The main legal point established in the judgment is the right of the financial corporation to sell the assets of the industrial concern and realize the property pledged, mortgaged, hypothecated, or assigned to the financial corporation under Section 29 of the State Financial Corporations Act, 1951.

ORDER :

Having heard learned counsel for the parties at length, we are of the view that the impugned judgment passed by the Division Bench of the High Court, allowing Writ Petition (Civil) nos. 7220/2007 and 8405/2007 filed by respondent nos. 1 and 2 – Sukanti Mohapatra and Prasanta Kumar Mohapatra, is unsustainable, both on facts and in law.

2. The appellant before us – Orissa State Financial Corporation¹[“Corporation”, for short] had granted a loan of Rs.3,26,258.78 (Rupees three lakhs twenty six thousand two hundred fifty eight and seventy eight paisa only) to respondent no. 2 -Prasanta Kumar Mohapatra. The loan was payable in 24 monthly installments commencing from 31.01.1997 and ending on 31.12.1998.

3. It is an undisputed and accepted position that respondent no.1 – Sukanti Mohapatra had mortgaged a plot bearing no. 359/5975 having area of Ac 0.20 decimals, situated at Mouza-Dhenkanal, Odisha²[“the mortgaged immovable property”, for short], as a security for the said loan.

4. The loan remained unpaid in spite of several demand notices issued by the appellant – Corporation. The loan was finally recalled on 08.11.2002 with Rs.10,91,673.07 (Rupees ten lakhs ninety one thousand six hundred seventy three and seven paisa only) remaining due as on 30.06.2002.

5. It is the case of the appellant – Corporation that the loan was granted in respect of a vehicle, which had become untraceable.

6. The appellant – Corporation took steps and seized the mortgaged immovable property in terms of and as per the provisions of Section 29 of the State Financial Corporations Act, 1951³[“the Act”, for short].

7. At the same time, respondent nos. 1 and 2 – Sukanti Mohapatra and Prasanta Kumar Mohapatra were given opportunity to pay the loan amount and/or to settle the dues. At their request, the sale of the property was deferred.

8. On 06.01.2004, respondent nos. 1 and 2 – Sukanti Mohapatra and Prasanta Kumar Mohapatra made a request for one time settlement under the One Time Settlement⁴[“OTS”, for short] Scheme-2003⁵[“first OTS proposal”, for short]. The total amount due and payable by respondent nos. 1 and 2 – Sukanti Mohapatra and Prasanta Kumar Mohapatra, at that time, was Rs.12,20,000/-(Rupees twelve lakhs twenty thousand only). The OTS application was rejected on account of failure of respondent nos. 1 and 2 – Sukanti Mohapatra and Prasanta Kumar Mohapatra to deposit the upfront fee.

9. Respondent nos. 1 and 2 – Sukanti Mohapatra and Prasanta Kumar Mohapatra submitted another OTS proposal under OTS Scheme-2004 on 08.09.2004⁶[“second OTS proposal”, for short] along with an interim deposit of Rs.16,400/-(Rupees sixteen thousand four hundred only). However, this OTS proposal was rejected on the grounds of willful default, and as the vehicle had been clandestinely sold and transferred.

10. However, on the representation of respondent no. 2 -Prasanta Kumar Mohapatra, the appellant – Corporation made an OTS proposal under the OTS Scheme-2004 for settlement of dues on payment of Rs.6,27,400/-(Rupees six lakhs twenty seven thousand four hundred only), vide a letter dated 31.03.2006⁷[“third OTS proposal”, for short]. This OTS proposal was subject to the condition that the entire amount would be paid within thirty days, that is, on or before 29.04.2006, or alternatively, 25% of the amount would be paid within two months and the balance 75% would be paid within six months. Payments were not made in terms of the said letter/ OTS Scheme-2004. The proposal lapsed.

11. The impugned judgment records that respondent no. 2 - Prasanta Kumar Mohapatra had submitted a representation dated 07.08.2006 for reduction of the OTS amount from Rs.6,27,400/- (Rupees six lakhs twenty seven thousand four hundred only) to Rs.4,27,000/-(Rupees four lakhs twenty seven thousand only). It is the case of the appellant – Corporation that they had rejected the said representation vide letter dated 02.09.2006.

12. The impugned judgment, in our opinion, erroneously records that the appellant –