The main legal point established is that the petitioner cannot challenge the previous action of O.S.F.C. and that O.S.F.C. is not obligated to pay surplus sale proceeds until recovering the entire debt and costs.

A. K. PATNAIK, J.

( 1 ) THE petitioner took a term loan of Rs. 30. 00 lakhs from the orissa State Financial Corporation (for short "the O. S. F. C.)during the years 1986 to 1988 and set up a re-rolling mill at Industrial estate, Kalunga, Rourkela, District-Sundergarh in the State of Orissa for manufacture of M. S. Rods, angles and flats etc. For the said re-rolling mill, the petitioner also availed cash credit and documentary discounting facilities to the extent of Rs. 12. 00 lakhs and Rs. 3. 00 lakhs respectively from the Bank of Baroda, Rourkla Branch, rourkela. The re-rolling mill of the petitioner went into commercial production on 2-10-1987. After moratorium period of two years, the petitioner started repaying the term loan to O. S. F. C. but subsequently defaulted in making payments of instalments to the o. S. F. C. and on 17-5-1953, the O. S. F. C. took over the said re-rolling mill of the petitioner under Section 29 of the State financial Corporations Act, 1951 (for short, 'the Act')and attempted to sell the said re-rolling mill by inviting offers for sale by notices published in the newspapers. The petitioner filed a writ petition O. J. C. No. 6040 of 1993 before this Court and on 6-1 -1994, the Court disposed of the writ petition after holding that the unit of the petitioner has been taken over by the O. S. F. C. under Section 29 of the act and on negotiation the O. S. F. C. got an offer of Rs. 55. 00 lakhs and in spite of the opportunity, the petitioner has not been able to offer better terms and, therefore, the action of the O. S. F. C. under Section 29 of the act cannot be faulted. The Court, however, observed that since the outstanding dues of the petitioner to the O. S. F. C. was in the neighbourhood of Rs. 21. 00 lakhs, as and when the amount outstanding against the petitioner is fully recovered, the balance of the sale proceeds shall be paid to the petitioner in, terms of Section. 29 (4) of the Act. In the said order dated 6-1-1994, the Court also took note of the submission of the petitioner that certain assets which could not have been deialt with sunder Section 29 of the Act are in possession of the O. S. F. C. and observed that it is open to the petitioner to represent to the O. S. F. C. in this regard and if any representation Is made the same shall be dealt with by the O. S. F. C. Thereafter the re-rolling mill of the petitioner was sold to the oppposite party No. 4 but the surplus amount of sale proceeds over and above the amount of Rs. 21. 00 lakhs and odd payable by the petitioner to the O. S. F. C. was not refunded to the petitioner and assets comprising of stock in trade and raw materials hypothecated to the bank but not given as security to the O. S. F. C. were not released despite request being made by the petitioner. The petitioner has, therefore, filed this writ petition praying, inter alia, for direction to the O. S. F. C. to pay the surplus of the sale proceeds along with 18% interest thereon to the petitioner. The petitioner has also prayed for declaring the opposite party No. 5-Bank as guilty of laches, negligence and dereliction of duty in not taking possession of the pledged/hypothecated stock of goods and for this reason, disentitled to recover any amount upto the value of such goods.

( 2 ) MR. Bijay Ananda Mohanty, learned counsel for the petitioner relying on the averments made in the writ petition submitted that the very action of the O. S. F. C. in seizng the re-rolling mill of the petitioner in exercise of its powers under Section 29 of the Act was arbitrary inasmuch as the petitioner was a defaulter of only about five instalments totalling to a sum of Rs. 11,25,000/- approximately out of a term loan of Rs. 30. 00 lakhs and the petitioner had already paid around Rs. 8. 75 lakhs towards principal and over Rs. 21. 22 lakhs towards interest. He submitted that the whole action of the O. S. F. C. in taking over the re-rolling mill of the petitioner under section 29 of the Act and sellin