A guarantor is entitled to notice before the auction of a seized vehicle under Section 29 of the State Financial Corporations Act, 1951, as the principles of natural justice and fair play apply to the actions of the Orissa State Financial Corporation under the Act.

P. C. NAIK, J.

( 1 ) BY this petition under Arts. 226/227 of the Constitution of India, the petitioner prays for issuance of an appropriate writ, direction or order quashing the notice dated 29-7-1993 Annexure-1 to the petition issued under S. 29 of the State Financial Corporations Act, 1951 (hereinafter for short as the'act'), requiring the petitioner to pay the short fall amount of Rs. 2,53,550. 44 paise. The facts involved in this petition are simple.

( 2 ) THE petitioner was a guarantor in respect of a loan of Rs. 1,75,300/ - advanced to one Sri Bansoidhar Samantray by the Corporation. The loan was to carry an interest of 15. 05 per cent. The petitioner by way of collateral security had mortgaged some properties with the O. S. F. C. to secure the repayment of the loan. As the borrower defaulted in paying the installments as per the agreement, the O. S. F. C. , in exercise of power under S. 30 of the Act recalled the loan and the truck bearing Registration No. OSU 1918 was seized by the Corporation in exercise of the power under S. 29 of the Act. The above facts are not disputed. The dispute between the parties is whether or not a notice under S. 29 of the Act was issued to the petitioner/ guarantor regarding the intended action under S. 29 of the Act by the Corporation. The petitioner alleges that the truck was put to public auction in the year 1990 without serving any notice of the intended sale on the petitioner. On the other hand, the contention raised on behalf of the opposite parties is that a registered notice was, in fact, served upon the petitioner. This is the bone of contention between the parties.

( 3 ) IT is, however, an undisputed fact that even after realisation of the sale money, the amount realised by the Corporation fell short by Rs. 1,73,297. 63 paise. It is at this point of time that an impugned notice (Annexure-1) to the petition was issued by Registered A. D. post calling upon her to clear the demanded dues with interest thereon within thirty days from the date of issue of the said notice; failing which the properties mortgaged by the petitioner in favour of the Corporation would be taken over by the Corporation in exercise of powers under S. 29 of the Act and put to sale for realisation of its dues. Accordingly, the petitioner has come up before this Court for quashing the aforesaid notice (Annexure-1), to the petition.

( 4 ) SRI S. K. Dash, learned counsel for the petitioner contends that even though the liability of the petitioner who is a guarantor is co-extensive with that of the borrower and though the Corporation has a right to proceed against it, yet no action can be taken against her as no notice was served on her before the truck was put to auction. The learned counsel for the petitioner contends that the rules of natural justice and fair play demand that she is given due notice of the proposed auction so that if she so desires be present at the auction and to see and be satisfied that the best possible price is obtained. This is all the more necessary because by virtue of being a guarantor, the petitioner, in case of any short fall, could be proceeded against to make good the shortfall. It is contended that as the borrower and the guarantor stand on the same footing as regards the liability for repayment, they are to be treated alike in the matter of giving notice regarding the proposed action under S. 29 of the Act. As no notice was served on the petitioner, it is contended that the proposed action as per Annexure-1 cannot be sustained.

( 5 ) THE opposite parties have filed the counter-affidavit opposing the petition. Sri B. K. Dash, learned counsel for the opposite parties contends that the petitioner being a guarantor has no locus standi to challenge the action of the Corporation under S. 29 of the Act. It is further contended that as the liability of the guarantor is co-extensive with that of the borrower, the guarantor cannot escape from discharging her liability on the ground that