1. Prabhat Terpenes and Synthetic Private Limited has filed this writ petition seeking quashing of the Jammu and Kashmir State Industrial Development Corporation Limiteds order No. 229 dated 14.2.2006 whereby physical possession of the mortgaged properties of the petitioner-Company (excluding raw materials finished and un-finished goods, pledged to the Bank) had been ordered to be taken over for realization of the outstanding dues of the Jammu and Kashmir Industrial Development Corporation Limited besides Auction Notification No. IDC/DB/99/CO/152/149 dated 28th of June, 2006. 2. The petitioner says that a Term Loan of Rs. 56.75 lacs at 9.5% interest rate (over and above 3.5% re-financed from IDBI) was obtained by it which was to be paid back in instalments after every six months. Referring to the tripartite agreement entered into between the petitioner, Jammu and Kashmir Financial Corporation and the State Industrial Development Corporation Limited and mortgage deed dated 26th of November, 1979, the petitioner says that liquidating major part of the loan amount from 1980 to September, 1986 an amount of Rs. 49.84 lacs had been paid back to the State Industrial Development Corporation Limited against the term loan of Rs. 56.75 lacs. 3. It is stated that petitioners Unit did not work well because of the Governmental policies resulting in delayed repayment of the loan amount which was due to the State Industrial Development Corporation (hereinafter to be referred as "SIDCO"). The Unit was ultimately closed. The petitioner further says that it had paid a sum of Rs. 102.60 lacs and no more amount was required to be paid by it to the SIDCO. The petitioner refers to one time settlement offer of SIDCO and its agreement for settlement for an amount of Rs.17,56,924/- as against Rs. 69, 18,946/- which was due in 1998. 4. With the aforesaid background facts, the petitioner questions SIDCOs taking over order and consequent auction notice on the ground that opportunity of hearing had not been given to the petitioner before taking action under Section 29 of the Jammu and Kashmir State Financial Corporation Act. 5. 69, 18,946/- which was due in 1998. 4. With the aforesaid background facts, the petitioner questions SIDCOs taking over order and consequent auction notice on the ground that opportunity of hearing had not been given to the petitioner before taking action under Section 29 of the Jammu and Kashmir State Financial Corporation Act. 5. Urging that neither any notice had been issued to the petitioner-Company by the SIDCO and nor had it acceded to the petitioners request for settlement of accounts, it submits that no inventory had been prepared before putting the mortgaged property to auction which had been ordered to be carried out without evaluating and working out the market value of the property which was required to be put to auction. The auction notice is dubbed as bad because it did not fix any Reserve Price of the auction. 6. In reply to the writ petition, the SIDCO submitted that the petitioner was a chronic defaulter which did not respond to any notice for payment of loan forcing it to initiate action under Section 29 of the Jammu and Kashmir State Financial Corporation Act and consequent auction notice of petitioners property on 5.5.1998. After the publication of this auction notice in the Newspaper, the petitioner made a representation pursuant whereto the auction process was put on hold. The petitioner, instead of settling the matter, approached the Board of Industrial Finance Re-construction (BIFR). After loosing there, it filed an appeal before the Appellate Forum (AAIRF). After having lost there too, it approached Honble High Court of Bombay which remanded the matter to Appellate Forum. This time too, the AAIRF upheld its previous order. Despite failing in the BIFR and other forums, the petitioner did not liquidate the debt. 7. The Corporation submits that its action against the petitioner was bona fide, fair and reasonable which had been so initiated when despite extending all possible help including extending of the one time settlement scheme in which 100% waiver of remaining interest had been offered, the petitioner failed to avail of the offered opportunities. The Corporation says that the petitioner had all along been communicated about its liability and it had never disputed its liability to pay the amount. 8. It is stated by the SIDCO that in 1989, the petitioner had accepted and acknowledged its liability to the tune of Rs. The Corporation says that the petitioner had all along been communicated about its liability and it had never disputed its liability to pay the amount. 8. It is stated by the SIDCO that in 1989, the petitioner had accepted and acknowledged its liability to the tune of Rs. 45.36 lacs whereafter the Corporation had communicated to the petitioner that the liability had arisen to Rs. 48.75 lacs. Petitioners communication dated 26th of September, 1989 and Corporations letter dated 28th of September, 1989 have been produced by the Corporation in support of its stand. This liability of Rs. 48.75 lacs, because of continued defaults of the petitioner had accumulated further and on 15.9.2005, it had gone to the tune of Rs. 166.54 lacs. The Corporation has produced the summary of accounts indicating the interest charged and the amount payable by the petitioner to SIDCO. 9. It is stated on behalf of the SIDCO that it is a nodal agency of the State Government for developing medium and large scale industries in the State and for securing its aims and objects, it offers financial assistance to the Industrial Units. It is stated that the petitioner-Company was under a contractual liability to liquidate the financial assistance granted to it along with interest especially when the loan amount granted to the petitioner-Company was a huge amount which had been secured by the Corporation from the Industrial Development Bank of India. The Corporation says that it had since liquidated the whole amount to the Industrial Development Bank of India along with interest in order to avoid any dispute with the Financial Institution. The petitioner-Company had to liquidate the whole term loan amount along with interest accrued thereon on or before 15th of September 1989 but it had failed to discharge its contractual obligation forcing the Corporation to resort to the provisions of Section 29 of the Jammu and Kashmir State Financial Corporation Act. 10. Projecting the ill intentions of the petitioner to liquidate the outstanding loan amount, the Corporation says that this Court had stayed the proposed auction on the request of the petitioner and in doing so had desired the petitioner to furnish a Bank guarantee to the tune of Rs. 50.00 lacs. The petitioner, however, failed to do that, revealing its intention to avoid payment of the loan amount due to the Corporation. 50.00 lacs. The petitioner, however, failed to do that, revealing its intention to avoid payment of the loan amount due to the Corporation. The Corporation relies on the law laid down by Honble Supreme Court of India in Karnataka State Industrial Investment & Development Corpn. Ltd. V. Cavalet India Ltd and others, reported as (2005) 4 SCC 456 to urge that judicial review of action initiated under Section 29 of the Jammu and Kashmir State Financial Corporation Act was permissible only if the action was unfair or unreasonable or in violation of the statutory provisions. The Corporation says that "judicial review" of Corporations action in the present case may not be justified because the petitioner was not a bona fide loanee and was rather a chronic defaulter who wanted to avoid its liability on one or the other pretext. 11. Learned counsel for the parties were heard in the matter. 12. Mr. U. K. Jalali, learned senior counsel appearing for the petitioner-Company, submitted that the petitioner-Company had not been provided opportunity by SIDCO for settlement of accounts and that action of SIDCO in going in for procedure under Section 29 of the Jammu and Kashmir State Financial Corporation Act was unreasonable besides being unfair. Learned counsel was critical of the auction notice because according to him, the value of the petitioner Companys assets had not been reflected in the auction notice and no inventory had been prepared before putting the properties of the Company to auction. It is urged by learned counsel for the petitioner that without fixing a Reserve Bid Price, the auction notice could not be sustained. 13. M/s. A. H. Naik, learned Advocate General and M. K. Bhardwaj, learned senior counsel, both appearing for the respondents submitted that the petitioner had raised disputed questions of fact in the writ petition which were not required to be gone into in the present proceedings and that from the conduct of the petitioner, it stood established, on the basis of documentary evidence produced by the respondents that the petitioner had all along admitted its liability to pay the amount due to the Corporation but had failed to liquidate it which clearly exhibited its ill-intentions not to pay the public money. Learned counsel submitted that the Corporation had even given an offer to the petitioner-Company for one time settlement foregoing the remaining interest payable by the Company to the Corporation but the Company had avoided the payment of amount due on flimsy grounds. Learned counsel submitted that the petitioner cannot invoke writ jurisdiction of the Court because judicial review of the actions of the respondents in the facts and circumstances of the case, would not be justified. Learned counsel refers to Karnataka State Industrial Investment & Development Corpn. Ltd. V. Cavalet India Ltd and others reported as (2005) 4 SCC 456 to urge that the writ petition of the petitioner was liable to be dismissed. 14. I have considered the submissions of learned counsel for the parties and gone through the documents placed by the respondents and the petitioner Company on records. 15. Petitioner-Companys case in nutshell is that it was not a willful defaulter and before initiating recovery proceedings, the respondents had not issued any prior notice to the company thereby violating the principles of natural justice. Its further case is that inspite of adverse conditions and closure of Unit it was willing to settle the account and pay the balance amount whatever remained to be paid by it to the Corporation. The Company additionally says that the action of the respondents was contrary to Section 29 of the State Financial Corporation Act and their action of taking over the possession and putting the property to auction without preparing any inventory, working out its value and fixing the Reserve Bid Price was unwarranted and unjustified. 16. The first plea of petitioner-company that it had no notice regarding taking over of the mortgaged property and its auction, appears to be an after thought. This is so because communication dated 1.12.1998 addressed by R. S. Shyamsaika, the General Manager of the Petitioner- company to the Managing Director of the SIDCO clearly demonstrates that after the expiry of the period fixed for paying back the loan amount, the Company had been in constant communication with SIDCO complaining about the issuance of auction notice of the Unit in Kashmir Times and regarding one time settlement under Amnesty schemes besides claiming additional loan facility and revised working capital limits for restarting the Unit. 17. 17. The petitioner has placed many such communications on records, perusal whereof would demonstrate that the Company had failed to pay the loan amount within the time fixed in the contract of the parties which loan had thus swollen because of the non-payment of the remaining principal amount and interest payable by the Company to the respondents. 18. The case set up by SIDCO that the borrower had failed to follow the schedule for repayment of loan which had swollen to Rs. 166. 55 lacs as on 15.9.2005, appears to be justified as nothing has been placed on records on the basis whereof it may be said that the petitioner company had not defaulted in the repayment of the loan amount. The Corporation had issued notices in Kashmir Times and Daily Excelsior informing the petitioner company to pay back the loan amount and interest thereon failing which the mortgaged property had been notified to be put to auction by invoking the provisions of section 29 of the State Financial Corporation Act. The Company had due notice of these notices. It, however, failed to pay back the loan amount. The property of the petitioner company was not still auctioned and was kept on hold on the request of the petitioner company which wanted re-settlement of accounts so as to pay the balance amount. 19. From the date of respondents putting the auction on hold, the petitioner company did not do any thing in repaying the loan amount and clearing the accounts. Six years thus passed without any payment by the Company to the SIDCO, the Financial Institution which, after borrowing amount from IDBI, had helped the petitioner company in setting up its Unit. 20. Natural justice cannot be placed in a strait-jacket; its rules are not embodied and they do vary from case to case and from one fact-situation to another. All that has to be seen is that no adverse civil consequences are allowed to ensue before one is put on notice that the consequences would follow if he would not take care of the lapse. Likewise fairness cannot be a one way street. The fairness required of the Financial Corporations cannot be carried to the extent of disabling them from recovering what is due to them. Likewise fairness cannot be a one way street. The fairness required of the Financial Corporations cannot be carried to the extent of disabling them from recovering what is due to them. While not insisting upon the borrower to honour the commitments undertaken by him, the Financial Corporation alone cannot be shackled hand and foot in the name of fairness. 21. In view of the case set up by the respondents which is supported by their documentary evidence and statement of accounts, I am not inclined to accept the petitioners version that the Corporation had not issued any notice to it before initiating action under Section 29 of the State Financial Corporation Act and that its action was unfair besides being unreasonable. 22. According to the agreement between the parties, the loan amount of Rs. 56.75 lacs had to be cleared by the petitioner company by 15th of September, 1989. The Company had vide communication dated 26th September 1989 admitted and acknowledged it to be in default of the principal amount of Rs. 30.95 lacs and interest amounting to Rs. 14.41 lacs. Non-payment of the loan amount and interest amount for such a long period after its due date cannot but term the petitioner company as a willful defaulter warranting action under section 29 of the State Financial Corporation Act. A Financial Institution, created for helping the entrepreneurs to set up industrial units in the State, has not to run after the borrowers to pay back the amount because such a course would result in closure of Financial Institution itself thereby affecting the States economy and development. 23. Respondents resort to the provisions of Section 29 of the State Financial Corporation Act, 1951 cannot thus be faulted in view of the facts and circumstances of the present case where the company, despite having admitted its liability to pay the amount, had succeeded in avoiding payment to the Financial Institution on false plea of non-settlement of accounts. The Corporation in the present case had done all what it could have done to give sufficient time to the company to pay back the amount and had even put its earlier attempt of putting the mortgaged property to auction on hold providing one time settlement offer to the company which the company had failed to avail of on its mere ipse dixit. 24. 24. The plea of Petitioner Company that action taken by the respondents under Section 29 of the State Financial Corporation Act, is unsustainable, is, accordingly, found to be without any substance. It is accordingly rejected. 25. That apart, as held by Honble Supreme Court of India in Karnataka State Industrial Investment & Development Corpn. Ltd v. Cavalet India Limited and others, reported as (2005) 4 SCC 456, the disputed questions of fact raised by the petitioner in this petition regarding non-settlement of accounts before initiation of action under section 29 of the State Financial Corporation Act, 1951 cannot be gone into because jurisdiction under Article 226 of the Constitution of India read with section 103 of the Constitution of Jammu and Kashmir, is not appellate in nature and may not be exercised particularly in commercial matters relating to recovery of secured debts unless however such recovery was in violation of any statutory provision or otherwise unreasonable. 26. The facts and circumstances of the present case demonstrate that the petitioner-Company had on number of occasions admitted and acknowledged its liability to pay the borrowed amount to the SIDCO. Its som-er-sault stand in the writ petition requiring adjudication of disputed questions of fact, cannot thus be entertained, for extra ordinary civil writ jurisdiction is not meant for such purposes. 27. Accordingly, SIDCOs order No. 229 dated 14.2.2006 taking over physical possession of the mortgaged properties of Petitioner Company for realization of outstanding dues of the Corporation, is held to be valid. Petitioners writ petition, in so far as it questions SIDCOs order No. 229 dated 14.2.2006, is accordingly dismissed. 28. I, however, find that the auction notice No. IDC/DB/99/CO/152/149 dated 28.6. 2006 issued by Senior Manager (DB) Jammu and Kashmir SIDCO for and on behalf of Jammu and Kashmir State Industrial Development Corporation limited is bad in law because the Corporation while enforcing its first charge on the assets of the petitioner company was required to proceed in terms of Section 29 (4) of the State Financial Corporation Act, 1951 but before doing so, it was imperative for the Corporation to have the assets of the company proposed to be sold in auction, valued. The Corporation, the first charge-holder, was required to act in a manner which protects not only its own interest but also the interest of the subsequent charge-holder/s and the mortgagor. The Corporation, the first charge-holder, was required to act in a manner which protects not only its own interest but also the interest of the subsequent charge-holder/s and the mortgagor. It would be fruitful to refer to what has been held by Honble Supreme Court of India in this respect in Gajraj Jain v. State of Bihar reported as (2004) 7 SCC 151. Their Lordships observed as follows:-- "12. Under Section 29 (1) of the 1951 Act, where any industrial concern under a liability to the financial corporation makes any default in repayment of loan, the corporation is empowered to take over possession of the industrial concern and realize the property pledged, mortgaged, hypothecated or assigned to the corporation. Under Section 29 (4) , all costs, charges and expenses incurred by the corporation as incidental to such realization of the property pledged, hypothecated or mortgaged shall be recovered firstly from the industrial concern and the balance shall be paid to the person entitled thereto. As stated above, a charge consists in the right of a creditor to receive the payment out of the proceeds of the realization of property or fund charged with the debt. A bare reading of sub-sections (1) and (4) of Section 29 shows that it is similar to Section 69 of the TP Act under which it is stipulated that a mortgagee exercising the power of sale is a trustee of the surplus sale proceeds and after satisfying his own charge he holds the surplus for the subsequent encumbrancers and ultimately for the mortgagor. (See Rajaj Kishendatt Ram v. Rajah Mumtaz Ali Khan). Section 29(1) contemplates, therefore, a sale for distribution of sale proceeds and not a sale for distribution of property charged with the debt. It also implies that the first charge-holder must act in a manner which protects not only its own interest but also the interest of the subsequent charge-holder and the mortgagor. This in turn implies that the first charge-holder is bound to obtain the best possible price for the mortgaged assets and the best possible price must, in the context, mean the fair market value." 29. Auction notice dated 28th June, 2006 of the SIDCO, when considered in the light of what has been held by Honble Supreme Court of India, is found to be wanting in many aspects. Auction notice dated 28th June, 2006 of the SIDCO, when considered in the light of what has been held by Honble Supreme Court of India, is found to be wanting in many aspects. The auction notice does not give description of the civil structures, plant, machinery and other items, which are stated to be there in the premises of the petitioner. The valuation of the property and the Reserve Bid Price of the property sought to be put to auction too have not been reflected in the auction notice. 30. The action of the SIDCO in publishing a slip-shod and vague notice of auction cannot thus be said to be in accordance with the letter and spirit of section 29 (4) of the State Financial Corporation Act, 1951. 31. Auction notice No. IDC/DB/99/CO/152/149 dated 28.6.2006 of the State Industrial Development Corporation, is, accordingly, quashed with a direction to the Corporation to get whole of the mortgaged property, sought to be put to auction, evaluated for assessing its market value and then to go ahead with the auction of the mortgaged property indicating, in the auction notice, the details of the properties along with their present market value either item wise or as a whole, as may be found desirable so as to fetch maximum price of the mortgaged properties together with the Reserve Bid Price for the auction. 32. The Corporation is left free to devise such procedure and prescribe such conditions for going ahead with the auction so as to get maximum price of the mortgaged property. 33. Before concluding, I would like to dispose of CMP No. 876/2006 filed by Appellate Authority Commercial Tax Officer, C.T Circle-I, claiming its first charge on the mortgaged property to recover sales tax arrears amounting to Rs. 1,54,35,357.70/-. 34. During the course of hearing of this application, learned Advocate General could not refer to any statutory provision of law, either in the General Sales Tax Act or elsewhere, on the basis whereof it may be said that the sales tax liability would operate as first charge on the assets of an assessee who was in default of the arrears of loan amount, which were payable to the State Industrial Corporation Limited for which the Corporation had secured its loan amount by mortgage of the properties of the petitioner-company. 35. 35. A similar question arose for consideration before a Full Bench of Madras High Court in UTI Bank v. The Deputy Commissioner of Central Excise, Chennai & anr, AIR 2007 Madras 118, as to whether or not the Sales Tax arrears would be treated as `first charge over the assets of a secured creditor. 36. After going through extensively, the law on the subject, the Full Bench had ruled as follows:-- "(i) Generally, the dues to government, i.e., tax, duties, etc. (Crowns debts) get Priority over ordinary debts. (ii) Only when there is a specific provision in the statute claiming "first charge" over the property, the Crowns debt is entitled to have priority over the claim of others. (iii) Since there is no specific provision claiming "first charge" in the Central Excise Act and the Customs Act, the claim of the Central Excise Department cannot have precedence over the claim of secured creditor, viz., the petitioner Bank. (iv) In the absence of such specific provision in the Central Excise Act as well as in Customs Act, we hold that the claim of secured creditor will prevail over Crowns debts." 37. In view of the authoritative pronouncement by the Full Bench of Madras High Court dealing with the point in issue and in the absence of any provision in the General Sales Tax Act of the State of Jammu and Kashmir supporting the plea of "First Charge", I do not find any merit in the CMP. Claim of the Sales Tax Department for its first charge over the assets of the petitioner-company is found to be untenable. This CMP is accordingly rejected. 38. CMP No. 689/2006 filed by Bank of Baroda, seeking its impleadment as party respondent on the ground that it has second charge over the leasehold rights and assets of the petitioner-company, may not survive for consideration and decision because the question of second charge on the mortgaged property would arise only after the property is put to auction and amount payable to the first charge holder satisfied. 39. The occasion having not yet arisen, the application of Bank of Baroda would not be maintainable in view of the order which has been passed in the Companys writ petition. The writ petition is accordingly disposed on above terms along with connected CMPs.