Judgment:
1. The present matter though has a chequered history but as the facts have been lucidly detailed in the order passed by the Hon'ble Single Judge, it is not necessary for us to repeat the very same exercise.
2. The facts necessary for disposal of these two appeals are that the present appellants M/s. Bala Paper Mills (Bihar) Pvt. Ltd., a Private Limited Company incorporated under the provisions of the Companies Act, 1956 in the year 1981 applied for the loan. The scheme was examined by the Bihar State Credit and Investment Corporation Limited (in short 'the BICICO') and the Technical Cell of the Bihar State Financial Corporation (in short 'the BSFC'). The appellants proposals were approved and the authorities sanctioned loan in favour of the appellants. The BSFC sanctioned Rs. 26 lacks while the BCICO sanctioned Rs. 46 lacs. The equitable mortgage agreement was executed in the year 1983 in favour of the BICICO and the BSFC and right of those authorities were created over the properties. The said Company went into production in the year 1985 but soon thereafter the factory was closed for several months. The Company remain closed till 1990 and thereafter as alleged by the appellants it came back into production in the year 1990 and started paying its dues to the BICICO and the BSFC. The proposal for rehabilitation made by the Appellant-Company was cancelled and as the unit could not pay the amount due, the BICICO took over the possession of the unit on 26.8.1996 along with its assets after making an inventory.
3. On 31.2.2002 the BICICO advertised the sale of property and ultimately accepted the higher, offer of Respondent M/s Patna Rolling Mills on 5.3.2002. The said M/s Patna Rolling Mills is Respondent No. 11 in C.W.J.C. No. 46702/2002 and the Respondent No, 7 in C.W.J.C. No. 10582/2002. The petitioner says that as the property before its settlement in favour of M/s Patna Rolling Mills was not offered to the original promoter/petitioner/appellant, the action taken by the respondents was patently bad.
4. It is not in dispute before us that the possession of the property was delivered to M/s Patna Rolling Mills on 16.3.2002 but before finalising everything a further offer was made to the present appellant-petitioner that he may obtain the property on the matching terms. Undisputedly the petitioner accepted the offer but made a counter-offer submitting that he be delivered possession of the property in accordance with the inventory prepared in the year 1996. It is not in dispute before us that the BICICO was offering the property to M/s Patna Rolling Mills on the condition - 'As it is where it is.'
5. It appears that the BICICO did not accept the counter-offer, therefore, the present appellant came to this Court In C.W.J.C. No. 4702/2002 and challenged the sale notice dated 31.1.2002 and the letter dated 25.3.2003 regarding the sale of the unit to the Respondent M/s Patna Rolling Mills
6. From the records it appears that M/s Patna Rolling Mills filed C.W.J.C. No. 8578/2002 and after hearing learned counsel for the petitioner and the counsel for the BICICO the Writ Petition was disposed of on 29.7.2002. In the said petition the further sale notice published by the BICICO was challenged on the ground that if the sale was already confirmed in favour of M/s Patna Rolling Mills, the BICICO could not put the unit for re-auction. This Court disposed of the Writ Application on 29.7.2002 observing that there is no scope of making further advertisement for sale but if the BICICO feels that the unit could fetch more money on auction sale then the BICICO may negotiate with M/s Patna Rolling Mills alone for higher price etc.
7. The present appellant filed yet another Writ Application (C.W.J.C. No. 10582/2002) to quash the order dated 19.8.2002 under which assets of M/s. Bala Paper Mills (Bihar) Pvt. Ltd. were handed back to M/s. Patna Rolling Mills in pursuance of the orders passed in C.W.J.C. No. 8578/2002.
8. The learned Single Judge after appreciating the legal position and considering the factual aspect in their true perspective found that the present appellants were not acting bona fide, the BICICO was justified in taking possession of the property putting the same to auction and confirming the sale in favour of M/s Patna Rolling Mills. The learned Single Judge also observed that the conduct of the present appellant does not inspire confidence nor is sufficient to persuade the Court to presume any bona fide in favour of the appellant. The learned Single judge also observed that the petitioner's total reliance on the judgment of the Supreme Court in the matter of Mahesh Chandra v. Regional Manager, U.P. Financial Corporation and Ors., (1993) 2 SCC 279 would now be misconceived because the said judgment has practicably been overruled by the Supreme Court in the matter of Haryana Financial Corporation and Anr. v. Jagdamba Oil Mills and Anr., 2002 (3) SCC 496. The learned Single Judge accordingly dismissed the said Writ Applications.
9. Being aggrieved by the said judgment disposing of the two Writ Applications the original promoters have come before us in these appeals.
10. Learned counsel for the appellants submitted that the order passed by the learned Single Judge is bad in law because the action taken by the authorities were patently illegal. He had submitted the following three arguments in support of his case :-
That no proper notice was given to the petitioner because from the records it would appear that the notice dated 5.3.2002 was not served upon the petitioner and the possession of the property was given to M/s Patna Rolling Mills on 16.3.2002 It is also submitted by him that in the second auction higher offers were received by the BICICO and therefore the property could not be settled in favour of M/s Patna Rolling Mills as the settlement of the property at a lower price was detrimental to the interest of the petitioner-appellant. It was lastly submitted that before fixing the valuation of the property and putting the property to auction, no notice was given to the petitioner and therefore the property has been sold at a song's price on the valuation arbitrarily fixed by the BICICO.
11. Learned counsel for the BICICO and M/S Patna Rolling Mills opposed the appeals inter alia contending that assuming that the letter dated 5.3.2002 was not received by the petitioner but on appellant's own showing it would appear that a second notice was issued to the petitioner to accept the property on the same matching terms but instead of accepting the offer the petitioners started making counter offers and started creating problems. In relation to the second argument it is submitted that the second offer would not assume any importance because if the proceedings relating to second offer have been quashed by the High Court then any action taken in execution of the second offer would stand nullified. Regarding fixation of the valuation of the property it is submitted that the petitioner while accepting the offer made by the BICICO for the very same amount on which it was offered to M/S Patna Rolling Mills added a counter offer that all the properties taken in possession under the inventory prepared in 1996 be given to him which would mean that the petitioner was of the opinion that the price which he was required now to pay was inclusive of the articles which the petitioner was claiming under the inventory prepared in 1996. They submitted that the total conduct of the petitioner would explain nothing but malice and mala fide.
12. We have heard learned counsel for both the parties at length, have gone through the pleadings of the parties and the two judgments of the Supreme Court.
13. So far as service of notice dated 5.3.2002 is concerned even if we assume that the said letter was not served upon the petitioner, from the petitioner's own showing it would clearly appear that he had written several letters to the BICICO for redressal of his grievances. The records also show that on 23.3.2002 the Board of Directors observed in the meeting that the petitioner be heard. On 25.3.2002 the BICICO gave a offer to the petitioner to take property on matching terms. Vide letter dated 30.3.2002 the appellant made a counter offer to the BICICO and that he was ready and willing to accept the proposal but the property should be handed over to him as it was on 26.8.1996 i.e. the date when the BICICO had taken possession.
14. From these letters of the petitioner it would clearly appear that an offer was made to the appellant-petitioner to take the property but instead of accepting the property as it is where it is, he started adding further conditions. Under these circumstances it cannot be said by the appellant that no proper notices were given to him.
15. So far as the question of higher offer is concerned it will have to be seen that a second notice to fetch better and further price was published by the BICICO. M/s Patna Rolling Mills filed C.W..J.C. No. 8578/2002 challenging the publication of the second notice. This Court vide its order dated 29.7.2002 quashed the second offer and observed that there was no scope of making further advertisement for sale. This Court further gave liberty to the BICICO that if the unit can fetch more money at auction sale then the BICICO may negotiate with M/s Patna Rolling Mills alone and not with others for such higher price and hence on such clause being incorporated in the order itself the Writ Petition was allowed. Fresh sale notice was also challenged by the present appellant before this Court in C.W.J.C. No. 8672/2002 but in light of the order passed in C.W.J.C No. 8578/2002 the said Writ Application was dismissed as infructuous. If the present appellant as also M/S Patna Rolling Mills, each were of the opinion that the second notice published by the BICICO was illegal and this Court accepting the argument of M/S Patna Rolling Mills quashed the publication of the second notice then at this stage the petitioner cannot be allowed to take any mileage by submitting that in view of the second auction notice higher offers were received, therefore, the property could not be sold at a lesser price. If the very basis of the second offer is non-est then the appellant cannot be allowed to take advantage of an act which is non-est and of the consequences which never ensued.
16. So far as the question relating to valuation of the price is concerned the argument appears to be one of frustration.
17. The property was offered to M/s. Patna Rolling Mills for Rs. 38.79 lacs. The petitioner was given a matching offer under letter dated 25.3.2002. The BICICO had clearly said that the petitioner would be entitled to accept the offer on matching terms and if the petitioner does not accept the offer he would lose all his rights. Instead of accepting the offer as it was, the petitioner made a counter offer saying that 40 per cent of the tender amount would be kept ready for being paid to the Officers of the BICICO at site of the Company at the time the property is handed over and possession is given. The appellant required that the BICICO must ensure that before handing over the property as it was on the date when the BICICO had taken possession vide letter dated 26.8.1996. This counter offer, in our considered opinion, was not a bona fide offer, Undisputedly the property was proposed to be sold on the terms ordinarily known as 'As it is where it is.' If M/s. Patna Rolling Mills was ready and willing to purchase the property on the terms--'As it is where it is' for a particular amount and the BICICO was making an offer to the promoter that he may accept the property 'as it is where it is' for the same amount then the offer made by the BICICO was a genuine, valid and bona fide offer. The petitioner did not accept the offer as it is, he wanted the possession of the property and offered conditions that the possession be handed over to him in accordance with the inventory prepared in 1996. If the petitioner was not aggreable to the said offer then he cannot be allowed to say that no proper offer was made to him and valuation of the property was not properly fixed.
18. For an amount of Rs. 40 lacs the petitioner was thinking that he was entitled to something more then the property as it is where it is. If that be so, the petitioner cannot say that the property was sold at the price arbitrarily fixed by the respondent BICICO.
19. Undisputedly the purchaser M/s Patna Rolling Mills having paid the full amount (as stated by their counsel in the open Court) this payment now would fix a nail in the argument of the appellants.
20. Taking into consideration the totality of the circumstances and assuming that Mahesh Chandra's case still applies to the petitioner's case, we are of the opinion that the appellants are not entitled to any relief. Both the Appeals are
dismissed. There shall be no order to costs.