IMPORTANT POINT
In the matter of a sale by the State Financial Corporation in exercise of the power conferred on it u/s 29 of the State Financial Corporation Act, the scope of judicial review is confined to two situations, namely, there is a statutory violation on the part of the Corporation, or where the Corporation acts unfairly and while exercising its jurisdiction under Article 226 of the Constitution, the High Court does not sit as an appellate authority over the acts and deeds of the State Financial Corporation.

JUDGMENT

S.C. Agrawal, J.-Special leave granted.

2. The Karnataka State Financial Corporation, appellant herein, is a State Financial Corporation established under the provisions of the State Financial Corporations Act, 1951 (hereinafter referred to as the Act ). Respondent No.1, a company registered under the Companies Act, set up a unit for the manufacture of rubber and like products. The appellant extended finance to the tune of Rs.14.15 lakhs to respondent No.1 on March 21, 1981. In August 1981 the unit of respondent No.1 commenced production but from its very inception it continued to incur losses. In order to make the unit viable the appellant, on December 14, 1981, rescheduled the payment of the loan. A further sum of Rs.1.65 lakhs was sanctioned in March 1984 for the purpose of purchasing a Diesel Generating Set. On October 10, 1986 the appellant extended rehabilitation assistance under the RSR Scheme of IDBI and treating the unit as a sick unit sanctioned a further amount of Rs.3.39 lakhs. Inspite of these facilities respondent No.1 continued to make default in payment of instalments for repayment of the loan. On October 23, 1990 the appellant took over the possession of the unit of respondent No.1 in exercise of the powers conferred on it under Section 29 of the Act. Thereafter the appellant took steps for sale of the unit and for that purpose a number of advertisements were issued inviting offers. No suitable offer was received in response to the first two advertisements. In response to third advertisement issued in August 1991, five offers were received. Out of them, the offer of Shri P.K. Joseph on behalf of M/s Chemtech Industries for a sum of Rs.24 lakhs was the highest and the Board of the appellant approved the said offer and decided that the communication for acceptance of the offer should be sent only after October 15, 1991 so as to give an opportunity to respondent No.1 to bring any other offer for a higher amount. Respondent No.1 did not bring any offer. But, in the meanwhile, Shri P.K. Joseph withdrew his offer on November 30, 1991. Thereafter respondent No.1 indicated that it would submit a proposal for the revival of the unit but it failed to come up with any concrete proposal. Therefore, a fresh advertisement for the sale of the unit was issued on August 25, 1992. In response to the said advertisement, three offers were received. One offer was of M/s Chemtech Industries for Rs.23 lakhs for land, building and machinery. The second offer was of M/s Prime Inputs (India) Ltd. for a sum of Rs.18 lakhs in respect of land and building only and the third offer was of M/s Shakti Rubbers for Rs.6 lakhs for plant and machinery only. A joint meeting of the offerers was held on September 28, 1992. Respondent No.1 was also invited. After considering the said offers, a tentative decision was taken to accept the offers submitted by M/s Prime Inputs (India) Ltd. and M/s Shakti Rubbers. Respondent No.1 sent a letter dated October 21, 1992 seeking 15 days time to make payment and submit a proposal for revival of the unit. By letter dated November 12, 1992, further time was sought by respondent No.1 till December 15, 1992. On January 4, 1993, an offer was submitted by respondent No.2 to purchase the entire unit including land, building, plants, furnishings and fixtures for Rs.25 lakhs. The said proposal of respondent No.2 as well as the offers received earlier were considered by the Board of the appellant and it was decided to accept the offers of M/s Prime Inputs (India) Ltd. and M/s Shakti Rubbers. On January 25, 1993, agreement was entered for the sale of entire unit to them. Thereafter, respondent Nos. 1 and 2 filed the writ petition (CWC 3591 of 1993) in the Karnataka High Court which has given rise to this appeal. The said writ petition of respondents Nos.1 and 2 was allowed by the learned single Judge of the High Court by judgment dated August 11, 1993 whereby all proceedings sub