IN THE HIGH COURT OF ANDHRA PRADESH Bench APHC010325372014 Sr.Nos:-

AT AMARAVATI

27 & 28 [3483]

WRIT APPEAL NO: 1065 of 2014 along with W.A.No.1077 of 2014 W.A.No.1065 of 2014:

M/s. Sriram Rice Mills Private Limited ...Appellant Vs.

Government of Andhra Pradesh & 3 others ...Respondents **********

Advocate for Appellant : Ms. Sudheshna Yakkala Advocates for Respondents : Mr. C. Sumon CORAM : T HE CHIEF JUSTICE DHIRAJ SINGH THAKUR SRI JUSTICE RAVI CHEEMALAPATI DATE : 27th January 2025 Per DHIRAJ SINGH THAKUR, CJ:

The Writ Appeal bearing No.1065 of 2014 and W.A.No.1077 of 2014 both arise out of a common judgment and order, dated 06.03.2014.

2. By virtue of the judgment and order impugned, W.P.No.17435 of

2008 filed by M/s. Sriram Rice Mills Private Limited/appellant herein was dismissed, whereas W.P.No.15771 of 2010 filed by M/s. Premier Agro Industries/respondent No.4 herein was allowed.

3. Briefly stated the material facts are as under:

M/s. Sriram Rice Mills Private Limited/appellant herein is a company incorporated under the Companies Act, 1956. It obtained a term loan of Rs.50.25 lakhs from the Andhra Pradesh State Financial Corporation /respondent No.2 herein for setting up a rice mill unit. The said loan was sanctioned on 08.08.1998, which was to be repaid within a period of 5 years in 17 quarterly installments, which were to commence after one year from the date of disbursement of any part of the loan, which was meant for purchases of plant and machinery (Rs.44.10 lakhs), contingencies (Rs.4.4 lakhs), pre-operating expenses (Rs.1.20 lakhs) and erection expenses (Rs.0.55 lakhs).

4. The loan was secured by mortgage of land and buildings and hypothecation of plant and machinery. The appellant is stated to have commenced its production in 2001, but became sick in 2002. The secured asset of the appellant's unit was seized on 21.01.2003. After seizure, the appellant appears to have approached the Finance Corporation with an offer to repay the loan amount and paid an initial amount of Rs.2 lakhs and issued postdated cheques of Rs.9 lakhs, with further assurance that it would pay the entire outstanding amount within a few days thereafter.

5. According to the stand of the Finance Corporation, the seizure, in those circumstances, was lifted on 25.01.2003. However, the postdated cheques submitted by the appellant were dishonoured, much less was the outstanding loan paid as per the promise. The unit of the appellant was then again seized on 20.03.2003, but the seizure was lifted on 27.03.2003 by accepting the postdated cheques of Rs.8.60 lakhs, which were also not honoured. The unit was thus again seized on 05.03.2004. The seizure was again lifted on the advice of the Government of Andhra Pradesh by accepting Rs.1 lakh for adjusting the same towards the outstanding loan.

6. The Finance Corporation then claims that it rescheduled the loan, however, on account of the cheques issued by the appellant having bounced subsequent to such a rescheduling, action under Section 29 of the State Financial Corporations Act, 1951, was initiated and recall-cum-sale notice, dated 27.08.2007, was issued. The unit was again seized on 07.11.2007. 7. According to the record, an advertisement notice was issued in the Andhra Jyothi newspaper on 14.03.2008, inviting bids for sale of the property, which was a secured asset with the Finance Corporation, pursuant to which and in response thereto, two bids were received, one from respondent No.4 and the other from Mr. S. Bhaskar Rao. The bidders were asked to increase the bid amount upon negotiation and, after considering the bids, the concerned committee, by following the procedure prescribed, submitted a proposal to the Managing Director, recommending the bid of respondent No.4 for Rs.84.50 lakhs, which was found to be the highest. Payment was made by way of cheques and the possession of the asset was handed over to the said respondent immediately thereafter.

8. Based on the recommendations of the ‘Committee on Petitions’