The main legal point established in the judgment is that the State Financial Corporation Act, 1951 prevails over any other laws, including the Rent Control Act, and governs the rights of the parties in cases involving properties mortgaged to the Corporation.

AR. LAKSHMANAN, J.:- This Writ Appeal can be disposed of on a short ground. The appellants in the Writ Petition are the petitioners in the Original Petition. They filed the Original Petition against the Kerala Financial Corporation and also against the owner of the property mortgaged to the Corporation, for a mandamus directing the respondents 1 and 2 to remove the seal affixed by them on the three rooms occupied by the appellants/petitioners in the hotel Moonstar Complex and permit them to conduct the business therein and grant appropriate reliefs.

2. According to the appellants they are the tenants of three rooms in the ground floor of the hotel Moonstar Complex, Ulloor Medical College Road, Thiruvananthapuram which is a multi-storeyed structure belonging to respondent No. 3. The complex has about 35 hotel rooms and a restaurant. Three rooms on the ground floor alone have been let out to the third party viz., petitioners/appellants herein. Respondent No. 3 has availed a loan from the first respondent Corporation by offering the hotel Moonstar Complex as security. He has fallen in arrears in repayment of the loan. Therefore the officials of the first respondent Corporation along with the police came to the hotel and evacuated the entire complex. The customers in the petitioners'/appellants shops were also asked to leave the premises and the shutters in the shops/rooms under the occupation of the appellants were also sealed by the Officers of the Corporation. According to the appellants they have not been served with any notice of any proceedings and that they have an independent right as tenants of the rooms. They have not availed of any loan from the respondents 1 and 2 and that the respondents ought to have issued notice of any proposed action and granted a fair and reasonable opportunity of hearing before taking any coercive action. It is further submitted that they are the tenants of the building of the third respondent and is protected under the Kerala Buildings (Lease and Rent Control) Act and therefore the action of the respondent No. 2 is illegal and arbitrary. Therefore they filed the above writ petition for a mandamus as already noticed. The writ petition was dismissed by the learned single Judge at the admission stage itself.

3. Being aggrieved against the judgment the petitioners have come up on appeal. The contentions raised in the writ petition have also been reiterated in the Writ Appeal. At the time of hearing Mr. S. V. Balakrishna Iyer submitted that there is violation of principles of natural justice and that Section 29 of the State Financial Corporation Act, 1951 does not contemplate arbitrary action without notice and therefore the learned single Judge ought to have held that the sealing of the premises by respondents 1 and 2 is illegal. It is also further submitted that in the case of take over of another complex 'Fort Manor' by respondents 1 and 2 the tenants were permitted to continue in occupation on payment of monthly rent and the same treatment ought to have been adopted in the case of appellants also. He would further submit that there is violation of Art. 14 of the Constitution of India. The appellants, as law abiding citizens did not forcibly resist the sealing of the premises though they did raise a protest.

4. The Writ Appeal was admitted by this Court on 30-3-99. Since no opportunity was given to the Corporation to file a counter-affidavit, we directed the respondent Corporation to file a counter-affidavit in the Writ Appeal. It is stated in the counter-affidavit that the third respondent who availed a loan of Rs. 124.69 lakhs had executed various agreements agreeing to repay the loan in monthly instalments and towards collateral security the company had created equitable mortgage in respect of the hotel building and 13.250 cents of land in Pattom Village and that the company had also mortgaged another extent of land in the same village and since the company had committed default of pa