HIMACHAL RUBBER FACTORY Vs. STATE OF HIMACHAL PRADESH

JUDGEMENT

(1.) The petitioner in this writ petition filed under Articles 226/227 of the Constitution of India has questioned the action of respondent No. 2, in taking over of his unit under the provisions of section 29 of the State Financial Corporations Act, 1951 (hereinafter to be called as ˜the Act) as also its sale in favour of respondent No, 3, on number of grounds.

(2.) It is alleged that the petitioner set up a unit, which came in production in the month of March, 1984, after he had raised a loan of Rs. 2,18,000 from respondent No 2 and spent another sum of about Rs. 2,05,000 from out of his own rescources After having come in production, petitioner started repaying the amount of loan and till December 1986 a sum of Rs. 8,2 0 had been repaid, where after it could not be repaid because of his having suffered unforseen heavy losses, which were beyond his control. Tbe basis for suffering losses are stated as change in the governments policy in the levying of Excise duty on the products being manufactured by the petitioner as also introduction of new technology for retreading the tyres. Petitioner approached respondent No 2 for providing additional resources/finances so as to enable him to modernise the process of manufacturing, in accordance with the new technology, which request was not acceded to and due to paucity of funds it became almost impossible for the petitioner to cope with the business commitments and repay the amount of loan.

(3.) It is also alleged that abruptly, without any justifiable cause, the Financial Corporation took over the possession of the unit in the absence of its owner. After having come to know of the same, efforts were made by the petitioner in paying more amount and by the last week of August, 198" a total amount of Rs. 1,53,230 had been paid. It is also alleged that the procedure prescribed under law was not followed and drastic action was taken without issuing any notice to the petitioner and affording him a reasonable opportunity. It is also alleged that after the taking over of the factory, the same was not run by respondent No. 2 but was locked and suddenly it was auctioned on 29th February, 1992. Before putting the unit to sale, no notice was given to the petitioner and no opportunity was afforded to him to procure better buyers and even no chance was given to him to liquidate the outstanding debt. It is also the case of the petitioner that respondent No. 2 resorted to unfair and dishonest means in finalising the deal in favour of respondent No. 3. 4 After having come to know, through a friend, that the unit had been auctioned, the petitioner approached respondent No. 2 and also contacted a commission agent, dealing in sale and purchase of buildings and machinery and finally got negotiation completed with one firm, namely, Mentor, who expressed its willingness through letter dated 8th March, 1992 to purchase the building and machinery for Rs. 3,05,000. After finding prospective buyer, petitioner again approached respondent No. 2 by contacting one Mr Joshi to negotiate with the buyer, who expressed his unwillingness and informed the petitioner that a communication had been addressed to him asking to be present in tbe office of the Corporation on 24th March, 1992, on which the petitioner informed that no such intimation was ever received by him for 24th March, 1992 In fact, he did receive a communication on 25th March, 1992 asking him to be present in the office of the Corporation on 24th February, 1992 for negotiations. The letter had been anti -dated It is alleged that for a paltry sum of Rs. 1,62,000 his unit worth Rs 8,00,000 was sold to respondent No. 3. Consequently, the prayer has been made to quash the proceedings for taking over as also the sale and to direct respondent No. 2 not to handover the possession of the unit to respondent No. 3, An application for interim relief was also made. 5, On 14th April, 1992, while issuing notice to the respondents, an interim order was passed directing the sale in favour of respondent No. 3, if not already confirmed, shall not be confirmed and respondents were restrained from alienating land, machinery and factory. This was subject to the petitioners depositing a sum of Rs. 50,000 on or before 24th April, 1992.