INDUSTRIAL PROMOTION AND INVESTMENT CORPORATION OF ORISSA LIMITED Vs. TUOBRO FURGUSON STEELS PRIVATE LIMITED

JUDGEMENT

(1.) This appeal, at the instance of M/s Industrial Promotion and Investment Corporation of Orissa Limited ("Corporation" for the sake of brevity), is directed against the judgment and order dated June 29, 2006 passed by a Division Bench of the Orissa High Court. By the impugned judgment, the High Court allowed the Writ Petition (W.P.(Civil) No. 1556/2003) filed by Respondent Nos. 1 & 2 (M/s Tuobro Furguson Steels Private Limited and its Director) and undoing a contract of sale of an Industrial Unit entered into between the parties, directed the Appellant to refund Rs. 8,00,000/- (Rupees Eight Lacs), that was paid by the Respondents to the Appellant as part of the sale consideration, together with simple interest at prevailing rates of interest of the State Bank of India on deposits made by customers during the relevant period.

(2.) The facts relevant to appreciate the rival contentions of the parties are brief and may be stated thus. A Foundry Unit situated at Ganeswarpur Industrial Estate, Balasore, by the side of NH-5, along with land, building, plant and machineries was taken over by the Corporation under Section 29 of the State Financial Corporation Act, 1951, as its original promoters namely, M/s Josna Casting Centre, defaulted in payment of its dues. The taken-over Unit was put to sale vide advertisement dated February 8, 1999 issued in Oriya and English newspapers inviting offers for purchase of the Unit. A copy of the sale advertisement is at Annexure P1 which gives a complete description of the Industrial Unit along with all the relevant details. It is significant to note that in the advertisement it was stipulated that the sale would be on AS IS WHERE IS basis. Further, the intending purchasers were allowed inspection of the Unit-on-sale from February 16 to 27, 1999.

(3.) In response to the advertisement the Respondents made an offer (revised by letters dated April 12, 1999 and August 5, 1999) to purchase the Unit for a total consideration of Rs. 40,00,000/- (Rupees Forty Lacs) with down payment of Rs. 8,00,000/- (Rupees Eight Lacs). The offer made by the Respondents was considered by the Advisory and Disposal Committee of the Corporation, and in acceptance of the offer, the Corporation issued the sale letter dated September 10, 1999. A copy of the sale letter is at Annexure P2. In the sale letter it was stated that possession of the Unit would be handed over to the Respondents on payment of Rs. 8,00,000/- (Rupees Eight Lacs) and the balance amount of Rs. 32,00,000/- (Rupees Thirty Two Lacs) would be treated as fresh loan to Respondent No. 1 to be repaid within a period of 6 years in quarterly instalments after a moratorium of 18 months with interest at the rate of 18 per cent per annum from the date of handing over the physical possession of the Unit. The sale formalities were required to be completed within 30 days from the date of issue of the letter. It was further stipulated in the letter that the sale would lapse and the earnest money forfeited if the documents were not executed within the prescribed time. In Clause 2 of the letter it was once again repeated that the sale was on "AS IS WHERE IS" basis and no further claim in that respect would be entertained by the Corporation. In Clause 5 it was stated that the sale of fixed assets was free from liabilities other than the deferred payment of loan of Rs. 32,00,000/- (Rupees Thirty Two Lacs) with interest as stated in the earlier paragraph of the letter. Clause 8 made it clear that the sale did not pre-suppose sanction of any additional loan in favour of the purchaser for operation of the Unit. In Clause 9 of the letter it was stated that though the Corporation would recommend to all concerned to assist and help the buyer of the Unit (the Respondents) but would not be in any manner responsible if any of the benefits were not granted to the Unit or if there was delay in grant of any of the benefits. It was expressly made clear that the denial of any benefits to the Unit by any financial organisation or any other body or delay in grant of any concession or benefit shall not be a ground for nonpayment of the Corporations dues.