the petitioners have been given an opportunity to pay off the dues. But instead of accepting the fair offer of the respondent-Corporation, they chose the path of litigation and filed Title Suit No. 92 of 1992. It is also evident that the petitioner had filed CWJC No. 2807 of 1992 only after the order of Injunction passed in Title Suit No. 1 of 1992 was vacated by an order dated 14-2-1991

27. Evidently, therefore, the petitioners have taken recourse to ‘suppressio veri and suggestio falsi.’ The petitioners obtained a favourable order of this court in the light of the decision of the Supreme Court in Mahesh Chandra’s case (AIR 1993 SC 935) in the aforementioned CWJC No. 2807 of 1992 but despite the same they did not comply with the directions of this Court.

28. It is, thus, clear that it is not a case as was the case in Mahesh Chandra before the Supreme Court where the ‘sale of the property was found to be vitiated by unjust and unreasonable Act on the part of the Corporation or its officers or its emloyees.

29. This aspect of the matter has recently been considered by a Division Bench of this court in the case of Bihar Cotton Mills Ltd. v. Bihar State Financial Corporation reported in 1993 (1) PLJR 150.

30. We are, therefore, of the view that the petitioners have disentitled themselves from obtaining an equitable relief from this court in view of their conduct.

Further the respondent No. 3 had to dispose of his own lands for depositing a sum of Rs. 10 lakhs and odd.

31. In such a situation, in our opinion, it would be unjust to give another opportunity to the petitioners to pay the dues of the Corporation.

32. It is well known equity be gests equity. As the hands of the petitioners are not clean they are not entitled to invoke the equitable
jurisdiction of this court.

33. This application is, therefore, dismissed but in the facts and circumstances of the case, there will be no order as to costs.

Om Prakash, J.

34. I agree.

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