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Judgment
The petitioner, which is a company registered under the Companies Act, 1956, has filed this writ petition through its Director, Shri Sunil Kumar Jain
seeking following reliefs:
“It is, therefore, respectfully prayed that record of the case may be called for an by an appropriate writ, order or direction :
(i) The impugned advertisement / auction notice dated 16.3.2013 (Anx.5) to the extent of the petitioner company may kindly be quashed and set aside
and directions may be issued to the respondent RFC to consider the proposal of the petitioner company for waiver of penal interest and reduction in
the rate of interest at par with rate of interest charged by the RFC during the contemporary period and give consequential relief to the petitioner
company.
(ii) Any other relief to which the petitioner is entitled,may be granted in his favour.
(iii) The writ petition my be allowed with costs.â€
The facts, inter alia, involved in this writ petition, as summarized by this Court for adjudication are that the petitionercompany was granted a term loan
of Rs.2.41 crores by the Rajasthan Financial Corporation (hereinafter to be referred as ‘the RFC’) on 29.12.1999. Thereafter another loan of
Rs.27.54 lac was disbursed to the petitioner-company by the RFC on 20.04.2001. The petitioner-company committed default in repaying the loan, and
the respondent-RFC issued a notice to it asking to repay the entire loan with outstanding interest. The petitioner-company being aggrieved with the
action of the respondent-RFC preferred SBCWP No.456/2005 before this Court, however, the learned Single Judge vide order dated 15th
September, 2006 disposed of the said writ petition while observing that there is no force in the same. The order dated 15th September, 2006 passed in
SBCWP No.456/2005 is reproduced hereunder:
“Heard.
If the RFC has settled the cases of the other person who are similarly situated to the petitioner they will hear the petitioner as well. The petitioner will
supply the name of three such persons whose cases the RFC has decided regarding which he is claiming discrimination. If he names three persons
then the respondent RFC will consider the case of the petitioner. If the RFC has not considered the cases of other similarly situated persons then they
are not bound to consider the case of the petitioner they may independently do it in the matter of the petitioner. In that view of the matter there is no
force in the writ petition, the same is hereby disposed off.
If the petitioner makes a representation to the respondents the same will be considered.â€
Being aggrieved with the same, the petitioner-company preferred Special Appeal Writ No.888/2006 before Division Bench of this Court, which was
disposed of by order dated 13.08.2008.
The order dated 13.08.2008 is reproduced hereunder:
“Learned counsel for the appellant submits, that he may be granted, time up to 31.3.2009, for settlement of the entire accounts, by the
appellant’s own resources or by obtaining financial assistance, from other financial institution, taking benefit of the NOC, issued by the RFC, and
also submits, that the respondents be directed to provide the statement of accounts, and also waive 50% of the penal interest, as was agreed, during
the earlier negotiations.
In our view, the time prayed for is very long. However, looking to the magnitude of the amount involved, we think it appropriate to grant the time,
ofcourse, subject to the conditions of the appellant’s depositing minimum amount of Rs.10,000,00/- per month, till 31.3.2009, or till the account is
cleared up, whichever is earlier.
First payment, to be made on or before 01.9.2008. The respondents are also directed to provide statement of accounts to the appellant.
So far as the request of waiver of penal interest is concerned, the appellant may submit representation to the respondents as to in what circumstances,
earlier negotiations took place and, what are the entitlements for the appellant, for waiver, and the same shall be considered by the respondent, on its
own merits objectively and dispassionately.
This disposes of the writ petition and the appeal. It is however clarified that if the appellant, fails to pay the aforesaid amount, in any month, the writ
petition and the appeal shall stand dismissed, unconditionally.â€
The petitioner-company failed to clear the loan account by 31.03.2009, as directed by the Division Bench of this Court in the above referred order,
though, the RFC has waived 50% of the penal interest of the petitioner-company. As per the RFC the petitioner has not agreed to waiver of 50% of
the penal interest and demanded for waiver of full penal interest and has failed to clear the accounts, therefore, the case of the petitioner-company
was rejected by the RFC.
The possession of the resort run by the petitioner-company was taken by the RFC on 19.10.2012 and thereafter, the petitioner-company approached
the then Hon’ble Industries Minister Government of Rajasthan, on whose instructions, the RFC again considered the case of the petitioner-
company and it was asked to deposit 20% of the balance outstanding in the loan account and also submit suitable repayment proposal of the balance
outstanding with an understanding that on doing the same, possession of the resort would be handed over to the petitioner-company. The said decision
was conveyed to Shri Anil Jain, representative of the petitioner-company on 06.03.2018. As per Annexure-AA filed by the RFC along with Additional
Submissions, Shri Anil Jain had agreed to visit the office of CMD on 08.03.2013 with concrete proposal for repayment of the dues of the Corporation
along with DD of 20%of the balance outstanding.
As per the case of the RFC, neither Shri Anil Jain nor any other representative of the petitioner-company attended the office of CMD on
08.03.2013 and then the RFC invited sealed bids from the parties interested in purchasing the resort of the petitioner-company vide notice dated
16.03.2013 (Annexure-5).
Being aggrieved with the notice dated 16.03.2013 (Annexure-5), the petitioner-company has preferred this writ petition with the prayers quoted
hereinabove.
This writ petition was filed on 22.03.2013. On 29.03.2013, Advocate for the RFC put in appearance. Thereafter on 24.05.2013, learned counsel for the
RFC apprised this Court that the proceedings, pursuant to the notice dated 16.03.2013, have already been completed, however, the same have not
been finalized on account of pendency of this writ petition.
On 28.05.2013, this Court allowed the RFC to negotiate with the bidder for finalization of the proceedings pursuant to the notice dated 16.03.2013,
however, ordered that the same shall not be finalized till next date. The interim order dated 28.05.2013 passed by this Court was extended from time
to time.
In the meantime on 16.02.2017, M/s Sun On Mount Hotels Pvt. Ltd., whose bid was accepted, pursuant to the notice dated 16.03.2013, was ordered
to be impleaded as party respondent in this petition.
On 20.12.2017, learned counsel for the petitioner-company made a statement before this Court that the petitionercompany is making every endeavour
to clear all the dues demanded by the respondent-RFC and, therefore, some time be granted to it to arrange the finances for clearing the dues. Time
prayed was granted by this Court and the matter was ordered to be listed on 11.01.2018. On 11.01.2018, this Court dismissed the stay petition while
observing that the petitioner-company is not serious in settlement of the dispute with the RFC.
Being aggrieved with the order dated 11.01.2018, the petitioner-company preferred D.B.Special Appeal Writ No.187/2018 before Division Bench of
this Court and the Division Bench vide order dated 19.01.2018 has disposed of the said Special Appeal while granting liberty to the petitioner-company
to file an application for early hearing within a period of one week from the date of receiving certified copy of the order with a request to the learned
Single Judge to decide the writ petition itself within two weeks thereafter. The Division Bench has further ordered that for three weeks, the
possession of the property in question shall not be handed over to respondent No.5 â€" M/s Sun On Mount Hotels Pvt. Ltd. Pursuant to the order
passed by the Division Bench of this Court on 19.01.2018, the matter came up for consideration of the application filed on behalf of the petitioner-
company and with the consent of the learned counsels for the parties, the matter was finally heard.
The petitioner-company has challenged the action of the respondent-RFC of selling its resort through notice dated 16.03.2013 on the ground that the
petitioner-company is being given discriminatory treatment by the respondent-RFC in comparison to other loan defaulters. It is claimed that the
respondent-RFC has settled the loan accounts of other defaulters at a very less amount, whereas in the case of the petitionercompany, the
respondent-RFC is adament to recover an exemplary amount from the petitioner-company as dues. Documents are also produced by the petitioner-
company along with writ petition, rejoinder and additional affidavit in support of its claim that the respondent-RFC has settled the loan account of other
defaulters at a very less amount.
It is noticed that similar contention was raised by the petitioner-company in SBCWP No.456/2005 and in D.B. Special Appeal Writ No.888/2006
and the learned Single Judge has disposed of SBCWP No.456/2005 vide order dated 15.09.2006 while observing that there is no force in the writ
petition, however granted liberty to the petitioner-company to move for grant of opportunity of hearing to it regarding the discriminatory treatment as
alleged by it. Thereafter, the Division Bench of this Court has disposed of the writ petition and the special appeal by directing the petitioner-company
to clear all the dues of the loan account by 31.03.2009.
Before the Division Bench also, the petitioner-company had raised a contention about alleged discriminatory treatment given to it by the RFC,
however, the Division Bench after considering the said contention of the petitioner-company granted time to it to clear the loan account by 31.03.2009.
Admittedly, the petitioner-company has failed to clear the loan account by the stipulated date given by the Division Bench, hence, now it is not open
for the petitioner-company to again raise the same contention, therefore, the same is liable to be rejected.
The another contention raised by the learned counsel for the petitioner during the course of argument is to the effect that the respondent-RFC has
committed grave illegality in inviting the sealed bids for the purpose of selling the resort of the petitioner-company instead of selling it through public
auction. It is noticed that no such averment is made on behalf of the petitioner-company either in the writ petition or rejoinder or in the additional
affidavits.Â
However, learned counsel for the petitioner-company has placed reliance on a decision of Hon’ble Supreme Court rendered in Mahesh Chandra
vs. Regional Manager, U.P.Financial Corporation & Ors., reported in AIR 1993 SC 935 in support of his contention that the respondent-RFC has
grossly erred in inviting sealed bids for the purpose of selling of the resort of the petitioner-company instead of selling it through public auction.
It is sorry to say that the reliance is placed on behalf of the petitioner-company on a decision of Hon’ble Supreme Court, which has been over-
ruled by Larger Bench of Hon’ble Supreme Court. It is noticed that Mahesh Chandra’s case (supra) has already been over-ruled by a Three
Judge Bench of the Hon’ble Supreme Court in Haryana Financial Corporation & Anr. vs. Jagdamba Oil Mills & Anr. reported in AIR 2002 SC
834 by making following observations:
“The aforesaid guidelines issued in Mahesh Chandra's case place unnecessary restrictions on the exercise of power by the Financial
Corporation contained in Section 29 of the Act by requiring the defaulting unit holder to be associated or consulted at every stage in the sale of the
property. A person who has defaulted is hardly ever likely to cooperate in the sale of his assets. The procedure indicated in Mahesh Chandra's case
will only lead to further delay in realization of the dues by the Corporation by sale of assets. It is always expected that the Corporation will try and
realize the maximum sale price by selling the assets by following a procedure which is transparent and acceptable, after due publicity, wherever
possible.
The subsequent decisions of this Court in GemCap's (supra), Naini Oxygen (supra) and Micro Cast Rubber (supra) run counter to the view
expressed in Mahesh Chandra's case. In our opinion, the issuance of the said guidelines in Mahesh Chandra's case are contrary to the letter and the
intent of Section 29. In our view, the said observations in Mahesh Chandra's case do not lay down the correct law and the said decision is overruled.
Hence, the contention raised on behalf of the petitioner-company to the effect that the respondent-RFC has illegally invited sealed bids for the purpose
of selling the resort of the petitioner-company instead of selling the same through public auction is bereft of any merit and is liable to be rejected.
Learned counsel for the petitioner-company has also placed reliance on decisions of Hon’ble Supreme Court in Aggarwal and Modi Enterprises
Pvt. Ltd. & Anr. vs. New Delhi Municipal Council, AIR 2007 SC 3131 and in Everest Wools Pvt. Ltd. and Ors. vs. U.P.Financial Corporation &
Ors., (2008) 1 SCC 643. He has also placed reliance on decision of this Court rendered in M/s R.S.Industries (Rolling Mills) Ltd. vs. Rajasthan
Financial Corporation & Anr., 2009(4) WLC (Raj.) 615Â and the decision of Jharkhand High Court rendered in M/s. Automobile Ancillary Industries,
Jamshedpur vs. Bihar State Financial Corporation and Ors., AIR 2001 Jharkhand 41.
The above judgments, upon which the learned counsel for the petitioner-company has placed reliance, are of no help to the petitioner because the
facts of those cases are altogether different from the facts of the present case.
Learned counsel for the respondent-RFC and the respondent No.5 have vehemently opposed the writ petition and argued that the Hon’ble
Supreme Court in catena of decisions has held that the High Court while exercising powers under Article 226 of the Constitution of India does not sit
as an appellate authority over the acts and deeds of the State Financial Corporations and the scope of judicial review in the contractual matters is very
limited and the High Court should be slow in interfering in the matters regarding the recovery of loans.
In support of above contentions, learned counsel for the RFC has placed reliance on decisions of Hon’ble Supreme Court rendered in
U.P.Financial Corporation vs. Gem Cap. (India) Pvt. Ltd. & Ors., (1993) 2 SCC 299, The Maharashtra State Financial Corporation vs. M/s. Suvarna
Board Mills & Anr., JT 1994 (5) S.C. 280, U.P.Financial Corporation & Ors. vs. Naini Oxygen & Acetylene Gas Ltd. & Anr., (1995) 2 SCC 754,
Karnataka State Financial Corporation vs. Micro Cast Rubber & Allied Products (P) ltd. & Ors., JT 1996 (6) S.C. 37, Orissa State Financial
Corporation & Anr. vs. M/s. Hotel Jogendra, J T 1996 (5) S.C. 322, State of Bihar & Ors. vs. Jain Plastics and Chemicals Ltd., AIR 2002 SC 206,
Haryana Financial Corporation & Anr. vs. Jagdamba Oil Mills and Anr., (2002) 3 SCC 496, Karnataka State Industrial Investment & Development
Corporation Ltd. vs. Cavalet India Ltd. & Ors., (2005) 4 SCC 456, and in Punjab Financial Corporation vs. M/s. Surya Auto Industries, 2010,Â
AIR (SC) 266. Learned counsel has also placed reliance on decisions of this Court rendered in M/s. Som Prakash & Sons Bricks (P) Ltd. Vs.
Rajasthan Financial Corporation & Ors., 2006 (6) RDD 3510, M/s. Bageshree Dairy Products Pvt. Ltd. vs. Raj.
Financial Corporation (Civil Writ No.4896/2005 decided on 03.08.2007), Rajasthan Financial Corporation vs. M/s Chetak Electric & Iron Industries,
2008 3 RLW (Raj) 2530 and M/s Ratan Industrial Corporation vs. State of Rajasthan & Ors. (SBCWP No.226/2010) decided on 23.02.2018.
It is true that in the above referred cases, the Hon’ble Supreme Court as well as this Court have categorically held that while exercising powers
under Article 226 of the Constitution of India, a High Court does not sit as an appellate authority over the acts and deeds of the State Financial
Corporations. It is also held that the scope of judicial review in the contractual matters is very limited and the Court should be slow in interfering in the
matters regarding the recovery of loans.
In the facts and circumstances of the case as noted above, it is clear that the petitioner-company has failed to comply with the directions given by the
Division Bench of this Court while disposing of Special Appeal Writ No.888/2006 vide judgment dated 13.08.2008.
Looking to the above fact and in view of the law laid down by the Hon’ble Supreme Court as well as by this Court in the judgments referred by
the learned counsel for the respondentRFC, no interference is called for.
Consequently, the writ petition fails and is hereby dismissed. There shall be no order as to costs.