1. Petitioner obtained a loan of Rs.1,62,500/- for acquisition of machinery and Rs.2,73,000/- for construction of building from the A.P. State Financial Corporation

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(Corporation)y and ran the unit for a period of two years successfully after establishing it. As the petitioner failed to discharge the loan, the Corporation seized its unit in March 1996. When the petitioner requested to lift the seizure and grant time for payment, the Corporation directed payment of Rs.1,00,000/- for lifting the seizure through its letter dated 11.12.1997. Petitioner paid an amount of Rs.60,000/- and requested the corporation to lift the seizure, which was accepted by the Corporation and the seizure was lifted. As the petitioner failed to pay the installments due and payable, the Corporation, through its letter dated 20.08.1999, directed the petitioner to pay the arrears of Rs.13,33,305 on or before 04.09.1999 at the pain of taking recourse to the procedure prescribed by Section 29 of the State Financial Corporations Act (the Act) by sale of the unit, enclosing a proforma sale notice. Thereafter, as no payment was made, the Corporation issued a telegram dated 07.01.2000 to the petitioner. Questioning the same, petitioner filed W.P.

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No.878 of 2000 and obtained an order of status quo. After filing the said Writ Petition, petitioner gave a representation dated 16.02.2001 requesting the Corporation to restrict the liability only to principal amount and settle the case under one time settlement scheme. On 10.08.2001, the petitioner withdrew the said Writ Petition on the basis that he wants to pursue the Corporation to enter into one time settlement with him and so the Court while dismissing the Writ Petition, directed the Corporation to consider the representation made by the petitioner in accordance with law, as expeditiously as possible, preferably, within a period of four weeks from the date of receipt of a copy of that order. As the petitioner did not make the

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payment to be made as required under the scheme of One Time Settlement, the Corporation called for tenders from the intending purchasers. Having known the same, petitioner approached the Corporation and requested for time whereupon he received a letter from the Corporation

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inter alia stating that as it received highest bid for Rs.6,50,000/he was being given a final opportunity to pay that amount and get the assets released by paying Rs.25,000/- as EMD amount within 15 days from the date of the letter and two installments subsequently. As the petitioner did not pay that amount, the seized property was sold to the third respondent for Rs.6,50,000/- Questioning the said sale in favour of the 2^nd respondent, petitioner filed this Writ Petition.

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2. The case of the Corporation is that in spite of it giving several opportunities to the petitioner, he did not make any payment and as his intention is only to gain as much time as possible, it sold the properties pledged to it by invoking the power vested in it by Section 29 of the Act, and so the petitioner is not entitled to any relief.

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3. Third respondent filed his counter affidavit contesting the application.

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4. The point for consideration is whether the sale of the unit of the petitioner in favour of the third respondent is improper and is liable to be set aside.

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5. The contention of the learned counsel for the petitioner is that inasmuch as the market value of the property sold as per the valuation certificate issued by the Sub-Registrar is

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Rs.18,53,866/-, in view of the ratio in M/s. Swastic Automobiles and others Vs. Bihar State Financial Corporation and other s^[1] , Gajraj Jain Vs. State of Bihar and other s^[2] and S.J.S.Business Enterprises (P) Ltd. Vs. State of Bihar and Other s^[3] , the sale made in favour of the third respondent for Rs.6,50,000/- is unsustainable and is liable to be set aside. It is his contention that the Corporation not acting upon the letter of offer of the petitioner to settle the amount due under one time settlement scheme and proceeding with the sale is but mala fide and contended that the Corporation erred in accepting the offer of the only bidder i.e., the third respondent and confirming the sale in favour of the third respondent, by rejecting the request of the petitioner, made on the same day to grant some time, when, even as per the terms of the One Time Settlement scheme, he has time for payment till 01.03.2002, which establishes the bent of mind of the Officials of the Corporation to sell away the property of the petitioner for any price, be it a reasonable price or not, which prima facie establishes the malafides on the part of Officers of the Corporation and so the sale made by the Corporation is liable to be set aside.

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6. The contention of the learned Standing Counsel for the Corporation is that though the petitioner was given a number of opportunities to pay the amount due, as he failed to make the payments, the Corporation got the value of the property evaluated and as per the valuation report, its value was only Rs.6,81,400/-, and as the third respondent offered to purchase land and building at Rs.4 lakhs and plant and machinery at

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Rs.1 lakh, negotiations were held whereat he offered to purchase the entire property at Rs.6,10,000/- and that offer of his was placed before the Committee for its decision on 06.02.2002, and the Committee, at its meeting held on 23-122002 at Ongole branch office, after detailed discussion on the value of the assets, land, building and machinery, had keeping in view the fact that nobody was coming forward to purchase the unit in view of the Vaasthu problem and the huge arrears payable to the electricity department, felt it desirable to forward the proposal to the head office for necessary action by operation committee, and in the meanwhile, the third respondent through his letter dated

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06-02-2002 offered a price of Rs.6,50,000/-, which offer was placed before the operations Committee of the head office, and that Committee accepted the said offer and as the Corporation followed the guidelines issued in Haryana Financial Corpn. &

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Anr. Vs. M/s. Jagdamba Oil Mills & Anr.^[4] , petitioner is not entitled to any relief.

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7. In reply, the contention of the learned Counsel for the petitioner is that the petitioner made an application under Right to information Act, 2005, for a copy of the letter dated 22-112007 of the Commissioner and Inspector General of Registration and Stamps, Hyderabad, in Memo No.MV4/2494/07, and the same was furnished to him and that letter shows that copy of a document No.5838/06 of the Registering Officer, Ongole, shows that 5760.3 square yards in Survey No.501/1 was valued at Rs.140/- per square yard when its market value is Rs.250/- per square yard and thus, the

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property was undervalued by Rs.5,76,580/- over which the deficit duty works out to Rs.54,802/- and so, it is clear that the property of the petitioner was sold for value much lesser than the actual market value, and so, in view of the ratio in M/s. Swastic Automobiles case (1 supra), Gajraj Jain case (2 supra), and S.J.S.Business Enterprises (P) Ltd. case (3 supra), the sale made in favour of the third respondent is liable to be set aside.

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8. With regard to the contention of the learned Counsel for the petitioner relating to letter of the Commissioner and Inspector General of Registration and Stamps, I am of the opinion that it is not necessary to go into the question whether the document executed in favour of the third respondent is undervalued or not, firstly because the valuation adopted in the document of sale executed in favour of the third respondent is not the subject matter of dispute in this case, and secondly because the proviso to Section 47-A of the Indian Stamp Act, which reads:

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“Provided that in respect of documents executed by or on behalf of the Central Government or the State Government or any authority or body incorporate by or under any law for the time being in force and wholly owned by Central /State Government, the market value of any property shall be the value shown in such instrument”

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takes away the document executed in favour of the third respondent by the Corporation out of the purview of scrutiny by the authorities under the Stamp Act.

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9. Before taking up the merits of the contentions raised by

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the learned Counsel for both sides, I feel it relevant to refer to the decisions relied on by the learned Counsel for the petitioner firm.

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10. Though the facts in M/s. Swastic Automobiles case (1 supra) are not clear from the judgment, it is evident from Para 3 of the said judgment that the security, which was valued over Rs.20 lakhs, was sold away for realising a small amount due from the debtor of Bihar State Financial Corporation in favour of the tenants in the premises. During the course of hearing, as there was settlement on major issues at the instance of the Counsel for the principal debtor, creditor and auction purchasers, the apex Court decided the other issues. In this case, when the property of the petitioner was seized in March, 1996 as the petitioner requested for lifting of seizure and sought time for payment of the amount due to the Corporation, the Corporation vide its letter dated 11-12-1997 asked him to pay Rs.1,00,000/- for lifting the seizure whereupon petitioner paid Rs.60,000/- only and requested for lifting of the seizure, which was accepted by the Corporation. As the petitioner again failed to pay the installments and fell in arrears to a tune of more than Rs.13,33,305/-, he was asked to pay the same on or before 04-09-1999, and as he failed to pay the said amount by that date and subsequently also, the Corporation issued a telegram dated 07-01-2000 to the petitioner informing him that it would put the property to auction. Questioning the same, the petitioner filed W.P.No.878 of 2000 and obtained an order of status quo and gave a representation dated 16-02-2001 requesting the Corporation to restrict the liability only to the principal amount and settle his case under One Time Settlement

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Scheme, and withdrew the Writ Petition on the ground that he would persuade the Corporation to give the benefit of One Time Settlement Scheme, and failed to pay the amounts due as per the One Time Settlement also. So it is clear that the Corporation had, after complying with the guidelines issued by the apex Court in Jagdamba Oil Mills case (4 supra) only, sold the property to the third respondent. So the ratio in M/s.Swastik Automobiles case (1 supra) does not apply to the facts of this case.

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11. The ratio in Gajraj Jain case (2 supra), which was decided on the basis of the ratio in S.J.S.Business Enterprises case (3 supra), is that the provisions of sub sections (1) and (4) of Section 29 of the State Financial Corporation Act, 1951, are similar to Section 69 of the Transfer of Property Act and so the Financial Corporation, while bringing the properties to sale under Section 29 of the State Financial Corporation Act, must act in accordance with the statute and must not act unreasonably. In this case, the documents produced by the Corporation show that it got the property of the petitioner evaluated and as per that report fixed the value of the total assets at Rs.8,44,000/-. The valuation report dated 26-09-2001 shows that the unit of the petitioner, which was seized on 26-092001, was lying idle for the past 4 years and the present realizable value of the plant, machinery and equipment was Rs.1,75,000/-. In view thereof, it cannot be said that the Corporation put the property to sale without getting the value of the property proposed to be sold, evaluated. No doubt, the certificate issued by the sub-Registrar, relating to market value of properties of the petitioner, issued under A.P.Court fees and

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Suits Valuation Act, shows their value as Rs.18,53,866/-. As the petitioner was made aware of the price offered for purchase and was given an option to purchase the property at that price and get the property released by paying Rs.25,000/- as Earnest Money Deposit within 15 days of receipt of that letter also, the petitioner did not respond. If the petitioner felt that his property would really fetch Rs.18 lakhs, nothing prevented him from purchasing the same at the price of Rs.6,50,000/- offered to him and reselling it at that price or from procuring bidders, who were prepared to purchase his property at that price. The property was brought to sale only after due publicity and advertisement in Eenadu newspaper.

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12. The value of the property shown in the valuation registers is for the purpose of finding out if proper stamp duty is paid on the property or not. Even when the consideration for sale is less than that of the market value, the Registering Officers can direct the parties to pay the stamp duty on the market value as shown in the registers. It is well known that all properties may not get price shown in the valuation register and sometimes purchasers by taking advantage of the situation in which the vendor is placed may not offer the real value. In this case, when the property was advertised for sale in the newspaper, which has vide circulation, no other bidders except the third respondent came forward to purchase the same. After negotiations, the negotiation committee fixed the price at Rs.6,50,000/- and the Corporation made an offer to the petitioner to purchase the property at that price. He did not do so, nor did he bring any other bidder for any higher price. The petitioner, who had ample opportunity to pay the amount offered

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by the third respondent, failed to pay the same. So, it cannot be said that the sale made by the Corporation is not in accordance with the provisions of the Act and the guidelines issued by the apex Court and I find no merits in the Writ Petition.

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13. Hence, the Writ Petition is dismissed. No costs.

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__________________ (C.Y.Somayajulu, J)

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14^th February, 2008 lur

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