Judgment 1. The Respondent, Bihar State Investment and Credit Corporation Ltd. (hereinafter referred to as "the respondent Corporation") put on auction a defaulting unit. The competing claims of the petitioner and the private respondents to the unit under auction, gives rise to the present controversy. 2. The respondent-Corporation is a Government Company created and registered under section 617 of the Companies Act, 1956, to promote growth and establishment of industries in the State of Bihar, inter alia, by providing loan on interest for the purpose. The Corporation has been vested with powers under section 29 of the State Financial Corporation Act for the purpose. 3. The respondent Corporation put on auction sale the assets of M/s Raj Chikitsa Private Limited, situated at the Boring-cum-Pattiputra Road in the main town of Patna after it was classified as a defaulting unit having failed to repay its loan to the respondent-Corporation. An advertisement was published on 31.1.2002 inviting offers. The petitioner alone responded with an offer of Rs. 42 lakhs. The offer was not accepted by the respondent Corporation. 4. A second advertisement followed on 10.4.2002. On the second consecutive occasion the only offer came from the petitioner for Rs. 52 lakhs. The petitioner was then called for negotiations. The price after negotiations, was finalised at Rs. 65 lakhs for the building only, with option to the petitioner for purchase of the land in one year. The negotiated price was then documented in a memorandum of understanding (hereinafter called MOU) signed by both parties on 10.5.2002. The MOU itself recorded deposit of 40% of the sale amount by the petitioner alongwith 60% of the balance by post dated cheques. The document provided for penal interest on delayed payment, including the right to recover any dues under the Bihar & Orissa Public Demand Recovery Act, 1914 or the Bihar State Financial Corporation Act, 1951. The MOU was subject to the approval of the Board of Directors of the respondent Corporation. The Board of Directors of the respondent Corporation, on perusal of the proposal recommended for valuation of the auctioned unit by an independent valuer. The valuation report dated 21.6.2002 assessed the value of the property at 1.47 crores treating the auctioned unit as free of any cloud of title. The auctioned unit was situated on lands with lease hold rights of 25 years, of which 10 years only remained. The valuation report dated 21.6.2002 assessed the value of the property at 1.47 crores treating the auctioned unit as free of any cloud of title. The auctioned unit was situated on lands with lease hold rights of 25 years, of which 10 years only remained. The valuer, on query by the respondent Corporation clarified that the valuation be therefore discounted by 40 to 60 percent valuing the auctioned unit at approximately Rs. 58.95 lakhs by its communication dated 3.7.2002. 5. A third advertisement followed in July, 2002. The Corporation again received no offer in response. This advertisement at annexure-3, states that the advertisement was published "as a last chance for higher offer" and that "the Corporation already had in hand an offer for Rs. 65 lakhs". This was the offer of the petitioner. Clearly the deal with the petitioner was still alive. The petitioner approached this Court in C.W.J.C. No. 8705 of 2002, aggrieved by the action of the respondent Corporation. The writ application was disposed-off on 31.7.2002 after hearing both sides with the direction that should any higher bid be received in response to the advertisement, the Corporation shall negotiate with the petitioner first and only in the event of his failure, the settlement be made with any fresh applicant. In no case shall the Corporation ignore the MOU dated 10.5.2002 without an opportunity of fresh negotiation to the petitioner. 6. The respondent Corporation having received no fresh offer invited the petitioner for fresh negotiations, when the petitioner enhanced his offer to Rs. 66 lakhs. The Corporation was already in possession of 40% of the amount as recorded in the MOU alongwith 10 lacs encashed by it from the post dated cheques deposited by the petitioner at the time of MOU, the balance post dated cheques having been returned to the petitioner in the meantime. Pursuant to the fresh negotiations, the petitioner again deposited the balance post dated cheques for the full agreed value. The respondent Corporation then handed over possession of the auctioned unit to the petitioner on 19.8.2002. It was agreed between the parties that apart from Rs. 66 lakhs as stated above the petitioner will pay Rs. 34 lakhs separately for the land also. A request was made by the petitioner on 18.9.2002 to postpone the deposit of its first post dated cheque for Rs. It was agreed between the parties that apart from Rs. 66 lakhs as stated above the petitioner will pay Rs. 34 lakhs separately for the land also. A request was made by the petitioner on 18.9.2002 to postpone the deposit of its first post dated cheque for Rs. ten lakhs dated 19.9.2002 for reason of prolonged Transport strike in the State of Bihar affecting the petitioners business and finances. It is the case of the petitioner that while in similar circumstances the respondent Corporation granted accommodation of time to M/s Annapurna Food Pvt. Ltd. and M/s Bala Paper Mills Pvt. Ltd., the petitioner was subjected to hostile discrimination and his request for rescheduling the payment, acknowledging his liability to pay penal interest for delayed payment was rejected. The respondent Corporation has not denied this fact in the counter affidavit. Another post dated cheque (dated 19.10.2002) for Rs. 6.50 lakhs was likewise dishonoured for the reason urged by the petitioner as above. The Corporation issued notice dated 3.11.2002 (a Sunday), requiring the petitioner to deposit the sum of Rs. 16.50 lakhs, value of the two dishonoured instruments, within two days i.e. by 5.11.2002. Of the two days time, 4.11.2002 was a Bank holiday for Deepawali. The respondent Corporation instituted a prosecution, inter alia, under section 138 of the N.I. Act against the petitioner. The respondent Corporation then unilaterally suddenly resumed possession of the unit instituted by the petitioner against the Corporation and its officials which is presently pending before this Court in Cr. Misc. No. 33145 of 2003. 7. On 2.8.2003 the respondent Corporation published a fourth advertisement for auction sale of the unit. The 40% deposit made by the petitioner alongwith Rs. ten lakhs from the post dated cheques at the time of MOU and the earnest money deposited by the petitioner still remained with the respondent Corporation. No fresh offer was received in response to the advertisement. The respondent Corporation again invited the petitioner for negotiations. A settlement dated 8.1.2004 followed. The sale price of the auctioned unit was agreed at Rs. 66 lakhs and Rs. 34 lakhs for the land for transfer on free hold basis. The condition for penal interest and the mode of recovery remained the same as in the MOU dated 10.5.2002. Both sides agreed to withdraw their respective criminal complaints. A settlement dated 8.1.2004 followed. The sale price of the auctioned unit was agreed at Rs. 66 lakhs and Rs. 34 lakhs for the land for transfer on free hold basis. The condition for penal interest and the mode of recovery remained the same as in the MOU dated 10.5.2002. Both sides agreed to withdraw their respective criminal complaints. The matter was placed for approval before the Board of Directors, which rejected it at the meeting dated 28.2.2004. Though the resolution be not on record, the details thereof are mentioned in paragraph 26 at page 146 of the counter affidavit filed by the respondent Corporation, setting out three grounds: (1) The conduct of the petitioner in launching criminal case against the officials of BICICO was not appreciated. (2) MOU itself was subject to final approval by the Board of Directors which did not find favour with the Board. (3) As per evaluation the auctioned unit was worth Rs. 1.47 crores which was much higher than the price offered by the petitioner. 8. The petitioner assails this resolution dated 28.2.2004 and seeks a direction to the Corporation to settle the property with him. The deposits made by the petitioner were then returned to him by letter dated 3.4.2004. 9. It is the case of the petitioner that while the Board of the Directors by its resolution dated 28.2.2004 rejected the petitioners offer on the premise that there was no policy to consider offers on discounted valuation after depreciation in view of the report dated 3.7.2002 of the valuer, the Corporation had however, granted the benefit of discounted value after depreciation for sale to one M/s Bala Paper Mills, thus subjecting the petitioner to hostile discrimination. This fact is not again denied in the counter affidavit of the Corporation. 10. On 20.5.2004 the respondent Corporation published the 5th advertisement inviting offers for sale of the auctioned unit. The petitioner then instituted the present writ application. On 2.6.2004 this Court granted liberty to the petitioner to participate in the auction proceeding which shall be subject to the result of the writ application. 11. On the 5th consecutive occasion the only offer received was of the petitioner. He now made offer for Rs. One Crore being Rs. 66 lakhs for the building and Rs. 34 lakhs for the land on free hold basis. The petitioner was then invited for negotiation on 6.7.2004. 11. On the 5th consecutive occasion the only offer received was of the petitioner. He now made offer for Rs. One Crore being Rs. 66 lakhs for the building and Rs. 34 lakhs for the land on free hold basis. The petitioner was then invited for negotiation on 6.7.2004. It is his case that negotiations were finalised and agenda note prepared for placement before the Board. Notwithstanding the same a fresh advertisement followed on 24.11.2004 for the 6th consecutive occasion. 12. No fresh offers were received on this sixth occasion also except from the petitioner who reiterated his offer of Rs. one crore made earlier even while the earnest money continued to be retained by the respondent Corporation. The respondent Corporation by letter dated 27.12.2004 at annexure-18 accepted the petitioners offer for one crore subject to payment of 100% amount by post dated cheques, and subject to the approval of the Board of Directors. The petitioner by letter dated 19.1.2005 objected to the change in conditions as recorded in the settlement dated 8.1.2004, white keeping himself open for further negotiations. 13. The respondent Corporation issued a 7th consecutive advertisement in January, 2005 for auction sale/lease of M/s Raj Chikitsa Pvt. Ltd. Clause 3 of the notice required deposit of 10% of the valuation of the assets immediately in case of grant of lease while Clause 4 of the notice specified that an offer for lease shall be considered only if there be no offer of out right purchase. 14. It is the case of the petitioner that since he did not receive any response to his letter dated 19.1.2005, in the facts and circumstances of the case, he assumed that his offer for purchase was still under consideration and, therefore, there was no need for him to make any offer afresh. 15. The last date for submission of offers fixed in the 7th advertisement was 31.1.2005 specifying the valuation of the unit under auction at Rs. 1.47 crores. The intervening respondents 4 to 6 are stated to have submitted their offer for lease hold rights of the auctioned unit on the last date. Their offer was finalised by the Corporation on the same very date at a monthly negotiated rent of Rs. 41,000/- per month. 1.47 crores. The intervening respondents 4 to 6 are stated to have submitted their offer for lease hold rights of the auctioned unit on the last date. Their offer was finalised by the Corporation on the same very date at a monthly negotiated rent of Rs. 41,000/- per month. The intervening respondents 4 to 6 on the same date deposited post dated cheques including 10% of the valuation as security deposit by cheque dated 31.1.2005 of Rs. one lakh, cheque dated 4.2.2005 for Rs. 8 lakhs and cheque dated 8.2.2005 for Rs. 5,70,000/-, alongwith 12 other post dated cheques for a total value of Rs. 14.70 lacs. The respondent Corporation proceeded to hand over possession of the property to respondents 4, 5 and 6 on 6.2.2005 (a Sunday) itself i.e. even without receiving the full 10% of the valuation amount as Security deposit, a mandatory condition under the 7th advertisement. The third cheque dated 8.2.2005 was returned to respondents 4, 5 and 6 on 6.2.2005 with a request for a current dated cheques, but which was actually given back to respondents 4, 5 and 6 on 12.3.2005, long after possession was already handed over. 16. The writ application was taken up on 9.2.2005 when the respondent Corporation was granted two weeks time to file counter affidavit. The Court restrained the Corporation from creating any third party interest in the property under auction till the disposal of the writ application. 17. Notwithstanding the developments on 6.2.2005 and the order dated 9.2.2005, the respondent Corporation never brought this fact to the attention of the Court that the possession of the unit had been handed over by it to intervening respondents 4 to 6. It did not file any application for modification or otherwise with regard to the interim order dated 9.2.2005. It is not in dispute that the post dated cheques deposited by respondents 4 to 6 have not been encashed by the Corporation, allegedly for the reason of interim order dated 9.2.2005. 18. While the present matter was pending before this Court, a supplementary counter affidavit was filed on behalf of the respondent Corporation. Annexure-E is an offer dated 2.5.2005 to the petitioner by the Corporation that pursuant to the discussion dated 31.3.2005 with him the Corporation was agreeable to settlement of the auctioned unit for Rs. 18. While the present matter was pending before this Court, a supplementary counter affidavit was filed on behalf of the respondent Corporation. Annexure-E is an offer dated 2.5.2005 to the petitioner by the Corporation that pursuant to the discussion dated 31.3.2005 with him the Corporation was agreeable to settlement of the auctioned unit for Rs. 66 lakhs with regard to the building in 12 monthly instalments instead of 24 as also Rs. 34 lakhs for lands in one instalment and withdrawal of the present case by the petitioner. The petitioner in reply confirmed his acceptance to the same in paragraph 8 of its second supplementary affidavit. The Corporation by letter dated 7.5.2005 still insisted on a written formal acceptance. 19. An additional supplementary counter affidavit then came to be filed by the respondent Corporation that the Board of Directors of the Corporation on 19.10.2005 at annexure-F approved the offer for lease received from intervenor respondents 4 to 6. The petitioner had not applied in response to the seventh advertisement. The Board having rejected the case of the petitioner on 21.9.2004, the Managing Director was misled in taking a wrong decision by making a fresh offer to the petitioner during the pendency of this application. 20. Learned Senior counsel Sri Navniti Prasad Singh appearing on behalf of the petitioner submitted that the respondent Corporation was a public body. The Corporation cannot act arbitrarily and unreasonably. Its actions have to stand scrutiny of fairness, even while allowing it to protect its interests. 21. It was submitted that the three grounds recorded in the resolution dated 28.2.2004 of the Board of Directors was arbitrary and perverse. In the settlement dated 8.1.2004, the parties had already agreed to withdraw their respective criminal cases. In any event this was not a ground germane to the issue and reflected "arbitrariness and bias against the petitioner. The rejection of the offer of the petitioner for purchase of the building for Rs. 66 lakhs for the reason that the valuation of the property was Rs. 1.47 Crores and that there be no policy for sale on depreciated value was also arbitrary. 22. The Board of Directors did not consider the clarification by the valuer on 3.7.2002 at their request fixing the depreciated value at Rs. 58.95 lakhs. 66 lakhs for the reason that the valuation of the property was Rs. 1.47 Crores and that there be no policy for sale on depreciated value was also arbitrary. 22. The Board of Directors did not consider the clarification by the valuer on 3.7.2002 at their request fixing the depreciated value at Rs. 58.95 lakhs. It was not in dispute that the Corporation had approved sale on discount value after depreciation to M/s Bala Paper Mills, thus subjecting the petitioner to hostile discrimination. The submission therefore was that once the resolution of the Board dated 28.2.2004 rejecting the case of the petitioner was found to be unreasonable, the writ application was fit to be allowed in view of the order dated 2.6.2004 subjecting any fresh auction to the result of the case. 23. Learned Senior Counsel Sri Singh then urged arbitrariness and hostile discrimination by the Corporation with regard to the petitioner by reason of fact that while it had granted extension of time and reschedulement of payments in the case of M/s Annapurna Food Private Ltd. and M/s Bala Paper Mills Ltd. the benefit was arbitrarily denied to the petitioner. This fact was not denied in the counter affidavit of the Corporation. 24. The last submission of Sri Singh was that the action of the Corporation in making the lease settlement with respondents 4 to 6 on 31.1.2005 itself, the day the offer was made by them, and being the last date for submission of offers under the 7th consecutive advertisement, followed by handing over the subject property on 6.2.2005, (a Sunday) to respondents 4 to 6, and that too without receipt of 10% of the full valuation as security deposit under the advertisement was a gross illegality primarily intended to over reach the interim order of this Court dated 9.2.2005. The entire dealings, coupled with the fact that the Corporation was represented before this Court on 9.2.2005 by its counsel and was well aware of the proceeding, it did not consider it proper to instruct its counsel and to inform this Court that it had, in fact, already handed over possession to respondents 4 to 6 earlier on 6.2.2005 itself were all evidence of arbitrariness and unfairness on the part of the Corporation. No application was even subsequently filed by the Corporation in this regard seeking modification or clarification of the interim order dated 9.2.2005. 25. No application was even subsequently filed by the Corporation in this regard seeking modification or clarification of the interim order dated 9.2.2005. 25. Concluding his argument learned senior counsel Sri Singh submitted that the respondent Corporation a bounden duty to obtain the best terms for disposal of the auctioned unit. The petitioner had offered outright purchase of the property for one crore to be paid within one year. The valuation report after depreciation qualified the market value of the auctioned unit at Rs. 58.95 lakhs. On the contrary, the Corporation had choosen in the background of the aforesaid facts, to settle the unit with intervenor respondents 4 to 6 on lease on a monthly rent of Rs. 41,000/- for the first ten years with 30% enhancement in the next ten years thus totaling Rs. 49,23,600 lakhs in the first ten years and thereafter Rs. 63,96,000 in the next ten years totaling to a sum of Rs. one crore, thirteen lakhs sixteen thousand in span of 20 years. It was submitted that arbitrariness on the part of the Corporation was writ large on the face of their action requiring judicial interference. 26. Sri Jitendra Singh, learned counsel appearing on behalf of the respondent Corporation submitted that the endeavour of the Corporation was to obtain the best return possible by auction of the defaulting unit. All actions and steps taken in this direction by the Corporation were ultimately subject to the approval of the Board of Directors. The petitioner was well aware of this fact. The Board of Directors at its meeting dated 28.2.2004 and again on 21.9.2004 did not accept the offer of the petitioner for purchase of the auctioned unit, inter alia for the following reasons:- The Corporation had obtained 40% of the sale amount of Rs. 65 lakhs by way of deposit and the balance of 60% by way of post dated cheques. The possession of the unit was handed over to the petitioner on 19.8.2002. The petitioner is presumed to have arranged his finances before making commitment and giving of post dated cheques to the Corporation. Yet the post dated cheques dated 19.9.2002 and 19.10.2002 of the petitioner came to be dishonoured. The Corporation issued a letter dated 3.11.2002 (a Sunday) requiring the petitioner to make good the dishonoured instruments. The possession of the auctioned unit was retaken by the Corporation on 18.11.2002. Yet the post dated cheques dated 19.9.2002 and 19.10.2002 of the petitioner came to be dishonoured. The Corporation issued a letter dated 3.11.2002 (a Sunday) requiring the petitioner to make good the dishonoured instruments. The possession of the auctioned unit was retaken by the Corporation on 18.11.2002. Despite the availability of the aforesaid time period the petitioner did not replace or pay up the value of the dishonoured instruments. Under the circumstances the Corporation was not satisfied of the bona fides of the petitioner and his ability to stand by his commitment to the Corporation. Added to this was the conduct of the petitioner in having instituted criminal cases against the officials of the Corporation. On the issue of the valuation report and the depreciated value of the property, learned counsel urged that depreciated value of the unit would be one aspect of the matter while the question of giving a discount to the petitioner by reason of depreciated value of the auctioned unit would be another matter. The Corporation did not have any policy for granting discount on the basis of the depreciated value of the unit on auction. In any event, whether the benefit be granted or not, in a particular case, would be the discretion of the Board. The petitioner had not made any offer in response to the seventh advertisement in January, 2005. The intervenor respondents had made the sole offer, the advertisement also contemplated grant of lease hold rights, the Corporation acted reasonably, fairly by granting lease hold rights to the intervenor respondents. The intervenor respondents were given possession on 6.2.2005 (a Sunday) after he had given post dated cheques covering as security deposit equivalent to 10% of the valuation of the assets. A sum of Rs. nine lakhs was thus in hand before it handed over possession. The fact that the 3rd cheque dated 8.2.2005 for a sum of Rs. 5.70 lakhs was returned subsequently to the intervenor respondents with a request for a cheque of current date and which, as a matter of fact, was not available to the Corporation on 6.2.2005 or soon thereafter was not of much significance so as to invalidate its action. Concluding his submission Sri Singh submitted that the Corporation had acted in its best interest to secure the maximum benefit from the auction of the defaulting unit. 27. Concluding his submission Sri Singh submitted that the Corporation had acted in its best interest to secure the maximum benefit from the auction of the defaulting unit. 27. Learned Senior counsel Sri Chitranjan Sinha, appearing on behalf of the intervenor respondents 4 to 6 submitted that the auctioned unit was situated on leased land The lease deed itself prohibited any right for the lessee (defaulting Unit) to sell the land in question. The entire thrust of the offer made by the petitioner was composite for purchase of the land and building. The respondent Corporation did not have the sanction in law to sell the lands. 28. He additionally submitted that the resolution of the Board of Directors dated 28.2.2004 assailed by the petitioner was not on record. This Court, therefore, did not have the benefit of going through the resolution and considering the issues and matters that may have transpired in the mind of the Board to arrive at the decision dated 28.2.2004 rejecting the petitioners offer. In support of the submission he relied upon a decision of the Supreme Court reported in A.I.R. 1986 SC 2166 (Surinder Singh V/s. Central Government & Ors.). 29. The next submission of Sri Sinha was that the writ petition itself had, in fact, become futile in terms of the subsequent developments and in absence of any challenge to the same by the petitioner. It was submitted that this Court by order dated 2.6.2004 had limited the issue till the fresh auction proceeding to be held on 8.6.2004 in pursuance of the advertisement dated 20.5.2004. The Board of the Directors of the Corporation on 21.9.2004 resolved to retender for sale the assets of M/s Raj Chikitsa. The offer of the petitioner was thus rejected but the petitioner did not challenge the same before this Court. A fresh advertisement came to be published on 24.11.2004. The petitioner made a fresh offer on 20-12.2004 by reiterating his earlier offer. The petitioner participated in the auction proceeding in November, 2004 voluntarily long after the auction proceeding on 8.6.2004 as noted in the order dated 2.6.2004. A fresh advertisement came to be published on 24.11.2004. The petitioner made a fresh offer on 20-12.2004 by reiterating his earlier offer. The petitioner participated in the auction proceeding in November, 2004 voluntarily long after the auction proceeding on 8.6.2004 as noted in the order dated 2.6.2004. Subsequently when the Corporation responded by its letter dated 27.12.2004 setting out certain terms and conditions in pursuance of the advertisement dated 24.11.2004, and the petitioners offer dated 20.12.2004, the petitioner did not accede to these conditions by his reply dated 19.1.2005 and stated that if the same be not acceptable, the matter be treated art closed. In any event the petitioner had chosen to place the subsequent developments on record by way of supplementary affidavit only. No amendment application had been filed challenging and seeking quashing of the subsequent actions of Corporation. It was submitted that filing on a supplementary affidavit of the developments could not be construed as a challenge which could only be made by way of an amendment application. Even the offer made by the Corporation to the petitioner during the pendency of the writ application by annexure E dated 2.5.2005 was subject to the approval of the Board of Directors. The Board did not approve it at its meeting dated 19.10.2005. The Corporation in its best judgment was not satisfied of the bona fides of the petitioner. The respondent Corporation, after advertisement, offer and negotiation followed by obtaining post dated cheques had handed over possession to the unit to the intervening respondents 4 to 6. The writ petition thus merited no consideration and was fit to be rejected. 30. The Court has considered the submissions of the learned Counsel of the parties, and given its anxious consideration to the same. 31. The respondent Corporation, held the property under auction in trust on behalf of the public. The money given on loan by the Corporation to the unit under auction was public money. The Corporation is expected to act on business principles. They are therefore necessarily required to act in good faith and their actions in auction of the defaulting unit will have to stand the test of fairness and reasonableness and the standard of the ordinary prudent man. All this has necessarily to be guided by the effort to obtain the best possible return as a trustees, to protect the public money. 32. All this has necessarily to be guided by the effort to obtain the best possible return as a trustees, to protect the public money. 32. In the facts of this case, it is noticeable that the advertisement with regard to the unit under auction has been published seven times. The petitioner on six occasions has been the only person to make an offer. The respondent Corporation has also been repeatedly calling him for negotiations. The original offer made by him for Rs. 42 lakhs with regard to the building, now stand at Rs. 66 lakhs. The respondent Corporation was therefore satisfied that the petitioner was a tenacious and serious contender for the purchase of the property in question. This Court cannot loose sight of the fact that in the grim economic scenario of the State of Bihar, the petitioner was repeatedly making the single offer and had increased it from Rs. 42 lakhs to Rs. 66 lakhs. This Court, is therefore not inclined to look upon the petitioner as a disinterested bidder for the property in question. This Court is satisfied that the petitioner is a serious bidder with genuine aspirations for auction purchase of the unit. 33. The respondent Corporation initially put the unit under auction twice without having any valuation done. The valuation of the auctioned property before the third advertisement was fixed initially at Rs. 1.47 Crores and then reassessed at Rs. 58.95 lakhs by a report dated 3.7.2002. This must be kept in mind while considering the petitioners offer for Rs. 66 lakhs. The Court finds it difficult to accept the submission of the Corporation that whether it will grant the benefit of the depreciated valuation to a bidder in a particular case will be its absolute discretion. In the present case nothing has been shown by the Corporation on what basis it insists on not acting under the depreciated value, specially when no other offers are forthcoming. The purpose of valuation is specific. It stands to reason by prudence why any one in a commercial transaction will bid in accordance with the original valuation, ignoring the depreciated value. Added to this is the charge of hostile discrimination which has not been denied. 34. The respondent Corporation in its counter affidavit has specifically set out the grounds on which the Board of Directors on 28.2.2004 proceeded to reject the offer of the petitioner. Added to this is the charge of hostile discrimination which has not been denied. 34. The respondent Corporation in its counter affidavit has specifically set out the grounds on which the Board of Directors on 28.2.2004 proceeded to reject the offer of the petitioner. The Court is satisfied that the reasons for rejection are not germane to the issue, especially in the given nature of the facts of the case. If the petitioner had the capacity to offer Rs. 66 lakhs and the agreement contained adequate protection to the Corporation to recover in default in payment with penalty and also under the Public Demands Recovery Act, this Court finds it difficult to appreciate the action of the Corporation for having unilaterally resumed possession of the premises on 18.11.2002 after it had delivered possession to the petitioner. The fact that both the Corporation and the petitioner had instituted criminal prosecutions against each other and then to invoke the same as a ground by the Corporation to reject the offer of the petitioner, to this Court, appears to be mala fide in law. In any event the petitioner and the Corporation had already arrived at a written understanding on 8.1.2004 to withdraw their respective criminal prosecutions. To reject the offer of the petitioner on the very same ground, is clearly arbitrary and perverse. The aspect of the valuation of the property has already been discussed above in this judgment. The Court, therefore, finds it difficult to uphold the reasons given by the Board that because of the valuation being originally fixed at Rs. 1.47 Crores, the offer of Rs. 66 lakhs by the petitioner was very low. The Board of Directors does not discuss the revised valuation obtained by them at Rs. 58.95 lakhs. No other ground has been urged on behalf of the Corporation for rejecting the offer of the petitioner by the Board of Directors. This Court does not consider it necessary to deal with this aspect of the matter any further. The Court is satisfied that the order dated 28.2.2004 refusing to accept the offer of the petitioner was clearly arbitrary, unreasonable and suffers from perversity. The Court, therefore, finds it difficult to uphold the same. The resolution of the Board dated 28.2.2004 is accordingly quashed and set aside. 35. The Court is satisfied that the order dated 28.2.2004 refusing to accept the offer of the petitioner was clearly arbitrary, unreasonable and suffers from perversity. The Court, therefore, finds it difficult to uphold the same. The resolution of the Board dated 28.2.2004 is accordingly quashed and set aside. 35. This Court on 9.2.2005 had specifically directed that while it was open to the Corporation to negotiate with regard to the property in question, it shall not create any third party rights during the pendency of the case. 36. The seventh advertisement by the Corporation as noticed above, published in January, 2005, notified the valuation of the property in question at Rs. 1.47 Crores, ignoring the revised valuation report dated 3.7.2002 fixing it at Rs. 58.95 lakhs. The advertisement mentioned 31.1.2005 as the last date for submission of offers. It was a mandatory condition under the advertisement that the offer was to be accompanied with the security deposit equivalent to 10% of the valuation of the assets as contained in the advertisement. The Corporation also specifically stated that the offer for lease shall only be considered if there be no offer for outright purchase of the assets. The intervening respondents 4 to 6 are stated to have submitted their offer for lease hold rights on the last date i.e. 31.1.2005. Negotiations are stated to have taken place between them and the Corporation on 31.5.2005 itself. A monthly rental of Rs. 41 thousand is stated to have been agreed on 31.5.2005 itself. Respondents 4 to 6 then gave 15 post dated cheques for a total of Rs. 14.70 lakhs. Of these, the security amount as required under the advertisement were the subject matter of the cheques dated 31.1.2005, 4.2.2005 and 8.2.2005. The respondent Corporation then handed over possession to respondent 4 to 6 on 6.2.2005 (a Sunday). This hastiness in action is noteworthy. 37. It is clear that the possession was handed over to respondents 4 to 6 even prior to receipt of the full 10% of the security amount. The learned counsel for the petitioner tried to persuade this Court that the act of handing over the possession of the Corporation to respondents 4 to 6 allegedly on 6.2.2005 (a Sunday) was nothing but an attempt to over reach the order of this Court dated 9.2.2005. The learned counsel for the petitioner tried to persuade this Court that the act of handing over the possession of the Corporation to respondents 4 to 6 allegedly on 6.2.2005 (a Sunday) was nothing but an attempt to over reach the order of this Court dated 9.2.2005. No affidavit has been filed by the Corporation in this regard This Court for the reasons discussed hereinafter, does not consider it necessary logo into this aspect of the matter. 38. It is apparent that when the Corporation published the seventh advertisement in January, 2005, the petitioner responded by his letter dated 19.1.2005 reiterating his offer of Rs. 66 lakhs for the building. He only reiterated to make the deposit in 24 months while clarifying that he was willing to respond to any other offer by BICICO so that settlement may be reached. This was not responded to by the Corporation. It is urged by the Corporation that since the petitioner did not apply in response to the 7th advertisement, the matter was therefore closed with regard to the petitioner. The earnest money deposited by the petitioner however remained with the Corporation. The letter of the petitioner was clearly available to the Corporation before the last date i.e. 31.1.2005 fixed under the 7th advertisement. This Court, therefore finds it difficult to uphold the plea of the Corporation that the petitioner being non-applicant now fell outside the* zone of consideration. 39. This Court, for the purpose will usefully rely upon the judgment of the Supreme Court reported in AIR 1994 S.C. 2657 (The Maharashtra State Financial Corporation V/s. M/s Suvarna Board Mills & Anr.). Para:6 "The representation it is alleged was not at all attended to, not to speak of the same receiving due consideration. We should have thought that the appellant being a public body should have acted fairly and should have communicated its response to the representation. May be, because of the respondent being almost a chronic defaulter and its earlier cheques having even bounced, the assurances contained in its representation did not carry weight. Even so, before taking resource to the drastic action of taking over possession, another assessment would have added credibility to its decision; it would have been better to do so." 40. May be, because of the respondent being almost a chronic defaulter and its earlier cheques having even bounced, the assurances contained in its representation did not carry weight. Even so, before taking resource to the drastic action of taking over possession, another assessment would have added credibility to its decision; it would have been better to do so." 40. It has been noticed from the sequence of facts that the petitioner was a lone bidder on six occasions, he had made deposits of a good part of the purchase price, the earnest money was still with the Corporation. If the petitioner was to be shut out from the consideration the Corporation in all fairness should have replied to his representation/offer dated 19.1.2005. The petitioner was therefore right in assuming that his offer for purchase was still pending consideration by the respondent Corporation and that therefore there was no need for him to make a fresh offer in response to the seventh advertisement. 41. The intervenor respondents 4 to 6 submitted its offer on the last date. Negotiations were finalised the same day and the cheques obtained. Possession was handed over on Sunday without receipt of even the full value of the security amount as required under the advertisement whereas an offer for purchase of the building for Rs. 66 lakhs by the petitioner was available to the Corporation. The advertisement stipulated preference to outright purchase over lease. The Corporation preferred to keep silent even after the interim order of this Court dated 9.2.2005 when it had allegedly handed over possession to intervenor respondents 4 to 6 on 6.2.2005 (a Sunday). The Corporation was represented by its counsel on 9.2.2005 and was granted time to file counter affidavit, yet it did not consider it necessary to instruct its counsel of the developments taking place and neither did it consider it proper to approach this Court, place the facts before it and seek a proper modification or clarification of the order dated 9.2.2005. 42. It is not in dispute that the cheques in question handed over to the Corporation by intervenor respondents 4 to 6 have not been encashed by the Corporation for the reason of the interim order dated 9.2.2005. It is not the case of the Corporation that it handed over the possession to respondents 4 to 6 on 6.2.2005 (a Sunday) with the approval of the Board of Directors. It is not the case of the Corporation that it handed over the possession to respondents 4 to 6 on 6.2.2005 (a Sunday) with the approval of the Board of Directors. This Court is therefore satisfied that irrespective of the contention of the petitioner that the act of handing over of possession to respondents 4 to 6 was an act to over reach the order of this Court, the handing over of possession on 6.2.2005 (a Sunday) was contrary to law, whether it be the order dated 9.2.2005 or the procedural requirements for handing over of the possession. The Court therefore holds that the property under auction never came in possession of the intervenor respondents 4 to 6 and continues to remain in possession of the respondent Corporation. 43. The development on 2.5.2005 when the Corporation in the present proceeding offered to hand over the property to the petitioner for Rs. 66 lakhs in 12 monthly instalments, was accepted by the petitioner before this Court. The Managing Director of the Corporation also consented to the same but subject to the withdrawal of the present writ application. The Board of Directors however at its meeting on 19.10.2005 at annexure F recorded that no offer was received from the petitioner in response to the 7th advertisement. This aspect of the matter has already been noticed by this Court hereinabove in the context of the petitioners letter dated 19.1.2005. This Court finds it difficult to appreciate the action of the Corporation in renegading from the offer made by it to the petitioner on 2.5.2005 approved by the Managing Director by simply stating that the Managing Director was misled into taking a wrong decision. It is not the case of the Corporation that any action has been taken against the official who misled the Managing Director into taking such wrong decision. This Court is satisfied that the resolution of the Board of Directors of the respondent Corporation dated 19.10.2005 at annexure-F to settle the property on lease with intervenor respondents 4 to 6, is in teeth of the interim order of this Court dated 9.2.2005. The resoiutio of the Board of Directors dated 19.10.2005 therefore does not stand the scrutiny of this Court as being proper, bona fide and in accordance with law, protecting the best interest of the Corporation. The same is accordingly set aside. 44. The resoiutio of the Board of Directors dated 19.10.2005 therefore does not stand the scrutiny of this Court as being proper, bona fide and in accordance with law, protecting the best interest of the Corporation. The same is accordingly set aside. 44. If an authority be needed for the purpose, reliance may be placed upon a Division Bench decision of this Court reported in A.I.R. 1983 Patna 8 [: 1982 PUR 376] (Nawal Kishore Prasad Sinha & etc. V/s. State of Bihar & Ors.). This Court was considering the validity of the decision taken at a meeting held contrary to the stay order of the Court. It was urged that the matter could be dealt with only under the contempt jurisdiction and not otherwise. The Division Bench in the" relevant extract at paragraph-8 held as follows:- "The question of committal or noncommittal under the Contempt of Courts Act is one of the discretion of the Court and can be exercised when this Court is fully satisfied that there has been deliberate attempt to flout the order of this Court. That will depend on the facts of each case, the nature of the order and the act complained of. But without initiating a proceeding for contempt this Court can quash any order or proceeding done in disregard of such orders which may also tantamount to contempt. It is very difficult to accept this extreme proposition that the acts done in defiance of Courts order can only be dealt with under the Contempt of Courts Act where a complete machinery is provided for, and in no other manner. The Act does not put any bar. By accepting the proposition this Court will have to completely ignore the illegal acts of the subordinate authorities and, I may hasten to add, this will lead to dangerous results. This Court, when confronted with such situation, has to exercise its power conferred under the Constitution and pass necessary orders to undo the wrong and to do justice between the parties." 45. The Supreme Court, in a judgment reported in {1996)4 SCC 622 [Delhi Development Authority V/s. Skipper Construction Company (P) Ltd. and Anr.] at paragraph 19 held that: "where an act is done in violation of an order of stay and injunction, it is the duty of the court, as a policy, to set the wrong right and not allow the perpetuation of the wrong doing. The inherent power of the Court, it was held, is not only available in such a case, but it is bound to exercise it to undo the wrong in the interest of justice". 46. This observation was with regard to a meeting held contrary to an order of injunction: "The court refused to recognise that the holding of the meeting is a legal one. It put back the parties in the same position as they stood immediately prior to the service of the interim order." 47. In the present case the first advertisement was issued on 31.1.2002 and the 7th advertisement in January, 2005. This Court has (or reference the judgment of the Supreme Court reported in A.I.R. 2004 SC 2421 [:2004(2) PLJR (SC)171] (M/s S.J.S. Business Enterprises (P) Ltd. V/s. State of Bihar & Ors.) aptly relied upon by the counsel for the petitioner. This arose out of an action by the present respondent Corporation for auction sale of a hotel. The advertisement was published on 31.1.2002. The original valuation was fixed at Rs. 2.16 Crores. In the second valuation it was reassessed at Rs. 1.58 crores. The third valuation fixed it at Rs. 94.81 lakhs. The first advertisement received an offer of Rs. 41 lakhs. A second advertisement followed on 26.3.2002. On the same day i.e. 26.3.2002, respondent no. 6 made an offer for purchase of the unit at Rs. 95.50 lakhs and, in fact, paid the amount, the same day. Four days later the price was enhanced, on negotiation, to Rs. one crore. The unit owner questioned the action of the Corporation. The Corporation contended that it had handed over possession to respondent no. 6 on 27.5.2003. The Supreme Court noticed that there was no resolution of the Board of the Directors or supplementary agreement or conveyance deed executed by the BICICO in favour of respondent no. 6. There is a mark similarity in facts here. Their lordships at paragraph 17 of the judgment proceeded to hold: "we are of the view that the sale effected in favour of respondent no. 6 cannot be sustained. It is axiomatic that the statutory powers vested in the State Financial Corporation under the State Financial Corporations Act, must be exercised bona fide. Their lordships at paragraph 17 of the judgment proceeded to hold: "we are of the view that the sale effected in favour of respondent no. 6 cannot be sustained. It is axiomatic that the statutory powers vested in the State Financial Corporation under the State Financial Corporations Act, must be exercised bona fide. The presumption that public officials will discharge their duties honestly and in accordance with law may be rebutted by establishing circumstances which reasonably probabilize the abuse of the power. In such event it is for the concerned officer to explain the circumstances which are set up against him..." 48. Their lordships at paragraph 21 of the judgment noticed the extraordinary circumstances that respondent no. 6 had submitted his offer and paid the entire consideration money on the same day. It was unlikely that respondent no. 6 was in a position to do this unless he knew that his offer is going to be accepted. 49. The conclusion at para 22 of the judgment was that: "no satisfactory explanation is forthcoming from the authorities to explain these deviations from the norm. The concatenation of inexplicable and unexplained circumstances is sufficient for us to hold that the sale was unfair and consequently invalid." 50. This Court can only notice two features of the aforesaid judgment. The time period of facts of the aforesaid case and the present case is the same. The background in which the settlement was made with the intervening respondents 4 to 6 are more or less alike. This Court would not like to say anything further in the matter. 51. The court is clearly satisfied that rather than discharging its duties on business principles, the respondent Corporation for reasons better known to it has only ended up creating an imbroglio to the benefit of none, including itself. 52. On a considered perspective of the entire matter, this Court holds that the act of the Corporation in handing over the possession of the unit to intervenor respondents 4 to 6 was clearly contrary to law and is of no effect. The property continues to be in the possession of the respondent Corporation. The petitioner has made an offer for outright purchase of the building at Rs. 66 lakhs. The Corporation is under duty to obtain the best possible offer. The condition of the advertisement was that outright purchase offer was to be preferred first. The property continues to be in the possession of the respondent Corporation. The petitioner has made an offer for outright purchase of the building at Rs. 66 lakhs. The Corporation is under duty to obtain the best possible offer. The condition of the advertisement was that outright purchase offer was to be preferred first. The respondent Corporation has no authority in law to sell the lands upon which the Unit under auction is situated. The Court, therefore, considers it proper to direct the Corporation to renegotiate the matter with the petitioner and intervenor respondent nos. 4 to 6 and arrive at a fresh decision of sale or lease of the building afresh in accordance with law. This will not preclude the Corporation from publication of fresh advertisement and inviting fresh offers which must be considered alongwith that of the petitioner and intervenor respondent nos. 4 to 6. The settlement shall be made with the highest bidder, giving preference to an offer of outright purchase as per the advertisement by the Corporation. 53. The writ application is allowed to the extent indicated, with the directions as contained. 54. No order as to costs.