Judgment:
ORDER
1. The petitioner-firm purchased a sick Khandasari sugar factory from the 3rd respondent A.P. State Financial Corporation and obtained a loan from the 3rd respondent for that purpose. For various reasons, the petitioner committed default in making repayment of the loan resulting in the 3rd respondent resorting to S. 31 of the State Financial Corporations Act, 1951 ('the Act'),for short in filing O.P. No. 53/75 in the District Court, Srikakulam A decree dt. 21-6-78 was passed for sale of the mortgaged properties for realising the loan amount and interest, in favour of the 3rd respondent, and in execution of the said decree an execution petition was filed on 21-6-78. Earlier, there was attachment before judgment of the properties of the petitioner-firm on 10-8-1977.
2. The 3rd respondent, without executing the decree in O.P. No. 53/75, invoked the provisions of S. 52. A of the Revenue Recovery Act, and the 2nd respondent brought the machinery of the petitioner-firm to sale and the sale was knocked down in favour of the 4th respondent for a sum of Rs. 75,000/-.
3. The petitioner assails the sale held by the 2nd respondent, firstly on the ground that once the third respondent invoked S. 31 of the Act, the proceedings under the. Revenue Recovery Act 1864, cannot be taken. The sale is also attacked on the ground that there was no notice to the petitioner and there was no notification of the sale, and hence the sale is vitiated, It is the further contention of the petitioner, that valuable properties of the petitioner-firm were sold for a meagre sum of Rs.75,000/- where the machinery is worth more than Rs. 2 lakhs,
4. Sri Pratap Reddy, learned counsel for the petitioner relied on K. Subba Reddy v. State Financial Corporation, : AIR1987AP119 and contended that having invoked S. 31 of the Act, the 3rd respondent cannot invoke the provisions of S. 29 of the Act. The learned Standing Counsel for the 3rd respondent submitted that it is open to the Corporation to proceed under S. 32G of the Act or under S. 52-A of the Revenue Recovery Act, and the fact that Civil Court was approached in accordance with S. 31 of the Act, did not bar the Corporation from taking recourse to the Revenue Recovery Act. The Full Bench in the Subba Reddy's case held that once the State Financial Corporation invokes the jurisdiction of the District Court under S. 31 of the Act, and obtained a decree, the corporation cannot invoke the provisions of S. 29 of the Act. SriSastry contended that the Corporation filed an appeal against the Full Bench Judgment in the Supreme Court in SLP (Civil) No.4181/87 and the same in now pending. He further submitted that the Supreme Court granted an ex parte stay in SLP (Civil) No. 13576/87 dt. 12-9-1988 against the Judgment of a Division Bench of this Court in W.A. No. 793/81 dt. 16-12-1986 which relied on the decision of the Full Bench referred to above (1 supra) and hence the ratio of the decision in the Subba Reddy's case is stayed by the Supreme Court and the same is not binding on this Court. In M/s. GAR Re-Rolling Mills v. A.P. State Financial Corporation, 1982 (1) ALT 93 held that a corporation can again take action under S. 31 of the Act. Reliance is also placed on a Full Bench decision of Allahabad High Court reported in M/s. Krishna Utensils Rampur v. State Financial Corporation, : AIR1989All226 , holding that S. 22G of the Act empowers the Corporation to recover the amount due to it without prejudice to any other mode of recovery.
5. Though the appeal against the Judgment of the Full Bench is pending in the Supreme Court, the Judgment is not either suspended or stayed by the Supreme Court and is therefore, binding on this Court. The question for consideration is whether the ratio of the Full Bench Judgment applies when the Corporation invokes S. 52.A of the A.P. Revenue Recovery Act 1864. The Full Bench held that the Corporation cannot proceed to take steps under S. 29 of the Act once the proceedings in the Civil Court under S. 31 of the Act were resorted to and a decree obtained.
6. Section 29 gives a right to the Corporation to take over the management or possession or both of the industrial concern on default of re-payment of the loan or advance, as well as the right to transfer by way of lease or sale and realise property pledged, mortgaged, hypothecated or assigned to the financial Corporation. S. 32G of the Act enables the Corporation to make an application to the State Government for recovery of the amount due to it and the State Govern-ment may issue a certificate for that amount to the Collector and the Collector shall proceed to recover the amount in the same manner as arrears of land revenue. Section 52-A of the Revenue Recovery Act provides for recovery of amount due to a corporation established by or under a Central or Provincial or State Act or Government Company in the same manner as arrears of land revenue under the provisions of the said Act.
7. The right to recover the amount due to a corporation under S. 32G of the Act or under S. 52A of the Revenue Recovery Act, flows out of the right conferred on the Corporation under S. 29 of the Act. Once the right to recover the amount due to the Corporation is barred by the Corporation obtaining a decree pursuant to proceedings in a Civil Court under S. 31 of the Act, it follows that the proceedings under S. 52-A of the Revenue Recovery Act, are also barred. It has therefore to be held that the auction-sale held by the 2nd respondent is not valid. No reliance can be placed on M/s. Gar Re-Rolling Mills' case, (1982) (1) ALT 93 or M/s. Krishna Utensils' case, : AIR1989All226 , in view of the binding decision of the Full Bench of this Court referred to above.
8. Sri Sastry next contended that under S. 57-A of the Revenue Recovery Act, a revision lies against the proceedings of the 2nd respondent and in view of the availability of an alternative remedy the writ petition should be dismissed. Sri Pratap Reddy contended that the auction was held without notice to the petitioner and is therefore, void. In the letter RC. No. 13/86 dt. 7-7-88 of the 2nd respondent addressed to the 3rd respondent-Corporation, the Mandal Revenue Officer clearly stated that notices under Sections 5, 7 of the Revenue Recovery Act, were not served on the petitioner for recovery of the out-standing dues to the A.P. State Financial Corporation, and therefore, the auction conducted on 27-6-1988 is invalid. Consequently, the auction was not confirmed. By another letter in RC. No. 13 / 86 dt. 5-8-88 the 2nd respondent reiterated that no notice was served on the petitioner and hence a fresh notice should be given before conduct-ing the auction. It is therefore clear that the auction was held without notice to the petitioner and is invalid, as it was conducted in violation of principles of natural justice and the provisions of the Revenue Recovery Act. Once the auction is held to be invalid, it is not necessary to drive the petitioner to approach the Government under S. 57-A of the Revenue Recovery Act.
9. It is further contended by Sri Sastry that the petitioner filed O.S. No. 3/92 in the Sub-Court, Parvathipuram, for recovery of damages and as such, this writ petition is not maintainable. The relief sought for in the suit is one for damages and it cannot stand in the way of petitioner seeking remedy under Art. 226 of the Constitution of India,
10. It was lastly contended by Sri Sastry that the Supreme Court by the order dt. 2-12-88 in SLP No. 12533/85 directed that the Corporation may take steps to recover the dues under the Financial Corporations Act or under the Revenue Recovery Act, and therefore, the Corporation is entitled to proceed under the Revenue Recovery Act. According to the order of the Supreme Court, recovery can be made either under the Financial Corporation Act or under the Revenue Recovery Act. The first choice having been availed by the Corporation, namely, by resorting to a Civil Court under S. 31 of the Act and having obtained a decree, it is for the corporation to pursue the matter in execution of the decree. It is not denied that an Execution petition was filed on 21-6-78 and it is pending. The 3rd respondent has to exhaust that remedy which was availed by it under S. 31 of the Act before taking recourse to proceedings under the Revenue Recovery Act.
11. The Writ petition is allowed and the auction sale held on 27-6-1988 by the 2nd respondent is quashed. The 1st and 2nd respondents are directed to refund the auction amount deposited by the 4th respondent immediately, within two weeks from the date of receipt of this order. No. costs.
12. Petition allowed.