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2019 DIGILAW 467 (ORI)

Mallika Patnaik v. Managing Director, OSFC

2019-07-18

PRAMATH PATNAIK, SANJU PANDA

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JUDGMENT : PRAMATH PATNAIK, J. 1. The writ application has been filed assailing the sale notice published by the Orissa State Financial Corporation (herein after referred in short 'OSFC') to sell the property mortgaged by the late husband of the petitioner for obtaining loan from OSFC for purchase of a Mini Truck. Further, challenge has been made to the action of the OSFC in selling the house situated over Plot No. 752 under Khata No. 250 old/1322(New) measuring an area Ac. 0.016 decs., of Mouza Jagadhatripur in Jeypore town in favour of the opp. party No. 4. 2. The petitioner has inter alia prayed for quashing of the sale notice so far as the mortgaged property and the sale of land together with house mentioned in Lot No. IIILB of Sl. No. 3 under Annexure-8 in favour of the opp. party No. 4 vide deed No. 183 of 2008 dated 17.09.2008. The undisputed facts as delineated in the writ application in a nutshell is that the husband of the petitioner late Pramod Kumar Patnaik made an application for loan from OSFC for purchase of a Mini Truck and loan was sanctioned for the said purpose and the mother of the husband of the petitioner stood as a guarantor for the said loan by mortgaging the property. Out of the sanction loan the husband of the petitioner has purchased the Mini Truck. The mother in-law of the petitioner died in the year 1993 leaving behind the husband of the petitioner. Since the husband of the petitioner was not regular in payment of the installments, opp. party No. 2 issued notice to show cause as to why the loan along with the interest will not be recalled and also the husband of the petitioner was noticed to clear the outstanding dues as revealed from Annexure-2 to the writ application. Thereafter, the vehicle bearing Registration No. OR-10-0110 was seized by the OSFC in the year 1995 under section 29 of the SFC Act and the vehicle was sold to one Gouranga Patra. While the matter stood thus the husband of the petitioner requested OSFC for permission to sell the mortgaged property for repayment of the balanced loan amount. But the opp. party did not take any action in that regard. Again the vehicle was seized from OSFC and sold to one Tejeswar Panda. While the matter stood thus the husband of the petitioner requested OSFC for permission to sell the mortgaged property for repayment of the balanced loan amount. But the opp. party did not take any action in that regard. Again the vehicle was seized from OSFC and sold to one Tejeswar Panda. The husband of the petitioner died in the year 2002 and the petitioner did not have any knowledge about the loan obtained by her late husband for purchase of Mini Truck from OSFC and subsequent sale of the vehicle. For the first time, the petitioner came to know about the sale of the mortgaged property from the sale notice published in Daily Oriya Sambad dated 19.03.2008 and immediately the petitioner intimated opp. party No. 2 requesting him not to sell the mortgaged property but to the utter surprise the opp. party sold the land with house to opp. party No. 4. It has been averred in the writ application that the petitioner is possessing the house situated over the aforesaid plot and there is no other place of residence. Being aggrieved by the illegal sale notice vide Annexure-8, the petitioner left with no alternative has been constrained to invoke the extra ordinary jurisdiction of this Court under Article 226 of the Constitution of India for redressal of her grievance. 3. Controverting the averment made in the writ application a counter affidavit has been filed on behalf of the opp. party Nos. 1 to 3. In the counter affidavit it has been submitted that since no step was taken for release of the seized collateral property, a loan settlement dues letter was issued intimating that the seized assets have been advertised for disposal through the Branch Level Disposal Committee meeting to be held on 12.03.2008 and the mortgagor was requested to clear up the outstanding dues along with interest and other charges. Again, the sale rescheduled on 12.03.2008 was deferred and re-advertised again to be sold through meeting dated 26.03.2008 and again deferred to 20.08.2008. The loan settlement notices for Branch Level Disposal Committee meeting dated 26.03.2008 and 20.08.2008 were also issued again vide letters dated 20.03.2008 & 11.08.2008 to settle the loan account and to get the seized assets released. Finally, in Branch Level Disposal Committee meeting held on 20.08.2008 the Lot-1 property was sold at Rs. 2,87,300/- on outright payment basis in favour of Op. Finally, in Branch Level Disposal Committee meeting held on 20.08.2008 the Lot-1 property was sold at Rs. 2,87,300/- on outright payment basis in favour of Op. party No. 4 and the sale letter was issued vide letter No. 147 dated 20.08.2008. Thereafter, after receipt of the entire sale consideration, possession was handed over to opp. party No. 4 vide letter No. 180 dated 12.09.2008 and subsequently deed of transfer was executed in favour of opp. party No. 4 dated 17.09.2008. However, lot-2 and 3 properties are still laying unsold. It is further submitted that even if borrower and mortgager had died and the petitioner being the legal heirs of mortgager is aware of all developments and having all notices etc. in her custody, is liable to pay back the dues which she has failed to do so and the action taken by the opp. parties with respect to seizure/sale of the vehicle and the collateral properties is fully justified and legal. It has also been submitted that after adjustments to the sale proceeds to the loan account there was outstanding of Rs. 6,85,806/- as on 31.12.2008 to be recovered from the borrower. 4. Learned counsel for the petitioner during course of hearing has vehemently submitted that the impugned action of the opp. parties is infraction of Section 31 & 32 of the State Financial Corporation Act. In that view of the matter the impugned sale notice and subsequent sale to opp. party No. 4 is not legally sustainable. Learned counsel for the petitioner has referred to decision reported in 2012 (1) OLR - 374 Smt. Sukanti Mohapatra & another vs. Orissa State Financial Corporation & 2 others. As against the submission of the learned counsel for the petitioner, learned counsel for the O.S.F.C. has vociferously submitted that due to default on the part of the husband of the petitioner and subsequently by the petitioner in payment of installments, the opp. parties were left with no alternative but to sell the properties to recover the loan. 5. Learned counsel for the OSFC further submits that the petitioner though was cognizant of the fact there was outstanding loan account but she never took any prompt action for squaring up the loan. parties were left with no alternative but to sell the properties to recover the loan. 5. Learned counsel for the OSFC further submits that the petitioner though was cognizant of the fact there was outstanding loan account but she never took any prompt action for squaring up the loan. After hearing the learned counsel for the respective parties and on perusal of the records, the questions falls for determination is as to whether the petitioner is entitled to the relief, i.e., for quashing of the sale of the mortgaged property belonging to the petitioner's mother-in-law in view of infraction of Section 31 & 32 of the said Financial Corporation Act? 6. For better appreciation, it would be apposite to refer Sections 31 & 32 of the SFC Act which is quoted hereunder: "Section 31 of the SFCs Act deals with special provisions for enforcement of claims by the Financial Corporation-(1) Where an industrial concern, in breach of any agreement, makes any default in repayment of any loan or advance or any installment thereof or in meeting its obligations in relation to any guarantee given to the Corporation or otherwise fails to comply with the terms of its agreement with the Financial Corporation or where the Financial Corporation requires an industrial concern to make immediate repayment of any loan or advance under Section 30 and the industrial concern fails to make such repayment, then without prejudice to the provisions of Section 29 of the this Act and Section 69 of the Transfer of Property Act, 1882, any officer of the Financial Corporation, generally or specially authorized by the Board in this behalf, may apply to the District Judge within the limits of whose jurisdiction the industrial concern carries on the whole or a substantial part of its business for one or more of the following reliefs, namely:- (a) for an order for the sale of property pledged, mortgaged, hypothecated or assigned to the Financial Corporation as security for the loan or advance; or (aa) far enforcing the liability of any surety; or (b) for transferring the management of the industrial concern to the Financial Corporation, or (c) for an ad interim injunction restraining the industrial concern from transferring or removing its machinery or plant or equipment from the premises of the industrial concern without the permission of the Board, where such removal is apprehended. (2) An application under Sub-section (1) shall state the nature and extent of the liability of the industrial concern to the Financial Corporation, the ground on which it is made and such other particulars as may be-prescribed. Section 32 deals with the procedure of District Judge in respect of application under Section 31. Sub-section (1) provides that when the application is for the reliefs mentioned in clauses (a) and (c) of Sub-section (1) of Section 31, the District Judge shall pass an ad interim order attaching the security, or so much of the property of the industrial concern as would on being sold realize in his estimate an-amount equivalent in value to the outstanding liability of the industrial concern to the Financial Corporation, together with the costs of the proceedings taken under Section 31, with or without an ad interim injunction restraining the industrial concern from transferring or removing its machinery, plant or equipment." Admittedly on perusal of the aforesaid Section provisions of State Financial Corporation Act, there has been no compliance of Section 31 & 32 of the State Financial Corporation Act and the decision cited (supra) by the learned counsel for the petitioner is squarely applicable to the case in hand. 7. In view of the aforesaid factual and legal position as enunciated in the foregoing paragraphs, we are of the considered view that the impugned sale notice of the mortgaged property mentioned Sl. No. 3 under Annexure-8 and the sale of the land together with house mentioned in Lot No. IIILB are liable to be held as not valid. We accordingly hold the same to be not valid. Resultantly, the writ petition stands allowed.