JUDGMENT The challenge in this petition is against the One Time Settlement (hereinafter referred to as OTS) dated 10th June 2009 made by Gujarat State Financial Corporation, respondent no.1 herein with M/s Shree Industries Limited, respondent no.5 on the ground that it is illegal, arbitrary and against public policy. 2. The facts, in brief, as emerging from the record of the petition are as under: 2.1 The respondent no.1-GSFC, respondent no.2-GIIC, respondent no.3-Bank of Baroda and respondent no.4-Dena Bank had sanctioned loan of Rs.30, 40, 15 and 15 lacs, respectively; in aggregate a loan of Rs.1 crore to M/s Ganpati Pulp and Paper Mills Limited, which is now in liquidation. 2.2 The petitioners, Late Govindbhai C.Patel and others were stated to be sureties for the purpose of securing the said loan of Rs.1 crore. The said company had also created equitable mortgages by way of deposit of title deeds in favour of respondent nos.1, 2, 3 and 4 in respect of immovable properties. Original title deeds of the mortgaged property were deposited with Respondent no.1 GSFC which accepted the same acting on behalf of itself and also respondents no.2, 3 and 4. Thereafter at the request of the aforesaid company respondents no.2, 3 and 4 granted additional term loan to the extent of Rs.20 lacs, 1.5 lacs and 1.5 lacs respectively. In addition to the aforesaid, respondent no.3 Bank of Baroda had also sanctioned Cash Credit facility and other financial facilities. For this purpose additional mortgage deed also came to be executed. 2.3 Since respondent no.6 company went into liquidation, this Court, by order dated 17th March 1986, passed in Company Petition No.135 of 1986, ordered respondent no.6 company to be wound up and appointed Official Liquidator attached to this Court as Liquidator of respondent no.6 company. 2.4 In pursuance of the same respondent no.1 GSFC, in exercise of powers under section 29 of the State Financial Corporations Act, took over the actual and physical possession of the mortgaged property on 22/26th October 1986 on its behalf and also on behalf of respondents no.2 to 4. 2.5 In view of the above position, the following suits came to be filed against respondent no.6 company and its sureties/guarantors: [a] Civil Suit No.241 of 1987 by Bank of Baroda (later on transferred to Debt Recovery Tribunal, Ahmedabad (DRT), and renumbered as TA No.202 of 1995. 2.5 In view of the above position, the following suits came to be filed against respondent no.6 company and its sureties/guarantors: [a] Civil Suit No.241 of 1987 by Bank of Baroda (later on transferred to Debt Recovery Tribunal, Ahmedabad (DRT), and renumbered as TA No.202 of 1995. [b] Civil Suit No.242 of 1987 by Bank of Baroda (later on transferred to DRT and renumbered as TA No.203 of 1995). [c] Civil Suit No.115 of 1988 by Dena Bank (later on transferred to DRT and renumbered as TA No.257 of 1995). [d] Civil Suit NO.3953 of 1988 filed by GIIC before the City Civil Court at Ahmedabad. 2.6 Pursuant to the action of taking over the possession of the mortgaged property, respondent no.1 published advertisements inviting offer for purchase of the mortgaged property. In response thereto, along with others, Shree Industries Limited, respondent no.5, participated in the proceedings and offered Rs.3.88 crores for purchase of the mortgaged property. Being the highest the said offer was accepted and finalized in favour of respondent no.5 on the terms and conditions stipulated in the acceptance letter. As per the agreement dated 27th November 1990 respondent no.5 was to pay Rs.50 lacs upfront and the remaining amount of Rs.3.38 crores within five years in 20 equal quarterly installments commencing from 1st May 1991 and ending on 30th April 1996 with interest at the rate of 15% with half yearly rests on 31st January and 31st July of every year. 2.7 Respondent no.5 made certain payments which were distributed on prorata basis amongst respondent nos.1 to 4. 2.8 However, respondent no.5 committed default in making remaining payment as stipulated in the agreement. The said respondent filed Reference Case No.129 of 1997 before BIFR which passed orders on 12th November 1997 declaring respondent no.5 as a sick industrial company. 2.9 The BIFR vide order dated 16th September 2002 ordered respondent no.5 to be wound up. This Court vide order dated 8.4.2004 in Special Civil Application No.11883 of 2000 restrained respondent no.1 from taking over the possession of the mortgaged property without prior permission of BIFR. 2.10 Respondent no.5 filed Appeal No.199 of 2003 before AAIFR wherein respondent no.1 was restrained from recovering its dues by enforcing any security interest against Shree Industries except with the permission of AAIFR. 2.10 Respondent no.5 filed Appeal No.199 of 2003 before AAIFR wherein respondent no.1 was restrained from recovering its dues by enforcing any security interest against Shree Industries except with the permission of AAIFR. Ultimately vide order dated 16th March 2006, the proceedings were remanded to BIFR, and directed Shree Industries to file revival proposal. 2.11 The respondent no.1 vide order dated 29th September 2006 requested BIFR that the mortgaged property should be excluded from the proceedings of BIFR. BIFR in its order dated 4th October 2006 recorded that Shree Industries was in the process of finalizing OTS with respondent nos.3 and 4. The respondent no.1 therefore approached AAIFR by way of Appeal No.11 of 2007 wherein AAIFR passed an order on 7th February 2007 giving liberty to respondent no.1 to ventilate its grievances before the Operating Agency IFCI and BIFR. 2.12 The respondent no.1 thereafter approached BIFR and BIFR observed that respondents no.1 GSFC and respondent no.2-GIIC are secured creditors and their dues will be settled at par with other secured creditors. The respondent no.1 therefore filed Appeal No.287 of 2007 before AAIFR which came to be dismissed vide order dated 19th July 2007. The respondent No.1 therefore filed Special Civil Application No.11116 of 2008 challenging the aforesaid order which was admitted and interim relief was granted. 2.13 In the meanwhile the DRT allowed TA No.257 of 1995 filed by respondent no.4 by order dated 29th September 2006 wherein it is observed as under: “13. Applicant has claimed total amount of Rs.39,96,227.53P. Applicant has filed the statement of account. It has come on record that Applicant had received total amount of Rs.48,35,769.00P in the account of the Defendant No.1, under liquidation. This fact appears at page No.38 of the Affidavit at Exh. A/122. The said amount was received after the date of filing the special civil suit, I.e. 30.4.1988. Applicant shall be entitled to interest @06% thereon from the date of suit until realization. Interest cannot be awarded at the contractual rate. Considering the decretal amount, interest awarded, amount received by the applicant pendentelite, according to me, Defendant's liability would be wiped out, totally or substantially. Applicant shall have to deduct Rs.48,35,769.00P received by it. I therefore answer the points accordingly and pass the following order...” The operative part of the said order reads as under: 1. Transfer Application is allowed with costs. 2. Applicant shall have to deduct Rs.48,35,769.00P received by it. I therefore answer the points accordingly and pass the following order...” The operative part of the said order reads as under: 1. Transfer Application is allowed with costs. 2. Defendants 1 to 7 do pay Applicant Rs.39,96,227.35P with simple interest @06% thereon from 30.04.1988 until realization. 3. Applicant shall deduct the amount of Rs.48,35,769.00P received by it in the account of Defendant no.1, under liquidation, during the pendency of the Special Civil Suit/Transfer Application. 4. The liability of Defendant Nos.3/1 to 3/3 shall be restricted tot he estate inherited and in their possession belonging to deceased Defendant No.3 5. Transfer Application stands disposed of against Defendant Nos.8 to 10 with no order as to cost.” 2.14 Against the aforesaid order the present petitioners filed Appeal No.475 of 2006 which is pending. Similarly TA No.202 of 1995 filed by respondent no.3 came to be allowed against which Appeal No.132 of 2009 came to be filed which is also pending. Similarly T.A. No.203 of 1995 filed by respondent no.3 also came to be allowed against which Appeal No.133 of 2009 came to be filed which is pending. 2.15 The respondent No.1 Gujarat State Financial Corporation, on 7th February 2009, took a decision to introduce One Time Settlement (OTS) Scheme to the purchasers of assets taken over by the Corporation and sold under section 29 of the SFC Act. It is stated that this scheme was floated in view of the fact that there are cases in which Corporation has sold assets in auction and purchasers have not made full payment after making initial down payment and some installments. Many purchasers have made default and requested for one time settlement. The assets are old and are getting depreciated with passage of time. Moreover it was reported that the recovery position of the Corporation had declined considerably affecting cash flow and there was recession in the economy. It is under these circumstances that the One Time Settlement Scheme came to be introduced. 2.16 The respondent no.5 Shree Industries approached the respondent no.1 vide letter dated 12th May 2005 requesting for One Time Settlement. Moreover it was reported that the recovery position of the Corporation had declined considerably affecting cash flow and there was recession in the economy. It is under these circumstances that the One Time Settlement Scheme came to be introduced. 2.16 The respondent no.5 Shree Industries approached the respondent no.1 vide letter dated 12th May 2005 requesting for One Time Settlement. The respondent no.1 accepted the proposal for a total sum of Rs.66,35,84/- by its letter dated 10th June 2009, respondent no.5 vide its letter dated 14th June 2009 confirmed acceptance of the terms and conditions mentioned in the aforesaid letter of respondent no.1. 2.17 The petitioners, who are guarantors, have challenged the said One Time Settlement by way of the present petition. 3. Mr. Mihir Joshi, learned Senior Counsel with Mr.A.S. Vakil, learned Advocate appearing for the petitioners submitted that respondent no.1 GSFC could not have granted OTS to respondent no.4 since it would necessarily imply conveyance/transfer of title of the subject property to respondent no.5 by respondent no.1 which is impermissible inter alia for the following reasons: [a] That the subject property is under a Joint Equitable Mortgage with GSFC, GIIC, BOB and DNB and therefore GSFC cannot convey the property on its own by settling its own component of debt with respondent no.5 but could only have released its charge on the subject property. [b] That the title deeds of the subject property have been retained by GSFC in trust for the other lenders and cannot be handed over to respondent no.5 which would amount to extinguishing the mortgage of the other lenders, and therefore it is impermissible under law for GSFC to sell the subject property. [c] That the proceedings under section 29 of the State Financial Corporations Act and the agreement of sale dated 27th November 1990 with respondent no.5 having been entered into by GSFC for itself and as agent of GIIC, BOB and DNB, there is no express or implied authority with GSFC to act upon the agreement on its own account and by settling its own component of debt with the borrower. [d] That since the mortgagor-GPPL continues to be the owner of the property, the same would be on behalf of GPPL and since the said company is under liquidation, no such conveyance can be done without associating the Official Liquidator and obtaining consent of the Company Court.3.1 He further submitted that assuming that the respondent no.1 GSFC has the power to convey the subject property to respondent no.5, even then such action in the facts of the case is unreasonable and illegal inasmuch as GSFC is enjoined to act in the interest of other secured creditors and the mortgagor-GPPL. The agreement for sale provides for a right to retain the title of the property, forfeit the earnest money deposited by the defaulting purchaser and return the balance to it. Such action would be eminently more just and reasonable and in the interest of the stake holders since the property would fetch a far higher net return for all, if brought to sale today.3.2 He submitted that no reasons are forthcoming from GSFC regarding consideration of the relevant circumstances and the justification for adopting the course of granting OTS rather than exercising the option under the agreement. 3.3 Mr. Joshi submitted that the action of the GSFC of granting OTS to respondent no.5 is invalid inter alia for the following reasons: [a] Under the OTS, GSFC has purported to settle the entire amount of balance purchase price along with the interest due thereon, which is relatable to the other lenders and there is no consent of the lenders on record, prior to grant of OTS. [b] The contention of GSFC and SIL that the unpaid price is considered to be a loan is contrary to the stand of GSFC in the proceedings, not supported by the record and since the purchase price is owed to 3 other secured creditors, it cannot be loan for one and price for others. [c] No reasons are forthcoming or have been assigned by GSFC for abandoning its claim to the subject property made before BIFR, AIFR and this Court and suddenly accepting the OTS proposal of SIL. [d] In fact the OTS Scheme itself is invalid since it is contrary to Section 29 of the SFC Act which mandates realization of the value of property upon sale thereof to ensure the highest price so as to secure the interest of the stake holders. [d] In fact the OTS Scheme itself is invalid since it is contrary to Section 29 of the SFC Act which mandates realization of the value of property upon sale thereof to ensure the highest price so as to secure the interest of the stake holders. Such OTS implies deferred realization of the value of the asset and settlement at a fraction of the balance price with interest, which is contrary to Section 29 of the Act. Moreover an OTS for purchasers is counter productive and does not sub-serve the purpose of Section 29 that is of quick recovery of the outstanding amount from the original borrower. 3.4 Mr. Joshi further submitted that the orders of BIFR and AAIFR are illegal and invalid since the same overlook the specific terms of the agreement of sale dated 27th November 1990 stipulating that title to the property was not conveyed to SIL and it was only a person in possession under an agreement to sell which cannot be equated with an owner of the property. 4. In support of his case Mr. Joshi has relied upon the following decisions: 4.1 In the case of New Kenilworth Hotels (P) Ltd. V. Ashoka Industries Ltd, reported in (1995)1 SCC 161 it is held as under: “Since the appellant had only an inchoate right it does not get any higher right than of a mere offerer for its consideration before sale is effected. There is no sale which is materialized. Though under Section 29 the O.S.F.C. acts as an owner in putting the property sale, it does not act in derogation of the right of the O.S.F.C. as a mortgagee and of the respondent the mortgagor. In the suit for redemption unless it is a conditional sale or anomalous mortgage, so long as the sale is not confirmed the debtor has a right to deposit the entire sale money including the sale expenses and poundage fee and the court is under the statutory duty to accept the payment and direct redemption of the mortgage. Therefore it is not open to the appellant to contend that under the proviso to Section 60 of the T.P. Act, the corporation has acted under Section 29 of the S.F.C. Act in derogation of its right as a mortgagee. Therefore it is not open to the appellant to contend that under the proviso to Section 60 of the T.P. Act, the corporation has acted under Section 29 of the S.F.C. Act in derogation of its right as a mortgagee. The limited right given to the Corporation under Section 29 is to act as an owner to bring the properties of the defaulter to sale and not in derogation of the right under Section 60. The fiction of law under Section 29 does not have the effect of wiping out the statutory right of r5edemption under section 60 of the T.P. Act. Therefore ,the right of the mortgagee still subsists and that thereby the mortgagor is entitled to exercise the right under Section 60 of the T.P. Act.” 4.2 In the case of Gajraj Jain V. State of Bihar, reported in (2004)7 SCC 151 it is held as under: “The provisions of sub-sections (1) and (4) of Section 29 of the State Financial Corporations Act are similar to Section 69 of the TP Act. Section 29(1) contemplates 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. The words “realization of the property pledged, mortgaged, hypothecated” presuppose realization of sale proceeds and application/appropriate thereof to liquidate the dues of the paramount charge-holder and from the surplus payment to person(s) entitled thereto. This 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. The financial Corporation, in the matter of sale under Section 29, must act in accordance with the statute and must not act unreasonably. Reasonableness is to be tested against the dominant consideration to secure the best price.” 4.3 In the case of Everest Wools Pvt. Ltd. And others Vs. U.P. Financial Corporation and others, reported in (2008)1 SCC 643 . Para 19 thereof reads as under: “19. When it takes over possession of the plant and machinery in exercise of its statutory power, apart from its obligation as a “bailee”, it also acts as a “trustee”. Its action otherwise must be fair and reasonable. U.P. Financial Corporation and others, reported in (2008)1 SCC 643 . Para 19 thereof reads as under: “19. When it takes over possession of the plant and machinery in exercise of its statutory power, apart from its obligation as a “bailee”, it also acts as a “trustee”. Its action otherwise must be fair and reasonable. It is true that fairness cannot be a one-way street, but then whereas the Corporation indisputably has a right to realize its dues, it must act strictly in terms of the statutory and constitutional scheme. If it acts unfairly, it fails the system. While it exercised its enormous statutory power, it is expected to perform its duties also. Such a duty is envisaged not only under the law but also under Article 14 of the Constitution of India. A person aggrieved by the action of the State must have an effective remedy. The purpose of taking over possession and that too of an ongoing concern, without taking over the management, would be to sell the unit. A buyer may like to purchase the ongoing concern. If the plant and machinery are kept in order and in a working condition they would fetch one price but if the machinery are stolen or allowed to rust, the same would not.” 4.4 In the case of Ram Kripal Singh V. State of Uttar Pradesh and others, reported in (2007)11 SCC 22 , in paras 6 and 7 it is held as under: “6. On a closer scrutiny the finding of the High Court appears to be in order. Though it was urged that the recovery citation was issued ager 24.1.2004 i.e. on 18.9.2004, it is to be noted that the first recovery citation was issued on 3.9.1993. It is true that the same was under challenge in another writ petition. But the basic features are distinguishable. The present case is different from that of Pawan Kumar case as principal debtors company has already been wound up and Official Liquidator has been appointed. The company was declared as sick industry on 17-11-1994 by the Board for Industrial and Financial Reconstruction (in short “BIFR”) whereafter the company has undergone winding up proceedings before the High Court. BIFR submitted its recommendation for winding up proceedings before the High Court. The company was declared as sick industry on 17-11-1994 by the Board for Industrial and Financial Reconstruction (in short “BIFR”) whereafter the company has undergone winding up proceedings before the High Court. BIFR submitted its recommendation for winding up proceedings before the High Court. BIFR submitted its recommendation for winding up and against the order of BIFR the appellant had preferred an appeal before the appellate authority which was rejected on 0-1-1997. The company had filed a writ petition questioning orders of BIFR and the appellate authority. By order dated 26-2-2003 Writ Petition No.14172 of 1997 was dismissed and in the winding-up proceedings Company Court has permitted Official Liquidator to proceed with the winding up.7. It appears that proposal for one-time settlement was made and nothing concrete has been done by the appellant. In International Coach Builders Ltd. V. Karnataka State Financial Corpn, it has been held that the position would be different if the company is under liquidation.”Further in paras 9 and 10 it is held as under: “9. The right of State Financial Corporation (in short “SFC”) unilaterally exercisable under section 29 of the State Financial Corporations Act, 1951 (in short “the SFC Act”) is available against a debtor, if a company, only so long as there is no orders of winding up.10. SFCs cannot unilaterally act to realize the mortgaged properties without the consent of the Official Liquidator.” 4.5 In the case of Rajasthan State Financial Corporation and Another V. Official Liquidator and another, reported in (2005)8 SCC 190 , in para 18 it is held as under:“18. In the light of the discussion as above, we think it proper to sum up the legal position thus: [i] A Debts Recovery Tribunal acting under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 would be entitled to order the sale and to sell the properties of the debtor, even if a company-in-liquidation, through its Recovery Officer but only after notice to the Official Liquidator or the Liquidator appointed by the Company Court and after hearing him. [ii] A District Court entertaining an application under section 31 of the SFC Act will have the power to order sale of the assets of a borrower company-in-liquidation, but only after notice to the Official Liquidator or the Liquidator appointed by the Company Court and after hearing him. [ii] A District Court entertaining an application under section 31 of the SFC Act will have the power to order sale of the assets of a borrower company-in-liquidation, but only after notice to the Official Liquidator or the Liquidator appointed by the Company Court and after hearing him. [iii] If a financial corporation acting under section 29 of the SFC Act seeks to sell or otherwise transfer the assets of a debtor company-in-liquidation, the said power could be exercised by it only after obtaining the appropriate permission from the Company Court and acting in terms of the directions issued by that court as regards associating the Official Liquidator with the sale, the fixing of the upset price or the reserve price, confirmation of the sale, holding of the sale proceeds and the distribution thereof among the creditors in terms of Section 529-A and Section 529 of the Companies Act. [iv] In a case where proceedings under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 or the SFC Act are not set in motion, the creditor concerned is to approach the Company Court for appropriate directions regarding the realization of its securities consistent with the relevant provisions of the Companies Act regarding distribution of the assets of the company-in-liquidation.”4.6 In the case of M/s Priya Plastics V. Rajasthan Financial Corporation, reported in AIR 2006 Rajasthan 265, in para 60 it is held as under: “60. The aforesaid submissions, far too stretched, by the learned counsel for the respondent no.4 are baseless, to say the least. Powers under Section 29 of the act of 1951 are essentially the powers meant for enabling a Financial Corporation to enforce the security available with it for recovery of its dues and thereunder, even if the RFC acts as an owner, it does not act in derogation of its rights as a mortgagee and the borrower’s rights as mortgagor; and till the sale was completed in all respects in his favour, so far the bidder like the respondent no.4 is concerned, he has only an inchoate right not higher than that of an offerer.” 4.7 In the case Micronis India V. Disco Electronics Ltd, reported in 96 Comp. Case.950 it is held as under: [i] That there was nothing on record to show that the management of the company had been taken over by the corporation in terms of section 32 of the State Financial Corporations Act. In fact, even in taking action under section 29, physical possession was not taken over by the officers of the corporation, but continued with the company, although in its capacity as custodian on behalf of the corporation. Therefore, the provisions of section 32E of the State Financial Corporations Act, 1951, requiring the corporation’s consent before filing a petition for winding up a company whose management has been taken over, were not attracted. [ii] That the sale, in violation of the injunction order of the court, which was still subsisting when the offer was received and accepted by the corporation was not valid. Prior to the receipt of the offer, the corporation admittedly acquired the same right to dispose of the property as the owner of the property had and if the owner had been injuncted from selling the property, the corporation could not acquire a better right to sell. Even prior to the status quo order dated October 19, 1992, there existed an injunction order which was passed on August 4, 1992, long before the receipt of the offer of the successful bidder and its acceptance. Therefore the acceptance of offer was in violation of the injunction order dated August 4, 1982. [iii] That, on the facts, the optimum price had not been obtained by the corporation, and for that reason the court would not grant leave ex post facto to sell the property.To say that for the purposes of section 537 of the Companies Act, 1956, the crucial date is the date of the winding up order would be contrary to the express provisions of section 537 of the Companies Act which refers to the date of “commencement of winding up” and not “winding up”. The expression “winding up” has been defined in section 441. The expression “winding up” has been defined in section 441. Sub-section (2) of section 441 provides that the winding up of a company by the court shall be deemed to commence at the time of the presentation of the petition for the winding up.” 4.8 In the case of Rajasthan State Financial Corporation and Another V. Official Liquidator and another, reported in (2005)8 SCC 190 it is held that some time having lapsed since the earlier valuation, the Company Court was not justified in not ordering a fresh valuation. 5. Mr. S.N. Soparkar, Senior Counsel with Mr. Devang D. Trivedi, learned Advocate appearing for respondent no.1-GSFC submitted that the petitioners have no locus standi to challenge the settlement between GSFC and Shree Industries Limited, which is pursuant to policy of GSFC for OTS, for all concerned. According to him, the properties of GPPL were taken over and sold by Public Auction under section 29 of SFC Act by GSFC in the year 1990 and the said auction was not challenged at the relevant time nor even today by GPPL. 5.1 He further submitted that there are two separate and independent transactions by GSFC like taking over the properties under section 29 of the SFC Act and settlement pursuant to OTS between GSFC and SIL and the settlement does not affect any right or interest of petitioners and they are not at all concerned with it. 5.2 He further submitted that the petitioners have no locus to challenge the order dated 19th February 2007 of BIFR and order dated 2nd May 2008 of AAIFR, which are passed in proceedings of Reference under Section 15 of SICA concerning to SIL, where petitioners are neither parties before BIFR nor are in any way concerned with the said proceedings. 5.3 Mr. Soparkar has relied upon an unreported judgement dated 11th May 1999 passed by Division Bench of this Court in Letters Patent Appeal No.16 of 1989 in Special Civil Application No.253 of 1987 between GSFC Vs. Kumarpal V. Shah. The relevant part of the order reads as under: “It was held that once the property was sold in auction, the Corporation was entitled to recover the consideration amount from the purchaser and not from the respondent-petitioner. Kumarpal V. Shah. The relevant part of the order reads as under: “It was held that once the property was sold in auction, the Corporation was entitled to recover the consideration amount from the purchaser and not from the respondent-petitioner. It was held that the argument, that the expression, “money received” in sub-section (4) of Section 29, connoted only the amount which was actually received, was a fallacious one, because once the property was sold by accepting the highest bid for a particular amount, then the transaction was completed and the amount, for which it is sold, can be said to have been received by the corporation. Subsequently, after the accrual of the amount, the Corporation gave loan facility to the purchaser. That would be at the cost and risk of the Corporation itself.” 6.0 Mr. Nandish Chudgar, learned Advocate appearing for respondent no.5-Shree Industries Limited submitted that SIL has adopted the arguments advanced by respondent No.1 GSFC. He Submitted that BIFR and AAIFR and their orders dated 19th February 2007 and 2nd May 2008 respectively have held that GSFC is Secured Creditor and the said property belongs to SIL as a result, BIFR have jurisdiction over it. He submitted that GSFC had initiated action under section 29 against SIL, which pre-supposes that GSFC had considered the property to have been owned and vested in SIL, pursuant to conversion of balance purchase price into loan. 6.1 According to him GSFC itself has considered the balance purchase price, after down payment of Rs.50 lakhs is converted into loan, which carried interest and penal interest over it and therefore BIFR/AAIFR have rightly passed the orders dated 19th February 2007 and 2nd May 2008 respectively. He therefore submitted that the petition deserves to be dismissed. 7. Mr. G.M. Joshi appearing for GIIC and Mr. K.M. Parikh adopted the arguments of Mr. S.N. Soparkar and opposed the petition. 8. As a result of hearing and perusal of the record certain facts are undisputed. The petitioners herein are guarantors of the default unit M/s Ganpati Pulp and Paper Mills Ltd. The possession of the mortgaged properties of GPPL were taken over by GSFC under section 29 of the SFC Act in the year 1986. 8. As a result of hearing and perusal of the record certain facts are undisputed. The petitioners herein are guarantors of the default unit M/s Ganpati Pulp and Paper Mills Ltd. The possession of the mortgaged properties of GPPL were taken over by GSFC under section 29 of the SFC Act in the year 1986. 8.1 The respondent no.1 GSFC accepted the offer of respondent no.5 SIL for transfer of the said mortgaged properties of GPPL, under Section 29 of the SFC Act for an amount of Rs.3.88 Crores. Out of the said amount, Rs.50 lacs were to be paid immediately at the time of taking possession of the properties and the balance amount of Rs.338 lakhs in the nature of loan to be paid in six years by way of half yearly equal installments carrying interest at the rate of 14% per annum. 8.2 For the said purpose charge was created on the said properties transferred to SIL. The SIL paid a total sum of Rs.3,45,72,307 till the year 1996. In the meanwhile SIL had taken term loan of Rs.56 lakhs from IFCI, Rs.47 lakhs from Punjab National Bank and Cash Credit Facility of Rs.150 lakhs from Punjab National Bank. For the said purpose, pari passu charges against the properties transferred to it by GSFC were created in favour of IFCI and Punjab National Bank and second charge for working capital. The said charge was created with the consent of GSFC, GIIC, Dena Bank and Bank of Baroda who were the members of the consortium. 8.3 In the year 1997 SIL became financially sick and was thus declared as “Sick Industrial Company” by BIFR under the provisions of Sick Industrial Companies (Special Provisions) Act, 1985. In the year 2007 BIFR passed an order whereby it was held that GSFC is a secured creditor of SIL and requested GSFC to participate in reconstruction and revival of SIL. Even though the said order was challenged before AAIFR by GSFC, the same came to be upheld. GSFC therefore filed Special Civil Application No.11116 of 2008 in this Court challenging the order of AAIFR dated 2nd May 2008. The said petition is pending. 8.4 Admittedly there are outstanding dues which are bad debt. Such dues could be recovered by GSFC and they could also take possession of the property especially in view the order of this Court and orders of BIFR and AAIFR. The said petition is pending. 8.4 Admittedly there are outstanding dues which are bad debt. Such dues could be recovered by GSFC and they could also take possession of the property especially in view the order of this Court and orders of BIFR and AAIFR. 8.5 GSFC had floated several One Time Settlement Schemes. One of the schemes was with regard to purchasers of assets taken over by Corporation and sold under Section 29 of the SFC Act. SIL therefore applied for availing the said One Time Settlement. 8.6 In pursuance of the said application of SIL and the OTS Schemes prevailing with regard to GSFC, the Board of GSFC accepted the application for OTS of SIL since the prerequisites for applicability of the said OTS were fulfilled by SIL. GSFC vide letter dated 12th May 2009 conveyed to SIL that as per the OTS Scheme the final amount payable by SIL to GSFC was worked out to Rs.67,07,599/- as on 31st December 2008. 25% of the said OTS amount was to be paid as down payment and the balance was to be paid in 4 monthly installments. Vide letter dated 14th June 2009 SIL accepted the terms and conditions of the OTS and other conditions as conveyed by GSFC’s letter dated 12th May 2009 and also submitted post dated cheques. By 12th October 2009 the last of the four post dated cheques was realized in favour of GSFC and thus the entire amount as per the OTS was paid to GSFC by SIL. Thus, the full payment has already been made by SIL. The OTS Scheme is a policy decision of the respondent no.1 and therefore the respondent no.1 was justified in settling the claim in OTS Scheme which was admittedly bad debt. I am also of the view that because of pendency of proceedings, there may be further delay and even on commercial point of view the course adopted by GSFC is just and proper. 8.7 Before proceeding further, it is required to be noted that the petitioners have failed to establish their locus standi to challenge settlement between GSFC and Shree Industries Limited. They are not in a position to point out anything from the record that their rights much less fundamental rights are violated in any manner whatsoever by settling the claim as per the policy of GSFC. They are not in a position to point out anything from the record that their rights much less fundamental rights are violated in any manner whatsoever by settling the claim as per the policy of GSFC. 8.8 It is also required to be noted that the properties of GPPL were taken over and sold by Public Auction under section 29 of the SFC Act by GSFC in the year 1990. The said action was not challenged at the relevant time, nor even today by GPPL and it is not open for the petitioners to challenge the same at this stage. 8.9 There were two separate and independent transactions by GSFC. Firstly, action under section 29 of taking over the properties of GPPL and sale by Public Auction by GSFC, in the year 1990, for Rs.3.88 crores in favour of SIL. Therefore the rights of GSFC were crystallized from the date on which the possession is taken over and the liability of the original debtor and the guarantors is fixed and crystallized. 8.10 Secondly there was settlement pursuant to OTS between GSFC and SIL for balance unpaid amount. Neither GPPL nor its guarantors are concerned with it because the “realization “ of dues of GPPL by Auction Sale under section 29 of the Act had already been placed in 1990 and amount of sale i.e. Rs.3.88 crores was realized and given credit of towards the dues of GPPL in the year 1990 itself. 8.11 Now by settling with SIL, GSFC is neither increasing nor decreasing the balance liability of GPPL nor its guarantors. It remains crystallized for Rs.3.88 crores as of 1990. The rights were crystallized under section 29(2) of the SFC Act in 1990. Therefore the settlement or OTS does not and cannot affect any right or interest of the petitioners and they are not at all concerned with it. 8.12 It is also required to be noted that as of from the year 1990 the suits were pending.8.13 The respondent No.1 Gujarat State Financial Corporation had introduced One Time Settlement (OTS) Scheme to the purchasers of assets taken over by the Corporation and sold under section 29 of the SFC Act. This scheme was floated in view of the fact that there are a few cases in which Corporation has sold assets in auction and purchasers have not made full payment after making initial down payment. This scheme was floated in view of the fact that there are a few cases in which Corporation has sold assets in auction and purchasers have not made full payment after making initial down payment. Many purchasers have made default and requested for one time settlement. The assets are old and are getting depreciated with passage of time. Moreover it was reported that the recovery position of the Corporation had declined considerably affecting cash flow. It is under these circumstances that the One Time Settlement Scheme has been introduced. The SIL was a defaulter. The property in question had already been taken over by the respondent no.1. The SIL had requested for availing of OTS Scheme. Since the SIL complied with all the criteria stipulated in the OTS Scheme the respondent no.1 has accepted the said proposal and the payment has already been made. It is not the case that the by granting OTS Scheme to SIL the respondent no.1 has suffered loss or it had adversely affected the petitioners.8.14 It is required to be noted that the petitioners have not pointed out anything from the record as to how their rights are affected or violated, much less their fundamental rights by acceptance of SIL’s application by GSFC to avail the OTS scheme floated by GSFC. 9. As regards challenge to the order dated 19th February 2007 and 2nd May 2008 is passed by BIFR and AAIFR are concerned, they cannot be accepted. The said orders were passed in the Reference Proceedings with regard to revival of Shree Industries Limited with which the present petitioners are neither affected nor concerned with. The said orders also do not affect the right, much less the fundamental rights of the petitioners, and therefore the petitioners have no right to challenge the same in the present petition. Further the petitioners were not parties in the said Reference proceedings before BIFR or AAIFR inasmuch as they are not concerned with the said proceedings or the outcome thereof. 10. In the present case the property was already taken over by respondent no.1 GSFC and the settlement was as per OTS Scheme. The OTS scheme was not only for the respondent no.5 alone, but for other defaulters also. No irregularity is found in settling the matter as per the policy of the respondent no.1. 10. In the present case the property was already taken over by respondent no.1 GSFC and the settlement was as per OTS Scheme. The OTS scheme was not only for the respondent no.5 alone, but for other defaulters also. No irregularity is found in settling the matter as per the policy of the respondent no.1. Therefore the decisions cited by the petitioners are not applicable to the facts of the present case. 10. A contention has been raised on behalf of the petitioners that the property should be taken back and fresh auction may be held and the difference amount may be credited to their account. This contention is totally misconceived inasmuch as the price of the property as on the date of auction is realized and rights and liabilities of parties are crystallized. Assuming that a second auction is required then the benefits thereof will go to respondent no.2 and they cannot go to petitioner or Ganpati Pulp and Paper Mills Limited, the respondent no.6 herein. The rights were crystallized in auction in 1990, and only on the ground of pendency of proceedings and default by new purchaser, the petitioner cannot get any right to challenge the same. Further, in view of the restraint order passed by this Court in the above mentioned Special Civil Application, a prudent decision is taken, which cannot be faulted. 11. In the premises aforesaid, I do not find any merits in the present petition. The same is therefore dismissed. Notice is discharged with no order as to costs. Order of status quo stands vacated. 12. At this stage, Mr. Mihir Joshi,learned Senior Counsel, requests for extension of interim relief for approaching higher forum. However, since the other petition i.e. Special Civil Application No.11116 of 2008 is pending and the same is listed for hearing on 18th October 2010 it will not be appropriate to extend the interim relief. Hence the prayer is rejected.0