Madras High Court
A.Raju vs Tamil Nadu Industrial Investment on 18 April, 2022
W.P.(MD)Nos.2366 and 1859 of 2010
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED : 18.04.2022
CORAM:
THE HONOURABLE MR.JUSTICE B.PUGALENDHI
W.P.(MD)Nos.1859 and 2366 of 2010
and M.P.(MD)Nos.1 and 2 of 2010 and 1 of 2011
W.P.(MD)No.1859 of 2010
A.Raju ... Petitioner
versus
1. Tamil Nadu Industrial Investment
Corporation Ltd.,
through its Managing Director,
Arulmanai,
No.27, Whites Road,
Madras – 14.
2. The Regional Manager,
The Tamil Nadu Industrial Investment
Corporation Ltd.,
Special Recovery Branch,
Plot No.3, Vaigai Colony,
Anna Nagar, Madurai – 625 020.
3. Dinakaran
4. Vanitha Devi ... Respondents
https://www.mhc.tn.gov.in/judis
W.P.(MD)Nos.2366 and 1859 of 2010
Writ Petition filed under Article 226 of the Constitution of India,
seeking for the issuance of Writ of Certiorarified Mandamus, to call for
the records pertaining to the Impugned Auction Notice in bt/M/vz;/
242-brkbjhm-kJiu dated 26.09.2009 on the file of the
Respondent No.2 in Serial No.5 in Advertisement
No.MDU/RO/2009-2010/07 dated 01.10.2009 published in daily
newspaper Dinathanthi and quash the same as illegal and consequently
forbearing the Respondent No.2 to execute the Sale Deed in favour of
the Respondent No.4 pertaining to the property described in Serial No.
5 of the impugned notice in R.S.No.89/6, Vilacherry Village Door No.
5/318, in Chinnakannu Nagar, Nagamalai Pudukkottai Village in an
extent of 2973 Square Feet of land along with the buildings and the
house site.
For Petitioner : Mr.S.Vasanth,
for M/s.T.Lajapathi Roy
For R1 and R2 : Mr.A.Suresh
for M/s.Aiyar & Dolia
For R3 : Tapal returned
For R4 : No appearance
W.P.(MD)No.2366 of 2010
R.Ilango ... Petitioner
versus
1. Tamil Nadu Industrial Investment
Corporation Ltd.,
through its Managing Director,
https://www.mhc.tn.gov.in/judis
W.P.(MD)Nos.2366 and 1859 of 2010
Nandanam, Chennai – 35.
2. The Regional Manager,
The Tamil Nadu Industrial Investment
Corporation Ltd.,
Special Recovery Branch,
Plot No.3, Vaigai Colony,
Anna Nagar, Madurai – 625 020.
3. Dinakaran
4. Vanitha Mani ... Respondents
Writ Petition filed under Article 226 of the Constitution of India,
seeking for the issuance of Writ of Certiorari, to call for the records
pertaining to the impugned Sale Deed No.242/2010 dated 22.01.2010
registered at Sub Registrar Office, Thirupparankundram, Madurai
executed by the Respondent No.2 in favour of the Respondent No.4
pertaining to the property situated in R.S.No.89/6, Vilacherry Village
Door No.5/318, in Chinnakannu Nagar, Nagamalai Pudukkottai in an
extent of 2375 Square Feet of Land along with the R.C.C.Building in
an extent of 506 Square Feet and the house site and quash the
impugned Sale Deed.
For Petitioner : Mr.S.Vasanth,
for M/s.T.Lajapathi Roy
For R1 and R2 : Mr.A.Suresh
for M/s.Aiyar & Dolia
For R3 : Tapal returned
For R4 : No appearance
https://www.mhc.tn.gov.in/judis
W.P.(MD)Nos.2366 and 1859 of 2010
COMMON ORDER
Since both these writ petitions are arising out of the sale of a
property in R.S.No.89/6, Vilacherry Village, Door No.5/318, in
Chinnakannu Nagar, Nagamalai Pudukkottai Village, both the writ
petitions are taken up together and disposed of by way of a common
order.
2. The writ petition in W.P.(MD)No.1859 of 2010 was filed by
one Raju, S/o. Arjunan as against the auction notice issued by the
second respondent/the Regional Manager, Tamil Nadu Industrial
Investment Corporation Limited, Madurai, for public auction of the
property above mentioned through daily newspaper Dinathanthi dated
01.10.2009.
3. The case of the petitioner in W.P.(MD)No.1859 of 2010 is
that his father, one Arjunan, was the owner of the property and he
conducted a business in the name of “Kavitha Hosieries” in the said
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W.P.(MD)Nos.2366 and 1859 of 2010
property by availing loan from the second respondent. His father died
in the year 2008. Prior to that, his father executed a Will in the year
2002, bequeathing the property in favour of him. In the year 2009, a
notice was issued by the second respondent for public auction of the
property above mentioned through daily newspaper Dinathanthi dated
01.10.2009. According to him, he was not aware of the public auction
Notification dated 01.10.2009, since the communication was sent only
to the name of his father Arjunan.
4. The fourth respondent, one Vanithamani, participated in the
auction conducted on 01.10.2009 and took the property for the bid
amount of Rs.3.5 lakhs. Thereafter, a sale deed was executed in favour
of the fourth respondent in No.242 of 2010 dated 22.01.2010 registered
on the file of the Sub Registrar Office, Thirupparankundram, Madurai.
On knowing the same, one Ilango, son of Raju, the petitioner in W.P.
(MD)No.1859 of 2010, made a request on 10.02.2010 claiming that it
is their family property and the value of the property is more than the
bid amount and he has also offered to pay the highest bid amount of Rs.
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W.P.(MD)Nos.2366 and 1859 of 2010
3.5 lakhs for the said property. But, the said request was not
considered. Therefore, the said Ilango filed W.P.(MD)No.2366 of 2010
as against the sale deed No.242/2010 dated 21.10.2010.
5. The learned counsel appearing for the petitioners, by relying
on the Judgment of the Hon'ble Apex Court, reported in 1993 AIR 935,
in the case of Mahesh Chandra vs. Regional Manager, U.P. Finance
Corporation and others, submits that when the Industrial Corporation
is intending to put the property under auction, in all fairness, they have
to provide an opportunity to the unit holder and if the unit holder is
inclined to take up the property for the highest bid amount, the unit
should be transferred to the unit holder. However, the guidelines laid
down by the Hon'ble Apex Court has not been followed in this case.
Therefore, the impugned sale deed is liable to be set aside. The learned
counsel has also relied on the relevant portion from the Judgment of the
Hon'ble Apex Court, which is extracted as follows:
“Keeping these various factors giving rise to
conflicting interest the following directions are necessary
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W.P.(MD)Nos.2366 and 1859 of 2010
to be issued to be observed by the Corporation while
exercising power under S.29:
Every endeavour should be made, to make the unit
viable and be put on working condition. If it becomes
unworkable:
(1) Sale of a unit should always be made by public
auction.
(2) Valuation of a unit for purposes of determining
adequacy of offer or for determining if bid offered was
adequate, should always be intimated to the unit holder
to enable him to file objection if any as he is vitally
interested in getting the maximum price.
(3) If tenders are invited then the highest price on
which tender is to be accepted must be intimated to the
unit holder.
(4)(a) If unit holder is willing to offer the sale
price, as the tenderer, then he should be offered same
facility and unit should be transferred to him. And the
arrears remaining thereafter should be rescheduled to be
recovered in instalments with interest after the payment
of last instalment fixed under the agreement entered into
as a result of tendered amount.
(b) If he brings third parties with higher offer it
would be tested and may be accepted.
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W.P.(MD)Nos.2366 and 1859 of 2010
(5) Sale by private negotiation should be permitted
only in very large concerns where investment runs in
very huge amount for which ordinary buyer may not be
available or the industry itself may be or such nature that
by normal buyers may not be available. But before taking
such steps there should be advertisements not only in
daily newspapers but business magazines and papers.
(6) Request of the unit holder to release any part of
the property on which the concern is not standing of
which he is the owner should normally be granted on
condition that sale proceeds shall be deposited in loan
account.
In the light of the above guidelines it becomes clear
that though tenders were invited the 3rd respondent alone
had given the tender for a sum of Rs. 2 lacs. On
negotiation it was said to have been raised to
Rs. 2,55,000. But deferred payments, on initial deposit of
25% and balance payment within four years of half
yearly instalments, were given. This solicitous attitude, at
the expense of the appellant, appear to be unjust and
unfair and no reasonable prudent owner would accept
such an offer. The appellant himself, long prior to sale,
offered to pay Rs. 5 lacs and odd in full quids. Section 29
does not exclude the application of the principles of
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W.P.(MD)Nos.2366 and 1859 of 2010
natural justice. It is not a straight jacket formula. It
depends on facts in each case. Nothing prevented the
Corporation to have given the appellant a chance for
payment thereof at reasonable instalments with interest
thereon. Nothing prevented them to release the open site,
the subject of mortgage on condition that the entire sale
price of the plots should be paid to discharge the liability
and it be a condition in the sale deed itself. Before
accepting the tender of the third respondent, an
opportunity should have been given to the appellant as to
why such an offer of the third respondent be not
accepted. The appellant would have come forward to
give his own offer or brought third parties with higher
offers. No such bona fide actions have been taken or
attempted by the Corporation. Thus the acts smacked of
bona fides or responsibility or reasonableness as an
ordinary prudent businessman/trustee/owner acting in or
dealing with such trust. Thus the sale of the property is
vitiated by unjust and unreasonable act on the part of the
Corporation or its officers or employees and is liable to
be set aside.”
https://www.mhc.tn.gov.in/judis
W.P.(MD)Nos.2366 and 1859 of 2010
6. Mr.Suresh, learned counsel representing M/s.Aiyar & Dolio
for respondent Nos.1 and 2 submits that Section 29 of the State
Financial Corporation Act 1951 does not specifically stipulate any
condition that such an offer has to be made to the unit holder.
However, in this case, the respondents have duly communicated about
the proposed auction to the unit holder Arjunan, by letter dated
04.11.2008, by registered post and a copy of the letter was also marked
to one R.Indira, w/o. Raju, R.Kavitha, Partner of M/s. Kavitha
Hosieires, R.Ilango, the writ petitioner in W.P.(MD)No.2366 of 2010
and R.Bharathi, S/o.Raju. Despite the letter dated 04.11.2008, none
appeared in the auction conducted on 03.11.2009. Thereafter, the
property was taken in auction by the fourth respondent M.Vanithamani.
Further, the property was not sold for Rs.3.5 lakhs as projected by the
petitioner in W.P.(MD)No.2366 of 2010 and the auction was finalized
as Rs.4 lakhs after negotiation. According to the learned counsel for
the respondent Nos.1 and 2, the guidelines laid down by the Hon'ble
Apex Court in the Judgment as cited supra has also been complied
with. However, the offer was made by the said Ilango only on
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W.P.(MD)Nos.2366 and 1859 of 2010
10.02.2010, i.e. after three months from the date of auction. Therefore,
the writ petitions are liable to be dismissed.
7. This Court paid its anxious consideration to the rival
submissions made and also perused the materials available on record.
8. One Arjunan, the father of the petitioner in W.P.(MD)No.
1859 of 2010 and grandfather of the petitioner in W.P.(MD)No.2366 of
2010 borrowed a sum of Rs.5.70 lakhs from the Tamil Nadu Industrial
Investment Corporation on 10.08.1993 and he also obtained a second
term loan of Rs.4.70 lakhs on 16.08.1994. According to the respondent
Nos.1 and 2, the unit holder failed to repay the loan amount. After
issuing a foreclosure notice to the unit holder, the assets belonging to
the unit, which were mortgaged as primary security, were taken
possession by the Corporation under Section 29 of the State Financial
Corporation Act 1951 and also put into auction by the respondent/the
Tamil Nadu Industrial Investment Corporation.
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W.P.(MD)Nos.2366 and 1859 of 2010
9. The auction was conducted on 03.11.2009 and the proposed
public auction was also communicated to the unit holder Arjunan as
well as the other Partners of the Company by letter dated 04.11.2008,
enclosing a set of terms and conditions for sale, list of assets and enter
form etc., enabling the unit holder and others to participate in the
Tender-cum-Public auction. However, there was no participation from
the side of the unit holder, whereas, after three months, by letter dated
10.02.2010, a request was made by one Ilango, the petitioner in W.P.
(MD)No.2366 of 2010, as if the property was auctioned for a sum of
Rs.3.5 lakhs and he is ready to pay the auction amount of Rs.3.5 lakhs
as per the condition stipulated by the Hon'ble Supreme Court.
10. According to the learned counsel for the respondents, though
the fourth respondent has taken the property in auction for a sum of
Rs. 3.5 lakhs after negotiation, it has been finalized as Rs.4 lakhs and
after the payment of Rs.4 lakhs, the sale deed was also executed by the
Corporation on 22.01.2010. After execution of the sale deed, the said
Ilango has come forward with this proposal on 10.02.2010 that too by
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W.P.(MD)Nos.2366 and 1859 of 2010
way of a registered post. Therefore, the petitioners are not entitled to
avail the benefit, which was provided to the unit holders in the
Judgment of the Hon'ble Apex Court, in the case of Mahesh Chandra
vs. Regional Manager, U.P. Finance Corporation and others,
reported in 1993 AIR 935.
11. Accordingly, both the writ petitions are dismissed. No costs.
Consequently, connected miscellaneous petitions are closed.
18.04.2022
ogy
Index : Yes / No.
Internet: Yes / No.
To
1. The Managing Director,
Tamil Nadu Industrial Investment
Corporation Ltd.,
Arulmanai,
No.27, Whites Road,
Madras – 14.
https://www.mhc.tn.gov.in/judis
W.P.(MD)Nos.2366 and 1859 of 2010
B.PUGALENDHI, J.
ogy
2. The Regional Manager,
The Tamil Nadu Industrial Investment
Corporation Ltd.,
Special Recovery Branch,
Plot No.3, Vaigai Colony,
Anna Nagar,
Madurai – 625 020.
W.P.(MD)Nos.1859 and 2366 of 2010
18.04.2022
https://www.mhc.tn.gov.in/judis
