C. JAGADISH S/O LATE CHANDRAPPA Vs. KARNATAKA STATE FINANCE CORPORATION CHITRADUGRA BRANCH BEHIND BASAVESHWARA THEATRE CHITRADURGA REP. BY ITS BRANCH MANANGER, KARNATAKA STATE FINANCE CORPORATION HEAD OFFICE 1/1, THIMMAIAH ROAD BANGALORE REP. BY

JUDGEMENT

(1.) THIS petition by borrowers of certain amount from the first respondent - state finance corporation - had been admitted and was being examined mainly on the question of the justification of the state owned finance corporation continuing to mulct the borrower with interest at the contractual rate, even after it had exercised powers under Section 29 of the State Financial Corporations Act, 1951 [for short, the Act] and had brought the asset of the borrowers to sale and in the instant case, the first petitioner -borrower being a self -employed person holding licence for driving heavy motor vehicles and who had been financed to purchase a truck by the corporation under a hire purchase transaction agreement. As per the statement placed before the court by the corporation, an outstanding of about Rs 2.60 lakh at the time when the corporation brought to public auction sale the takeover property of the borrower, had swollen to more than Rs 60 lakh during the pendency of this writ petition, which was, on the face of it, a very shocking development, because of which this Court had been compelled to examine the justification of the corporation in mulcting the borrower with interest and compound interest periodically on the outstanding amount even after the asset of the borrower was taken over in exercise of its power under Section 29 of the Act and had been sold by the corporation etc.

(2.) THIS development had been noticed by this Court as per order dated 13 -11 -2009, reading as under: This is a story of the suffering of small time borrowers from the KSFC who particularly suffer if they are belonging to the lower strata of the society, and reveals as to what kind of harassment humiliation and disastrous financial consequences are heaped on them, are all very well demonstrated in the present writ petition. 2. A person who had a driving licence with the fond hope of owning a transport vehicle, had borrowed a sum of Rs. 5.66 lakhs from the respondent -Corporation on 20.12.1996 under the self -employment scheme mooted by the Corporation.

(3.) IT appears, the petitioner was unable to maintain the schedule for repayment of the loan as per the instalments and had defaulted in making payment of a few instalments, which gave cause for the Corporation to re -possess the vehicle and ultimately, the vehicle itself was sold on 09.04.2001 for a price of Rs. 2.80 lakh after going through a farce of a procedure for notifying the public at large to buy the vehicle in an open competition/auction. This is the allegation of the petitioner against the respondent Financial Corporation as an advertisement on 15.02.2001 about the sale of such seized vehicles was carried out in a non -descript vernacular newspaper by the name "Ranarudra" published at Chitradurga, the place of the borrower and the mainstay of which newspaper appears to be only such advertisements issued by the Corporation.