JALESH BHATIA Vs. UPFC

JUDGEMENT

(1.) This petition has been filed by M/s. Chemtech (India) (hereinafter referred to as the 'Industrial Unit') and its two partners for quashing the recovery certificate issued by the U.P. Financial Corporation Ltd., Kanpur (hereinafter referred to as the 'UPFC') and the recovery notices issued by the Assistant Collector, Delhi and for quashing the sale proceedings of the Unit and for other consequential reliefs.

(2.) The Industrial Unit acquired Shed No.G-19 Sector IX in New Okhla Industrial Development Authority (hereinafter referred to as the 'NOIDA') on lease from NOIDA for manufacture of Latex Foam Products and for the purposes of establishing the Industrial Unit, an application for grant of loan was submitted before the UPFC which sanctioned the loan of Rs.2.5 lacs on 6th May, 1982. In order to secure the loan the petitioners had created an equitable mortgage on 1.7.1981 in favour of UPFC as also the hypothecation deed and the agreement dated 1.7.1981 according to which the petitioners were required to make the payment in accordance with the schedule failing which the entire loan could be recalled and the petitioners could be directed to return the amount forthwith. The petitioners, however, failed to make payment in accordance with the schedule as a result of which a notice dated 26/27th October, 1985 was sent by UPFC mentioning therein that as they had failed to abide by the terms of the mortgage deed and had not deposited the overdues relating to the loan in spite of several requests, the UPFC had decided to recall whole of the outstanding amount of the loan under the terms of the deed of the mortgage. It was also mentioned in the notice that repayment of whole of the outstanding amount of Rs.2,85,270.81 should be made within 30 days failing which steps would be taken to recover the said amount by issuance of recovery certificate to the Collector. Subsequently, another notice dated 16.12.1986 was sent to the petitioner to make the payment of the aforesaid amount within 15 days failing which the UPFC would exercise powers vested in it under Section 29 of the State Financial Corporation Act, 1951 (hereinafter referred to as the 'Act') and takeover the physical possession of the property and also take further action for transfer of the assets of the Unit mortgaged to the UPFC. The petitioners, however, did not make the payment under the said notice and, therefore, the Corporation took over the physical possession of the Industrial Unit on 13th December, 1986. At this stage it may be pertinent to state that another Industrial Unit namely M/s. Bhatia Enterprises situated on Plot No.G-18, Sector IX, NOIDA had also been granted loan by UPFC but it also failed to make payments as a result of which a similar notice was issued by the UPFC and as it failed to abide by the terms indicated in the notice, physical possession of the said Industrial Unit was also taken by the UPFC on 16th December, 1986.

(3.) The UPFC thereafter issued advertisement for sale of a number of such Industrial Units including that of the petitioner and M/s. Bhatia Enterprises. These advertisements were initially issued in Hindustan Times on 2nd March, 1987 and thereafter on 22nd April, 1987. They were also advertised in Navbharat Times and Economic Times. Pursuant to the aforesaid advertisements two tenders were received by the Corporation for purchase of the said Units. One M/s. Bhatia Rasayan Udyog offered a sum of Rs.1,34,000/- and Sri O.P. Nagpal respondent no.3 offered a sum of Rs.1,40,000/-. Both these offers were also rejected as being inadequate. Sri O.P. Nagpal, however, submitted another offer which was accepted for a sum of Rs.1,70,000/- for both the Units. This was accepted by the Managing Director of UPFC on 23rd May, 1987 and a communication dated 17.6.1987 was sent to Sri O.P. Nagpal intimating the terms and conditions. Subsequently, a request was made by Sri O.P. Nagpal by the letter dated 25.7.1987 to allot the two Units separately in the names of Sri O.P. Nagpal (G-18) and Sri Ramesh Gupta (G-19). This request was also accepted by the Managing Director of the UPFC. The said respondents thereafter deposited 25% of the offered amount and the balance amount in instalments. The physical possession of the Industrial Units was given to Sri O.P. Nagpal and Sri Ramesh Gupta on 17th August, 1987. Thereafter the sale deed was duly executed in favour of the said respondents by UPFC on 6th October, 1987. The final payment towards the sale consideration was made on 23rd December, 1989. It may also be stated that as the entire money could not be recovered through the sale deed, the UPFC issued the notice for recovery of the balance amount under the provisions of U.P. Public Money (Recovery of dues) Act, 1972.