JUDGMENT

M. JAGANNADHA RAO, J. - Leave granted in both the special leave petitions.

2. These two appeals have been preferred against the judgment of the Andhra Pradesh High Court in WA No. 946 of 1995 dated 8-5-1996. Civil appeal arising out of SLP (C) No. 12831 of 1996 has been preferred by the Andhra Pradesh State Financial Corporation (hereinafter called the Corporation). In CA No. ... arising out of SLP (C) No. 15260 of 1996, the appellant is M/s. Vasant Organics (P) Ltd.

3. The Corporation sanctioned a term loan of Rs. 10,09,080 to the writ petitioner first respondent [M/s. Vajra Chemicals (P) Ltd.] on 28-11-1979 and the said amount remained unpaid by the due date - 13-2-1987. Upon a representation made by the first respondent on 3-3-1990, the Corporation rescheduled the loan repayment, waived an amount of Rs. 4,48,803.23 and the due date was extended. There was default in payment of the instalments. The first respondent made a representation on 17-8-1992 and paid Rs. 25,000 and undertook to pay Rs. 25,000 in the first week of September 1992 and balance of Rs. 1.50 lakhs before 31-12-1992 and other instalments in time. The Corporation sent telegram dated 2-3-1992 and letter dated 4-7-1992 requesting the first respondent to make payment. Recall-cum-sale notice was issued on 28-7-1992 for Rs. 9,87,25,079. As the first respondent did not avail of the opportunity, the Corporation exercised power under Section 29 of the State Financial Corporations Act, 1951 (hereinafter called the Act) and seized the unit belonging to the first respondent on 17-12-1992 and issued an advertisement on 22-2-1993 for sale of the unit. The first respondent paid an amount of Rs. 85,000 on 29-6-1993, gave one cheque dated 30-6-1993 for Rs. 20,000 and also gave two post-dated cheques dated 21-7-1993 and 27-7-1993 for Rs. 30,000 each and requested the Corporation to release the unit and promised to pay the instalments in time. The Corporation lifted the seizure on 29-6-1993 and handed over the unit to the first respondent. However, the post-dated cheques, when presented, were dishonoured by the Bank and no offer was made by the first respondent to make good the amounts covered by the cheques. In fact, earlier cheques dated 17-9-1984 for Rs. 25,000, 11-3-1985 for Rs. 25,000, 25-3-1985 for Rs. 25,000, 30-3-1985 for Rs. 25,000, 17-7-1985 for Rs. 50,000, 30-12-1989 for Rs. 15,000, 31-3-1990 for Rs. one lakh and 26-11-1992 for Rs. 1.99 lakhs were dishonoured. The Corporation, in exercise of its powers under Section 29 of the Act issued a recall-cum-sale notice dated 9-9-1993 for Rs. 10,70,45,695 for payment before 20-9-1993 and on default, seized the unit on 11-11-1993.

4. The first respondents Managing Director, made a fresh representation in person on 27-12-1993 for lifting the seizure and for making a one-time settlement. According to the Corporation, a meeting of the officers of the Corporation headed by its Executive Director and of the Managing Director of the first respondent (Mr. Vijaya Kumar) and Branch Manager of the Corporation (R.R. Branch) took place on 27-12-1993 and the Corporation decided to give one more opportunity. The Managing Director of the Corporation made an endorsement on the file agreeing to lift the seizure on condition of the first respondent making a payment of Rs. 30,000 by a demand draft and giving a post-dated cheque for Rs. 50,000 and the first respondent was to make a one-time settlement in 6 months. It is the further case of the Corporation that this arrangement was entered into in the presence of Shri Vijaya Kumar (Managing Director of the Company) and that in spite of the above concessions, no payment was made by the first respondent. Thereafter, the Corporation issued an advertisement on 9-3-1994 in Eradu and Deccan Chronicle newspapers for sale of the unit. Only three offers were received, the highest being Rs. 13.50 lakhs. As the offers were low, they were rejected by the Corporation. A second advertisement dated 9-6-