Advance Oils Private Limited vs Punjab Financial Corporation and others

M.M. Kumar, J.

This petition filed under Article 226 of the Constitution prays for quashing order dated 13.3.1987 (P8) initiating proceedings against the petitionerCompany under Section 29 of the State Financial Corporation Act, 1951 (for brevity, `the Act''). It also prays for quashing all the subsequent proceedings taken in pursuance to that order. It has further been prayed that the order of transfer dated 27.3.1989 and sale deed (P9) in respect of the property of the petitionerCompany be also quashed.

The case of the petitionerCompany is as under :

That on 30.3.1976 the petitionerCompany, applied for a loan of Rs. 30 lacs to respondent No. 1Punjab Financial Corporation (hereinafter to be referred as `the Corporation'') the Corporation. However, an amount of Rs. 14.33 lacs was the loan availed by the petitionerCompany between 15.3.1977 to 24.10.1978. The details of the loan amount disbursed by the Corporation to the petitionerCompany is as under :

(1) Vide Draft No. PKR/790355, dated 15.3.1977

Rs. 3,10,000/

(2) Vide Draft No. 754683/7/77, dated 22.8.1977

Rs. 2,32,000/

(3) Vide Draft No. PKR/79570/9/77, dated 7.10.1977

Rs. 50,900/

(4) Vide Draft No. PKR/795962, dated 22.10.1977

Rs. 1,79,000/

(5) Vide Draft No. PKR/797097, dated 21.11.1977

Rs. 1,16,600/

(6) Vide Draft No. PKR/798875/1/78, dated 7.1.1978

Rs. 2,46,100/

(7) Vide Draft No. PKR/7998462/78, dated 15.7.1978

Rs. 1,53,000/

(8) Vide Draft No. PKR/8017805/78, dated 22.5.1978

Rs. 51,300/

(9) Vide Draft No. PKR/806076, dated 24.10.1978

Rs. 94,100/

It is, thus, evident that an amount of Rs. 15,67,000/ was not advanced. On account of nonadvancing the balance amount, the petitionerCompany had to face a lot of harassment and financial difficulties in commencing the project. The petitionerCompany had also executed a mortgage deed on 18.3.1977 when the first instalment of Rs. 3,10,000/ was advanced. As a consequence of mortgage deed, a charge was created in favour of the Corporation on the properties of the petitionerCompany. The petitionerCompany was able to repay the loan to the extent of Rs. 7,02,119.33 till 2.12.1983. On account of wide spread terrorism at that time in the State of Punjab and deterioration of law and order situation, the industry, trade and development were vitally affected and suffered huge losses. The unit of the petitionerCompany was situated in District Ferozepur, which was worse affected. The petitionerCompany has claimed that the loan sanctioned by the Corporation was linked with the finances of the Industrial Development Bank of India (I.D.B.I.). The rate of interest payable by the petitionerCompany was 91/2 % per annum and in case of any delay in making the payment of instalment on time, the Corporation was to charge penal interest @ 121/2 % and 153/4 % on the total amount of loan advanced. The enhanced/penal interest was not confined to the amount defaulted. It is claimed that if the rate of interest had been correctly levied/calculated, the amount due to the Corporation would have worked out far less than the amount given. In no circumstance the interest of 121/2 % or 153/4 % could be charged. On account of its disability to pay back the instalment on time, the Corporation filed a petition under Section 31 of the Act against the petitionerCompany before the learned Additional District Judge, Ferozepur, with a prayer that an order for recovery of Rs. 24,07,551.24 along with interest @ 153/4 % with effect from 15.6.1984 with half yearly rest was to be made. The Corporation further requested for an interim injunction restraining the petitionerCompany from transferring or removing the plant and machinery from its premises without permission of the Corporation. It claimed the relief of attachment of mortgaged property with a further prayer for sale of the property to realize the amount due to the Corporation (P1). The petitionerCompany filed its reply on 9.8.1985 (P2). The Corporation then filed replication (Annexure P3) through its Secretary Shri Harjit Singh (Respondent No. 3). During the pendency of the proceedings under Section 31 of the Act, the petitionerCompany filed an application under Order XXI Rule 83 read with Section 151 of the Code of Civil Procedure, 1908 (for brevity, `the Code''), seeking permission of the Court for disposal of the assets and land by private sale (P4). The Corporation did not have any objection if the petitionerCompany was to be granted permission to sell the property for Rs. 32,44,000/. However, learned Additional District Judge allowed the petitionerCompany to dispose of the property by private sale for a sum of not less than Rs. 25,00,000/ and the entire amount due was ordered to be deposited by the petitionerCompany to the Corporation. A period of four months was granted to dispose of the entire machinery along with landed property. The order dated 21.11.1985 has been placed on record as annexure P 6.

The petitionerCompany was not able to sell the total property but was able to dispose of few machinery items for Rs. 5,45,000/. The amount was deposited with the Corporation for adjustment of its account. It is claimed that the petitionerCompany had paid an amount of Rs. 12.17 lacs to the Corporation up to October, 1986 against a loan of Rs. 14,33,000/. The petitionerCompany has pleaded that there was no commercial activity in the State of Punjab during the years 1985 to 1987 and every entrepreneur was leaving the State to settle outside Punjab because of the terrorist activities which were at its peak particularly in District Ferozepur. However, it is claimed that land measuring 38 Kanals 18 Marlas, situated within the municipal limits of Abohar alone was sufficient to satisfy the balance payment of loan advanced by the Corporation as the value of the land was more than Rs. 25,00,000/. The Revenue Authorities had assessed the value of the land at a conservative price of Rs. 4,00,000/ per acre. A copy of the assessment report has been placed on record as Annexure P7. The assessment has been framed by the Patwari, then approved by Kanungo, further accepted by Tehsildar and Sub Divisional Officer. Apart from the land, the building has been insured by the Corporation for over Rs. 8 lacs. The value of the unsold mortgaged machinery and other moveable property in the factory was worth Rs. 2,50,000/. The value of the building has been claimed to be Rs. 8,00,000/ as it was got insured by the Corporation for the aforementioned amount. The value of remaining assets has also been claimed to be Rs. 2,50,000/. The total worth of the property has been assessed to be more than Rs. 37,00,000/. It is claimed that the Corporation rightly insisted for selling the property for not less than Rs. 32,44,000/ although the Court had granted permission to sell the same for not less than 25,00,000/.

For the aforementioned factual position reliance has been placed by the petitionerCompany on the reply dated 21.11.1985 (P5) filed by the Corporation to the application moved by the petitionerCompany under Order XXI Rule 83 of the Code in the proceedings before the District Judge. In para 6 of the reply, the averment made (which has been signed by respondent No. 3 Shri Harjit Singh) is that the entire property should be sold for an amount not less than Rs. 32,44,000/, which is assessed value of the entire mortgaged properties. The petitionerCompany remained unable to sell the total property but sold some machinery items for over Rs. 5,45,000/ and the sale proceeds were deposited by it with the Corporation. The petitionerCompany was able to repay Rs. 12.17 lacs to the Corporation upto October, 1986 against the total loan amount of Rs. 14,33,000/. The inability to sell the aforementioned property has been sought to be explained by referring to the continuous deteriorating law and order condition in the terrorist affected State of Punjab, which in fact was at its peak, especially in District Ferozepur, where the premises in dispute were situated.

The petitionerCompany has alleged that the property has been sold by respondent Nos. 1 and 3 for a song at a rock bottom price of Rs. 7,00,000/, which is mala fide and on extraneous considerations. The Revenue Authorities had made assessment and accordingly the total land measuring 38 Kanals 18 Marlas would have worked out for more than Rs. 16,00,000/. The aforementioned position is also evident from perusal of para 13 of the affidavit dated 18.7.2005, filed by the Managing Director of the petitionerCompany under the subheading `Valuation of the Property''. The computation of Rs. 32,44,000/ as per the stand taken by the Corporation before the learned Additional District Judge was based on a report dated 6.9.1985 of its Manager (Technical). The Manager (Technical), had visited the unit of the petitionerCompany on 5.9.1985 and then submitted his report. After inquiry he had assessed the realisable rate at Rs. 40,000/ per Kanal and accordingly he estimated the auction value of the land to Rs. 15.56 lacs. He also assessed the realisable value of the building to Rs. 9.70 lacs and that of the machinery at Rs. 7.18 lacs. The affidavit dated 18.7.2005, goes on to further state that the land was assessed on 18.6.1987 by the Tehsildar, Abohar and his report was accepted by the Sub Divisional Officer, as is evident from the perusal of the report dated 18.6.1987.

When the petition under Section 31 of the Act was pending before the Learned Additional District Judge, the Corporation in exercise of power conferred by Section 29 of the Act, hurriedly took a decision on 13.03.1987 (P8) to take over possession of the mortgaged properties which included both moveable and immovable properties as also the management of the petitioner Company. It is alleged that no notice as required by Section 29 of the Act was given to the petitionerCompany. According to the petitionerCompany, after the possession of the property and the management of the petitionerCompany had been taken over by the Corporation on 30.3.1987, the right to charge interest on the outstanding amount due from the petitionerCompany did not survive. It is asserted that the Corporation could not have retained possession and continued charging interest.

In pursuance to the order of taking over dated 13.3.1987 (P8), passed by the Corporation, the land, building and machinery of the petitionerCompany were sought to be sold by issuing advertisement. A Committee of officers for the sale of properties was constituted which consisted of the following members :

(1) Shri Harjit Singh, SecretarycumGeneral Manager of Punjab Financial Corporation;

(2) Shri D.C. Aggarwal, General Manager; and

(3) Shri J.S. Aulakh, Deputy General Manager.

First set of advertisement was issued in the leading newspapers on 11.4.1987, which have been placed on record as Annexures R2/F, R2/G, R2/H, R2/I and R2/J. These newspapers are `The Daily Tribune'', `Times of India'', `Hindustan Times'' and Urdu newspaper `Milap'' and `Hind Samachar''. The allegation of the petitionerCompany is that the advertisement is devoid of any details with regard to reserved price, land, machinery, nature of possession and date of opening bids etc. It is claimed that there is no transparency maintained and it was full of illegalities. According to the advertisement, sealed offers along with earnest money of Rs. 5,000/ or 5% of the offered price, whichever was higher through bank draft in favour of the Corporation, were invited. For details of properties, the intending buyers were to contact the Head Office and the properties could be inspected from 10.00 a.m. to 4.00 p.m. between 20.4.1987 to 28.4.1987. Against the first advertisement no offer was received. Although, in para 12 of the written statement, the Corporation has stated that it had received only two offers. After the inspection of record, petitionerCompany has clarified by filing an affidavit, dated 18.7.2005, that in response to the first advertisement no offer was received as per the record. It has further been urged in para 4 of the said affidavit that no reasonable person would have come forward in response to such a vague advertisement.

Then a second set of advertisement was issued on 4.2.1988 (R2/A, R2/B, R2/C, R2/D and R2/E). According to the affidavit dated 13.7.2005, filed by Shri T.C. Singla, Manager (Finance), Punjab Financial Corporation, Chandigarh, one offer was received for the land and machinery from Shri Umesh Chander Kukkar, for Rs. 1,50,000 on 19.2.1988 (R1/A). He further revised his offer to Rs. 2,22,000/, vide letter dated 22.4.1988 (R1/B). A letter dated 25.3.1988 was received from one Kamra Flour and Oil Mills, as has been disclosed in para 6 of the affidavit dated 18.7.2005, filed by the petitionerCompany after inspection of record. Kamra Flour and Oil Mills had merely expressed interest in the property and had requested for a copy of the terms and conditions of the proposed sale and also desired to inspect the property after making arrangements with the Corporation. According to the record no terms and conditions were sent nor any inspection was arranged for Kamra Flour and Oil Mills. It is pertinent to mention that on 4.8.1988 the offer of Shri Umesh Kumar Kukkar etc. was declined and earnest money was refunded, vide cheque dated 26.8.1988. The aforementioned position is evident from para 7 of the affidavit filed by the petitionerCompany on 18.7.2005.

On 4.8.1988, the Managing Director of the Corporation had also taken decision to issue still another advertisement. However, para 8 of the affidavit dated 18.7.2005, further states that a letter dated 5.8.1988 was received from respondent No. 2 firm by some unknown person in the office of the Corporation on 10.8.1988. The letter, which is typed on the letterhead of respondent No. 2 firm is reproduced hereunder for facility of reference :

"LETTER HEAD OF JAGTAR SINGH GORAV KUMAR

Dated : 581988

To

The Managing Director,

P.F.C. Chandigarh

Subject : Offer for purchase of property of M/s Advance Oils Pvt. Ltd. Abohar

R/Sir,

We understand that you are the absolute owner of the properties originally held by M/s. Advance Oils (P) Ltd. Hindumal Kat Road ABOHAR. The unit is lying such for the last few years. We are interested to restart this unit and are thus interested to purchase these properties at a mutually agreed reasonable price. As a consideration towards the value of these properties, we have the following alternative offers :

(a) Rs. One lac as down payment on acceptance of offer.

(b) Rs. Five lacs within three months on getting registration of documents in our favour.

(a) Rs. 100 lac on down payment of acceptance of offer

(b) Rs. 200 lac after one year.

(c) Rs. 200 lac after two years

(d) Rs. 200 lac after three years

(a) Rs. 200 lacs as down payment on acceptance of offer.

(b) Rs. 100 lac after six months.

(c) Rs. 100 lacs after one year

(d) Rs. 100 lac after two years.

(f) Rs. 100 lac after 21/2 years

(g) Rs. 100 lac after 3 years

We also agree to pay interest at the rate of 111/2% per year in our proposal No. 2 is accepted.

It is hoped that you will find one of the above proposals acceptable and call us at an early date for making payment and finalising other details.

As a token of our bona fide we are enclosing a draft of Rs. 5,000/ numbering SBI/840406 which is refundable within a period of one month in case none of our proposals is acceptable.

Thanking you

Yours faithfully,

For Jagtar Singh Gorav Kumar

Signatures of Harmohinder Singh Grover

Partner"

On the basis of the aforementioned letter it is alleged that the following facts have become evident : (a) that the letter dated 5.8.1988, was not written by respondent No. 2 firm in response to the advertisement issued by the Corporation in February, 1988 or any other advertisement but on the basis of some mysterious understanding. The source of such understanding has not been disclosed; (b) letter dated 5.8.1988 was received by some unknown person in the office of the Corporation on 10.8.1988, who forwarded the same to the General Manager; and (c) the letter was neither accompanied by the requisite earnest money of 5% of the offered price nor it was sent in sealed cover, with or without superscription in the manner indicated in the advertisements.

The petitionerCompany has alleged that by the time of receipt of letter dated 5.8.1988, which was received on 10.8.1988, the Managing Director had already taken a decision by passing an order in writing for readvertisement of the property on 4.8.1988. There was no reason to accept/encash the bank draft of Rs. 5,000/ received from respondent No. 2 firm by the Corporation. However, the Corporation accepted the said bank draft of Rs. 5,000/ and encashed the same. The Corporation thereafter also had decided to proceed with the readvertisement of the property by observing that respondent No. 2 firm was to apply against the fresh advertisement. Accordingly, the property was thereafter advertised on 18.12.1988 (P12). Again the Corporation received a letter dated 29.12.1988 (there is overwriting in respect of date) from respondent No. 2 firm and the same is reproduced hereunder :

"LETTERHEAD OF JAGTAR SINGH GORAV KUMAR

291288 (date overwritten)

To

The Managing Director.

PFC

CHANDIGARH

Sub : Reminder for offer for purchase of property of M/s. Advance Oils Pvt. Ltd. ABOHAR dt 581988

Sir,

As we have already made offer for M/s. Advance Oils Pvt. Ltd. ABOHAR. According to your fresh advertisement Dt. 18 Dec. 88.

We stand for our previous offer. And we are ready for any negotiation.

We are also ready to come Chandigarh for discussion.

Pl. give us opportunity

Thanking yours and hoping for an early reply.

Yours Faithfully

For Jagtar Singh Gorav Kumar

Signatures of Harmohinder Singh Grover

Partner"

The petitionerCompany has asserted that the aforementioned letter did not constitute an offer in terms of the advertisement and the same could not have been taken into consideration for various reasons. According to the advertisement the offer for which property was required to be sent in separate sealed covers subscribing `Tender for purchase of property at''. Moreover, the sealed offer along with earnest money of Rs. 5,000/ or 5% of the offer price whichever higher, was payable through bank draft in favour of the Corporation and the same was to reach by 2.1.1989 before 3.30 p.m. at the Head Office of the Corporation at Chandigarh. The offer was made for Rs. 6 lacs and Rs. 30,000/ was required to be deposited by way of bank draft. Therefore, the offer made by respondent No. 2 firm by paying earnest amount of Rs. 5,000/ was void abinitio. There was no sealed cover used for making the offer. The offers were to be received till 3.30 p.m. on 2.1.1989 and, therefore, it was incumbent upon the Corporation to record date and time of receipt of the offer. The receipt register (Dak Register) was not produced to substantiate the factum of the date of receipt of the letter. In any case, it has been pointed out that letter dated 29.12.1988 was only a reminder and in continuation to letter dated 5.8.1988. It was not an unconditional offer as per the terms of the advertisement. The advertisements have been placed on record as Annexures P12, P13 and P15 (at pages 115, 166 and 117 of the paper book). This advertisement is also in the same terms with difference of date only. The Committee despite numerous incurable defects had accepted tender/offer of respondent No. 2 firm for a pittance of Rs. 7,00,000/ only. The property was transferred by way of registered sale deed dated 27.3.1989 (P9) in its favour. In the affidavit filed by the petitionerCompany, dated 18.7.2005, it has been alleged that the value of the property and assets has been assessed on 15.3.1989. The value of the land is assessed at Rs. 1.58 lacs, building at Rs. 4.32 lacs and machinery at Rs. 0.30 lacs and the total amount assessed is Rs. 6.20 lacs. The recommendation of the Committee were accepted on the same date and the letter was delivered to respondent No. 2 firm. Subsequently transfer deed was executed as has already been noticed above. In para 16 of the affidavit details have been given as to how the value computed could not have been reached by any stretch of imagination. The property has been sold by private negotiation. It is also alleged that another firm Panjawa Traders were also called for negotiations, which had revised its offer on 14.3.1989 to Rs. 6.00 lacs, which was a part of cartel created by respondent No. 2 firm. There are further allegations that the SubCommittee had misstated facts in its minutes dated 14.3.1989 (R1/1) and the Committee was under obligation to reject the offers which were lower than the assessed value (written down value and not market value) of Rs. 7.60 lacs as mentioned in the agenda note. The allegation is that the misstatement in the minutes was deliberate in order to favour respondent No. 2 firm because on that date computed value of the property had never been assessed at Rs. 6.20 lacs, which in fact was Rs. 7.60 lacs. The recommendation of the SubCommittee were accepted and a letter was delivered to respondent No. 2 firm on the same day. Para 18 of the affidavit reads as under :

"I state that the statement in the minutes that the assessed value on 18.12.1988 comes to Rs. 6.20 lacs is a deliberate factual misstatement. As on 14.03.1989, the Respondent No. 1 had never computed the value of the property at Rs. 6.20 lacs. On the contrary on 14.03.1989 itself the assessed value had been mentioned at Rs. 7.60 lacs. The mala fides are further evident from the fact that while the negotiations committee even recommended for delivery of vacant possession which it had no business to do as the sale was liable to be made on "AS IS WHERE IS BASIS". Conditions of sale could have not been changed after inviting offers through advertisement without issuing a fresh advertisement."

It has also been alleged that according to the record a letter was written by the Branch Manager of the Corporation Shri V.K. Aggarwal on 12.1.1989 to the DGM(A) of the Corporation. The letter was marked as most urgent. It is stated that the Directors of one Company, namely, M/s. Roshan Lal Oil Mills (P) Ltd., Bhatinda, had approached his office to purchase the machinery of the unit of the petitionerCompany. He visited Abohar on 7.1.1989 and found that major plant and machinery including lankshaire boiler and 1000 KVT transformer etc., which were supposed to be there and were found available at the site at the time of his assessment about 23 years back were missing. There were only scrap items as per the details given in the inventory attached to the said letter. Accordingly, a request was made for communication of complete details of the plant and machinery, which were found installed at the time of taking over the unit under Section 29 of the Act to enable the officer to assess the loss and register a case of theft of machinery etc., if any, with the police. He also suspected an earlier Chowkidar posted there to have misappropriated the machinery items, which was on the basis of the statement made by one Sudarshan Sharma, Inspector of Punsup, who was posted there on account of stock of Punsup lying at the site. The rough estimate of the machinery which was found available at the site was Rs. 50,000/. No FIR was lodged. On 7.3.1989, a telegram dated 4.3.1989 was received by the Corporation from the Chowkidar, who was employed to guard the property of the petitionerCompany. The telegram stated `DAKAITI HUI HAI''. It was under these circumstances that the Corporation hurriedly held negotiations on 14.3.1989 and accepted the revised offer of respondent No. 2 firm on 15.3.1989. On 15.3.1989, letter of acceptance was also handed over to the representative of respondent No. 2 firm in the office of the Corporation at Chandigarh. On 16.3.1989, Shri Manjeet Singh, an officer of the Corporation gave the opinion that the papers under consideration (apparently Chowkidar''s telegram and letter etc.) may be filed and no action was called for. The said recommendation was accepted by the Corporation and no FIR was lodged. On 27.3.1989, the sale deed (P9) was executed between respondent Nos. 1 and 2, wherein in Schedule `B'' delivery of possession was shown even with respect to that part of the machinery, which was missing as per the Branch Manager''s letter dated 12.1.1989 (and after 12.1.1989 there had allegedly been a further dacoity on 3.3.1989).

When the petitionerCompany came to know about all the irregularities and illegalities, it filed a complaint to the Managing Director of the Corporation on 17.5.1989. A copy of the complaint has been placed on record as Annexure P10. There are numerous allegations levelled including the one noticed above. In the concluding para, the petitionerCompany had requested for initiation of inquiry and investigation into the illegalities, irregularities and misdeeds in the sale of the property belonging to the petitionerCompany and also for setting aside the sale deed made in favour of respondent No. 2 firm.

Respondent No. 2 firm has filed its written statement alleging that major portion of the loan advanced to the petitionerCompany was not repaid and the delays could be seen from the reply of respondent Nos. 1 and 3. It has further been alleged that the petitionerCompany in fact had no intention to sell the property and made an attempt to delay the repayment of loan due to the Corporation on one pretext or the other. The factual position with regard to permission to the petitionerCompany granted by the learned Additional District Judge for selling the property for not less than Rs. 25 lacs, the fact with regard to initiation of proceedings under Section 29 of the Act for taking over the property of the petitionerCompany on 30.3.1987 has been accepted. It is claimed that wide publicity was given by respondent Nos. 1 and 3, which is evident from the fact that advertisements were issued in more than 11 daily papers having wide circulation in northern India, on three occasion i.e. in April, 1987, February, 1988 and December, 1988. The allegation that Harjit Singh, respondent No. 3, was instrumental in selling the property to grant benefit to his relation has been denied. It has been stated that Joginder Singh, husband of his wife''s sister (cobrother in law) is not a partner of the respondent 2 firm and has no concern with their firm whatsoever. The allegation with regard to value of the property at Rs. 30,00,000/ has also been denied. It is claimed that the family member of the petitionerCompany has sold various pieces of land on the main road in the same vicinity @ Rs. 90,000/ per acre. To illustrate, a sale was effected on 11.8.1988 by Shri Bhup Singh son of Lal Chand, one of the Directors of the petitionerCompany in favour of Sunil Cotton Factory, Abohar, in respect of 6 Kanals 10 Marlas of land for a sum of Rs. 70,000/. Another plot of land has been sold by Smt. Harbans Kaur in favour of Shri B.M. Rathee, measuring 4 Kanals 13 Marlas and the same was sold on 14.10.1988 for Rs. 30,000/. The sale price comes to Rs. 55,000/ per acre. Therefore, an attempt has been made to justify the valuation of the land at Rs. 1.58 lacs.

The Corporation has filed a written statement on 9.1.1992 stating that the learned Additional District Judge, Ferozepur, had permitted the petitioner Company to dispose of the property on 21.11.1985 by holding private negotiation within a period of four months. However, the Corporation had granted it six months more. However, petitionerCompany remained unable to bring any buyer for purchasing the property in question. It is asserted that the Managing Director called the representative of the petitionerCompany in his office on 23.2.1987 and they finally met on 5.3.1987. It is alleged that the petitionerCompany expressed its willingness to hand over the unit to the Corporation in the meeting held on 5.3.1987. The aforementioned assertion has been made on the basis of a note of the Managing Director, dated 6.3.1987 on the file, which reads as under :

"Pl. proceed to take over the unit before 31.3.87. No need to issue any notice as the party is willing to hand over."

Thereafter, an order under Section 29 of the Act was passed on 13.3.1987 (P8) and the possession through the Deputy Manager (Legal) was taken over. A copy of the order dated 13.3.1987 (P8) was also handed over to Shri Ravi Dev Siag, one of the Directors of the petitionerCompany and the possession was taken on 30.3.1987. The inventory of the property was prepared at the site, which was duly attested by the members of the team, Shri Ravi Dev Siag, Director of the petitionerCompany and Shri Sudershan, Inspector of Punsup. Thereafter, the unit was advertised for sale and no objection was ever raised by the petitionerCompany either to taking over of the unit under Section 29 of the Act nor to the issuance of advertisement or its terms and conditions. It is claimed that the offer made by the intending buyer in response to the first advertisement was too low and as a consequence another advertisement was issued on 3.2.1988. Even then no objection was raised by the petitioner Company. Thereafter, the unit was advertised for sale for the third time on 18.12.1988. The petitionerCompany failed to raise any objection, therefore, it is claimed that the petitionerCompany is estopped from challenging the taking over, advertising the unit and selling the same by private negotiation. It has also been urged that the petitionerCompany has failed to deposit the sale proceeds of certain items when permission was granted to sell the machinery, building or the plant by the learned Additional District Judge. The other factual position has not been denied. It has also been pointed out that when the proceedings under Section 29 of the Act are pending then there is no bar to take over the property of such a Company under Section 29 of the Act. The details which lead to receipt of offer have been given, which are to the effect that wide publicity was given for the sale of land under factory; building and small part of the machinery (whatever was left) by the Corporation by way of advertisement in various papers including the Punjab Kesri, The Tribune, Hindustan Times etc. This publication was made three times i.e. in April, 1987, February, 1988 and December, 1988 (R2/A to R2/6 respectively). This wide publication was given so that people all over India and particularly in the Northern India would have the knowledge regarding the sale of the property in dispute; Inspite of wide publicity given in the various Newspapers, many buyers did not come forward. In response to the first advertisement issued in April 1987 the Corporation received offers only from two persons. The maximum offer was of Umesh Kumar of Fazilka for Rs. 2.20 lakhs which he subsequently enhanced to Rs. 2.80 lakhs on negotiations. In response to the second advertisement the Corporation received the offer of Respondent No. 2 firm only for Rs. 5 lakhs down payment. Since there was only one offer, the Corporation again advertised in Dec. 1989 for the third time. In response to this, Respondent No. 2 firm again requested for consideration of his earlier offer. The Corporation also received one more offer for Rs. 4 lakhs. Both the parties were called for negotiations with the Managing Director on 14.3.89. The Corporation had in the meanwhile got the value of the property assessed. The Managing Director constituted a SubCommittee comprising of Shri D.C. Aggarwal, G.M., Shri Harjit Singh, G.M. & Shri J.S. Aulakh, to negotiate the price with the offerers. On negotiations respondent No. 2 firm enhanced his offer to Rs. 7 lakhs whereas the second offeror did not enhance his offer beyond Rs. 5 lakhs. The subcommittee submitted its recommendations to the Managing Director. The Managing Director, who is the competent authority to finalise the sale, accepted the offer of Respondent No. 2 firm, which was much higher than the offer of the other party. Minutes of the meeting of the Subcommittee, held on 14.3.1989, have been placed on record as Annexure R1/1. It has been denied that the subcommittee was constituted so as to be presided over by Shri Harjit Singhrespondent No. 3. The offer made by respondent No. 2 firm has been defended by stating that it was highest bidder at Rs. 6 lacs in instalment or Rs. 5 lacs as down payment, which was later on increased to Rs. 7 lacs after negotiations. The allegation of fraud has been denied. The property has been rightly sold for Rs. 7 lacs plus the outstanding charges of Punjab State Electricity Board and local bodies were to be paid by respondent No. 2 firm. The petitionercompany could have produced any suitable buyer, which it failed to do. This shows that there was in fact no buyer in the market at that time. The relation of Harjit Singh with the brother of the partner of respondent No. 2 firm has been accepted. But it has been stated that there is no connection of Harjit Singhrespondent No. 3 and the partners one of whom happens to be the brother of one Joginder Singh. It is Joginder Singh, who is married to the wife''s sister of Harjit Singh. The order under Section 29 of the Act was issued on 13.3.1987 and the petition to challenge the same has been filed after more than two years.

On 30.5.1989, when the Division Bench of this Court admitted the instant petition, interim directions were also issued. Accordingly, respondent was held entitled to run the installed machinery but it was debarred from alienating the machinery or demolishing the building or selling the land till further orders.

The allegation of the petitionerCompany is that in the facts and circumstances, the Corporation could not have sold the property for a sum of Rs. 7,00,000/ after giving its assessment at Rs. 32,44,000/. In any case, the property could not have been sold for less than Rs. 25,00,000/, which was the price fixed by the Court at which the property could have been sold by the petitionerCompany, vide order dated 21.11.1985 (P6). In order to substantiate its allegation, the petitionerCompany has pointed out in para 14 of the petition that, in fact, the property of the petitionerCompany has been sold for a song on account of the influence of respondent No. 3 Shri Harjit Singh, a General Manager with the Corporation. It has been pointed out that there is close relationship of respondent No. 3 with the partners of respondent No. 2 firm and in order to extend the benefit to his relations, even the order passed by the learned Additional District Judge has been circumvented. Respondent No. 2 firm is comprised of four partners out of whom Sarv Shri Harmohinder Singh and Jagtar Singh represents 50% of the share. Smt. Dashvinder Kaur and Smt. Harvinder Kaur are two real sisters and they are married to Shri Joginder Singh and Shri Harjit Singh (respondent No. 3) respectively. The partners in the firm Shri Harmohinder Singh is the real brother of Shri Joginder Singh, who is cobrother of Shri Harjit Singh. It has been further pointed out that sister of Shri Joginder Singh and Shri Harmohinder Singh (who are real brothers) is married to Shri Jagtar Singh, who is the other partner of respondent No. 2 firm. Therefore, partners in respondent No. 2 firm are related to Shri Harjit Singhrespondent No. 3. It is claimed by the petitionerCompany that if the properties were to be sold for a price lower than the one fixed by the learned Additional District Judge vide his order dated 21.11.1985 (P6) then express permission for selling the property at such a low price of Rs. 7,00,000/ was required to be obtained from the learned Additional District Judge as the petition under Section 31 of the Act, filed by the Corporation was pending. The petitionerCompany sent a representation to the Corporation in that regard on 17.5.1989 (P10) by demanding an inquiry into the misdeeds, illegalities and irregularities in the sale of its property. It has, thus, been prayed that the order dated 13.3.1987 (P8) and the transfer deed, dated 27.3.1989 (P9) are liable to be set aside. It has also been prayed that the doctrine of `restitution'' be invoked by restoring the property back to the petitionerCompany as if the petitioner Company has never been sold off to respondent No. 2 firm and that no interest be levied after the date of taking over of the possession by the Corporation.

Mr. Amit Dyal, learned counsel for the petitionerCompany has argued that the sale made by the Corporation in favour of respondent No. 2 firm is mala fide, collusive, unfair, arbitrary and contrary to Section 29 of the Act and the Corporation had acted unfairly and unreasonably. In support of his submission, learned counsel has placed reliance on a judgment of the Hon''ble Supreme Court in S.J.S. Business Enterprises (P) Ltd. v. State of Bihar, (2004) 7 SCC 166, and argued that the power exercised under Section 29 of the Act must be exercised bona fidely, fairly and the same must be in accordance with the Statute. Learned counsel has placed reliance on the observation made in para 18 and 19 of the judgment by emphasising that adequate publicity to ensure maximum participation of bidders in turn requires that a fair and practical period of time must be given to purchasers to effectively participate in the sale and if there is any haste then the same is required to be explained. According to the learned counsel the object of any such sale is to fetch the best buyer and the best price. He has also cited the judgment of the Hon''ble Supreme Court in the case of Gajraj Jain v. State of Bihar and others, (2004) 7 SCC 151. According to the learned counsel, the following guidelines emerge from the two judgments :

a) Sale must be as per the statute.

b) Sale must not be made unreasonably/unfairly.

c) Sale must be made bona fidely.

d) Public auction after adequate publicity ensures participation of every person who is interested in purchasing the property and generally secures the best price. (Chairman & Managing Director, SIPCOT v. Contromix (P) Ltd., 1995(3) RRR 324 (SC) : (1995) 4 SCC 595).

e) Reasonableness to be tested against dominant consideration to secure best price for the property to be sold i.e. fair market value. First charge holder is bound to obtain the best possible price for the mortgaged assets and the best possible price must, in the context, mean the fair market value. The Corporation is bound to protect the interest of the subsequent charge holder/mortgagor, which would be entitled to the balance sale proceeds.

f) In the absence of proper mechanism, auction sale becomes a mere pretence. Before putting the assets to sale, it is imperative to have valuation of the assets proposed to be sold. Value or price is fixed by the market. If the object of Section 29 of the Act is to obtain the best possible price then the Corporation ought to have called for the valuation report. If publicity and maximum participation is to be attained then the bidders should know the details of the assets (or itemised value). The argument that absence of valuation report and the reserve bid does not vitiate the sale has been rejected in para 14 of Gajraj Jain''s case (supra) and paras 8, 13 and 17 of the Allahabad Bank v. Bengal Paper Mills Co. Ltd., AIR 1999 SC 1715. Learned counsel has also placed reliance on Union Bank of India v. Official Liquidator H.C. of Calcutta & Others, (2000) 3 S.C.R. 691 and argued that for deciding reasonable price, valuation report of an expert is a must and valuation report to be properly examined. (699H, 700AB, 701BD, 702BC, E). Objective of achieving dominant consideration to secure best price could be attained by ensuring maximum effective participation by purchasers by providing opportunity to inspect and give a considered offer with necessary financial support.

g) Unusual haste not explained inference of extraneous considerations drawn. Other judgments have been relied in support of the proposition that undue haste (shown on 14.3.89, 15.3.89 & 16.3.89), is not usual in the Corporation and if it is shown then an inference of mala fide and of the fact that some higherup (Respondent No. 3) was interested in it, is liable to be raised. In that regard he has relied upon the judgments of the Hon''ble Supreme Court in cases of Dr. S.P. Kapoor etc. v. State of Himachal Pradesh & Others etc., (1982) 1 S.C.R. 1043 (at 1073C, 1073F, 1075B, 1074CD, 1075A); Bahadursinh Lakhubhai Gohil v. Jagdishbhai M. Kamalia & others, 2004(1) RCR(Civil) 503 : (2004) 2 SCC 65 (paras 2426).

h) It is for the officer concerned to explain the circumstances which are set up against him. If there is no credible explanation forthcoming, the Court can assume that the impugned action was improper.

i) Difference in valuations not explained adverse inference must be drawn.

j) A part of sale consideration received prior to sale notice which for undisclosed reasons had not been returned Adverse inference, therefore, must be drawn.

k) The Corporation misused its authority and power in breach of law by taking into account extraneous matters and by ignoring relevant matters which has rendered all its acts ultra vires.

Learned counsel has further urged that the tender submitted by respondent No. 2 firm in response to the advertisement was liable to be rejected out rightly as it was not in conformity with the notice/advertisement inviting tender. According to the learned counsel various conditions have been laid down in the tender notice (P12). It was stipulated that the sealed tenders along with earnest money of Rs. 5,000/ or 5% of the offer price, whichever is higher, through bank draft in favour of the Punjab Financial Corporation, payable at Chandigarh, was to reach by 2.1.1989 before 3.30 p.m. at the Head Office of the Corporation. The detailed particulars were available for the intending buyers on contacting the Head Office of the Corporation and the properties could be inspected from 10.00 a.m. to 4.00 p.m. between 19.12.1988 to 30.12.1988 every day. According to the learned counsel, the tender submitted by respondent No. 2 firm was liable to be rejected because of the following reasons :

a) Requisite earnest money of 5% was not deposited as only a sum of Rs. 5,000/ was sent;

b) Tender was not submitted in a sealed cover;

c) Corporation failed to adduce material to show that it was received before 3.30 p.m. on 2.1.1989; and

d) The offer was not made unconditional.

He has further submitted that the action of the Corporation was discriminatory, which violated Article 14 of the Constitution, inasmuch as, several interested bidders were deprived of opportunity to apply by putting forward the earnest money of a paltry sum of Rs. 5,000/ or by submitting the tender on any day after 2.1.1989. Learned counsel has placed reliance on three judgments of the Hon''ble Supreme Court in the cases of Ramana Dayaram Shetty v. The International Airport Authority of India & others, (1979) 3 SCR 1014 [at 1028B1028H, 1031F1031H, 1033C1033D, 1034F1034H, 1041H, 1042C and 1056C]; Harminder Singh Arora v. Union of India & others, (1986) 3 SCR 63 [at 72BF, 75BD, 77DF]; and Himadri Coke & Petro Ltd. v. Soneko Developers (P) Ltd. & others, (2005) 12 SCC 364 [paras 8, 9 & 10].

Learned counsel has then argued that the inclusion of respondent No. 3 in the negotiation committee completely vitiate the sale as respondent No. 3 became judge in his own cause. He has maintained that respondent No. 3 was duty bound to recluse himself because the decision taken by the committee is the result of bias. He was closely related to the partners of respondent No. 2 firm. In support of his submission, learned counsel has placed reliance on four judgments of the Hon''ble Supreme Court in the cases of A.K. Kraipak and others v. Union of India and others, (1970) 1 SCR 457 [at 461E463B, 466DG, 467AD, 468GH, 469DE, 469GH, 470CE]; J. Mohapatra & Co. and another v. State of Orissa and another, (1985) 1 SCR 322 [at 328B329E, 332GH, 333FH, 334AG, 335CE]; Ranjit Thakur v. Union of India & others, (1988) 1 SCR 512 [at 516E517D, 519BC, 519F, 520DF, 522B]; and Badrinath v. Government of Tamil Nadu and others, 2000(4) SCT 832 (SC) : AIR 2000 SC 3243 [at 3263 Para 81].

Another submission made by the learned counsel is that taking over of possession was without issuing any notice, which violate Section 29 of the Act as the principles of natural justice have been flagrantly violated. Learned counsel has maintained that on 13.3.1987, when order of taking over was issued (P8) then no notice prior to that date was given to the petitionerCompany. In support of his submission, learned counsel has placed reliance on a Division Bench judgment of this Court in the case of Subhari Papers (P) Ltd. v. Haryana Financial Corporation, 1998(1) RCR(Civil) 747 : 1998 (1) PLR 77. Learned counsel has also submitted that the amount outstanding on the date of taking over possession is liable to be recomputed by, inter alia, not charging penal interest and/or not charging interest on penal interest and expenses. For the aforementioned proposition, he has placed reliance on a Constitution Bench judgment of the Hon''ble Supreme Court in the case of Central Bank of India v. Ravindra & others, 2002(1) RCR(Civil) 49 (SC) : (2001) Supp. 4 SCR 323, and a judgment of the Himachal Pradesh High Court in the case of H.P. Financial Corporation v. Parveen Kumar & another, AIR 1994 HP 120. Another limb of the same arguments is that the Corporation is not entitled to charge any interest from the petitionerCompany for the period when it was not in a position to redeem the mortgage deed because of the mala fide and illegal sale to respondent No. 2 firm as the petitionerCompany could not have exercised any right of redemption and the machinery had already been handed over to respondent No. 2. For the aforementioned proposition, learned counsel has placed reliance on judgments of the Hon''ble Supreme Court in the cases of Lallan Prasad v. Rahmat Ali & another, (1967) 2 SCR 233; Dhanalakshmi Bank Ltd. v. K.K. Jose @ Jose Mohan, (1993) 78 Company Cases 604 (Kerala); and Smt. Aratibala Mohanty v. State Bank of India & others, (1992) 74 Company Cases 249 (Orissa).

Learned counsel has concluded by praying that the properties be restored to the petitioner and it be put back in the position had the mala fide and illegal sale not taken place. In other words the petitionerCompany would be liable to pay only the amount due on the date of taking over as no interest could be levied after the possession was taken and the machinery was recovered from the petitionerCompany.

Mr. Arun Nehra, learned counsel for the Corporation has argued that the principle of estoppel would apply to the case of the petitionerCompany as it has agreed to surrender possession after meeting on 5.3.1987. Learned counsel has drawn my attention to the original record (Vol. 4) (N) Page 1 to 170. According to Noting at Page 166 it is recorded that the party had met the Managing Director on 5.3.1987 and the Managing Director had recorded an order on 6.3.1987 stating `Pl. proceed to take over the unit before 31.3.87. No need to issue any notice as the party is willing to hand over''. According to the learned counsel it was on account of the willingness expressed by the petitionerCompany to hand over possession that no notice satisfying the requirement of principle of natural justice was issued to the petitioner Company before passing the order of taking over. According to the learned counsel, the order of taking over was passed in the aforementioned circumstances on 13.3.1987 (P8) and the inventory of the property was accordingly prepared. He has further emphasised that no objection was raised despite the fact that three times advertisements were issued for the sale of the property i.e. on 11.4.1987, 3/421988 and 18.12.1988. Therefore, the principle of estoppel has been invoked against the petitionerCompany.

Mr. Nehra, learned counsel has further submitted that the petitioner Company is guilty of misappropriating the sale proceeds of the machineries sold. According to the learned counsel, document Annexure R3 would show the sale of machinery amounting to Rs. 8,320/ to M/s. Navbhart Rice and General Mills, Hanumangarh, by the petitionerCompany on 26.3.1987. Similarly, machinery worth Rs. 15,600/ was sold by the petitionerCompany to the same firm on 1.3.1987 and it has not been accounted for. Learned counsel has emphasised that these two items are only a tip of the iceberg and the petitionerCompany must have misappropriated huge amount, which has remained undetected.

Learned counsel has also argued that the allegation of the petitioner Company that no sufficient particulars were given in the advertisements, is absolutely without any basis. He has drawn my attention to the advertisements dated 11.4.1987 (R2/F, R2/G, R2/H, R2/I and R2/J), 3/421988 (R2/A, R 2/B, R2/C, R2/D and R2/E) and 18.12.1988 (P12) and argued that all possible details were given in the advertisements, which included area of the land, measuring 38 Kanals 18 Marlas, area constructed 27720 Sq. ft., machinery as available on the site, nature of industry as oil extraction. According to the learned counsel these details sufficiently satisfy the expectation of any reasonable prospective buyer who is seriously thinking of investing in such a property.

Learned counsel has then argued that the property has been sold at a reasonable price as is evident from the averments made in para 12 of the written statement. The advertisement was issued in all the newspapers including Punjab Kesri, The Tribune, Hindustan Times and even in Urdu paper (copies of the advertisement have been placed on record as Annexures R2/A to R2/6). Inspite of the wide publicity many buyers did not come forward to make any offer. It has been pointed out that no offer was received after the issuance of first advertisement. In response to the second advertisement, the Corporation received an offer from one Shri Umesh Kumar Kukkar of Fazilka for Rs. 2.20 lacs, which was subsequently enhanced to Rs. 2.80 lacs on negotiations. As there was only one offer received, the Corporation decided to advertise the property for sale again in December, 1988 for the third time. The stand of the Corporation is discernible from para 12 of the written statement filed by it, which is extracted below for facility of reference :

"12. ......This wide publication was given so that people all over India and particularly in the Northern India would have the knowledge regarding the sale of the property in dispute; Inspite of wide publicy (publicity?) given in the various Newspapers, many buyers did not come forward. In response to the first advertisement issued in April 1987 the Corporation received offers only from two persons. The maximum offer was of Umesh Kumar of Fazilka for Rs. 2.20 lakhs which he subsequently enhanced to Rs. 2.80 lakhs on negotiations. In response to the second advertisement the Corporation received the offer of Respondent No. 2 only for Rs. 5 lakhs down payment. Since there was only one offer, the Corporation again advertised in Dec. 1989 for the third time. In response to this, Respondent No. 2 again requested for consideration of his earlier offer. The Corporation also received one more offer for Rs. 4 lakhs. Both the parties were called for negotiations with the Managing Director on 14.3.89. The Corporation had in the meanwhile got the value of the property assessed. The Managing Director constituted a SubCommittee comprising of Sh. D.C. Aggarwal, G.M., Shri Harjit Singh, G.M. & Sh. J.S. Aulakh, to negotiate the price with the offerers. On negotiations the Res. No. 2 enhanced his offer to Rs. 7 lakhs whereas the second offeror did not enhance his offer beyond Rs. 5 lakhs. The subcommittee submitted its recommendations to the Managing Director. The Managing Director, who is the competent authority to finalise the sale, accepted the offer of the Respondent No. 2, which was much higher than the offer of the other party. A true copy of the minutes of meeting of the subcommittee held on 14.3.89 are attached as Annexure R1/1."

Learned counsel has also rebutted the argument with regard to mala fide by submitting that there was no relationship in fact or law and that the decision of the subcommittee was not final. The amount of Rs. 7,00,000/ must be held to be reasonable and it does not suffer from any mala fide. In support of his submission, learned counsel has placed reliance on a judgment of the Hon''ble Supreme Court in the case of Haryana Financial Corporation v. Jagdamba Oil Mills, 2002(1) RCR(Civil) 794 : (2002) 3 SCC 496. Learned counsel has also made reference to the sale deed appended with C.M. No. 8401 of 1991 to show that the prices in the area were almost similar to the one for which the property was sold by the Corporation to respondent No. 2 firm.

Ms. Kamaljit Bajwa, learned counsel for respondent No. 2 firm has referred to another sale deed dated 22.8.1988 in respect of 6 Kanals 9 Marlas of land situated in close proximity to the factory of the petitionercompany, for a sum of Rs. 49,000/ on the same date. She has also referred to any sale deed, dated 11.8.1988 in respect of plot measuring 6 Kanals 6 Marlas which was sold for Rs. 58,000/ and still another sale deed dated 14.10.1988, in respect of land measuring 4 Kanals 13 Marlas for sale consideration of Rs. 30,000/. These sale deeds have been brought on record by Civil Misc. No. 8401 of 1991. She has then referred to the transfer deed dated 27.3.1989 (P9) to argue that possession was never delivered to respondent No. 2 firm. She has further drawn my attention to para 5 of the additional affidavit filed through Civil Misc. No. 9151 of 1993 and argued that sum of Rs. 66,624/ was outstanding on account of electricity bill, which was to be paid by respondent No. 2 firm as per the terms of transfer. A copy of the bill showing outstanding amount as on 19.4.1989 has been attached with the affidavit as Annexure `E''. A further amount of Rs. 51,910/ was outstanding on account of Municipal Taxes and a copy of the same has also been placed on record as Annexure `F''. Respondent No. 2 firm is stated to have incurred various expenses, which include stamp duty for registration, building repair etc., which are as under :

"(a) Stamp duty for registration of land and building for execution of sale deed by Punjab Financial Corporation.

Rs. 1,00,000/

(b) Building Repair and construction of office complex.

Rs. 60,000/

(c) Advance for purchase of Transformer, set made to M/s. Meera & Co. Ludhiana.

Rs. 10,000/

(d) Advance for purchase of Expeller made to Shri Guru Nanak Dev Engineers.

Rs. 30,000/

(e) Installation of Tubewell

Rs. 18,000/

(f) Telephone installed in the premises.

Rs. 7,000/"

She has also clarified that no offer was received against first advertisement whereas Shri Umesh Kumar Kukkar has offered Rs. 2.2 lacs against the second advertisement after enhancing the same from 1.50 lacs. It was conceded that no offer was received from Kamra Flour and Oil Mills, which had sent merely a communication for supply of terms and conditions and making arrangements for inspection. It is claimed that against the third advertisement, the Corporation had given the best offer and offer made by Panjawa Traders was not accepted. However, there is no denial that Om Parkash was the tenant of respondent No. 2 firm.

Shri T.C. Singla, in his affidavit dated 7.10.2005, has conceded the fact that respondent No. 2 firm had sent a letter dated 5.8.1988, which was received in the office of the Managing Director on 10.8.1988. It has been conceded that the letter was not in the shape of an offer against any advertisement. The letter was submitted with earnest amount of Rs. 5,000/ only and it was not in response to any specific advertisement. It was not to be considered because the decision had already been taken on 4.8.1988 to re advertise the property, yet, the offer was neither accepted nor rejected. It has also been admitted that another letter dated 29.12.1988 was received from respondent No. 2 firm on 2.1.1989. Accordingly, the office had decided that the property had been readvertised and the offeror was to apply again. It is claimed that nonreceipt of letter against third advertisement, nonpresence of seal or less amount of earnest amount were mere irregularities and do not go to the roots. With regard to M/s. Panjawa Traders, Abohar, it has been stated that their offer was also received with earnest money and the Corporation had called both respondent No. 2 firm and M/s. Panjawa Traders on 14.3.1989. It is clarified that after taking over of the unit, the assessment was made on the basis of decision of the Board of Directors taken on 22.11.1985 and respondent No. 3 had no involvement in the aforementioned process. The assessment in terms of the Board''s decision is sought to be justified by stating that the Corporation was giving depreciation on the value of the assets at the rates approved by the incometax authorities. The aforementioned procedure of assessment could not be followed when the matter was pending before the Learned Additional District Judge under Section 31.

A variety of issues have been raised by the learned counsel for the parties. However, the following issues which are fundamental to the controversy raised, would arise for determination :

(A) Whether the order dated 13.3.1987 taking over assets of the petitioner Company is vitiated for want of issuance of show cause notice in accordance with Section 29 of the Act ? Conversely, whether the consent of Shri Ravi Dev Siag as recorded by the Managing Director on 6.3.1987 on the file, would satisfy the requirement of sufficient notice.

(B) Whether the sale to respondent No. 2 firm is vitiated for want of submitting a valid tender or on account of presence of respondent No. 3 Shri Harjit Singh, who is admittedly related to the partners of respondent No. 2 firm ?

(C) Whether any interest is to be charged after taking over the possession and management of the petitionerCompany along with its assets ?

RE : QUESTION A

It is admitted position that the petitionerCompany had applied for a loan of Rs. 30 lacs to the Corporation on 30.3.1976. An amount of Rs. 14.33 lacs was disbursed as loan between 15.3.1977 to 24.10.1978. It is also undisputed that by 2.12.1983, the petitionerCompany had repaid the loan to the extent of Rs. 7,02,119.33. It appears that terrorism in the State of Punjab resulted into paralysing worth of the economy, especially in District Ferozepur, where industrial unit of the petitionerCompany was situated. As a natural consequence, the petitionerCompany defaulted, which led to the filing of an application by the Corporation under Section 31 of the Act before the learned Additional District Judge for recovery of Rs. 24,07,551.24 along with penal interest @ 153/4 % w.e.f. 15.6.1984 with half yearly rests. The petitioner Company also filed an application under Order XXI Rule 83 of the Code read with Section 151 of the Code seeking permission of the Court for disposal of the assets. The stand of the Corporation before the learned Additional District Judge was that the petitionerCompany could be permitted to sell the property for Rs. 32,44,000/, although the learned Additional District Judge vide his order dated 21.11.1985 permitted the petitionerCompany to dispose of the property by sale or by initiation for a sum of not less than 25,00,000/ within a period of 4 months (P6). The petitionerCompany was able to sell assets worth Rs. 5,45,000/ and deposited the said amount for adjustment with the Corporation in October, 1986. It shows that against the principal amount of Rs. 14,33,000/ an amount of Rs. 12.17 lacs had been deposited. The Corporation had calculated the arrears by adding interest, penal interest and other charges and as a consequence it availed the remedy under Section 29 of the Act and took over the assets of the petitionerCompany on 30.3.1987. The initial controversy between the parties on the issue whether during the pendency of the proceedings under Section 31 of the Act before the learned Additional District Judge, the Corporation was entitled to invoke Section 29 of the Act has been finally settled in favour of the Corporation by the Hon''ble Supreme Court in the case of A.P. State Financial Corporation v. Gar ReRolling Mills, 1994(2) RRR 38 : (1994)2 SCC 647.

There is some controversy as to whether the Director Shri Ravi Dev Siag had ever expressed willingness to hand over possession when he met the Managing Director of the Corporation on 5.3.1987. An examination of the official record (Page Nos. 166 and 167 of the File Volume IV (M)) would show that some meeting had taken place on 5.3.1987 and thereafter on 6.3.1987, the Managing Director had recorded the note "Pl. proceed to take over the unit before 31.3.87. No need to issue any notice as the party is willing to hand over". The aforementioned note cannot by itself be considered to be a notice under Section 29 of the Act because it does not show any endorsement on the part of any of the Director of the petitionerCompany. Moreover, it also does not show who had met the Managing Director and whether the person who had met the Managing Director of the Corporation was authorised to represent the petitionerCompany. There is no resolution passed by the petitionerCompany authorising any person to represent its interests in the meeting stated to he held on 5.3.1987 or 6.3.1987. It is evident from the record that the petitionerCompany had four Directors, namely, Shri Jai Dev Siag, Managing Director, Shri Ravi Dev Siag, Shri Rai Singh Bhadoo and Shri Bhagirath Bhadoo, Directors. The name of none of the Director or the Managing Director find mention in the record. Therefore, the aforementioned note of the Managing Director of the Corporation would not result into dispensing with the notice required under Section 29 of the Act. It is well settled that notice under Section 29 of the Act is mandatory and in the absence of such a notice, the order dated 13.3.1987 taking over the petitionerCompany and its assets would be vitiated. The aforementioned proposition is evident from the judgment of the Hon''ble Supreme Court in the case of Maharashtra State Financial Corporation v. Suvarna Board Mills, (1994) 5 SCC 566. The aforementioned principle has also been followed by a Division Bench judgment of this Court in Subhari Papers (P) Ltd. v. Haryana Financial Corporation, 1998(1) PLR 77. If the order dated 13.3.1987 is viewed in that perspective then it cannot stand legal scrutiny of satisfying the principles of natural justice. The subsequent event like taking over, preparation of inventory with signature of one of the Director thereon or subsequent issuance of advertisements leading to sale and raising of no objection by the petitionerCompany would be of no consequence. Therefore, the impugned order dated 13.3.1987 (P8) is liable to be set aside on this ground and Question `A'' has to be answered in favour of the petitionerCompany and against the Corporation.

RE : QUESTION B

In order to place the facts on record correctly, the Corporation was permitted to file amended written statement vide C.M. No. 249 of 1992 on 6.2.1992. Thereafter, some affidavits of the petitionerCompany after inspection of the record of the Corporation and counter affidavit by the Corporation were permitted to be filed. It reveals that after the decision on 13.3.1987 to take over the petitionerCompany and its assets (moveable and immovable) was taken then a Committee of Officers for sale of the properties was constituted as has already been pointed out in para 9. The first set of advertisement was issued on 11.4.1987. However, no offer was received against the first advertisement. Against the second set of advertisement one offer from Shri Umesh Chander Kukkar for Rs. 1,50,000/ was received on 19.2.1988 (R1/A), which was further revised to Rs. 2,22,000/, vide letter dated 22.4.1988 (R1/B). A letter was received from M/s. Kamra Flour and Oil Mills asking for the supply of a copy of terms and conditions and also expressing desire to inspect the property. No terms and conditions were provided to M/s. Kamra Flour and Oil Mills and the offer made by Shri Umesh Chander Kukkar for an amount of Rs. 2,22,000/ was rejected on 4.8.1988. The earnest money was refunded vide cheque dated 26.8.1988. On 4.8.1988, a decision was taken by the Managing Director of the Corporation for issuance of still another advertisement. On 5.8.1988, a letter was received from respondent No. 2 firm, which has already been referred to in para No. 12. It is appropriate to mention that at that stage no advertisement was in operation as the new advertisement was to be issued and the offers received on the basis of earlier advertisements were finalised, inasmuch as, the offer of Shri Umesh Chander Kukkar was rejected and his earnest money was refunded. The third set of advertisement was issued on 18.12.1988 (P12). According to the advertisement, sealed tenders along with earnest money of Rs. 5,000/ or 5% of the offered price, whichever higher, through bank draft in favour of the Corporation, were invited, which was to reach Head Office of the Corporation at Chandigarh by 2.1.1989 before 3.30 p.m. and the inspection of the property could have been undertaken between 19.12.1988 to 30.12.1988 between 10.00 a.m. to 4.00 p.m. In other words, a period of about 14 days was given. The earlier advertisements also shows a similar trend. Respondent No. 2 firm sent a letter allegedly on 29.12.1988 and the same has already been reproduced in para 14. A perusal of the letters dated 5.8.1988 and 29.12.1988 would show that respondent No. 2 firm had offered Rs. 5,00,000/ to be paid within a period of three months and some other alternatives with conditions were indicated. It has also enclosed a draft of Rs. 5,000/ and the same was admittedly not sent in a sealed cover. It is evident that the letter dated 5.8.1988 was not sent by respondent No. 2 firm in response to any advertisement. The said letter was not accompanied by requisite amount of earnest money of 5% of the offered price i.e. a sum of Rs. 25,000/ nor it was sent in a sealed cover with or without superscription in the manner indicated in the advertisements. I find considerable force in the argument raised by Mr. Dayal, learned counsel for the petitionerCompany, that such an offer was liable to be rejected outrightly as it was utterly against the minimum requirements of the tender conditions. In these circumstances, the influence and extraneous factor like presence of Shri Harjit Singh, respondent No. 3, as a member of the Committee, assumes extreme significance. Shri Harjit Singhrespondent No. 3 is married to wife''s sister of one Shri Joginder Singh. In other words, Shri Joginder Singh and Shri Harjit Singh are cobrother in law being married to two sisters. The real brother of Shri Joginder Singh, namely, Shri Harmohinder Singh is partner in respondent No. 2 firm. Therefore, the possibility of respondent No. 2 firm influencing the sale cannot be ruled out, especially in the aforementioned facts and circumstances. Therefore, the sale in favour of respondent No. 2 firm on 14.3.1989/15.3.1989 is liable to be set aside. It is further appropriate to mention that respondent Nos. 1 and 3 have failed to substantiate that the letter dated 29.12.1988 has been duly received before 3.30 p.m. on 2.1.1989. The receipt register (Dak Register) has not been produced to substantiate the factum of the date of receipt of the letter. The only justification offered is that letter dated 29.12.1988 was only a reminder and it was in fact in continuation to the letter dated 5.8.1988.

The valuation of the property and its assets was made on 15.3.1989. The land was assessed for Rs. 1.58 lacs, building at Rs. 4.32 lacs and machinery at Rs. 0.30 lacs. The total amount assessed was Rs. 6.20 lacs. The assessment so made was accepted on the same day and a letter was delivered to respondent No. 2 firm. It is further pertinent to mention that another offer was received from Panjawa Traders, Abohar. This firm had revised its offer to Rs. 6,00,000/. The Committee had rejected the offer of Panjawa Traders. It appears that Panjawa Traders was a part of cartel as they are the tenant of respondent No. 2 firm. According to the assessment made on the basis of written down value and not on basis of market value. The total valuation assessed was Rs. 7.60 lacs whereas in the minutes of the meeting dated 14.3.1989 (R1/1) it has been recorded that at the time of the last advertisement of 18.12.1988 the assessed value was Rs. 6.20 lacs. This also constitute a grave lapse which looks to be done to extend the benefit to respondent No. 2 firm because otherwise any offer less than Rs. 7.60 lacs was liable to be rejected.

I also find merit in the contention of Mr. Dayal that when the proceedings were pending before the learned Additional District Judge under Section 31 of the Act, an assessment of price of the land was obtained by the petitioner Company from the Sub Divisional Officer (Civil) Abohar and the same was submitted to the Corporation. The value of the land was assessed at Rs. 4,00,000/ per acre. The total land of 38 Kanals 18 Marlas would not constitute less than six acres and, therefore, the worth of the land was more than Rs. 24,00,000/ apart from the building and machinery. The Manager (Technical) of the Corporation himself visited the unit of the petitioner Company on 6.9.1985 and after ascertaining the price prevalent in the market submitted a report to which reference has been made in the pleadings of the Corporation before the learned Additional District Judge. The report has been reproduced in the additional affidavit dated 18.7.2005 filed by Shri Jaidev Singh Siag on behalf of the petitionerCompany. The report has not been disputed. For the aforementioned reason, the learned Additional District Judge did not permit the sale of the assets of the petitionerCompany for less than Rs. 25,00,000/ as is evident from its order dated 21.11.1985 (P6). The value of the building has been assessed by the Insurance Company at Rs. 8,00,000/ as it was got insured by the Corporation on the basis of the aforementioned value. The Corporation itself has opposed the application filed by the petitionerCompany under Section 31 of the Act by raising the plea that the assets of the petitionerCompany were not less than Rs. 32,44,000/. In this regard reference may be made to the reply filed by the Corporation, dated 21.11.1985, before the learned Additional District Judge (P5).

The facts akin to those mentioned above fell for consideration of Hon''ble the Supreme Court in the case of S.J.S. Business Enterprises (P) Ltd. (supra). After noticing numerous lapses, irregularities and illegalities Hon''ble the Supreme Court in para 17 to 22 has concluded that the sale in favour of firm like respondent No. 2 could not be sustained. In that regard, their Lordships'' have placed reliance on various judgments of Hon''ble the Supreme Court in the cases of Pannalal Binjraj v. Union of India, AIR 1957 SC 397 and Chairman and Managing Director, SIPCOT v. Contromix (P) Ltd., (1995) 4 SCC 595, and observed as under :

"17. We are of the view that the sale effected in favour of Respondent 6 cannot be sustained. It is axiomatic that the statutory powers vested in State financial corporation under the State Financial Corporations Act, must be exercised bona fide. The presumption that public officials will discharge their duties honestly and in accordance with the law may be rebutted by establishing circumstances which reasonably probabilise the abuse of that power. In such event it is for the officer concerned to explain the circumstances which are set up against him. If there is no credible explanation forthcoming the court can assume that the impugned action was improper. (See Pannalal Binjraj v. Union of India, AIR 1957 SC 397 at p. 409.) Doubtless some of the restrictions placed on State financial corporations exercising their powers under Section 29 of the State Financial Corporations Act, as prescribed in Mahesh Chandra v. Regional Manager, U.P. Financial Corpn., 1992(1) RRR 576 : (1993) 2 SCC 279, are no longer in place in view of the subsequent decision in Haryana Financial Corpn. v. Jagdamba Oil Mills, (2002) 3 SCC 496. However, in overruling the decision in Mahesh Chandra this Court has affirmed the view taken in Chairman and Managing Director, SIPCOT v. Contromix (P) Ltd. and said that in the matter of sale under Section 29, State financial corporations must act in accordance with the statute and must not act unfairly i.e. unreasonably. If they do, their action can be called into question under Article 226. Reasonableness is to be tested against the dominant consideration to secure the best price for the property to be sold.

"This can be achieved only when there is a maximum public participation in the process of sale and everybody has an opportunity of making an offer. Public auction after adequate publicity ensures participation of every person who is interested in purchasing the property and generally secures the best price."

In that case only a period of three days was given to the prospective purchasers to submit their offers, which was found to be inadequate. In the present case, the valuation report is claimed to have been obtained on 15.3.1989. The Subcommittee, which comprised of respondent No. 3 Shri Harjit Singh, accepted the report on the same day and handed over a letter of intent to respondent No. 2 firm. There is no explanation whatsoever for this unusual haste. The Hon''ble Supreme Court has condemned unexplained haste by observing as under :

"......Besides, we have not been told the reason for this unusual haste. Such precipitate action was not called for unless there were some other considerations weighing with the authorities, considerations which have not been disclosed to the Court."

The Hon''ble Supreme Court also noticed variation in valuation report as is the position in the present case. On 21.11.1985 (P5), the Corporation had taken the stand that the property was not worth less than Rs. 32,44,000/, whereas on 18.12.1988 it was valued at Rs. 7.60 lacs and on 15.3.1989 it was assessed at Rs. 6.20 lacs. There is no mitigating circumstance which may result in reduction of price except that the petitionerCompany had sold machinery worth Rs. 5.45 lacs and the amount was deposited with the Corporation as per the direction issued by the learned Additional District Judge in its order dated 21.11.1985 (P6). The deteriorating conditions in Punjab, especially in Abohar, District Ferozepur continuous to be same as it was earlier. In these circumstances, the test of reasonableness as laid down in S.J.S. Business Enterprises''s case (supra) must be held to be violated. The failure to call for a valuation report based on relevant considerations was sine qua non. In the case of Gajraj Jain (supra) their Lordships'' have observed as under :

"......In the case of a going concern, one has to value the assets shown in the balance sheet (Datta, S. : Valuation of Real Property, p. 198). In our view, if the object of Section 29 of the Act is to obtain the best possible price then the Corporation ought to have called for the valuation report. This has not been done."

In the present case, the Manager (Technical) had himself visited the spot on 6.9.1985 and had assessed the realisable rate of the land to be Rs. 40,000/ per kanal. The value of the building was assessed at Rs. 9.70 lacs and that of the machinery at Rs. 7.18 lacs. The total figure of Rs. 32,44,000/ was worked out in support of the stand taken before the learned Additional District Judge. It has been claimed that when the petitioner Company was taken over on 30.3.1987 along with its assets then the assessed value was Rs. 7.60 lacs, which included Rs. 1.58 lacs for the land, Rs. 5.42 lacs for the building and Rs. 0.60 lacs for machinery. The stand of the Corporation with regard to change in method of valuation cannot be accepted because the procedure for assessment has been given in the reply dated 21.11.1985 and if on 22.11.1985 any different decision for making assessment has come into being then the Corporation was bound to extend that benefit to the petitionerCompany as the proceedings were pending and the petitioner Company was in the process of selling its assets. It has come on record that the petitioner company had sold machinery worth Rs. 5,45,000/ and deposited the same in October, 1986. On the contrary, the Subcommittee which conducted the sale, in its proceedings dated 14.3.1989 has concluded that the value of the building and machinery must have come down to Rs. 6.20 lacs and, therefore, it was justifiable to sell the land, building and machinery to respondent No. 2 firm for an amount of Rs. 7,00,000/. The aforementioned method adopted by the Subcommittee and approved by the Corporation is full of suspicions and doubts, which mar the credibility of the whole process.

The fact that no offer in a sealed cover accompanied by 5% of the amount offered was sent by respondent No. 2 firm, would itself be sufficient to conclude that the communications sent on 5.8.1988, renewed on 29.12.1988 was in disregard of the provisions of the sale notice. Such an offer was bound to be rejected. If the earnest amount sent by Shri Umesh Chander Kukkar against the second advertisement could be refunded, there was no reason to retain the earnest amount belonging to respondent No. 2 firm. It speaks volumes about the lack of bona fide on the part of the Corporation and the hidden hand of respondent No. 3 to help his relations. Moreover, if a person was entitled to participate with paltry sum of Rs. 5,000/ then an advertisement was required to be issued inviting applications with the aforementioned condition, which was not done. It is well settled that when the public authority accept an offer by changing the condition, then any change in the conditions has to be notified to the knowledge of the public at large, by the same process. In that regard, reliance has been rightly placed by Mr. Dayal on the judgments of the Hon''ble Supreme Court in the cases of Ramana Dayaram Shetty (supra), Harminder Singh Arora (supra) and Himadri Coke & Petro Ltd. (supra). In Himadri Coke & Petro Ltd. (supra) a party similar to respondent No. 2 firm was not qualified to participate in the sale process who had succeeded, was held to be bound by the terms and conditions of the sale notice. The Hon''ble Supreme Court set aside the sale by observing as under :

"8. We are of the view that the sale must be set aside and the property be sold after readvertisement. As far as the appellant is concerned it could not have been allowed to participate in the proceedings as it had not submitted an offer pursuant to the last advertisement. If any person''s offer other than the offers received in response to the advertisement has to be considered, then an opportunity must be granted to other offerers pursuant to a fresh advertisement. The appellant could not have been permitted to enter into the arena by making an offer which was not in response to the advertisement. The last date specified in the advertisement resulting in the sale to Respondent 1 has long since expired. 9. As far as Respondent 1 is concerned, we are of the view that it was bound by the terms and conditions of sale as was the authority concerned. It was not up to them to extend the dates for submission of the balance price when there was no clause in the terms and conditions of the sale allowing the authority to extend the time beyond the period specified in the advertisement for making the initial deposit or the balance price."

It is also well settled that minimum reserve price has to be intimated, as has been held by the Hon''ble Supreme Court in the case of Allahabad Bank v. Bengal Paper Mills Co. Ltd. (supra). If minimum reserve price has not been indicated and the valuation is suspicious then it cannot stand judicial scrutiny. The result would be the same if offer has not been made in accordance with the terms of the sale notice if deciding the reasonable price, the valuation report by an expert is a must. For the aforementioned view, reliance could be placed on a judgment of the Hon''ble Supreme Court in the case of Union Bank of India (supra). It is further well settled that handing over possession to the purchaser does not create any bar for setting aside the sale, as has been held in the case of Allahabad Bank (supra). The presence of Shri Harjit Singh, respondent No. 3, who is admittedly a relation of partner of respondent No. 2 firm, also raise a reasonable suspicion, especially when the sequence of event is examined. Such a course is not permissible on the anvil of principle that no one can be judge in his own case and all doubts with regard to bias were required to be set at rest. In that regard, reliance can be placed on the Constitutional Bench judgment of Hon''ble the Supreme Court in the cases of A.K. Kraipak (supra), J. Mohapatra (supra), Ranjit Thakur (supra), Badrinath (supra). I am further of the view that the first charge holder like the Corporation should have acted in a manner which could protect not only its own interests but also the interest of the subsequent charge holder and the mortgager like the petitionerCompany. In Gajraj Jain''s case (supra), Hon''ble the Supreme Court in that regard has observed as under :

"......Under Section 29(4), all costs, charges and expenses incurred by the corporation as incidental to such realisation of the property pledged, hypothecated or mortgaged shall be recovered firstly from the industrial concern and the balance shall be paid to the person entitled thereto. As stated above, a charge consists in the right of a creditor to receive the payment out of the proceeds of the realisation of property or fund charged with the debt. A bare reading of subsections (1) and (4) of Section 29 shows that it is similar to Section 69 of the TP Act under which it is stipulated that a mortgagee exercising the power of sale is a trustee of the surplus sale proceeds and after satisfying his own charge he holds the surplus for the subsequent encumbrancers and ultimately for the mortgagor. (See Rajah Kishendatt Ram v. Rajah Mumtaz Ali Khan, (1879) 6 IA 145). Section 29(1) contemplates, therefore, a sale for distribution of sale proceeds and not a sale for distribution of property charged with the debt. It also implies that the first chargeholder must act in a manner which protects not only its own interest but also the interest of the subsequent chargeholder and the mortgagor. This in turn implies that the first charge holder is bound to obtain the best possible price for the mortgaged assets and the best possible price must, in the context, mean the fair market value." (Emphasis added)

The above facts, law and precedent clearly shows unfair, unreasonable and arbitrary conduct of the Corporation and respondent No. 3 in the conduct of sale. Therefore, the sale finalised on 14.3.1989 and all consequential acts are liable to be set aside.

RE : QUESTION C

It is admitted position that an order dated 13.3.1987 was passed by the Corporation for taking over the petitionerCompany and its assets. Accordingly, the petitionerCompany and its assets were taken over on 30.3.1987. The Corporation is not entitled to charge any penal interest and interest on penal interest and expenses. It is also admitted position that the Corporation after obtaining first instalment of the loan had got executed a mortgage deed, dated 18.3.1977 from the petitionerCompany, creating a charge in its favour in respect of the properties of the petitionerCompany. The petitionerCompany was not in a position to redeem the mortgage because of mala fide and illegal sale by the Corporation and respondent No. 3 to respondent No. 2 firm. For the aforementioned proposition, reliance has been rightly placed on a judgment of the Hon''ble Supreme Court in the case of Lallan Prasad (supra). The aforementioned view has been followed and applied in Dhanalakshmi Bank Ltd. (supra) by the Kerala High Court and in Smt. Aratibala Mohanty (supra) by the Orissa High Court and it has been held that no interest after the date of sale, which has been held to be illegal, would accrue in favour of the pawnee like the Corporation.

The argument of Mr. Arun Nehra, learned counsel for respondent Nos. 1 and 3, is without any substance when he submitted that all possible efforts were made to secure the best available purchaser in the market by issuing advertisements in large number of news papers and no person better than respondent No. 2 firm had come forward. The issuance of advertisement is one aspect and working on the advertisement to ascertain the best available purchaser is another. Respondent No. 2 firm, in fact, had not made any offer either in response to the second set of advertisement or in response to third set of advertisement. In any case, offer of respondent No. 2 firm suffered from numerous incurable illegalities. The foremost illegality was inadequate earnest money, which was to be paid @ 5%. The application of respondent No. 2 firm had made offer of Rs. 5,00,000/ and only draft of Rs. 5,000/ did accompany the offer. The offer was not even in a sealed cover and it could not be concluded with certainty that it has reached the Head Office of the Corporation on 2.1.1989 at 3.30 p.m. Moreover, the valuation reports also leave much to desire. It has not been explained as to why the inquiry made by M/s. Kamra Flour and Oil Mills was not attended to and why further information was not given to them. It has also not been shown as to why no inspection of the premises was arranged for the aforementioned firm. Moreover, no explanation has been tendered for huge difference in prices. The valuation report submitted in 1985, amounting to Rs. 32,44,000/ and assessment made on 13.3.1987 at Rs. 7.60 lacs and then assessment made hurriedly on 14.3.1989 are silent as to how these figures have been arrived at. It has been left to wild imagination. Therefore, there is no substance in the arguments raised by Shri Nehra, learned counsel for the Corporation and respondent No. 3.

The argument raised by Ms. Kamaljit Bajwa, learned counsel for respondent No. 2 firm also do not require any detailed consideration. Her reliance on the sale deeds dated 14.10.1988, 11.8.1988 and 22.8.1988, disclosing the rates of the land approximately Rs. 50,000/ per acre, even by that standard the total area of six acres would fetch more than Rs. 3,00,000/ in respect of land above. It is absolutely doubtful whether the sale deeds, which are referred to by the learned counsel, could be taken into consideration as these sale deeds were never set up before preparing valuation report, prepared on 13.3.1987 and 14.3.1989 (R1/1), which apparently is based on extraneous considerations as has already been observed in the preceding paras. The condition with regard to payment of electricity charges and Municipal Taxes would not cut any ice. Such an argument does not require any detail consideration.

For the reasons aforementioned, this petition succeeds. The order dated 13.3.1987 (P8), initiating proceedings against the petitionerCompany under Section 29 of the Act is set aside. All subsequent proceedings leading to execution of the transfer deed, dated 27.3.1989 (P9) are also set aside. The Corporation is directed to compute the dues of the petitionerCompany till the date of taking over of possession. The Corporation is not to charge any interest from the petitionerCompany after the date of taking over i.e. 30.3.1987. The possession of the premises in dispute be delivered back to the petitionerCompany as it was on 30.3.1987 by keeping in view the inventory prepared on that date. No recovery from the petitionerCompany shall be effected for a period of two months. The petitionerCompany shall also be entitled to its costs, which is determined at Rs. 50,000/ which shall be paid by the Corporation. A further cost of Rs. 20,000/ each shall be paid by respondent No. 2 and respondent No. 3. However, it is made clear that respondent No. 2 firm shall be permitted to take away any of their assets like machinery etc. The whole process be completed and directions be complied with within two months from today.