Judgment

Y.K. Sabharwal, J.—The question that arises for consideration in these matters is whether Karnataka State Industrial Investment and Development Corporation (for short, ‘KSIIDC’) acted in a bona fide manner in sale of the properties of the borrower exercising its right under Section 29 of State Financial Corporation Act, 1951 (for short, ‘the Act’).

2. The appeals have been preferred by KSIIDC a well as M/S Vinpack Investments Pvt. Ltd., the purchaser (for short ‘Vinpack’) against the judgment and order of the Division Bench of the Karnataka High Court directing KSIIDC to undertake the entire sale process once again and give opportunity to respondent No.1 to bring better offer for the properties.

3. Respondent No.1, M/s Cavalet Industries Ltd. (for short, ‘the borrower’) borrowed a sum of Rs. 116.30 lakhs from KSIIDC as per the sanction letter dated 22nd April, 1991. The borrower committed defaults in payment of the installments and, therefore, KSIIDC on 30th March, 1995 passed an order under Section 29 of the Act for taking over the unit of the borrower for recovery of its dues. However, KSIIDC did not implement that order. There was considerable correspondence between KSIIDC