FALCON RETREAT PVT LTD Vs. EDC LTD

JUDGEMENT

(1.) Rule. By consent, the rule is made returnable forthwith.

(2.) The petitioners seek a writ of mandamus in the nature of direction to the respondent No. 1 to consider and accept the proposal of the petitioners communicated to the respondent No. 1 vide letter dated 18.1.2006 and further to restrain the respondent No. 1 from proceeding to sell the property in question to the respondent No. 3 and, in the alternative, in case of completion of sale, to quash and set aside the same.

(3.) The petitioners being chronic defaulters in the matter of repayment of the loan to the respondents No. 1 and 2 and besides having failed to keep their assurances and representations in the matter of clearance of dues and/or for arranging a purchaser for the attached properties, the respondent No. 1 proceeded to take action in terms of Section 29 of the State Financial Corporation Act and consequently, attached the properties of the petitioners and also took possession thereof in September/october, 2004. The hotel property was put to auction as many as seven times but was postponed either because of non-availability of the purchaser or consequent to the indulgence shown to the petitioners on account of representations made by the petitioners. However, nothing concrete was done and absolutely no efforts were made by the petitioners to regularise the loan accounts or reduce the liability. Ultimately, the respondent no. 1, by letter dated 5.12.2005, notified the petitioners that they have received a private offer of Rs. 12.99 crores which is much higher than the offer received in the auction of the hotel property and if the petitioners were interested, they should get a better offer within 3 days from the date of the letter, failing which the respondent would proceed with the sale of the hotel property to the firm from whom the offer of Rs. 12.99 crores had been received. On 15.12.2005, the petitioners expressed their inability to secure a better offer within three days as they had received the letter only on 13.12.2005 i. e. after expiry of period of three days from the date of issuance of the letter dated 5.12. 05. The petitioners sought time of 12 months to arrange buyer to settle the entire liability of the respondent No. 1. By letter dated 29.12. 05, the respondent No. 1 informed the petitioners that it was constrained to accept the private offer of Rs. 12.99 crores. By letter dated 5.1. 06, the petitioners called upon the respondent No. 1 not to proceed with the sale of the property to the proposed buyer on the ground that the price offered was ridiculous. On 17.1. 06, the respondent No. 1 issued a public notice stating that it was in possession of the hotel property attached by it on account of the default in payment committed by the petitioners and it was deemed owner in possession of the hotel property and entitled to sell the same. On 22.1. 06, website of the respondent No. 1 disclosed that the property attached by respondent No. 1 was still available for sale. The present petition was filed on 23.1. 06 with the prayers as stated above. The respondents have contested the claim of the petitioners stating that in terms of resolution dated 5.12. 05 by the Board of respondent No. 1, in its 288th meeting, it was decided to accept the offer of the respondent No. 3 in the amount of Rs. 12.99 crores. However, as a measure of fairness, the respondent No. 1 vide communication dated 5.12. 05 informed the petitioners about the proposal that was being accepted to the tune of Rs. 12.99 crores unless the petitioners could submit a better offer. However, there was no favourable response from the petitioners. The respondent No. 3 on its part has stated that respondent No. 1 accepted the offer made by the respondent No. 3 and accordingly communicated the same to the respondent No. 3 under letter dated 12.12. 05 and consequently, there is a concluded contract between the respondent No. 1 and the respondent No. 3 in relation to the hotel premises. Therefore, the question of issuance of directions in terms of the prayers made by the petitioners for acceptance of the proposal of the petitioners under letter dated 18.1.2006 does not arise at all.