UNDER SECTION 26(2) OF THE COMPETITION ACT

1. The information has been filed under section 19(1) of the Competition Act, 2002 (the Act) by the legal heirs of the diseased directors of M/s. of Jakarso Pack Aids Ltd. (the informant) against State of Uttar Pradesh through Principal Secretary (opposite party no. 1), UP Financial Corporation, (UPFO) (opposite party no. 2) and one Shri G.S. Bhatia (opposite party no. 3).

2. The informant, M/s Jakarso Pack Aids Ltd. (JPAL), a Private Ltd. Company, incorporated under the Companies Act, 1956 was engaged in manufacturing of corrugated boxes and sheets. The said JPAL took a loan of Rs. 3,87,000/- on 08.09.1981 from UP Financial Corporation (UPFC) which was re-scheduled after JPAL was transferred to Late Shri Lal Chand Yadav, and others on 12.09.1988. The UPFC vide letter dated 23.01.1989 had informed the then director Late Shri Lal Chand Yadav about the re-schedulement of the loan and to make payment of the outstanding loan of Rs. 3,18,000/- in eight instalments of diverse amount till 15.11.92.

2.1. It is stated by the informant that due to natural calamities and other financial hardship, the said Shri Lal Chand Yadav defaulted in making the payment of two instalments. Consequently, a demand notice was issued to the informant according to which a sum of Rs. 3,73,795.60/- was shown due to the JPAL and this amount was required to be paid by 20.03.1993.

2.2. The informant has alleged that UPFC without waiting upto 20.03.1993, the period given to the informant to deposit the outstanding loan by the UPFC itself, and published an advertisement on 07.03.1993 in newspaper "Sandhya Dainik Amar Ujala" and invited sealed offers for the sale of immovable property of the JPAL. Last date for submitting the sealed offer was shown as 15.03.1993 in the said advertisement. Aggrieved by the aforesaid conduct of UPFC, the informant challenged the above action in the High Court of Judicature at Allahabad and the Hon'ble High Court vide Order dated 29.03.1993 stayed UPFC from proceeding further with the sale and directed the payment of dues in periodic installements. However, despite High Courts intervention informant still did not deposit the due amount in the manner as directed by the High Court and UPFC proceeded to recover its dues by sale of immovable assets of JPAL. Thereafter, the informant made a representation to the regional manager, UPFC to take an appropriate action so as to save the Informant's company. However immovable property of the JPAL was sold to Shri G.S. Bhatia, (opposite party no. 3) in public auction at a price of Rs. 6,50,000/-. The informant alleged that the prevalent market price of the property was Rs. 12 Lac. The informant again approached Allahabad High Court which directed the UPFC to decide the representation of the JPAL within two weeks. On UPFC allegedly not deciding the representation of JPAL as directed by Allahabad High Court, a Civil Misc. Contempt Petition was filed by the informant against the UPFC. The Allahabad High Court discharged the contempt notice on 01.12.2009 holding that there was substantial compliance of the writ order of High Court by the UPFC. After exhausting ail these remedies, the informant through RTI applications obtained information relating to the outstanding loan, auction and bidding process etc.

2.3. On the basis of the information obtained through RTI applications, the informant had a feeling that a fraud was perpetuated on him by the opposite parties in connivance with each other, and the actual due balance against the JPAL was not Rs. 3,73,795.60/- as demanded by UPFC but a lesser amount.

2.4. The informant, approached this Commission and alleged that there UPFC was a monopolistic enterprise and it abused its dominant position in connivance with opposite party no. 3, allegedly the actual beneficiary of fraud and conspiracy. It is alleged that the detailed accounts for the period from 12.09.1988 to 28.09.1993, show that the entries with regard t