JUDGMENT Bhawani Singh, J.—The petitioner is a company incorporate under the Indian Companies Act, 1956 on January 15, 1992 with registered office at New Rajender Nagar, New Delhi and branch office at LJB-38, Antriksh Bhawan, 22, K- G, Marg, New Delhi, Shri Rajpat Sawhney is one of its Director authorised by resolution of the company dated April 7, 1994 to initiate proceedings. Respondent 1 is the State Financial Corporation established under section 3 of the State Financial Corporation Act, 1951. It is a body corporate having perpetual succession and a common seal and as such falls within the definition of "State" as defined under Article 12 of the Constitution of India. Respondent 2, namely, M/s. Himachal Holiday Resorts (P) Ltd is also a company incorporated under the Indian Companies Act, 1956 and owns "Hotel Tragopan" (hereafter the Hotel) situated at Manali, District Kulu, Himachal Pradesh. Syal, resident of R-548, Shankar Road, New Delhi; (ii) Shri Vijay Mehra, son of Shri Dau Dayal Mehra, resident of F/185, Vikas Puri, New Delhi ; (iii) Shri Rajat Sawhney, son of Shri R. C. Sawhney, resident of 28, Rajendra Park, New Delhi, By the same resolution, Shri Rasik Khosla, Managing Director of respondent 2 was authorised to execute the licence deed in favour of the aforesaid persons. Consequently, a licence deed dated October 30, 1991 was executed between respondent 2 through Managing Director Shri Rasik Khosla and Shri Araan SyaJ, Shri Rajat Sawhaey and Shri Vijay Mehra by means of which the Hotel was given on licence basis to these persons for a period of four years and possession thereof was also to be handed over to them. The terms and conditions of the licence were reduced into writing (Annexure C-I) and finally by Annexure D. Apart frdm certain obligations of the petitioner; respondent 2 was not to interfere in any manner in day-today running of the Hotel by the petitioner an d to pay the interest at the rate of 24 per cent per annum to the petitioner in case the possession of the Hotel was not handed over to the petitioner by March 31, 1992. Respondent 2 was responsible to deal with respondent 1 for payment of its loan and interest thereon and the petitioner was under no obligation whatsoever for any such matter between the respondents. Respondent 2 was responsible to deal with respondent 1 for payment of its loan and interest thereon and the petitioner was under no obligation whatsoever for any such matter between the respondents. The petitioner was entitled to be indemnified by respondent 1, in case it suffered any loss on account of stoppage of work by interference of respondent 1 or any other Government authority. The petitioner was under obligation to meet the running expenses, payment of Sales Tax, Luxury Tax, Telephone, Electricity bills etc. Besides, it was under an obligation not to transfer or assign or sub-let or part with the possession without the previous consent in writing of respondent 2. The petitioner was to maintain the Hotel and all its assets including fittings, fixtures, furnitures, furnishings, carpets, amenities, services, crockery, cutlery, glassware, kitchen equipments etc. etc. and to hand over the Hotel and all its assets at the end of licence period to respondent 2 in good condition. 3. Licence deed contains an arbitration clause that in case of any dispute or differences which may arise between the parties on any matter, the same would be settled according to the provisions of the Indian Arbitration Act inforce at that time. Among others, the following two conditions also form part of the licence deed: "(i) Yearly instalment of Rs. 9 Lakhs (Rupees Nine Lakhs only) was to be paid by the licensee(s) to the licensor. However, for the first year Rs 4.5 lakhs (Rupees Four Lakhs Fifty Thousand Only) were to be paid before 31st of January, 1992 out of which Rs. 1 5 lakhs (Rupees One Lakh Fifty Thousand Only) were being paid vide (a) DD No. 291106 dated 29-10 1991 drawn on State Bank of India, Manali for a sum of Rs 1 00 lakhs (Rupees One Lakh Only) (b) DD No. 600436 dated 29-10 1991 drawn on Punjab National Bank, Manali for a sum of Rs. 50,000 (Rupees Fifty Thousand Only) as the signing amount and the balance of Rs 3.00 lakhs was payable by 15th of January 1991.” (ii) For the next three years the payment was to be made in four (4) equal quarterly instalments commencing from March every year i. e. payment for each quarter was to be made in advance. 4. 50,000 (Rupees Fifty Thousand Only) as the signing amount and the balance of Rs 3.00 lakhs was payable by 15th of January 1991.” (ii) For the next three years the payment was to be made in four (4) equal quarterly instalments commencing from March every year i. e. payment for each quarter was to be made in advance. 4. The licence deed dated October 30, 1991 came into operation immediately and the possession of the Hotel was handed over to the petitioner on June 5, 1992. Though the agreement inter partus has been described as a licence deed yet it is, in fact, a lease deed since it not only satisfies all the tests of lease deed but also displays the intention of the parties for governing their inter se relationship qua this transaction. The petitioner made substantial payments to respondent 2 from time to time. 5. The aforesaid three persons incorporated a Private Limited Company M/s. Riverside Hotels and Resorts (P) Ltd and licence deed dated December 18, 1992 was executed between the petitioner and respondent 2 through which the Hotel was given on licence to the petitioner for a period of five years against yearly instalments rupees nine lac per annum for the first four years and at the rate of rupees eleven lac per annum at the option of the petitioner for the fifth year. It has been clearly mentioned that the amount of rupees four lac fifty thousand had already been advanced to respondent 2 and it was further agreed that the payment would be made in four quarterly instalments commencing from June of every year (Annexure D) This licence deed is, as matter of fact, lease deed and governs the relationship of the parties. The licence deed dated December 18f 1992 was introduced from March 31. 1992 for a period of five years and actual possession of the Hotel was handed over to the petitioner on June 5, 1992. Respondent 2 also received goods worth Rs. 4 lac 50 thousand as the second instalment of the lease amount for the Hotel for the annual lease for the year \ 992-93 and this amount governed payment upto June 5, 1993 since the licence period started from June 5, 1992. Respondent 2 also received goods worth Rs. 4 lac 50 thousand as the second instalment of the lease amount for the Hotel for the annual lease for the year \ 992-93 and this amount governed payment upto June 5, 1993 since the licence period started from June 5, 1992. As such, since June 5, 1992 the petitioner is in possession of the Hotel and after its incorporation since December 18, 1992, the petitioner was in physical possession of the Hotel and was running it upto December 6, 1993 when the possession of the same was taken by respondent 1 through its officials in gross violation of the principles of natural justice, rule of law and the provisions of the State Financial Corporation Act, 1951. 6. Further, it is stated that as per the licence deeds dated December 18, 1992 and October 30, 1991, it was duty of respondent 2 to deal with all the matters relating to respondent 1 exclusively and in case of any loss of business to the petitioner on account of stoppage of work by interference of respondent 1, the same would be indemnified to the petitioner. The petitioner did not receive any notice from respondent I with respect to the matters concerning respondents 1 and 2 or with respect to the Hotel. However, on the contrary, vide letter dated November 18, 1993, respondent 1 was apprised of the fact that the petitioner had taken on lease the Hotel for a period of five years at rental of Rs 9 lac per year for the first four years and at the rate of Rs 11 lac per year for the fifth, year in quarterly instalments. It is clearly mentioned therein that with a view to enable respondent 2 to complete the Hotel or to make the payment to respondent 1, the petitioner was compelled to complete the Hotel by investing a sum of Rs 9,92,000 apart from Rs. 4 lac 50 thousand having been paid at the time of the agreement receipt of which was annexed alongwith the aforesaid letter addressed to respondent I It was clearly mentioned therein that this amount of Rs 9 lac 92 thousand was utilised for the purpose of Hotel material including the H. T. transformers, H. T. cables, televisions, crockery, telephones, sanit-ware etc. and it was further mentioned therein that apart from the above, the petitioner had paid an amount of Rs. 2 lac 50 thousand directly to the Corporation by way of demand drafts and cheques. It; is also pointed out therein that keeping in view the huge investments made by the petitioner with respect to the Hotel, respondent 1 was requested to release rupees one lac to the petitioner out of the additional loan sanctioned by respondent 1 to respondent 2 and that seeing the plight and huge investment made by the petitioner, it be allowed to pay all the amounts to respondent 1 directly which were payable by respondent 2 as and when the same were due. 7. However, inspite of the receipt of the aforesaid letter by respondent 1 and without responding to it, possession of the Hotel along with its assets was taken from the petitioner on December 6, 1993. Respondent 1 is a statutory body created under the State Financial Corporation Act, 1951 and is "State" within the ambit of Article 12 of the Constitution of India, failed to comply with the principles of natural justice It did not act fairly and in consonance with the objects of its creation in public interest, but intended to achieve extraneous purpose by acting in an arbitrary manner in collusion or connivance with respondent 2. Therefore, the action is liable to be set aside being ultra vires of its powers and against the principles of natural justice. When there was no doubt about the petitioner being in possession of the Hotel, taking of possession of the Hotel and the assets is in gross violation of the principles of natural justice By this act of respondent 1, the petitioner has been put to great loss. On the other hand, respondent 2 has been put in possession of the Hotel alongwith assets on payment of only a paltry sum of money out of the huge outstanding amount This conduct demonstrates that the sole object of taking possession of the Hotel from the petitioner was to oust it from the Hotel and hand over the same to respondent 2. Collusion between them is quite apparent The statutory power available to respondent 1 under the State Financial Corporation Act 1951 has not been exercised for purposes it has been conferred. Collusion between them is quite apparent The statutory power available to respondent 1 under the State Financial Corporation Act 1951 has not been exercised for purposes it has been conferred. Thus, exercise of power by respondent is colourable and fraud on the power available to it The petitioner is prepared to pay the amount of loan which is payable by respondent 2 to respondent I directly to liquidate the liability of respondent 2 subject to the handing over of the peaceful, vacant and physical possession of the Hotel alongwith its assets. 8. Respondent 1 has questioned the maintainability of this petition stating, inter alia, that the petitioner has no cause to assail the action. Respondent I cannot be prevented from exercising its statutory duty under the State Financial Corporation Act, 1951 and the relationship of the petitioner with respondent 2 is irrelevant for the exercise of this power. Resolution of respondent 2 was in violation of terms and conditions of loan agreements dated March 10, 1988, March 13, 1992 and September 19, 1992 executed between respondents 1 and 2, as such, not binding on respondent 1. Moreover, the petitioner cannot interfere with the mortgaged/hypothecated property/premises by executing the documents with respondent 2 nor could respondent 2 allow this thing to happen. Respondent 1 extended loan to respondent 2 to the extent of Rs. 49 lac for establishing the Hotel For securing it, loan documents were executed on March 10, 1985 and September 19, 1992 in favour of respondent 1. This way, execution of any other document in contravention of the agreements with respondent 1 is neither legal nor binding on respondent f. Respondent 2 cannot get out of these documents till the loan is fully liquidated Respondent 1 is fully empowered to take action for the realisation of its loan in case default is committed by respondent 2. 9. Since respondent 1 committed persistent default in the payment of loan, recall-cum-take over notice was issued on October 16, 1993 for taking over the possession of the mortgaged/hypothecated assets for realisation of the outstanding loan amount of Rs. 52.22,744 including interest upto September 9, 1993. Still, at the instance of respondent 2 and acting on sound business principles as well as to enable respondent 2 to meet its obligations, deferred the take over action for ten days vide letter dated November 23, 1993. 52.22,744 including interest upto September 9, 1993. Still, at the instance of respondent 2 and acting on sound business principles as well as to enable respondent 2 to meet its obligations, deferred the take over action for ten days vide letter dated November 23, 1993. However, despite extension of this accommodation, respondent 2 did not clear the default as such respondent 1 took over the possession of the Hotel and the assets on December 6, 19>3 in accordance with law. The action of respondent 1 is perfectly legal, valid and reasonable in the facts and circumstances of this case and a stranger like the petitioner cannot be vested with the right of securing any kind of hearing by invoking the principles of natural justice. The licence deed executed by the petitioner with respondent 2 is illegal since it is not permissible under the law till the outstanding loan is fully discharged. There is no privity of contract between the petitioner and respondent 1 The petitioner is a stranger to the transaction since the loan has been extended only to respondent 2 on the terms and conditions settled between them. Respondent 2 not only paid Rs. 4.73 lac towards the defaulted amount for seeking restoration of the property but also executed agreement-cum-undertaking on March 12, 1994 in favour of respondent 1 envisaging the payment of the outstanding loan in accordance with the schedule of payment The allegation that the petitioner was divested from the possession of the Hotel simply to facilitate respondent 2 to have the physical possession of it from the petitioner, has been vehemently denied and it has been stated that the action was taken in accordance with law and it does not display any kind of bias, vindictive-ness or unfairness towards the petitioner The claim for hearing, damages, restoration of possession of the Hotel and the assets has also been denied. 10. Through the rejoinder to the reply of respondent No. 1, the petitioner has stated that the writ petition is maintainable in the facts and circumstances of this case. Moreover, respondent 1 has taken the action against the petitioner in gross violation of principles of natural justice and in violation of the statute in question. 10. Through the rejoinder to the reply of respondent No. 1, the petitioner has stated that the writ petition is maintainable in the facts and circumstances of this case. Moreover, respondent 1 has taken the action against the petitioner in gross violation of principles of natural justice and in violation of the statute in question. Dispossession of the petitioner from the Hotel is also against the spirit of the powers under sections 29 and 30 of the State Financial Corporation Act, 1951 since it does not envisage taking of possession from one and giving the same to another who did not possess it before to achieve extraneous, or alien, or a collateral purpose. It has been denied that there is no relationship between the petitioner and respondent I. As a matter of fact, the action of respondent 1 against the petitioner has been challenged for acting in violation of law though it is a statutory authority discharging public function. Even if any document has been executed between the petitioner and respondent 2, that does not empower respondent 1 to take the impugned action Assuming that the petitioner under law was not entitled to keep or run the Hotel without obtaining prior permission of respondent 1, even then respondent 1 was under obligation to comply with the principles of natural justice being integral part of the statutory provisions of sections 29 and 30 of the State Financial Corporation Act, 1951. Since the possession was taken from the petitioner, restoration of the same could be in its favour and none-else. Other averments of the reply have also been denied. 11. Respondent 2 has stated in its reply that the petitioner has made mis-statement of facts deliberately by suppressing material facts, therefore, it is not entitled to seek extraordinary relief from this Court. The petitioner failed to pay the licence money in terms of the licence deed (Annexures C-I and D) dated Oct 30, 1991 and July 8, 1992 to respondent 2. The petitioner also removed thirteen coloured televisions, about one hundred blankets, two hundred bed-sheets, crockery, utensils and other items from the Hotel a day or two before the Hotel was taken over by respondent 1 on December 6, 1993. The value of these articles was more than Rs three lac. First Information Report in this behalf was lodged on March 14, 1994. The value of these articles was more than Rs three lac. First Information Report in this behalf was lodged on March 14, 1994. The petitioner was only a licensee for running the Hotel as per licence deed. Clause 15 of this deed, dated December 18, 1992, provides that: “15. That in case of any dispute or difference which may arise between the parties on any matter relating to this Deed, the same shall be settled according to the provisions of the Indian Arbitration Act, then in force. As such, the present petition is not maintainable. The petitioner failed to comply with the terms of the licence deed resulting in great loss including consequential action of respondent 1 taking over the Hotel on December 6, 1993. Further, loan of several lacs had to be raised to liquidate certain pressing recoveries of many including respondent I. Respondent 1 handed over the possession of the Hotel to it after receiving some payments and executing agreement providing schedule for payments in future Possession of the Hotel was taken from respondent 2 alongwith the petitioner as is clear from the receipt executed at the time of its taking over by respondent 1. The petitioner failed to pay the liabilities of respondent 1 and also the amount due to respondent 2 under the terms of licence deed, as such, the Hotel was rightly taken by respondent 1 and then delivered to respondent 2. The statement that respondent 1 is a State within the meaning of Article 12 of the Constitution of India, has been denied. The Hotel was given on licence and not on lease since it was not authorised. Use of word licence in the first part of resolution (Annexure C) is misnomer and due to inadvertant mistake. The petitioner was given the Hotel only for being run on licence basis Otherwise, the over all possession and control was to remain with respondent 2. It has been admitted that there could be no transfer of the Hotel without the permission of respondent I and no permission had been obtained by the petitioner and/or respondent 2 for allowing them to run the Hotel on lease basis, therefore, the transaction was not confirmed at any time by respondent 1. 12. It has been admitted that there could be no transfer of the Hotel without the permission of respondent I and no permission had been obtained by the petitioner and/or respondent 2 for allowing them to run the Hotel on lease basis, therefore, the transaction was not confirmed at any time by respondent 1. 12. The petitioner did not pay luxury tax, electricity bills, telephone bills, licence fee and other dues running in lacs thereby committing serious violation of the conditions of the licence, therefore, it had no right to run the Hotel and challenge the dispossession in this Court, Taking away of large number of valuable articles from the Hotel further demonstrates that the petitioner was not interested in running the Hotel and was bent upon creating situation enabling respondent 1 to initiate the action for the taking over the possession of the Hotel and sell it, but for the timely payment of substantial amount to respondent 1 and other dues, possession of the Hotel could not possibly be retrieved. Possession of the Hotel was taken through receipt (R-2/4) from respondent 2 and Shn R. Kak, who had shown himself the General Manager of Himalaya Holiday Resorts Pvt. Ltd Mr. Rakesh Khosla, who is the Executive Director of the Himalaya Holiday Resorts Pvt. Ltd., was also signatory at the time of taking over the possession as the Hotel was on licence with the petitioner. Conspiracy between the respondents has been denied and it has been stated that respondent 1 took possession of the Hotel in accordance with law, handed over the possession to respondent 2 after deposit of Rs. 4.73 lac and under-taking for future regular payments. The petitioner was conspiring to grab the Hotel by allowing it to be taken over and the purchase it in auction by not paying the instalments in time and removing various articles which were necessary for running the Hotel. The petitioner cannot seek the relief of restoration of possession since the licence stands revoked due to its failure to comply with the conditions of the licence deed. The powers exercised by respondent 1 are legal, valid and cannot be questioned. The petitioner was not entitled to hearing before the action was taken, as contended In any case Clause 15 of the licence deed provides for arbitration in case of dispute and difference between the parties. The powers exercised by respondent 1 are legal, valid and cannot be questioned. The petitioner was not entitled to hearing before the action was taken, as contended In any case Clause 15 of the licence deed provides for arbitration in case of dispute and difference between the parties. Consequently, the present petition is not maintainable nor the reliefs, being sought by the petitioner, can be allowed in exercise of writ jurisdiction by this Court. 13 Through the rejoinder to the reply of respondent 2, it has been stated that there has not been any omission in stating the material facts to this Court. Non-payment of licence fee in terms of the licence deed dated October 30, 1991 and July 8, 1992 to respondent 2 had been denied Position disclosed in Annexure REJ-1 demonstrates that the allegations of nonpayment of licence fee to respondent 2 are without any basis Assuming that it has not been paid, that does not justify respondent I taking over the possession of the Hotel from the petitioner and hand over the same to respondent 2 It has not been clearly pointed out what arrears of licence fee u "payable by the petitioner to respondent 2 Removal of articles from ?he Hotel as alleged, are without any basis, hence denied. Some articles were shifted to the hotel of the petitioner due to lean season with mutual understanding between the parties. Initiation of First Information Report is for creating a false ground for implicating the petitioner to serve the conspiracy between the respondents. Resort to arbitration proceedings is not mandatory and the dispute can be settled by this Court. Moreover respondent 2 is not a party to the agreement, as such, initiation of arbitration proceedings without it would be misconceived. It has been denied that the petitioner at any point of time failed to comply with the terms of licence deed, as such. The action is unwarranted. Respondent 1 could not have taken over possession from the petitioner before looking into the matter properly, reasonably and without hearing the petitioner since the petitioner was in possession of the property at the relevant time. Assuming that the petitioner was a licensee, still it was entitled to hearing before the possession was taken, being in possession of the Hotel. Respondent 1 could not have taken over possession from the petitioner before looking into the matter properly, reasonably and without hearing the petitioner since the petitioner was in possession of the property at the relevant time. Assuming that the petitioner was a licensee, still it was entitled to hearing before the possession was taken, being in possession of the Hotel. Certain demands relating to the Hotel were raised after the petitioner was divested of the possession of the Hotel, therefore, the petitioner was not expected to make payment. It has been denied that the petitioner had intention of abandoning the Hotel and create situation to purchase n after it was sold by respondent 1. 14. Through sur-rejoinder respondent 1 has also stated that it has not violated principles of natural justice nor fundamental right under Article 14 of Constitution qua the petitioner. The action had been initiated strictly in accordance with law and to safeguard the interest of the institution. With a view to safeguard the commercial interest, such a step had to be taken and it is in accordance with law. It had no interest in the transaction between the petitioner and respondent 2 nor this relationship was ever approved or confirmed by it. Similarly, sur-rejoinder of respondent 2 reiterates its opposition to the case of the petitioner and states that the petitioner had no right to remain in possession of the Hotel after having failed to act according to the terms of the licence Taking away of many essential items and non-payment of outstanding dues further demolished the continuance of licence of remaining in possession of the Hotel. All other submissions of the petitioner have been strongly opposed. 15. Ms. Abhilasha Kumari, learned Additional Central Government Standing Counsel, submitted on behalf of the Union of India that since the petitioner did not address any submission assailing the constitutional validity of the State Financial Corporation Act, 1951 or any action of her client, there is no necessity to file specific reply by the Union of India. This submission is correct. 16. Having recorded the essential facts of the case, we proceed to deal with the specific contentions urged before us. 17. This submission is correct. 16. Having recorded the essential facts of the case, we proceed to deal with the specific contentions urged before us. 17. Shri Ashok Gurnani contended that he would not like to deal with the question whether the transaction between the petitioner and respondent 2 was in the nature of a licence or lease deed The grievance is that his client was in possession of the Hotel on the basis of written documents, therefore, before taking possession of the Hotel from the petitioner, the petitioner should have been heard. The action of respondent c is not only mala fide, arbitrary but also against the provisions of sections 29 and 30 of the State Financial Corporation Act, 1951 wherein prior hearing of person to be affected by the intended action is implicit. The total liability towards respondent 1 was around Rs. 52 lac. Taking possession of and then restoration thereof to respondent 2 against payment of Rs. 4 73 lac demonstrates that the sole design of respondent 1 was to dispossess the petitioner from the occupation of the Hotel and to hand-over the possession to respondent 2 who could not otherwise divest the petitioner from it in view of the licence/lease deed between them. 18. We see no substance in the submission of the learned Counsel for the petitioner. It is admitted that there is no privity of contract between the petitioner and respondent 1 and that the transaction between the petitioner and respondent 2 could neither be entered into by the parties nor had the confirmation of respondent 1. It is also admitted position that outstanding loan had risen to around Rs. 52 lac giving cause to respondent 1 to take recourse to section 29 of the State Financial Corporation Act. Legally, the responsibility to liquidate the outstanding loan was of respondent 2 with whom there was privity of contract of respondent. Obviously, respondent 2 and the Hotel alongwith the assets were liable to be proceeded against in case of default. 19. Although both sides tried to impress upon us to hold that they were in possession of the Hotel, yet the available material indicates that the loan transaction was between respondent I and respondent 2 and the latter was responsible for payment of the loan regularly to the former. The petitioner was no party to this transaction and had no privity of contract with respondent 1. The petitioner was no party to this transaction and had no privity of contract with respondent 1. The licence/lease transaction was not only de horse transaction between respondent 1 and respondent 2, but had no confirmation of respondent 1 making it answerable for any action to the petitioner. 20. Now, the question arises whether in the aforesaid background and under the provisions of State Financial Corporation Act, 1951, the petitioner was entitled to prior notice before the possession of the Hotel was taken by respondent 1. The documents reveal that whatever communications were addressed by respondent 1 lo respondent 2, were received by it although the petitioner had been in possession of the same This means, the petitioner and respondent 1 had good relations for sometime. Consequently, the petitioner was aware of the failings in the liquidation of outstanding loan to respondent 1 and the intended action After having issued the takeover notice, respondent 1 deferred taking possession of the Hotel for some days. It is difficult to believe that the petitioner was not aware of these happenings. It did not take any action to save the possession, rather, it handedover the same to respondent 1 without protest of any kind, assuming that the petitioner was in actual possession of the Hotel. 21. Possession of the Hotel was taken in accordance with the provisions of the State Financial Corporation Act, 1951. Restoration depended upon the discretion of respondent I. It was handed over after payment of Rs. 4.73 lac was made. In addition, fresh undertaking deed was executed by respondent 2 envisaging future regular schedule of payment Obviously, when the petitioner had no privity of contract with respondent 1 and was out of possession, restoration of possession in favour of respondent 2 against payment towards the loan amount was neither illegal nor actuated by bias or arbitrariness. After all, respondent 1 is a statutory Corporation, trustee of public funds and discharging its function with a commercial spirit. It has right to take steps to prevent Joss to it and safeguard its commercial transactions. It has to be allowed to work freely and independently till its actions are patently erroneous, arbitrary, mala fide and against the provisions of law. 22. In JT 1994 (7) SC 551, U. P. Financial Corporation and others v. Mjs. Naini Oxygen and Acetylene Gas Ltd. and another, the apex Court has held that : "21. It has to be allowed to work freely and independently till its actions are patently erroneous, arbitrary, mala fide and against the provisions of law. 22. In JT 1994 (7) SC 551, U. P. Financial Corporation and others v. Mjs. Naini Oxygen and Acetylene Gas Ltd. and another, the apex Court has held that : "21. However, we cannot lose sight of the fact that the Corporation is an independent autonomous statutory body having its own constitution and rules to abide by, and functions and obligations to discharge. As such, in the discharge of its functions, it is free to act according to its own light. The views it forms and the decisions it takes are on the basis of the information in its possession and the advice it receives and according to its own perspective and calculations. Unless its action is mala fide, even a wrong decision taken by it is not open to challenge. It is not for the courts or a third party to substitute its decision, however more prudent commercial or business like it may be, for the decision of the Corporation Hence, whatever the wisdom (or the lack of it) of the conduct of the Corporation, the same cannot be assailed for making the Corporation liable " 23. In (1981) 1 SCC 568, Fertilizer Corporation Kamgar Union (Regd.), Sindri and others v. Union of India and others, the apex Court held in para 35 that; "35. A pragmatic approach to social justice compels us to interpret constitutional provisions, including those like Articles 32 and 226, with a view to see that effective policing of the corridors of power is carried out by the court until other ombudsman arrangements—a problem with which Parliament has been wrestling for too long—emerges. I have dwelt at a little length on this policy aspect and the Court process because the learned Attorney General challenged the petitioners locus standi either qua worker or qua citizen to question in court the wrong doings of the public sector although he maintained that what had been done by the Corporation was both bonafide and correct. I have dwelt at a little length on this policy aspect and the Court process because the learned Attorney General challenged the petitioners locus standi either qua worker or qua citizen to question in court the wrong doings of the public sector although he maintained that what had been done by the Corporation was both bonafide and correct. We certainly agree that judicial interference with the administration cannot be meticulous in our Montesquien system of separation of powers The court cannot usurp or abdicate, and the parameters of judicial review must be clearly defined and never exceeded If the Directorate of a Government company has acted fairly, even if it has faltered on its wisdom, the court cannot, as a super-auditor, take the Board of Directors to task. This function is limited to testing whether the administration action has been fair and free from the taint of unreasonableness and has substantially complied with the norms of procedure set for it by rules of public administration." (Emphasis supplied) 24. Apart from the fact that the petitioner had no privity of contract with respondent 1 and its transaction with respondent 2 had no approval of respondent 1, the petitioner was aware of the on-goings between respondent 1 and respondent 2. The petitioner did not raise even semblance of protest at any stage Therefore, it is deemed to have acquiesced the actions of the respondents. It felt aggrieved only when the possession was restored to respondent 2 which was not of the liking of the petitioner. 25 The provisions of State Financial Corporation Act does not envisage transfer of property by its loanee to an outsider, therefore, the contention that the petitioner ought to have been heard before the possession was taken, is completely untenable. The principles of natural justice cannot be extended to cover a case of this nature. Claim for hearing raised by the petitioner is founded so is the allegation of mala fide action and arbitrariness against the respondents. The principles of natural justice cannot be extended to cover a case of this nature. Claim for hearing raised by the petitioner is founded so is the allegation of mala fide action and arbitrariness against the respondents. The cases brought to our notice by the learned Counsel for the petitioner in support of the plea of requirement of hearing, AIR 1983 SC 75, National Textile Workers Union etc v. P. R. Ramakrishnan and others ; AIR 1986 SC 872, Express Newspapers Pvt. Ltd. and others v. Union of India and others ; (1^89) 4 SCC 187, Supreme Court Employees9 Welfare Association v. Union of India and another and (1993) 1 SCC 78, C. B. Gautam v. Union of India and others, do not help him at all. 26. Although learned Counsel for respondent 2 brought to our notice large number of instances from the case file pointing out the violation of conditions of the licence by the petitioner, yet we do not want to enter into the merits of this plea. Rights of the petitioner and respondent 2 on the basis of the licence/lease documents cannot be decided in this petition since the parties did not address us on this question and the learned Counsel for the petitioner concentrated his submissions on the questions answered here-inabove. No other point was urged by the learned Counsel for the parties. Order accordingly. What emerges from the aforesaid examination of the questions raised before us, is that there is no merit in this writ petition and the same is accordingly dismissed. The parties are, however, left to bear their own costs. -