A financial corporation has the right to elect between the remedies provided under Section 29 and Section 31 of the State Financial Corporation Act, 1951, to realize its dues, and the choice to proceed under Section 29 is lawful and wider in scope.

Order

1. The instant civil writ petition has been filed by the petitioner under Article 226 of the Constitution of India with the prayer to declare the transfer of his factory to respondent No.3 as null and void, to direct the respondent Nos.1 and 2 to re-deliver the factory along with entire raw material and other items to him or in the alternate, to award compensation for loss to him, and to direct the respondent No.1 to investigate into the matter and punish the defaulting officer accordingly.

2. The facts of the case in nutshell are that the respondent Rajasthan Financial Corporation (hereinafter, ‘the RFC’) was established under the State Financial Corporation Act, 1951 (hereinafter, ‘the Act of 1951’) with a view to finance medium small scale industries. The petitioner took a loan of Rs. 1,33,000/- on 02.09.1981 from respondent No. 1 and respondent No. 2 to establish his industry for manufacturing Sodium Silicate at the Gangapur city and with respect thereto a certificate was issued by Vyas & Vyas Chartered Accountants on 24.09.1982. A loan amount of Rs. 22,000/- was further sanctioned to the petitioner on 02.02.1984. On 06.01.1986, the petitioner was informed that a total amount of Rs. 62,380/- is outstanding against him which has to be deposited by him within 15 days.

Upon receiving the said notice, the petitioner deposited Rs. 10,000/- on 08.01.1986. The petitioner requested for time citing non-production by unit due to non-availability of the raw material and further deposited Rs. 5,000/- on 27.03.1986. The petitioner was again served with a legal notice on 16.12.1986 under Section 30 of the Act of 1951 requiring him to deposit Rs. 1,05,658/- up to 30.12.1986, failing which possession of the factory would be taken by the respondents and a further liability of Rs. 1,38,527/- would be imposed on him as costs. Following this, the petitioner deposited Rs. 5000/- on 30.12.1986.

The respondents took possession of the petitioner’s industrial unit on 07.02.1987. A tender notice was published on 20.03.1987 by the respondents in the daily newspaper Rajasthan Patrika for sale of the Industrial Unit. The petitioner’s factory was auctioned on 20.01.1989 and transferred to respondent No. 3, Shri Satya Narain Girdharilal, for Rs. 1,00,000/-. The petitioner was informed about the same vide letter dated 18.02.1989 and he was again informed on 30.08.1989 to pay the outstanding amount of Rs. 1,01,988/- within 15 days.

3. The learned counsel for the petitioner submits that the raw material worth Rs. 1,10,932/- which was hypothecated to the Bank of Baroda, was lying inside the factory when it’s possession was taken over by the respondents by breaking the locks of the factory and no inventory of the movable or immovable property belonging to petitioner was prepared. The counsel submits that the property worth Rs. 4 Lakhs/- was sold for just Rs. 1 Lakh/- on easy instalments without informing the petitioner and a further demand of Rs. 1,01,988/- was raised without furnishing any details as to how this figure was arrived at.

The counsel further submits that the respondents, instead of exercising wide powers under Section 29 of the Act of 1951 taking over the possession of the only source of livelihood of the petitioner, could have proceeded as per Section 31 of the Act of 1951 by applying to the District Judge for other reliefs and the petitioner then would have had an opportunity to rebut the allegations.

4. The learned counsel for the respondents submits that the petitioner’s factory was taken over after duly serv