Mis. Sudha Resorts Limited (SRL) represented by its Managing Director, Vasam Shiva Prasad, filed the instant Writ Petition praying for the following relief.

...... this Hon'ble Court may be pleased to issue an appropriate writ, order or direction, more particularly a writ in the nature of mandamus, declaring the action of the 15t respondent in selling the property belonging to the petitioner company and confirming the same in favour of respondent No. 3 without informing the bid amount and without giving an opportunity to the petitioner to clear off the outstanding amounts to be paid to the 151 and 2nd respondents without following the mandatory principles laid down by the Hon'ble Apex Court as reported in 1992 (2) JT SC 326 as well as this Hon'ble Court as being illegal, arbitrary, mala fide and consequently set aside the same in the interests of justice.

2. The brief fact of the matter is as follows. Mis. Sunkara Hotels Limited (SHL) is a Company incorporated under the Companies Act, 1956, for the purpose of establishing Hotels and Lodging Houses. It was promoted by Sri S. Hanumantha Rao and Associates initially as a private compal1Y, which later was converted into a public company. SHL availed term loan of Rs. 47,92,423/- from the Andhra Pradesh State Financjal Corporation Limited (APSFC), .. which was disbursed on 9-8-1989. A further . term loan of about Rs.6,00,000/- was also availed on 31-3-1993. In addition to this, SHL availed general loan of Rs 40,00,000 From the Andhra Pradesh Industrial Oeve~men1: Corporation Limited (API DC).

The borrower, however, could not complete the project. It is alleged that they approached $RL to take over the company. The petitioner, therefore, expressed its !. willingness, and APSFC vide letter, dated 9-2-19j5, allegedly agreed for such take over of the management of SHL by SRL, subject to certain conditions. After obtaining necessary certificate for change of name of the company to SRL, according to the petitioner, take over was completed, and thereafter, tt;w3 petitioner invested an amount .; o! rupees four crores eighty lakhs and completed the project. In May 1996 hotel , was inaugurated and commercial operations , were commenced from 1-9-1996.

3. The petitioner company allegedly paid the loan instalments regularly; by Apri11997 remitted a sum of RsA72 lakhs. But, due to financial problems the project faced crisis.

APSFC, therefore, issued sale-cum-recall notice dated 2-3-1998 calling upon the borrower to discharge the amounts immediately. It appears Vasam Shiva Prasad, who filed case on behalf of SRL, was detained in prison in connection with criminal case against Mis. Sudha Finance, in which he was a partner. In the meanwhile, the Hotel was seized and locked by staff of APSFC. They also filed a caveat petition in the Court of the Senior Civil Judge, City Civil Court, Hyderabad, stating that an amount of Rs.55,92,379/- is due from the borrower. On 21-6-1999 APSFC addressed a letter to promoters of SHL stating that the property has been sold an that if promoters pay highest bid price, assets will be offered to them. Subsequently, APSFC filed interpleader suit, being O.S.No. 7 of 2000, on the file of the Court of the Chief Judge, City Civil Court, Hyderabad, under Order XXXV and Section 88 of the Code of Civil Procedure, 1908 (CPC), stating that the property of the borrower was sold, that an amount of RS.1 ,01 ,214/- was appropriated for discharge of liabilities by SHL, and that as there were lot of demands by other creditors of the company, because of which, interpleader suit is filed. Having come to know of the suit, being O.S.No. 7 of 2000, the petitioner approached first respondent for release of excess sale proceeds. Petitioner claimed an amount of Rs. 72 lakhs being excess sale amount over and above the loan payable to APSFC. On 18-1-2000 an application was submitted along with legal opinion of the Standing Counsel for APSFC. Though the Counsel opined that petitioner is entitled fo