ORDER Mis. Sudha Resorts Limited (SRL) represented by its Managing Director, Vasam Shiva Prasad, filed the instant Writ Petition praying for the following relief. ...... this Hon'ble Court may be pleased to issue an appropriate writ, order or direction, more particularly a writ in the nature of mandamus, declaring the action of the 15t respondent in selling the property belonging to the petitioner company and confirming the same in favour of respondent No. 3 without informing the bid amount and without giving an opportunity to the petitioner to clear off the outstanding amounts to be paid to the 151 and 2nd respondents without following the mandatory principles laid down by the Hon'ble Apex Court as reported in 1992 (2) JT SC 326 as well as this Hon'ble Court as being illegal, arbitrary, mala fide and consequently set aside the same in the interests of justice. 2. The brief fact of the matter is as follows. Mis. Sunkara Hotels Limited (SHL) is a Company incorporated under the Companies Act, 1956, for the purpose of establishing Hotels and Lodging Houses. It was promoted by Sri S. Hanumantha Rao and Associates initially as a private compal1Y, which later was converted into a public company. SHL availed term loan of Rs. 47,92,423/- from the Andhra Pradesh State Financjal Corporation Limited (APSFC), .. which was disbursed on 9-8-1989. A further . term loan of about Rs.6,00,000/- was also availed on 31-3-1993. In addition to this, SHL availed general loan of Rs 40,00,000 From the Andhra Pradesh Industrial Oeve~men1: Corporation Limited (API DC). The borrower, however, could not complete the project. It is alleged that they approached $RL to take over the company. The petitioner, therefore, expressed its !. willingness, and APSFC vide letter, dated 9-2-19j5, allegedly agreed for such take over of the management of SHL by SRL, subject to certain conditions. After obtaining necessary certificate for change of name of the company to SRL, according to the petitioner, take over was completed, and thereafter, tt;w3 petitioner invested an amount .; o! rupees four crores eighty lakhs and completed the project. In May 1996 hotel , was inaugurated and commercial operations , were commenced from 1-9-1996. 3. The petitioner company allegedly paid the loan instalments regularly; by Apri11997 remitted a sum of RsA72 lakhs. But, due to financial problems the project faced crisis. rupees four crores eighty lakhs and completed the project. In May 1996 hotel , was inaugurated and commercial operations , were commenced from 1-9-1996. 3. The petitioner company allegedly paid the loan instalments regularly; by Apri11997 remitted a sum of RsA72 lakhs. But, due to financial problems the project faced crisis. APSFC, therefore, issued sale-cum-recall notice dated 2-3-1998 calling upon the borrower to discharge the amounts immediately. It appears Vasam Shiva Prasad, who filed case on behalf of SRL, was detained in prison in connection with criminal case against Mis. Sudha Finance, in which he was a partner. In the meanwhile, the Hotel was seized and locked by staff of APSFC. They also filed a caveat petition in the Court of the Senior Civil Judge, City Civil Court, Hyderabad, stating that an amount of Rs.55,92,379/- is due from the borrower. On 21-6-1999 APSFC addressed a letter to promoters of SHL stating that the property has been sold an that if promoters pay highest bid price, assets will be offered to them. Subsequently, APSFC filed interpleader suit, being O.S.No. 7 of 2000, on the file of the Court of the Chief Judge, City Civil Court, Hyderabad, under Order XXXV and Section 88 of the Code of Civil Procedure, 1908 (CPC), stating that the property of the borrower was sold, that an amount of RS.1 ,01 ,214/- was appropriated for discharge of liabilities by SHL, and that as there were lot of demands by other creditors of the company, because of which, interpleader suit is filed. Having come to know of the suit, being O.S.No. 7 of 2000, the petitioner approached first respondent for release of excess sale proceeds. Petitioner claimed an amount of Rs. 72 lakhs being excess sale amount over and above the loan payable to APSFC. On 18-1-2000 an application was submitted along with legal opinion of the Standing Counsel for APSFC. Though the Counsel opined that petitioner is entitled for an amount of Rs.72 lakhs, APSFC paid approximately RS.27 lakhs after obtaining necessary indemnity bonds from petitioner company. The petitioner contends that the conduct of sale by APSFC is arbitrary and contrary to the provisions of Section 29 of the State Financial Corporations Act, 1951 (the Act, for brevity). Having recognized the new management of SRL, which took over the assets and liabilities of SHL, issuance of notice only to promoters of SHL is mala fide. 4. The petitioner contends that the conduct of sale by APSFC is arbitrary and contrary to the provisions of Section 29 of the State Financial Corporations Act, 1951 (the Act, for brevity). Having recognized the new management of SRL, which took over the assets and liabilities of SHL, issuance of notice only to promoters of SHL is mala fide. 4. APSFC filed counter affidavit, which is adopted by auction purchaser; the third respondent herein. In their counter affidavit APSFC has stated as follows. The deponent of the writ affidavit is not Managing Director of SHL. APSFC sanctioned a loan of RS.60 lakhs on 9-8-1989 and released an amount of RS.53.93 lakhs to SHL, who also obtained a term loan of Rs,40 lakhs from API DC. The land, which was originally owned by S. Hanumantha Rao (Managing Director), S. Anjaiah, Radhakrishna Murthy and N. Rama Rao was mortgaged as security. As per records of APSFC there was no take over of SHL. SRL is not a different company. No such letter was ever addressed by the petitioner to APSFC. While admitting the sale of property and appropriation towards loan as well as filling the interpleader suit, APSFC further stated that after appropriating towards loan of APSFC, API DC and other creditors, balance of Rs.22,57,459.20 was paid to the petitioner, and two Authorized Directors received the cheque on behalf of SRL. Though the name of SHL was changed as SRL, management was not changed. The writ petition is also opposed on the ground that the decision in Mahesh Chandra v. Regional Manager, U. P. Financial Corporation', has been overruled in Jagdamba Oil Mills v. Haryana Financial Corporation. 5. Learned Counsel for the petitioner submits that SRL took over the management of SHL. Though the same was approved by APSFC and was very much in the knowledge of such takeover, notice as required under Section 29 of the Act was not given to SRL, and therefore, whole process of auctioning petitioner's assets in favour of third respondent for an abnormally low sum is violative of Section 29 of the Act. He secondly submits that no offer was made to SRL before confirming the sale in favour of third respondent, and therefore, sale is illegal. He refers to certain averments in the caveat, interpleader suit and notice issued to SHL after receiving the bids. He secondly submits that no offer was made to SRL before confirming the sale in favour of third respondent, and therefore, sale is illegal. He refers to certain averments in the caveat, interpleader suit and notice issued to SHL after receiving the bids. Secondly, he submits that even if the petitioner and other authorized signatories accepted the payment of balance sale consideration, same does not amount to waiver of rights of the petitioner, because the action of APSFC is not fair in selling the assets in favour of third respondent. According to the learned Counsel even though the principle laid down in Mahesh Chandra' was overruled by subsequent decision of the Supreme Court, still while taking drastic action under Section 29 of Act, first respondent has to act fairly, but they failed to do so. He submits that the liability of petitioner went on changing upwardly from the stage of sale-cum-recall notice to auction, confirmation and interpleader suit. Therefore, he submits that appropriations made by APSFC towards its liability as well as liability of API DC are illegal. 6. Learned Counsel for APSFC submits that writ petition is not bona fide. The petitioner having accepted balance of sale consideration without any objection and without any demur, cannot maintain this writ petition based on the principles laid down in Mahesh Chandra (1 supra), which is overruled in Jagdamba Oil Mills (2 supra). He has taken this Court through the correspondence between SHL and letters written by Vasam Shiva Prasad acting on their behalf. Lastly, he submits that if petitioner disputes acknowledgement of payment of quantum thereof towards balance sale consideration, which the petitioner accepted without any objection, its remedy is not a writ petition and it has to seek remedy elsewhere. 7. Learned Counsel for third respondent submits that SRL never informed APSFC about the alleged takeover of management of SHL, and therefore, there was no necessity to issue sale-cum-legal notice. Secondly, he submits that there is nothing on record to show that change of name was effected in the records of APSFC and they accepted/approved such change of name. 7. Learned Counsel for third respondent submits that SRL never informed APSFC about the alleged takeover of management of SHL, and therefore, there was no necessity to issue sale-cum-legal notice. Secondly, he submits that there is nothing on record to show that change of name was effected in the records of APSFC and they accepted/approved such change of name. When creditor does not accept the change of name, it is only SHL, which is liable to discharge debts and as the petitioner itself claimed to have taken over assets and liabilities and were in possession of the assets of SHL, properties were sold legally and there is no infirmity in such sale. Nextly, he contends that after interpleader suit was filed, petitioner and other debtors negotiated with APSFC and agreed for certain appropriations, and therefore, the same cannot be raised in writ petition. Lastly, he submits that writ petition itself is not maintainable as Vasam Shiva Prasad, who filed the affidavits on behalf of SRL is not the Director or Managing Director of SHL 8. The respondents have specifically averred that Vasam Shiva Prasad is not Managing Director or the Director of SRL.From these, a contentious issue would arise requiring person who filed the writ petition on behalf of SRL to demonstrate that he has such authority to file the writ petition.No such material is placed before this Court.Learned Counsel for the petitioner placed before Court, Memorandum and Articles of Association of SHL, which only shows that the petitioner is a promoter and signatory of the Memorandum. Form No. 32 as per Section 302 (2) of the Companies Act if placed before this Court would have been conclusive and clinching. Form No. 32 has not been placed before this Court, and therefore, prima facie, Vasam Shiva Prasad cannot be said to have a locus to file the writ petition on behalf of SRL, which took over assets and liabilities of SHL. In addition to this, in a communication, dated 17 -01-2000, Vasam Shiva Prasad signed himself as EX.M.D of SHL, which itself would belie any allegation that he can represent company. Furthermore, the Board of Directors of SRL passed a resolution on 16-10-1999 authorizing Mis. Devarajam and D.R.R. Rajeshwar, Directors of the company to receive the cheques, papers and to sign or execute any documents on behalf of SRL. Furthermore, the Board of Directors of SRL passed a resolution on 16-10-1999 authorizing Mis. Devarajam and D.R.R. Rajeshwar, Directors of the company to receive the cheques, papers and to sign or execute any documents on behalf of SRL. Vasam Shiva Prasad is not one of the eight Directors of the Board who are signatories to the said resolution. Therefore, this Court finds considerable force in the submissions made on behalf of the respondents and holds accordingly. 9. That sale-cum-recall notice was issued to SHL is not specifically denied. Indeed, there is record to show that such notice was issued to SHL at Registered Office bearing Door No. 11-5-341, Red Hills, Lakdikapool, Hyderabad. What is contended is that no such notice was issued to SRL though APSFC was having knowledge of SRL taking over management of SHL. Reliance is placed on certain documents, which are discussed hereafter. Sometime in December 1994 or January 1995 Vasam Shiva Prasad addressed a letter to the Senior Branch Manager, APSFC, Hyderabad Branch, informing that Sri S. Hanumantha Rao and associates approached them with request to take over the management of SHL and also sent a cheque for RS.5,00,0001-, further informing that they would approach APSFC shortly. There is yet other letter by Sri S. Hanumantha Rao on behalf of SHL informing that they have identified Mis. Vasam Shiva Prasad and his associates to take over management. In this letter it was informed that the second respondent has approved the change of management. By letter No. GM (M and R)I SHPU5476/95, dated 21-1-1995, the General Manager (M and R), API DC, addressed to Vasam Shiva Prasad, which reads as under. Sri V. Siva Prasad, 405, Prudhvi Sagar Apartments Lower Tank Bund Road HYDERABAD. Dear Sir, Sub: Proposal to take over management of Ms. Sunkara Hotels (P) Ltd. Ref: Your letter dated 31-12-1994. * * * Please refer to your proposal submitted through your letter cited for take over of the management of Mis. Sunkara Hotels (P) Ltd. We agree in principle for the change of management of the captioned company in your favour subject to the approval of Board. In the mean time, you may please arrange to pay the balance down payment of Rs. 14.62 lakhs being the 35% down payment of outstanding dues as on 30-11-1994. Sunkara Hotels (P) Ltd. We agree in principle for the change of management of the captioned company in your favour subject to the approval of Board. In the mean time, you may please arrange to pay the balance down payment of Rs. 14.62 lakhs being the 35% down payment of outstanding dues as on 30-11-1994. Thanking you, Yours faithfully, (S.V. REDDY) General Manager (M and R) Again in February 1995 by letter NO.M(M and R)/SHPU5784/95, the Manager (M and R), APIDC, addressed a letter, which reads as follows. Sri V. Siva Prasad 405, Prudhvi Sagar Apartments, Lower Tank Bund Road, HYDERABAD. Dear Sir, Sub: Sunkara Hotels (P) Ltd. Change of management - approval- Reg. * * * With reference to the subject cited, we wish to inform you that the Board of Directors of our Corporation at their meeting held on 2-2-95 approved the change of management of Sunkara Hotels (P) Ltd. in favour of Sri V. Siva Prasad and Associates subject to the following terms and conditions:- 1. Down payment of 35% of the outstanding loan as on date. 2. The balance loan outstanding shall be paid within the original loan period (i.e. 10-3-97). 3. Penal interest charges if any shall be waived as the project is still under implementation. 4. A moratorium period of 9 months shall be given to repay the balance loan from the date of approval. 5. Suitable guarantees as applicable shall be given by the new promoters. You are requested to pay the balance down payment immediately and also comply with the above terms and conditions to enable us to take further necessary action. Thanking you, Yours faithfully, (K.N.RAHMAN KHAN), Manager (M and R) 10. Except the two letters from APIDC there is no communication from APSFC nor proof is placed before this Court that Sri S. Hanumantha Rao and his associates informed APSFC about likely take over of management by Vasam Shiva Prasad and Associates. Though a reference is made to this correspondence with APIDC it is not correct to contend that it is APSFC who agreed in principle for change over/taking over of management. 11. In addition to the above documents, learned Counsel for the petitioner has also placed reliance on the averments made by the Branch Manager, APSFC, Hyderabad Branch, ill the affidavit filed along with caveat petition in the Court of the Senior Civil Judge, City Civil Court, Hyderabad. 11. In addition to the above documents, learned Counsel for the petitioner has also placed reliance on the averments made by the Branch Manager, APSFC, Hyderabad Branch, ill the affidavit filed along with caveat petition in the Court of the Senior Civil Judge, City Civil Court, Hyderabad. In paragraph 3 of the said affidavit, the Branch Manager averred that M/s. Hanumantha Rao and Rama Rao approached APSFC in 1995, expressed their inability to continue the business and informed that they had decided to handover the business to the present promoters, and that APSFC approved change of promoters on 29-3-1995. When there was not even a communication by SRL or its promoters to APSFC, it is not possible to read the said averments as an admission on the part of APSFC that change of management in favour of SRL has been approved. Similarly, certificate of registration issued by the Registrar of Companies on 11-6-1996 registering the change of name, is also of no help to support the contention of the petitioner. Admittedly, there was a sale - cum - recall notice as well as another letter date 21-6-1999 addressed by APSFC to SHL and its Directors informing that an offer for RS.284 lakhs has been received, that the same is being offered to promoters, and if they failed to respond, the sale will be finalized in favour of highest bidder. When the petitioner herein or their promoters were actively involved in business, and when notice was sent to SHL, it is deemed to be a constructive notice to the petitioner and others also. 12. In any event, as presently noticed, the petitioner waived its right to question the sale and indeed was bent upon getting back the excess sale proceeds realized by sale of the assets. That the petitioner is also interested in getting back the excess sale proceeds is admitted in paragraph 11 of the writ affidavit, which reads as under. I submit that summons in O.S. NO.7/2000 were served upon the petitioner company and the suit was posted for the appearance of the petitioner - company on 2-3-2000. Surprisingly, the 151 respondent withdrew the suit O.S.No. 7/2000 on the file of the Court of the Chief Judge, City Civil Courts at Hyderabad even before the petitioner - Company could put appearance and file their counter. Surprisingly, the 151 respondent withdrew the suit O.S.No. 7/2000 on the file of the Court of the Chief Judge, City Civil Courts at Hyderabad even before the petitioner - Company could put appearance and file their counter. Having come to know of all these facts, the petitioner - Company approached the 1st respondent and requested them to release the excess sale auction. All the efforts of the petitioner - Company to get back the excess sale amount of Rs. 72 lakhs proved futile. Finally, the petitioner - Company on 18-1-2000 submitted an application to the 1st respondent inter - alia contending that a legal opinion was sought from Standing Counsel for the 1st respondent Corporation. The learned Standing Counsel advised the 1st respondent through his legal opinion to release the excess sale amount of RS.72 lakhs in deposit with the 151 respondent even disregarding the legal opinion released approximately 27 lakhs to the petitioner Company in the month of February 2000 after obtaining the necessary indemnity bonds from the petitioner Company. 13. In view of the above admissions and also in view of the documents on record, supporting the above, it must be held that petitioner willingly requested APSFC to pay back the amount of Rs.72 lakhs, being excess of sale proceeds, and when an amount of Rs.22,57,459.20 was paid, same was received by SRL (formerly SHL) without even mentioning that amount is being received by them without prejudice to their rights. In such a situation, the action of the respondents cannot be termed as arbitrary or illegal. 14. The principles laid down by the Supreme Court in Mahesh Chandra (1 supra) have been specifically overruled in Jagdamba Oil Mills (2 supra) wherein after making reference to U.P. Financial Corporation v. Naini Oxygen and Acetylene Gas Limitecf3, Karnataka State Financial Corporation v. Micro Cast Rubber and Allied Products (P) Limited and Chairman and Managing Director, Sipcot v. Contromix (P) LimitecJ5, the Supreme Court laid down as follows: The fairness required of the Corporations cannot be carried to the extent of disabling them from recovering what is due to them: The matter can be looked at from another angle. The Corporation is an independent autonomous statutory body having its own constitution and rules to abide by, and functions and obligations to discharge. As such in the discharge of its functions, it is free to act according to its own light. The Corporation is an independent autonomous statutory body having its own constitution and rules to abide by, and functions and obligations to discharge. As such in the discharge of its functions, it is free to act according to its own light. The views it forms and decisions it takes are on the basis of the information in its possession and the advice it receives and according to its own perspective and calculations. Unless its action is mala fide, even a wrong decision by it is not open to challenge.It is not for the Courts or a third party to substitute its decision, however, more prudent, commercial or businesslike it may be, for the decision of the Corporation. 15. It was also laid down that unless there is a statutory violation by APSFC and unless APSFC acted unreasonably, High Court under Article 226 of the Constitution of India should not interfere and cannot consider the matter as an appellate authority over the deeds and acts of APSFC. 16. In their sale - cum - recall notice APSFC demanded an amount of Rs.55,92,379/- as outstanding in two accounts of SHL. In the affidavit filed along with the caveat petition on 22-6-1998 the amount outstanding was shown as Rs.53,93,240/-, whereas in their interpleader suit it was mentioned that an amount of Rs.44,65,564/- is due from SHL. Pointing out these variations, petitioner's Counsel submits that refund of Rs.22,57,459/- as excess sale amount is arbitrary and illegal. As noticed supra, in paragraph 11 of the affidavit accompanying the writ petition. Vasam Shiva Prasad admits that an amount of RS.72 lakhs is due from APSFC. If that be so, for recovery of that amount, remedy is not a writ petition. 17. In Suganmal v. State of Madhya' .Pradesh Constitution Bench at the Supreme' Court considered the question whether a petition under Article 226 of the Constitution of India for refund of money collected by the State as tax, is maintainable. In the said case, appellant was proprietor of Bhandari Iron and Steel Company, which had its foundry in Indore carrying on business of Mechanical Engineers, Iron, Brass and Malleable Iron founders and Re-rollers in Steel. Though it was not carrying on any business of cotton mill, it was called upon to pay industrial tax under Industrial Tax Act imposed on cotton mills. Though it was not carrying on any business of cotton mill, it was called upon to pay industrial tax under Industrial Tax Act imposed on cotton mills. During the years 1941 to 1943, the authorities assessed the industrial tax payable by the appellant, and the amount was paid. The appeals filed by the appellant were decided in their favour holding that the appellant is not liable to pay industrial tax. Attempts of the appellant for refund of amount from the State Government proved unsuccessful and therefore a Writ Petition was filed before the High Court of Madhya Pradesh. High Court dismissed the Writ Petition holding that Writ of Mandamus could not be issued for the purpose of refund of tax wrongly realized by the State. The Supreme Court affirmed the view and held that "normally, petitions solely praying for refund of money against State are not maintainable and that the aggrieved party has right to go to Civil Court where the State can raise all the defences which cannot be raised in Writ Petition'. It was held as under: On the first point, we are of opinion that though the High Courts have power to pass any appropriate order in the exercise of the powers conferred under Article 226 of the Constitution, such a petition solely praying for the issue of a wit of mandamus directing the State to refund the money is not ordinarily maintainable for the simple reason that a claim for such a refund can always be made in a suit against the authority, which had illegally collected the money as a tax... We have not been referred to any case in which the Courts were moved by a petition under Article 226 simply for the purpose of obtaining refund of money due from the State on account of its having made illegal exactions. We do not consider it proper to extend the principle justifying the consequential order directing the refund of amounts illegally realized, when the order under which the amounts had been collected has been set aside, to cases in which only orders for the refund of money are sought... We do not consider it proper to extend the principle justifying the consequential order directing the refund of amounts illegally realized, when the order under which the amounts had been collected has been set aside, to cases in which only orders for the refund of money are sought... We do not find any good reason to extend this principle, and therefore, hold that no petition for the issue of a writ of mandamus will be normally entertained for the purpose of merely ordering a refund of money to the return of which the petitioner claims a right. 18. u.P. Pollution Control Board v. Kanoria Industrial Ltd.? is also a case which involved the claim of respondent industry for refund of amount paid by them as water cess under the provisions of Water (Prevention and Control of Pollution) Cess Act, 1977. The High Court of Allahabad directed the U.P. Pollution Control Board to refund the sums "Aalized from the respondent as water cess. before the Supreme Court it was contended that a Writ of Mandamus could not be given for refund of the amount. The Supreme Court referred to various decisions on the point, including the decision in Suganmal v. State of Madhya Pradesh (6 supra), as to maintainability of Writ Petition in relation to a claim for refund of money, and laid down: . . .It is one thing to say that the High Court has no power under Article 226 of the Constitution to issue a writ of mandamus for making refund of the money illegally collected. It is yet another thing to say that such power can be exercised sparingly depending on facts and circumstances of each case. For instance, in the case on hand where acts are not in dispute, collection of money as cess was itself without the authority of law; no case of undue enrichment was made out and the amount of cess was paid under protest; the writ petitions were filed within a reasonable time from the date of the declaration that the law under which tax/cess was collected was unconstitutional. There is no good reason to deny a relief of refund to the citizens in such cases on the principles of public interest and equity in the light of the cases cited above. There is no good reason to deny a relief of refund to the citizens in such cases on the principles of public interest and equity in the light of the cases cited above. However, it must not be understood that in all cases where collection of cess, levy or tax is held to be unconstitutional or invalid, the refund should necessarily follow. We wish to add that even in cases where collection of cess, levy of tax is held to be unconstitutional or invalid, refund is not an automatic consequence but may be refused on several grounds depending on facts and circumstances of a given case. (emphasis supplied) 19. In Dr. J. Ramachandra Rao v. Andhra Pradesh State Civil Supplies Corporation this Court after referring to above two apex Court decisions laid down as under. In view of the principles laid down by the Supreme Court though in appropriate cases it is always permissible for this Court to entertain claim for refund of money against State or instrumentality of the State, the Court will not normally exercise its prerogative writ jurisdiction to the exclusion of the other available remedies unless such action of the State is arbitrary and unreasonable so as to violate Article 14 of the Constitution of India. If reasonableness of the State action itself is a disputed question requiring elaborate evidence, the Court should refrain from entertaining Writ Petition for money claim. 20. The petitioner has to file a suit for recovery of the said amount subject to proving legal entitlement to the said amount. Insofar as the sale conducted by APSFC and confirmation of such sale in favour of the third respondent is concerned, petitioner cannot have any grievance in these proceedings because by accepting the payment, it waived the right. Indeed, as rightly pointed out by the learned Counsel for the respondents writ petition was filed based on the decision in Mahesh Chandra (1 supra), which stands overruled in Jagdamba Oil Mills (2 supra). The fact that the petitioner accepted the payment without any demur would show that writ petition is not bona fide. 21. In the result, for the above reasons, the writ petition is devoid of any merit, and the same is dismissed accordingly with costs.