Judgment:
ORDER
1. The parties are common. The grievance is similar. The reliefs sought are identical. Therefore, these petitions are disposed of by this common order.
2. It is now well-settled law that the writ jurisdiction of the High Court under Article 226 of the Constitution, is a discretionary jurisdiction and even in cases, where an authority is amenable to the High Court's jurisdiction under Article 226, the High Court may decline to exercise that jurisdiction on principles of justice, equity or good conscience including waiver or acquiescence or any other laches on the petitioners part or particularly, on grounds that the matter involves an adjudication of disputed facts, necessitating a detailed enquiry by taking and appreciating oral, or documentary evidence adduced, or most likely to be adduced by the parties or there is an alternative and equally efficacious remedy for redressal of the wrong complained of or the writ petition has been filed after considerable delay.
3. Petitioners 1 and 2 were shareholders and Ex-Directors of M/s. Dhanlaxmi Ginning Industries Private Limited and M/s. Vinayak Pressing Industries Private Limited located at Raichur. The branch office of Karnataka Financial Corporation, Raichur, had sanctioned certain-loan facilities to the aforesaid private companies, and for that purposes, petitioners had executed a deed of guarantee in favour of the Corporation. Misunderstanding among the Directors resulted in petitioners approaching the Jurisdictional Civil Court in O.S. No. 48 of 1986 for a decree of declaration, to declare that they are absolved from their liability for paying any amount by virtue of the deed of guarantee executed by them. The suit is now renumbered and still pending before the Civil Court.
4. The State Financial Corporation, in view of the defaults committed by the borrower companies, in repaying of the loan amounts sanctioned, had taken over the assets of the companies by exercising their powers under Section 29 of the State Financial Corporations Act, 1951. After such take over had sold and handed over the possession of land and building, plant and machinery to the fourth respondent-M/s. Srinivasa Industries, Raichur. Disturbed by this action of the respondent-State Financial Corporation, petitioners are before this Court in a petition filed under Article 226 of the Constitution, inter alia seeking a writ, to set aside the sale of the assets of the third respondent-private companies in favour of the fourth respondent-firm on 29-10-1992.
5. The Financial Corporation apart from resisting the petitions on merits of the case, by way of preliminary objections have stated in their counter-affidavit that it is not open to the petitioners to invoke the extraordinary jurisdiction of this Court under Article 226 of the Constitution, since petitioners have already filed a civil suit for identical reliefs before Civil Judges Court, Raichur. Secondly, respondents assert that the petitions deserve to be dismissed on the ground of inordinate unexplained delay and laches on the part of the petitioners in approachingthis Court, nearly after three years from the date of cause of action pleaded in the petitioners. Sri Rudragowda, learned Counsel for the Corporation supports the stand of the Corporation with reference to the pleadings in the suit, the issues raised by the Trial Court for its consideration and decision and the oral evidence of the petitioners before the Trial Court.
6. Per contra, Sri B.V. Acharya, learned Senior Counsel for petitioners submits that petitions need not be rejected by this Court on the preliminary objections raised by respondents and further, contends that the subject-matter and the legal issues raised by the petitioners in the original suit filed by them before the Trial Court is for a different relief altogether and has no semblance of similarity with the reliefs sought in these petitions and nextly contends, that delay, if any, in approaching this Court has been properly and satisfactorily explained by the petitioners in the main petitions as well as in the application filed for raising additional facts and therefore, there is no delay or laches on the part of the petitioners in approaching this Court. Therefore, petitioners require to be decided on merits of the facts in the case.
7. Before adverting on the merits of the case, in my view, the preliminary objection raised and canvassed by learned Counsel for respondent-Corporation requires to be considered and decided first, since delay or laches is one of the factors, which requires to be borne in mind by this Court, while exercising its discretionary power under Article 226 of the Constitution and this Court in an appropriate case may refuse to invoke its extraordinary powers, if there is negligence or omission on the part of the petitioners in asserting their rights before this Court. The law on this point is now well-settled by an authoritative pronouncement of the Apex Court in the case of Maharashtra State Road Transport Corporation v Balwant Regular Motor Service, Amravati and Others (para 11)-
'Now the doctrine of laches in Courts of equity is not an arbitrary or technical doctrine. Where it would be practically unjust to give a remedy either because the party has, by his conduct done that which might fairly be regarded as equivalent to a waiver of it or whereby his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases, lapse of time and delay are most material. But in every case, if an argument against relief, which otherwise would be just, is founded upon mere delay, that delay of cause not amounting to a bar by any statute of limitation, the validity of that defence must be tried upon principles substantially equitable. Two circumstances always important in such cases are, the length of the delay and the nature of the acts done during the interval which might affect either party and cause a balance of justice or injustice in taking the one course or the other, so far as relates to the remedy.
8. Keeping this well-settled principles in view, let me now turn my attention to the explanation offered by the petitioners in explaining the delay of nearly three years in approaching this Court from the date of cause of action for which relief is sought in these petitions. In the main petitions, it is stated:
'5. After 1987, not even a single notice was served on the petitioners till this day either with regard to the sale of the unit or any other action proposed for realisation of the amounts due by alienating the A Schedule property which has been in the possession of the Corporation. It is only during 1994, that there was some rumour that the officials of the first respondent have clandestinely entered into some arrangements with the 4th respondent for sale of the unit for a very low price. However, the details in this behalf was deliberately concealed from the petitioners. It is only during 1994 that the petitioners came to know that the first respondent has filed Miscellaneous Case No. 30 of 1993 before the District Judge, Raichur, against the petitioners and others seeking to enforce the liability of the petitioners based on the letter of guarantee. The petition purports to invoke Section 31(1)(aa) of the Act. A true copy of the petition is produced herewith as Annexure-C. In the said petition, the petitioners entered appearance on 25-11-1994 pursuant to the paper publication dated 7-10-1994. A true copy of which is produced as Annexure-D. It is only thereafter that the petitioners could secure a copy of miscellaneous petition. In the said petition, it is stated 'The Corporation after series of advertisements has sold the Industrial Unit in favour of M/s. Srinivas Industries for a sum of Rs. 17.00 lakhs on 21-10-1992'. This is the first time when the first respondent has come out with the information regarding the sale. Even the information so furnished in the miscellaneous case lacks particulars and the same is not complete'.
9. Petitioners by filing their additional facts on 24-7-2000 have tried their best to fill the gaps and have also attempted to improve their case, but in my view, have failed miserably. In their additional statements, they state:
'2. The petitioners came to know of the publication at Annexure-D in the newspaper only in November 1994. Immediately after they came to know of the publication, they approached their Advocate who entered appearance on their behalf in Miscellaneous Case No. 30 of 1993 on the file of the District Judge, Raichur, on 25-11-1994. It is only thereafter that the petitioners secured copies of the miscellaneous case and the enclosures. As the averments in the miscellaneous case were vague and did not give relevant particulars of the transaction under which the unit is said to have been sold to the 4th respondent and the terms and conditions relating to the same. The visit of the petitioners to the office of the first and second respondents at Bangalore and Raichur several times was notsuccessful inasmuch as the officials went on promising to furnish the particulars, but failed to do so. As the sale of the property had to be only by means of registered sale deed, the petitioner made enquiries at the registration office at Raichur and it was found that the alleged sale deed had not yet been registered before the concerned registration office. As under law, a document executed could be registered within 4 months, the petitioners were advised to wait for a couple of months hoping that the alleged sale deed will be registered within that period. Even after four months, it was found that there was no sale deed registered. Thereafter, the petitioners approached their Counsel at Bangalore and took legal advise in the matter. This become necessary in view of the pendency of a civil suit by the petitioners and the miscellaneous cases filed by the Karnataka State Financial Corporation before the District Judge, Raichur. After securing such advise, it was then felt that it would be appropriate to file a writ petition challenging the purported sale with the available material. Thereafter, the petitioners took steps to file the present writ petitions. It is, thus, submitted that the petitioners are not guilty of any delay and laches and delay if any may please be condoned.
3. The contention of respondent 4 that they have purchased the properties does not appear to be true. It is seen that even to this date, there is no such purchase and no registered sale deed has been executed. The 4th respondent appears to have been put in permissive possession of the properties under some clandestine arrangement with the first respondent. The claim that the factories have been inaugurated by inviting people including 'the petitioner' is not true. None of the petitioners have been invited nor have they attended any such alleged inauguration. Respondent 4 is well-aware that the relationship between the petitioners on the one hand and Lalit V. Sampat on the other were strained and in fact, Lalit V. Sampat is a party to the resolution removing the first petitioner from the directorship of Vinayaka Pressing Industries (Private) Limited. It is not true that Lalit V. Sampat is partner along with the petitioners in any family business. There is no exclusive Association of Ginning and Pressing Factories in Raichur. Annexure-R2 refers to the meeting of Raichur District Factory Owners Association. The petitioners were not aware of either the Srinivas Industries or any one representing them to the meeting of the Association in the year 1993 as alleged. In Annexure-R2, item relating to Srinivas Industries appears to be a subsequent insertion. It is relevant to mention that Sri Bolbandi Venkappa, partner of 4th respondent has been the partner of other industries which were members of the Association. It is false to allege that the petitioners had knowledge of the sale of the properties in 1992 or 1993. It may also be observed that permissive possession of the properties in question by any one cannot lead to any inference of sale. Admittedly, till the averment to that effect is made in themiscellaneous case, it has never been stated that there was a sale of the properties in favour of the 4th respondent. It now so transpires that in fact, there was no sale as alleged and the 4th respondent was only in permissive possession under some secret arrangement with the first respondent'.
10. The respondent-State Financial Corporation, while disputing the claim made by the petitioners in the aforesaid paragraphs, state in their counter-affidavit filed on 17-8-2000 as under:
'7. The petitioners have filed that false affidavit as stated above that they were not aware that Dhanalakshmi Ginning Industries Private Limited was sold on 21-10-1992 for a sum of Rs. 17.00 lakhs and Vinayaka Pressing Industries Private Limited was sold for Rs. 14.00 lakhs. The units were sold on deferred payment basis and it is clear from the sale communications produced along with this statement of objections.
8. It is submitted that the first petitioner was examined before the Additional Munsiff and Judicial Magistrate, First Class, Raichur, in O.S. No. 127 of 1989 on l-3-ifd94 and in the examination-in-chief the first petitioner has deposed that sale was made in favour of the local party after filing the suit. Hence, the affidavit filed in the writ petition and also the affidavits along with the additional statements stating that they came to know of sale only after 7-10-1994 are false and baseless. The first petitioner himself has stated in O.S. No. 127 of 1989 that the unit was sold to a private party in the year 1992-93. A copy of the deposition is produced herewith and marked as Annexure-R22. The petitioner himself has admitted in his cross-examination that the petitioners were aware of the sale proceedings by KSFC and the petitioner could not get the purchaser to purchase the unit'.
11. In the suit filed in O.S. No. 48 of 1986, on the file of the Civil Judge, Raichur, which is renumbered as O.S. No. 128 of 1989, which on its transfer is pending before the Munsiff, Raichur, first petitioner has adduced his oral evidence in support of his case in the suit as under:
'8. Later on the Private Limited Company was taken over by defendants. By the time defendants taken over the aid Company, it was ready for running i.e., it was in running conditions. For about 6 months my brothers did run the said company. When defendants 1 and 2 taken over the said company, its properties were totally worth of nearly Rs. 50 lakhs. Presently the said Private Limited Company was sold by defendants to local party. Same local party is running the said company. We were not informed about the sale of Private Limited Company to local party and also about the consideration etc., received by defendants. The said sale in favour of local party was made after filing this suit. We plaintiffs demanded the accounts from the defendants but it was not furnished after our removal.
Further Chief Examination deferred at the request of Advocate typed to my dictation in open Court on 1-3-1994.
19. It is true to suggest that sale notices were issued given to Directors of Company during 1986-87. It is true to suggest that paper publication was also issued proposing to sell the plant and machinery in question. It is true to suggest that in the said paper publication and also in the individual notices, it was mentioned that the Directors of the Company can get their intending purchaser to have full and satisfactory value. We made efforts to get the intending purchaser, but maker was not favourable to the seller. The said our efforts to sell the plant and machinery and also to fetch the intending purchaser was during 1986-87. During 1986, KSFC, taken over the plant and machinery after issuing notices, under Section 29 of the SFC Act during 1992 or 1993 the plant and machinery in question were sold During i.e., between 1987 to 1992 we made efforts to procure intending purchaser but market yard was not favourable till 1992, hence we did not procure the intending purchaser. I fully admit Ex. D-l including contends and my signature'.
12. A reading of the evidence adduced by first petitioner, who is none other than the husband of the second petitioner and co-owner of the third petitioner in the examination-in-chief had deposed on 1-3-1994, much earlier to the filing of the writ petitions, that the respondent-Corporation had made sale of the assets of the 3rd respondent-Private Limited Company in favour of the local party after filing the suit some time during the year 1992-93. In his cross-examination, he has further stated that the petitioners were aware of the sale proceedings by respondent-Corporation and the petitioners could not get any purchasers to purchase the unit. However, in the writ petitions and in the additional facts filed, they assert that they came to know the sale of M/s. Dhanalaxmi Ginning Industries Private Limited and M/s. Vinayaka Pressing Industries for a sum of Rs. 17 lakhs and Rs. 14 lakhs respectively on 21-10-1992 only after 7-11-1994, when notice of Miscellaneous Case No. 48 of 1986 pending before District Judge, Raichur was notified to the petitioners by paper publication and after that they secured the copies of miscellaneous petition and its enclosures. In support of this assertion, they have filed affidavits before this Court. It is rather very difficult to believe their 'concocted story'. Petitioners in his evidence before the Trial Court on 1-3-1994 categorically states that the sale of the units in favour of 4th respondent-Firm was made after filing the suit some time during the period 1992-93. Obviously, petitioners have filed false affidavits before this Court to explain the delay in approaching this Court nearly after three years after completion of the sale transaction and handing over the possession of the industrial units to the 4th respondent on 21-10-1992. It is nothing but suppression of material facts and deliberate false and mischievous statement made before this Court. A party who does not approach this Court with clean hands is not entitled to discretionary reliefs. Suppression of material facts or misrepresentation and misleading statements also disentitle a person from getting anyrelief. By all this discussion, one factor is certain that Financial Corporation had sold the assets of the 3rd respondent-companies for realisation of its dues to the 4th respondent-Firm on 21-10-1992. Secondly, petitioners were fully aware of such sales and handing over of the assets of the defaulter companies to the purchaser. In spite of this, they have taken nearly three years to approach this Court for setting aside the sale and to direct the respondent-Corporation to take possession of the sold units and sell it once over again in a public auction after due publication. In my opinion, no relief can be granted to the petitioners, who have approached this Court without any reasonable explanation after inordinate delay. The party aggrieved must move this Court at the earliest possible time and explain satisfactorily all semblance of delay and the Court definitely does not expect false and misleading statements. It is stated in State of Madhya Pradesh v Nandalal Jaiswal that (para 23):
'The High Court in exercise of its discretion does not ordinarily assist the tardy and the indolent or the acquiescent and lethargic. If there is inordinate delay on the part of the petitioner and such delay is not satisfactorily explained, the High Court may decline to intervene and grant relief in exercise of its writ jurisdiction'.
13. The Court was further pleased to observe:
'The High Court does not ordinarily permit a belated resort to the extraordinary remedy because it is likely to cause confusion and public inconvenience and bring in its train new injustices and if writ jurisdiction exercised after unreasonable delay, it may have the effect of inflicting not only hardship and inconvenience but also injustice on the third parties'.
14. In the above circumstances, the first preliminary objection raised by respondent's learned Counsel requires to be accepted and the petitions require to be rejected on the ground of unexplained inordinate delay coupled with creation of third party rights.
15. The normal rule, which is a rule of policy, convenience and discretion, is that this Court would not interfere, if there is an adequate-efficacious alternative remedy to an aggrieved person and secondly, if a party who is actively pursuing an alternative remedy, relief under Article 226 must be refused, as the party cannot be allowed to pursue two parallel proceedings. This is what the learned Counsel for respondent-Corporation urges by way of second preliminary objection. In support of this contention, he has brought to my notice the original suit filed by the petitioner before learned Civil Judge, Raichur in O.S. Nos. 48 and 49 of 1986 which are renumbered as O.S. Nos. 127 and 128 of 1989 and also the issues framed by the Trial Court in its consideration and decision. Per contra, learned Senior Counsel still maintains that the issues raised and the relief sought in these petitions are in no way identical and the petitioners can maintain these proceedings before this Court.
16. In the original suit filed before the Trial Court, the very same petitioners are the plaintiffs. The suit is against respondent-Corporation. The prayer made therein is to declare that the plaintiffs are discharged from the Guarantee ship of the deed of Guarantee dated 31-3-1984, executed by them in favour of the State Financial Corporation. The defendants have filed their written statements. The learned Judge apart from three main issues, has framed the following additional issues for his decision and consideration. They are:
'1. Whether the defendants have sold the factory premise and machineries of M/s. Dhanalaxmi Ginning Industries Private Limited to a firm M/s. Srinivas Industries, Raichur in the year 1992-93 after due publication and notice to the plaintiffs?
2. Whether the factory M/s. Dhanalaxmi Ginning Industries Private Limited is sold by making publication to the papers and whether the sale to M/s. Srinivas Industries for an amount of Rs. 17 lakhs is property?
3. Whether M/s. Srinivas Industries, Raichur have paid the sale consideration amount to the defendants out of their own fund or have availed loan from the defendants? If so on what date and the amount availed as loan from the defendants?'
17. Petitioners in these petitions in support of the reliefs sought in the petitions contend that, the sale of the assets of the borrower companies to the 4th respondent-Firm is illegal and arbitrary since the sale effected is in violation of the guidelines issued by the Apex Court in the case of Mahesh Chandra v Regional Manager, Uttar Pradesh Financial Corporation, in violation of principles of natural justice and lastly, without following the procedure of public auction and without even calling the tenders. In my opinion, the issues which requires to be decided in these petitions are the very issues, which the learned Trial Judge has framed in his consideration and decision. Since the petitioners are actively pursuing an alternate civil remedy, in my considered view, they should not be allowed to pursue this discretionary remedy before this Court.
18. The administrative action or decisions of the Financial Corporation regarding recovery of its loans from its debtor can be interfered with by the High Court in its jurisdiction under Article 226 of the Constitution only in two situations i.e., if there is statutory violation by the Financial Corporation or if it were to act unfairly or unreasonably. While explaining these principles, the Supreme Court in the case of Uttar Pradesh Financial Corporation v M/s. Gem Cap (India) Private Limited2, was pleased to state (para 10):
'In a matter between the Corporation and its debtor, a writ Court has no say except in two situations: (1) there is a statutory violation on the part of the Corporation, or (2) where theCorporation acts unfairly i.e., unreasonably, Acting unfairly or unreasonably does not mean that the High Court exercising its jurisdiction under Article 226 of the Constitution can sit as an Appellate Authority over the acts and deeds of the Corporation and seek to correct them. That is not the function of the High Court under Article 226. Doctrine of fairness, evolved in administrative law was not supposed to convert the writ Courts into Appellate Authorities over administrative authorities. The constraints self-imposed undoubtedly-of writ jurisdiction still remain. Ignoring them would lead to confusion and uncertainty. The jurisdiction may become rudderless'.
19. In the instant case, in my view, the issues which are required to be considered are mixed questions of facts and law and those issues are whether respondent-Corporation has committed any statutory violations of guidelines issued by the Apex Court in Mahesh Chandra's case, supra and is there any unfairness and unreasonableness in the action of the respondent-Corporation in selling the assets of its debtor and the very issues which are pending for consideration and decision before the Trial Court in the suit filed by the petitioners. Therefore, I do not intend to express my opinion on the merits of the petitioners case.
20. In the result, petitions are rejected for the reasons mentioned by me in the course of this order. Rule discharged. In the facts and circumstances of the case, parties are directed to bear their own costs. Ordered accordingly.