Headnote
STATE FINANCIAL CORPORATION ACT, 1951 - SECTION 29 - DEFAULT IN LOAN REPAYMENT - TRANSFER OF UNIT TO PARTNERSHIP FIRM - VALIDITY - AGREEMENT TO SELL - POWER OF ATTORNEY - WITHDRAWAL - EFFECT.
Fact of the Case:
Petitioner, a defaulter on a loan from the Rajasthan Financial Corporation (RFC), sought to challenge the RFC's transfer of his industrial unit to a partnership firm, M/s. Uma Enterprises, arguing that the transfer was illegal and that the unit should be handed back to him upon payment of legitimate dues. The petitioner claimed that he had entered into an agreement to sell the unit to the partnership firm but that the agreement was not finalized and that he had prepared to clear the dues of RFC. The partnership firm, which was impleaded as a respondent, contended that the petitioner had agreed to sell the unit to them, that they had paid various dues to financial institutions as agreed upon, and that they were prepared to pay the outstanding balance amount of the loan payable to RFC.
Finding of the Court:
The court found that the petitioner had indeed entered into an agreement to sell the industrial unit to the partnership firm, M/s. Uma Enterprises, and that the agreement had been acted upon by both parties. The court also found that the petitioner had requested the RFC to transfer the unit to the partnership firm and that the RFC had completed the transfer formalities. The court further found that the petitioner had accepted part payment from the partnership firm and that he had not raised any objection or grievance against the transfer of the unit to the partnership firm for 10 years.
Issues: 1. Whether the RFC's transfer of the industrial unit to the partnership firm, M/s. Uma Enterprises, was illegal and arbitrary. 2. Whether the petitioner's withdrawal of the power of attorney given to the partnership firm invalidated the agreement to sell the unit.
Ratio Decidendi: 1. The court held that the RFC's transfer of the industrial unit to the partnership firm, M/s. Uma Enterprises, was not illegal or arbitrary. The court found that the petitioner had defaulted on his loan repayment and that the RFC had the right to take possession of the unit under Section 29 of the State Financial Corporation Act, 1951. The court also found that the petitioner had agreed to sell the unit to the partnership firm and that the agreement had been acted upon by both parties. 2. The court held that the petitioner's withdrawal of the power of attorney given to the partnership firm did not invalidate the agreement to sell the unit. The court found that the agreement had already been acted upon and that the petitioner had accepted part payment from the partnership firm.
Final Decision: The court dismissed the petitioner's writ petition, holding that the RFC's transfer of the industrial unit to the partnership firm, M/s. Uma Enterprises, was valid and that the petitioner was not entitled to have the unit handed back to him.
JUDGMENT
1. - By this writ petition, the petitioner prayed that respondent RFC be directed to hand over the industrial unit situated in plot No. 81 and 82 to petitioner and Mrs. Sudarshana Sharma upon payment of its legitimate dues calculated on the basis of its policy, guidelines and circulars.
2. The case of petitioner that petitioner has set up a proprietorship concern in the name and style of M/s. Uma Enterprises in the year 1978 for establishing and running a marble cutting and polishing ---. Upon an application made in this respect, the petitioner was granted a temporary registration by the District Industries Centre on 25.4.1978. For the purpose of establishing a marble cutting o unit in the name and style or M/s. Uma Enterprises, the petitioner applied to the District Industries Centre for grant of margin money loan which was sanctioned in.March, 1979, but that was not sufficient, and thereafter, petitioner approached to Rajasthan Financial Corporation (hereinafter, referred as 'RFC') and RFC has sanctioned loan of Rs.1.38 Lacs. The case of petitioner that to secure the said loan s amount, the requisite mortgage deed in respect of plot No. 82 was signed by the petitioner in favour of RFC on 10.8.78. In 1983, petitioner also prayed for additional loan in the sum of Rs.28,000/-. That was also sanctioned by the RFC, but for numerous reasons and beyond the control of petitioner, the petitioner was not able to operate the said unit in a profitable manner and could not clear the instalments liability after October, 1984, therefore, he preferred to sell that industrial unit. He contacted the various persons and finally he contacted one Shri Ashok Kumar Rander and it was agreed that subject to the requisite approval and consent being granted by the concerned Financial Institutions and the Government, the petitioner may sell the unit to the perspective purchaser. The agreement to this effect was reduced in writing with Shri Ashok Kumar Rander and that agreement has been acted upon. Thereafter, action was taken Under section 29 of the State Financial Corporation Act, 1951 (hereinafter, referred the Act of 1951), the possession of the factory has been taken over by the RFC on 29.3.86 and then that has been transferred to partnership firm M/s. Uma Enterprises Ltd. To avoid the confusion between M/ s. Uma Enterprises Ltd. and M/s. Uma Enterprises Ltd., the business was run in the name of M/s. Uma Enterprises Ltd. which is a proprietory concern of petitioner Vinod Kumar Sharma. The unit is also purchased by M/s. Uma Enterprises Ltd. but purchaser is a partnership firm consisting of Shri Lal Chand, Smt. Geeta Devi, Ashok Kumar and Smt. Uma Devi, therefore, hereafter for the firm which has purchased the asset, I will refer it as partnership firm M/s. Uma Enterprises Ltd.
3. Mr. Paras Kuhad, learned counsel for the petitioner has submitted that though there was an agreement in writing to sell the unit to firm M/s. Uma Enterprises, but that was not finalised and petitioner prepared himself to clear the dues of RFC, but in spite of that, RFC has taken over the possession of unit and transferred it to partnership firm M/s. Uma Enterprises. He further submitted that he was not party to negotiations between partnership firm M/s. Uma Enterprises and RFC, therefore, his unit has wrongly been transferred to firm M/s. Uma Enterprises, hence the industrial unit be handed over to petitioner, he is prepared to pay all the legitimate dues.
4. A Partnership firm M/s. Uma Enterprises to which the unit has been transferred by the petitioner was not made a party to the writ petition, therefore, Mr. Rastogi, learned counsel for partnership firm M/s. Uma Enterprises moved an application to implead partnership firm M/s. Uma Enterprises as a respondent. The application of Mr. Rastogi was allowed and the partnership firm M/s. Uma Enterprises was impleaded as respondent No.5. Mr. Rastogi has submitted that the petitioner agreed to sell the industrial unit to hi
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