ANBALAYAM TEXTILES PRIVATE LTD , REP BY ITS CHAIRMAN, P VEERASAMY Vs. CHAIRMAN CUM MANAGING DIRECTOR, TAMIL NADU INDUSTRIAL INVESTMENT CORPORATION LTD

JUDGEMENT

(1.) The legality and correctness of the sale of mortgaged property made by the State Finance Corporation for an amount less than the market value indicated in the Valuation Certificate prepared by the Registered Valuer, without fixing the reserve price, rejecting the request made by the borrower to pay the amount quoted by the successful bidder even before the payment of 90% of the balance consideration and thereafter, belatedly accepting the balance amount from the successful bidder without forfeiting the earnest money in accordance with the auction condition, is the core question involved in this writ appeal.

(2.) The appellant was granted financial assistance by the Tamil Nadu Industrial Investment Corporation [hereinafter referred to as 'the Corporation'] during the year 1994. The immovable property which is the subject matter of the present litigation was given as security. The appellant was running a spinning mill and due to market recession, they sustained severe loss and as a result, the loan installments were not paid as per the agreement. The Corporation agreed to settle the account by way of one time settlement. As per the terms of settlement, the unit was expected to pay the entire amount by 1 January 2004. Since one time settlement was not honoured in its entirety, the Corporation took possession of the unit on 4 December 2006. The Corporation, through an authorized valuer, valued the property. The valuer fixed the market value at Rs.156.43 lakhs. Subsequently, the property was sold in favour of third respondent for an amount below the market value.

(3.) The appellant approached the Corporation to pay the bid amount quoted by the successful bidder. However, the request was turned down. The third respondent failed to pay the balance consideration less EMD within the mandatory period of thirty days as stipulated in the auction notification and the order of confirmation. Even then, the successful bidder was permitted to pay the balance of 90% after 92 days and sales certificate was issued. The value of the property was more than Rs.2.50 crores as on the date of sale. Therefore, the appellant was constrained to file the writ petition challenging the sale proceedings. The successful bidder was given possession of the property subject to the result of writ petition.