Judgment :- The prayer of the petitioner is to issue a writ of Mandamus or any other appropriate Writ, Order or direction in the nature of Mandamus, directing the 1st respondent to release the petitioner's Matador Van, bearing Regn. No. TN 29-Y- 1425. 2. The petitioner in his affidavit in support of the writ petition states that he purchased the Matador Van bearing Regn. No. TN-29-Y-1425 in a public auction held on 3-2-1994, conducted by the 2nd respondent herein, for a sum of Rs. 89,653/- and on 4-5- 1994, by an endorsement, the said vehicle was transferred in the name of the petitioner, with effect from 4-2-1995. It appears that the said vehicle was seized by the 2nd respondent for offences under the Tamil Nadu Forests Act, 1892. By an order of the 2nd respondent dated 27-12-1993, the said vehicle was confiscated and on 3-2-1994 it was brought for sale through public auction and the petitioner purchased the same for a sum of Rs. 89,653/-. While so, on 6-8-1995, the 1st respondent- Corporation seized the said vehicle on the ground that the vehicle in question was subject to a hypothecation in its favour and the original owner viz. K.T. Lakshamana Perumal failed to pay the loan amount in installments. Aggrieved by the same, the petitioner has filed the writ petition. 3. A counter-affidavit has been filed on behalf of the 2nd respondent, wherein the 2nd respondent has stated as follows: "On 23-7-1993, at about 8.00 p.m. the then Forest Rang-e Officer and his party noticed a Matador Van bearing Regn. No. TN-29-Y-1425 parked in the 12th curve of the road leading to Elagiri Hills. On search, inside the vehicle they found sandalwood worth of 1.96 kg. valued Rs. 43,808/ -.he vehicle and the sandalwood were seized and the same were produced before the Asst. Conservator of Forest (Sandal Wood Depot) and authorised officer under the Forest Act. The authorised officer under the Forest Act entrusted the properties to their Ranger for safe custody. In this regard, a case in UDSTOR No. 79/93-94 was registered. The then Forest Range Officer requested the Motor Vehicle Inspector to disclose the name and address of the owner of the vehicle. Accordingly, the Motor Vehicle Inspector sent a reply dated 3-9-1993 in his letter No. R/7044/A1/93 stating that one Mr. In this regard, a case in UDSTOR No. 79/93-94 was registered. The then Forest Range Officer requested the Motor Vehicle Inspector to disclose the name and address of the owner of the vehicle. Accordingly, the Motor Vehicle Inspector sent a reply dated 3-9-1993 in his letter No. R/7044/A1/93 stating that one Mr. Lakshmana Perumal, son of K. P. Naidu, C-29/ 18 TNHB Colony, Hosur is the owner of the vehicle as per his records. Accordingly, a show cause notice dated 18-11-1993 was issued by R.P. A.D. to the registered owner of the vehicle and the same was returned with the postal endorsement dated 24-11-1993. "No such person." A publication was effected in the leading newspapers. Since there is no response and there was no claim from any person including the registered owner and after being satisfied that forest offence was committed in respect of the vehicle the authorised officer Thiru A. Nagarajan, passed an order of confiscation in his proceedings in UDSTOR No. 79/93-94 dated 27-12-1993. A copy of the confiscation proceedings was also sent to the registered owner on 1-2-1994. Since nobody has claimed and no appeal was filed within time against the confiscation order, the order become final. An auction notice was issued on 23-12- 1993 and also it was published in the leading newspapers, 'Indian Express', 'Daily Thanthi'. On 3-2-1994 this vehicle was auctioned in public auction in pursuance of the auction notice. The sale is knocked down in favour of S. Dhanasekaran who is the highest bidder for Rs. 82,100/-. The sale was accepted and he has paid the following amount on the same day itself: " * Sale Amount : Rs.82,100.00 Sale Tax at 8% : Rs. 6,568.00 S C at 15% : Rs. 985,00 Rs.89,653.00 The District Forest Officer passed a delivery Proceedings on 3-2-1994 directing the then Ranger to deliver the vehicle to S. Dhanasekaran since he has paid the full amount on the same day. The vehicle was delivered to S.Dhanasekaran. . . . . . . . I submit that it is needless to traverse each and everyone of the allegations of the petitioner except to state that the confiscated vehicle was sold to the petitioner to possess the same as a lawful owner as he got the same in public auction and he is entitled to it free from all encumbrances. " 4. . . . I submit that it is needless to traverse each and everyone of the allegations of the petitioner except to state that the confiscated vehicle was sold to the petitioner to possess the same as a lawful owner as he got the same in public auction and he is entitled to it free from all encumbrances. " 4. A counter-affidavit has been filed by the 1st respondent, wherein it is stated as follows: " * . . . . . . . that the first respondent-Corporation having its branch at Hosur, sanctioned a loan of Rs. 1.28 lakhs on 7-7-1990 to Thiru K. T. Lakshmana Perumal at Hosur, for purchase of one New Metador F-307 Micro Bus. The said borrower executed necessary documents including the deed of hypothecation and availed the entire loan. The said borrower purchased the new vehicle and was registered as Regn. No. TN-29-Y-1425. The said borrower hypothecated the said Micro Bus to and in favour of the first respondent and the due endorsement was made in the certificate of registration for the vehicle concerned by the Transport Registering Authority to the effect that the said vehicle was hypothecated to and in favour of this respondent. Subsequently the said borrower requested this respondent to transfer the liabilities in his account to and in favour of one Tmt. Noorjan, "wife of Syed Ismail, Narasima Colony, Hosur. The first respondent acceded to the request of the borrower subject to the conditions mentioned in the respondent's letter, dated 28-7-1992. Tmt. Noorjan executed necessary documents for the repayment of the loan. It is learnt that the transferee, Tmt. Noorjan did not take steps for transfer of ownership of vehicle before the Transport Registering Authority though she took possession of the said vehicle. It may be pointed out that the hypothecation of the vehicle in favour of this respondent is continuing as security for the due repayment of loan with the interest thereon. The said Tmt. Noorjan committed defaults and the dues in the account were mounting." * 5. Mr. Natesan, learned counsel for the petitioner submitted that the petitioner was the successful bidder in the auction conducted by the 2nd respondent on 3-2-1994 and as his offer was confirmed by the 2nd respondent, he has purchased the vehicle in question and as such he became the absolute owner thereof. Mr. Natesan, learned counsel for the petitioner submitted that the petitioner was the successful bidder in the auction conducted by the 2nd respondent on 3-2-1994 and as his offer was confirmed by the 2nd respondent, he has purchased the vehicle in question and as such he became the absolute owner thereof. In this connection, learned counsel referred to Sec. 49-F of the Tamil Nadu Forest Act, 1882, which says that, "when an order for confiscation of any property has been passed under S. 49-A or S. 49-C or S. 49-D and such order has become final in respect of the whole or any portion of such property, such property or portion thereof, or if it has been sold under sub-section (3) of Sec. 49-A the sale proceeds thereof, as the case may be, shall vest in the Govt. free from all encumbrances," * and submitted that the 1st respondent has no right to seize the vehicle after the vehicle was seized and confiscated by the 2nd respondent for the offences under the Tamil Nadu Forest Act. The learned counsel further submitted that whatever right the 1st respondent had in the vehicle merged with the order of confiscation passed by the 2nd respondent on 27-3-1993 and thereafter the 1st respondent has no right to seize the vehicle in order to enforce the hypothecation agreement. Learned Government Advocates appearing for Respondents 2 and 3 supports the contention of the petitioner. Learned counsel "for the 2nd respondent submitted that once the vehicle was confiscated, complying with the provisions of the Forest Act and the Rules made there- under, the owner of the vehicle as well as the person who has a right of hypothecation over the vehicle lose their right and the property in the said vehicle vests with the Government free from all encumbrances. In the present case, the vehicle was seized, confiscated and later on brought to public auction for sale wherein the petitioner was the successful bidder. The ownership of the vehicle was endorsed in favour of the petitioner with effect from 4-2-1995. 6. Learned Government Advocate appearing .for the 3rd respondent adopts the argument of learned Government Advocate for the 2nd respondent. 7. Mr. The ownership of the vehicle was endorsed in favour of the petitioner with effect from 4-2-1995. 6. Learned Government Advocate appearing .for the 3rd respondent adopts the argument of learned Government Advocate for the 2nd respondent. 7. Mr. Somayaji, learned Senior counsel appearing for the 1st respondent Corporation vehemently contended that the 1st respondent-Corporation is an instrumentality of the State and it has been established with the object of promoting and helping Industrial Development in the State of Tamil Nadu by providing financial assistance by way of term loans, etc. for starting industries or expansion of existing industries. Learned Senior counsel submitted that special privileges had been conferred on the 1st respondent and, in particular, he referred to Sec. 29 read with Sec. 46-B of the State Financial Corporations Act, 1951 and submitted that the 1st respondent-Corporation is entitled to the benefits under Sec. 29 of State Financial Corporations Act, 1951. 8. I have considered the contentions of the learned Senior counsel for the 1st respondent, learned Government Advocates appearing for Respondents 2 and 3 and also the learned counsel for the petitioner. 9. Mr. Natesan, learned counsel for the petitioner contended that the petitioner had purchased the vehicle in question in a public auction, free from all encumbrances and whatever the hypothecation right the 1st respondent had over the said vehicle ceased to exist once the vehicle was confiscated by the state Government. Learned Government Advocates for Respondents 2 and 3 supported the said contention of the petitioner. I am unable to accept the contention of Mr. Somayaji, learned senior counsel that the 1st respondent is entitled to protection under Sec.29 read with Sec.46-B of the State Financial Corporations Act, 1951. It is admitted in the counter-affidavit filed by the 1st respondent that it has extended financial assistance to Thiru K.T. Lakshmana Perumal for purchase of the vehicle in question. This clearly shows that the transaction is one of the loan and the relationship between the person who availed loan facility and the 1st respondent was that of debtor and creditor and the 1st respondent as a creditor having hypothecation right over the vehicle in question and has a right of lien to seize and retain the vehicle if any instalment was not paid apart from other remedies open to the 1st respondent. In this connection, learned counsel for the petitioner relied upon the decision of the Supreme Court in U. P. Financial Corporation v. M/s. Gem Cap (India) Pvt., Ltd., wherein the Supreme Court has observed as follows (Para 10): It is true that the appellant Corporation is an instrumentality of the State created under the State Financial Corporation Act, 1951. The said Act was made by the Parliament with a view to promote industrialisation of the States by encouraging small and medium industries by giving financial assistance in the shape of loans and advances, repayable with in a period not exceeding 20 years from the date of loan. We agree that the Corporation is not like an ordinary money-lender or a Bank which lends money. It is a lender with a purpose - the purpose being promoting the small and medium industries. At the same time, it is necessary to keep certain basic facts in view. The relationship between the Corporation and the borrower is that of creditor and debtor. . . . . . .. These Corporations are not sitting on King Solomon's mines. They too borrow monies from Government or other financial Corporations. They too have to pay interest thereon. The fairness required of it must be tempered- nay, determined, in the light of all these circumstances" * . In the instant case the vehicle in question was seized and confiscated by the second respondent for the offences committed under the Tamil Nadu Forest Act under Section 49-A(2) and thereafter it was sold in a public auction under Section 49-A(3) of the Act and as per Section 49-F of the Act, if such property or portion thereof has been sold under Section 49-A(3) and the sale proceeds shall vest in Government free from all encumbrances and hence I am of the considered view that the auction-purchaser purchased the vehicle fret from all encumbrances. I am also unable to accept the contention of Mr. I am also unable to accept the contention of Mr. Somayaji, learned Senior counsel that the first respondent Corporation is entitled to the benefits under Section 29 of the State Financial Corporation Act, 1951 "(1) Where any industrial concern, which is under a liability to the Financial Corporation under an agreement, makes any default in repayment of any loan or advance or any instalment thereof for meeting its obligations in relation to any guarantee given by the Corporation or otherwise fails to comply with the terms of its agreement with the Financial Corporation, the Financial Corporation shall have the right to take over the management or possession or both of the industrial concern, as well as the right to transfer by way of lease or sale and realise the property pledged mortgaged, hypothecated or assigned to the Financial Corporation. (2) Any transfer of property made by the Financial Corporation, in exercise of its powers under sub-sec. (1) shall vest all the transferee all rights in or to the property transferred as if the transfer had been made by the owner of the property. (3) The Financial Corporation shall have the same rights and powers with respect to goods manufactured or produced wholly or partly from goods forming part of the security held by as it had with respect to the original goods. (4) Where any action has been taken against an industrial concern under the provisions of sub-sec. (1) all costs; charges and expenses which in the opinion of the Financial Corporation have been properly incurred by it as incidental thereto shall be recoverable from the industrial concern and the money which is received by it shall, in the absence of any contract to the contrary, be held by it in trust to be applied firstly, in payment of such costs, charges and expenses and, secondly, in discharge of the debt due to the Financial Corporation, and the residue of the money so received shall be paid to the person entitled thereto. (5) Where the Financial Corporation has taken any action against an industrial concern under the provisions of sub-sec. (5) Where the Financial Corporation has taken any action against an industrial concern under the provisions of sub-sec. (1) the Financial Corporation shall be deemed to be the owner of such concern, for the purposes of suits by or against the concern, and shall sue and be sued in the name of the concern." * Section 46-B of the State Financial Corporations Act, 1951 reads as follows: "The provisions of this Act and of any rules or orders made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in the memorandum or articles of association of an industrial concern or in any other instrument having effect by virtue of any law other than this Act, but save as aforesaid, the provisions of this Act shall be in addition to, and not in derogation of any other law for the time being applicable to an industrial concern." * It is clear from the combined reading of S.29 and S.46-B, that Sec.29 will get attracted only when an order under sub-sec. (1) thereof is passed by the financial corporation concerned. It is clear from a reading of Sec. 29 whenever an industrial' concern, which is under a liability to the financial corporation under an agreement, makes any default in repayment of any loan or advance or any installment or fails to comply with the terms of its agreement with the financial corporation, the financial corporation shall, have the right to take over the management or possession or both of the industrial concern as well as the right to transfer by way of lease or sale and realise the property pledged, mortgaged, hypothecated or assigned to the financial corporation. The term 'industrial concern' is defined in Sec. 2(iv) of the State Financial Corporation Act, 1951 and the 'industrial concern' is defined under clause (iv) of Sec. 2 i.e. "the transport of passengers or goods by road or by water or by air or by ropeway or by lift" * . Mr. The term 'industrial concern' is defined in Sec. 2(iv) of the State Financial Corporation Act, 1951 and the 'industrial concern' is defined under clause (iv) of Sec. 2 i.e. "the transport of passengers or goods by road or by water or by air or by ropeway or by lift" * . Mr. Somayaji, learned Senior counsel submitted that the definition 'industrial concern' squarely covers the loan extended to an individual and in support of this contention, he relied on the Full Bench decision of this Court in Paramasivam v. The Tamil Nadu Industrial Investment Corporation Ltd., 1993 Writ LR 273, which does not support his contention wherein it is observed as follows: "Learned counsel submits that a lorry or a motor vehicle is also an industrial concern as defined by the Act. We do not find any substance in the contention. According to him S.2(c)(iv) of the Act would mean a motor vehicle................ The expression used by the Section is "concern". The Act does not define that expression. One of the meanings of 'concern' is a 'business'. A lorry or motor vehicle is not a business, though it may be a business asset. Hence, the contention that a lorry is an industrial concern within the meaning of the Act cannot be accepted." * A combined reading of Sec.29 read with Sec.46-B of the State Financial Corporation Act, 1951 clearly shows that a financial corporation has got a right to take legal proceedings under the ordinary law or it could take action under Sec.29 of the Act, if it is an industrial concern. If the financial corporation decides to take action under Section 29 of the Act, even assuming it to be an industrial concern first there should be an order under Sec.29(1) of the Act. In the instant case, Mr. Somayaji, learned senior counsel was fair enough in submitting that order under Sec.29(1) of the State Financial Corporations Act was passed on 19-9-1994; whereas confiscation order was passed on 27-12-1993. In view of the above, the hypothecation right which the 1st respondent Corporation had over the vehicle in question to seize the vehicle and enforce its lien was lost when the order of confiscation was passed by the 2nd respondent on 27-12-1993. In view of the above, the hypothecation right which the 1st respondent Corporation had over the vehicle in question to seize the vehicle and enforce its lien was lost when the order of confiscation was passed by the 2nd respondent on 27-12-1993. Thereafter, the property in the vehicle vests with the 2nd respondent without any encumbrance and since the petitioner purchased the said vehicle from the 2nd respondent in a public auction and the property in the said vehicle transferred to him, free from all encumbrances. In view of the above, the 1st respondent corporation has no right to seize the vehicle from the petitioner. Accordingly, the 1st respondent is directed to release the vehicle in question to the petitioner forthwith, at any rate, within ten day from the date of receipt of the copy of this order. 10. Mr. Somayaji, learned senior counsel submitted that without prejudice to the rights of the 1st respondent Corporation to resort to the remedies available under the hypothecation agreement against the person who obtained the loan and the subsequent assignee of the loan and the sale proceeds of the vehicle should be given to the 1st respondent. In view of the peculiar relationship between the 2nd respondent, who actually represent the State of Tamil Nadu, and the 1st respondent Corporation, which is an instrumentality of the State, it is open to the State Government to consider the application of the 1st respondent, if made for return of the sale proceeds, after deducting the cost incurred for bringing the vehicle in question for sale through public auction. With the above observations, the writ Petition is allowed, with costs. 11. Learned counsel for the petitioner submits that the petitioner was deprived of the use of the vehicle by the act of seizure of the 1st respondent and he is deprived of his income for 3 1/2 months. It is open to the petitioner to take appropriate action for compensation, if so advised. The first respondent shall pay costs of Rs. 1500/- which shall be shared equally by counsel for the petitioner and respondents 2 and 3 respectively. The costs shall be paid within four weeks from the date of receipt of the copy of the order. 12. In view of the disposal of the writ petition, no orders are necessary in the connected WMP and accordingly, it is rejected. Petition allowed.