Shyam Narain Sinha vs Managing Director,Bihar State on 25 November, 2008

Patna High Court
Shyam Narain Sinha vs Managing Director,Bihar State on 25 November, 2008
Author: Ajay Kumar Tripathi
                     CIVIL WRIT JURISDICTION CASE No.10221 OF 1999

                     SHYAM NARAIN SINHA, son of Late Ram Barai Lal, resident of Mohalla
                           Katirabag, Ara, P.S. Ara Nawadah District - Bhojpur

                     1. Managing Director, Bihar State Financial Corporation, Frazer
                        Road Patna.
                     2. Branch Manager, Bihar State Fionancial Corporation, Branch Ara,
                        Mohalla Pakri, P.O. Ara District - Bhojpur
                     3. Sanjay Chopra Maharana Pratap Nagar, P.O. Nawadah, Arrah,


For The Petitioner : Mr. Kai Das Chatterjee, Adv.

Mr. Amlesh Kr. Verma, Adv.

For The Respondent : Mr. Girijesh Kumar, Advocate.



A. K. Tripathi, J. Heard learned counsel for the petitioner and learned

counsel for the State.

Petitioner is the father of the original promoter. One

Kamlesh Kumar Sinha set up an industry on disbursement of

certain amount of loan in the name of M/s Kamlesh Engineering

Works located at Club Road, Arrah. The sanction of loan in

favour of the original promoter was made some time in the year

1986 and the term loan was of about 3.05 lakhs. Some

repayment till 26.12.1989 was made by him but thereafter in the

year 1990 he became traceless. In absence of repayment the

respondents Bihar State Financial Corporation (hereinafter

referred to as the ‘corporation’) initiated a proceeding under

section 29 of the Act. Out of concern or may be family pride

father of the original promoter (the present writ petitioner)

decided to take responsibility upon himself not only to settle the

dues of the corporation but may be even run the Unit. He

decided to communicate with the respondent’s corporation and

wrote many a letters in the year 1997. The matter was

considered and certain terms and conditions were laid down for

the petitioner to fulfill for a reconsideration of withdrawing the

proceeding under section 29 of the Act.

The earliest offer made by the corporation to the

petitioner is dated 22.03.1999, and has been brought on record

as Annexure – 4, not all the terms and conditions need be

noted in the present order but some of them are that the

petitioner was given a months time to repay 5.52 lakhs in one

lump sum. Since corporation had found a purchaser who had

deposited Rs. 60,000/- (sixty thousand only) the same had to

be also paid back and 18% interest has to be borne by the

petitioner if the refund of Rs. 60,000/- (sixty thousand only) to

the purchaser had to be made. There are several other

conditions with regard to the rate of interest which on a reading

does give a feel to the court that it was loaded against the

petitioner. The court also gets a feeling that the corporation did

not have patience and indulgence for the petitioner.

Annexure – 2 is the offer made to the purchaser by the

corporation. The purchaser was supposed to one Sanjay Kumar

Chopra for whom the consideration money fixed for the Unit

was 2.95 lakhs only. Out of this consideration money he was to

pay 25% by way of a Bank Draft within 21 days of the date of

issue of the order for confirmation of sale in his favour and

balance amount to Rs. 2.95 lakhs was converted into loan

repayable in a period of five years in twenty equal quarterly

installments and the first installment becoming due on 31 st

January, 1997. The installment worked out for him was Rs.

11067.58 Paise. The interest component was 20% per annum,

rest of the other conditions are not required to be dealt with in


When the petitioner learnt about the terms and

conditions which had been offered to the purchaser the private

respondents no. 3, he approached the corporation for

reconsideration. He demanded a kind of parity or fairness in the

decision making process, more so, since the respondents are

not only statutory body but a public body and certain amount of

responsibility is thrust upon them in decision making, specially

in public domain. Respondents however adopted the attitude of

take it or leave it. The petitioner did not succeed in getting any

concession to the offer made to him. He even contends that

probably it was purposefully done to shut him out of the scene,

so that private respondents Sanjay Kumar Chopra could have

posses the unit at his own leisure and time without making any

major financial outlay.


Vide order dated 23.09.1999, the sale of the Unit was

confirmed in favour of private respondents the petitioner is

aggrieved by this communication and decision and therefore,

the writ application came to be filed. At the time of admission,

the court decided to protect the interest of the petitioner by

directing that till further orders the Unit in question would not be

sold and the assets and liabilities of the Unit was protected. In

other words, by virtue of the order dated 14.10.1999, a kind of

status quo came to be maintained and Annexure – 1 to that

extent was not given effect to.

Notice had been issued to the private respondent but

he has chosen not to appear or assist the court. The counsel for

the respondent’s corporation also informs the court that he has

not been in touch with the office of the corporation on the matter

for a long long time which could be an indication of the fact that

he might have lost interest in the matter, since the writ

application is almost 10 years old when it was initially filed.

Counsel for the corporation is present and has

submitted in favour of the decision for auction sale of the Unit.

His submission is that the corporation has acted bonafidely and

only to protect its commercial or financial interest. The offer

made to the private respondent was in terms of his commitment

to the purchase and to assure that a buyer does emerge which

will facilitate recovery of some amount of money which was

loaned out to the original promoter.


No doubt the object for such decision is laudable but

the test of the pudding is in eating because there is nothing to

show from records that the respondent corporation at any point

of time really wanted to consider the offer of the petitioner with

equal magnanimity if not equality. If the corporation would have

been a little less tight fisted may be, they could have struck a

bargain with the petitioner whose sole interest in saving the Unit

was his emotion and feeling for a son who had gone missing

and had not been heard in all these years.

A dispassionate reading of Annexure – 4 with

Annexure -2 of the writ highlights the issue and reaffirms the

feeling of discrimination which the petitioner is making a

grievance. Learned counsel for the petitioner has no quarrel

with the power which the corporation has under section 29, but

he only wants a fair treatment in matter of decision making

process. Even today he is willing to meet the obligation of the

original promoter provided the finance corporation uses the

same yardstick and may be on similar laid down consideration

as purchaser in matters of repayment of the outstanding dues

against the Unit.

The present petitioner is the father of the original

promoter, he has no responsibility or liability to the Corporation.

Merely because he happens to be the father of the original

promoter, it does not mean that the respondents corporation

has to be harsh in its decision making process.

The court does come to a considered opinion that the

matter requires reconsideration at the level of the corporation

with an observation that the terms and conditions which had

been offered to the purchaser, who is anyway not interested in

pursuing the matter would be kept in mind so that the petitioner

wish to wash away the stigma or the liability which had been

created by his son may be fulfilled.

The writ application is allowed. Annexure – 1 is

quashed with a direction that an early decision be taken to

resolve the dispute.

Patna High Court
The 25th Day of
November, 2008                        (Ajay Kumar Tripathi, J.)


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