ANBALAYAM TEXTILES PRIVATE LTD 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. CONSPECTUS OF FACTS :-

(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 third respondent (auction purchaser) filed a counter wherein it was contended that he was a bona fide purchaser for value and consideration. He has also deposited the amount due to the Sales Tax Department besides incurring an expenditure of Rs.12,00,000/- for registration of sale deed. According to the third respondent, the Corporation has not committed any illegality in the matter of sale.