1. The Respondent, Bihar State Investment and Credit Corporation Ltd. (hereinafter referred to as "the respondent Corporation") put on auction a defaulting unit. The competing claims of the petitioner and the private respondents to the unit under auction, gives rise to the present controversy.

2. The respondent-Corporation is a Government Company created and registered under section 617 of the Companies Act, 1956, to promote growth and establishment of industries in the State of Bihar, inter alia, by providing loan on interest for the purpose. The Corporation has been vested with powers under section 29 of the State Financial Corporation Act for the purpose.

3. The respondent Corporation put on auction sale the assets of M/s Raj Chikitsa Private Limited, situated at the Boring-cum-Pattiputra Road in the main town of Patna after it was classified as a defaulting unit having failed to repay its loan to the respondent-Corporation. An advertisement was published on 31.1.2002 inviting offers. The petitioner alone responded with an offer of Rs. 42 lakhs. The offer was not accepted by the respondent Corporation.

4. A second advertisement followed on 10.4.2002. On the second consecutive occasion the only offer came from the petitioner for Rs. 52 lakhs. The petitioner was then called for negotiations. The price after negotiations, was finalised at Rs. 65 lakhs for the building only, with option to the petitioner for purchase of the land in one year. The negotiated price was then documented in a memorandum of understanding (hereinafter called MOU) signed by both parties on 10.5.2002. The MOU itself recorded deposit of 40% of the sale amount by the petitioner alongwith 60% of the balance by post dated cheques. The document provided for penal interest on delayed payment, including the right to recover any dues under the Bihar & Orissa Public Demand Recovery Act, 1914 or the Bihar State Financial Corporation Act, 1951. The MOU was subject to the approval of the Board of Directors of the respondent Corporation. The Board of Directors of the respondent Corporation, on perusal of the proposal recommended for valuation of the auctioned unit by an independent valuer. The valuation report dated 21.6.2002 assessed the value of the property at 1.47 crores treating the auctioned unit as free of any cloud of title. The auctioned unit was situated on lands with lease hold rights of 25 years, of which 10 years only remained. The valuer, on query by the respondent Corporation clarified that the valuation be therefore discounted by 40 to 60 percent valuing the auctioned unit at approximately Rs. 58.95 lakhs by its communication dated 3.7.2002.

5. A third advertisement followed in July, 2002. The Corporation again received no offer in response. This advertisement at annexure-3, states that the advertisement was published "as a last chance for higher offer" and that "the Corporation already had in hand an offer for Rs. 65 lakhs". This was the offer of the petitioner. Clearly the deal with the petitioner was still alive. The petitioner approached this Court in C.W.J.C. No. 8705 of 2002, aggrieved by the action of the respondent Corporation. The writ application was disposed-off on 31.7.2002 after hearing both sides with the direction that should any higher bid be received in response to the advertisement, the Corporation shall negotiate with the petitioner first and only in the event of his failure, the settlement be made with any fresh applicant. In no case shall the Corporation ignore the MOU dated 10.5.2002 without an opportunity of fresh negotiation to the petitioner.

6. The respondent Corporation having received no fresh offer invited the petitioner for fresh negotiations, when the petitioner enhanced his offer to Rs. 66 lakhs. The Corporation was already in possession of 40% of the amount as recorded in the MOU alongwith 10 lacs encashed by it from the post dated cheques deposited by the petitioner at the time of MOU, the balance post dated c