The main legal point established in the judgment is that the auction process and acceptance of the highest offer were conducted in accordance with the directions of the Division Bench, and the subsequent settlement was found to be valid.

P. K. MOHANTY, J.

( 1 ) IN both the writ applications, the action of the Orissa State Financial Corporation in auctioning M/s Lords Food Products (India) Pvt. Ltd. and settling the same in favour of opp. Party No. 5, Tarakanta Mohapatra being under challenge and common question of fact and law being involved, on the consent and on agreement of the learned counsel for the parties, both the writ petitions were heard analogously and is being disposed of by this common order.

( 2 ) O. J. C. No. 13332 of 1999 has been filed by M/s Lords Food Products (India) Pvt. Ltd. represented through its Chairman-cum-Managing Director, Dr. Durga Prasad Sahoo (Petitioner No. 2 ). In O. J. C. No. 13385 of 1999, Shree Jagannath Education Trust, represented by its Chairman is the petitioner, which was an auction bidder in the auction conducted on 14-10-1999 by the Orissa State Financial Corporation (hereinafter called as 'o. S. F. C. ') of the defaulting a bakery unit. Lords Food Products (India) Pvt. Ltd. (Petitioner No. 1 in O. J. C. No. 13332 of 1999 ).

( 3 ) THE short facts of the case leading to the present writ applications are that M/s Lords Food Products (India) Pvt. Ltd. , a private Limited Company, established in the year 1986 having equity capital of Rs. 10. 00 lakhs and petitioner No. 2 is its Chairman-cum-Managing Director, manufacturing Bread, Biscuits etc. by a fully mechanised Biscuit Plant at Industrial Estate, Mancheswar. According to the petitioner unit, as per the official valuer, the asset and cost of the unit is more than Rs. 6. 15 Crores. The Company incurred a Term loan of Rs. 37. 00 lakhs from Orissa State Financial Corporation by mortgaging assets and it also incurred loans from different financial institutions like Industrial Promotion and Investment Corporation Ltd. (IPICOL), Industrial Development Corporation. (IDCOL) and the State Bank of India towards its working capital. It started its commercial production on 26-2-1988, but for various reasons, the unit became sick by the end of the year 1993. The Industrial Unit was seized by the O. S. F. C. on 24-3-1994 under S. 29 of the State Financial Corporation Act, 1951, but however, on 6-4-1994, the unit was released under certain conditions in terms of Annexure-2. It is alleged that after releasing from the seizure, the O. S. F. C. failed to take any action to revive the unit. In the year 1996 IPICOL was entrusted to make rehabilitation package, but since no assistance was made available towards the need based working capital, the unit could not revive. The O. S. F. C. arbitrarily, without complying with the provisions of S. 29 of the Act and without considering the one-time settlement proposal (in short called 'o. T. S. ') and without allowing the petitioners to give a better bid, clandestinely wanted to sale the unit to one M/s T. K. Narayan, Director, Teekey foams Pvt. Ltd. The petitioner-unit moved this Court in O. J. C. No. 4728 of 1999 challenging the seizure made by the O. S. F. C. This Court by judgment/order dated 20-8-1999 disposed of the writ petition directing for a fresh auction and fixed the terms.

( 4 ) PURSUANT to the direction in O. J. C. No. 4728 of 1999, the O. S. F. C. vide letter dated 7-9-1999, a copy of which is Annexure-3, directed the petitioner, seized unit, to submit O. T. S. proposal on 15-9-1999 in the proposed joint meeting to be held in the chamber of Executive Director. The petitioner unit submitted O. T. S. Proposal on 15-9-1999, a copy whereof is Annexure-4. The O. T. S. proposal submitted by M/s Lords Food Products Pvt. Ltd. was rejected by the O. S. F. C. in letter dated 1-10-1999 on the ground that the total over dues of O. S. F. C. and IPICOL as on 31-8-1999 stood at Rs. 219. 13 lakhs. A copy of the letter had been annexed as Annexure-5 (in O. J. C. No. 1332 of 1999 ).

( 5 ) THE O. S. F. C. published a sale notice on 14-10-1999 in daily newspapers inviting offers for sale of assets through Disposal-cum-Advisory Committee (for short