s 27(d) of the Drugs and Cosmetics Act, 1940 (in short, the Act) for violation of Section 18(a)(i)/16 and schedule-II and punishable under Section 27(c) of the Act for violation of Section 18(a)(i)/17B(d) of the Act.Drugs Inspector, Mahaboobnagar District had drawn sample of Rabpraz tablets from G.M. Medical and General Stores, Atmakur by allegedly following procedure prescribed by law and forwarded sealed portion of the sample drug to the Government Analyst, Drugs Control Laboratory, Hyderabad under registered parcel. On 06.07.2009, analysis report of the sample drug is received in Form-13 from the Government Analyst declaring the sample as not of standard quality for the reason that the sample does not comply the Assay for Rabprazole Sodium as per STP (claim 20mg/tablet, found 4.9 mg/tablet). In Medicamen Biotech Limited V. Rubina Bose1 of the Supreme Court it was held that the delay deprived valuable right under Sections 25(3) and 25(4) of the Act and it should necessitate quashing of the proceedings against the accused. in order to send second sample to Central Drugs Laboratory for second analysis, the accused could have notified his intention in writing under Section 25(3) to adduce his evidence in controversion of the report of the Government analyst. Such expression of intention by notification in writing arises only in case the proceedings are started even before expiry date of the sample drug. In this case, the question of exercising option or notifying intention under Section 25(3) of the Act does not arise, as report of the Government analyst was received after expiry date of the sample drug. In such a case, the accused has no opportunity to notify his intention under Section 25(3) of the Act as even if such intention is notified, there is no subsistence of shelf life of the sample drug as the sample drug had already expired. In these circumstances, the accused suffered great prejudice as the accused is deprived of valuable right of defence of having opportunity to get correctness of analysis report of the Government analyst challenged. Hence, continuation of proceedings in the lower Court for further trial becomes futile exercise.Accordingly, the Criminal Petition is allowed quashing proceedings in C.C. No.102 of 2011 on the file of Judicial Magistrate of the First Class, Atmakur, Mahabubnagar District.

THE HONOURABLE SRI JUSTICE SAMUDRALA GOVINDARAJULU              

CRIMINAL PETITION No.6019 of 2012  

27-08-2012

M/s.Associated Biotech and 4 others

The State Government of A.P. rep. by Asst. Director,Incharge Drugs Inspector,
Mahabubnagar District, Rep. by its Public Prosecutor

Counsel for the Petitioners : M/s.Dilip Kumar Jaiswal

Counsel for the Respondent:  Public Prosecutor

<Gist :

>Head Note:

? Cases referred:

(2008)3 Supreme Court Cases (Cri) 20

ORDER :
        The petitioners 1 to 5/A-1 to A-5 are accused of offences punishable under
Sections 27(d) of the Drugs and Cosmetics Act, 1940 (in short, the Act) for
violation of Section 18(a)(i)/16 and schedule-II and punishable under Section
27(c) of the Act for violation of Section 18(a)(i)/17B(d) of the Act.  A-1 is
having approval to manufacture drug viz., Rabpraz from the Licensing Authority,
Shimla and A-2 to A-5 are partners of A-1 firm.  It is alleged that they are all
responsible for the day-to-day activities of the firm.  On 05.09.2008 Drugs
Inspector, Mahaboobnagar District had drawn sample of Rabpraz tablets from G.M.
Medical and General Stores, Atmakur by allegedly following procedure prescribed
by law and forwarded sealed portion of the sample drug to the Government
Analyst, Drugs Control Laboratory, Hyderabad under registered parcel. On
06.07.2009, analysis report of the sample drug is received in Form-13 from the
Government Analyst declaring the sample as not of standard quality for the
reason that the sample does not comply the Assay for Rabprazole Sodium as per
STP (claim 20mg/tablet, found 4.9 mg/tablet).  On 03.12.2009, the incharge drugs
inspector addressed notice to Proprietor of G.M. Medical and General Stores to
disclose source of supply of the sample drug under Section 18(A) of the Act and
to submit copy of purchase invoice.  On the same day, reply was received from
the said proprietor that subject batch drug was purchased from Thirumala Pharma,
Mahabubnagar through invoice dated 14.06.2008, along with enclosure of attested
copy of purchase invoice.  On the same day, the incharge drugs inspector notice
under Section 18(A) and 22(1)(cca) of the Act to Thirumala Pharma, Mahabubnagar
requesting to disclose source of the sample drug and to submit copies of
purchase invoice.  The drugs inspector also handed over a sealed portion of the
sample drug and copy of analysis report to Partner of Thirumala Pharma under
Section 23(4)(ii) and 25(2) of the Act.  On 04.12.2009, reply was received from
Thirumala Pharma stating that the subject batch drug was purchased from Neosun
Biotech India Pvt. Ltd, Hyderabad vide invoice dated 07.06.2008 and from Sadguru
Pharmaceuticals, Hyderabad vide invoice dated 05.03.2008.  Attested copies of
purchase invoices were also furnished.  On 29.12.2009, incharge drugs inspector
addressed letter to Neosun Biotech India Pvt., Ltd., Hyderabad under Sections
18(A), 18(B) and 22(1)(cca) of the Act to disclose source of supply and to
submit purchase invoices.  On 07.01.2010 reply was received from Neosun Biotech
India Pvt., Ltd., stating that the subject drug was purchased from A-1 through
invoice dated 31.07.2007, along with attested copy of purchase invoice and sale
bill.  On 12.01.2010, incharge drugs inspector addressed notice to Sadguru
Pharmaceuticals, Hyderabad under Sections 18(A), 18(B), 22(1)(cca) of the Act to
disclose source of supply of the sample drug.  The said notice sent by
registered post was returned unserved as left.  On 02.02.2010, incharge drugs
inspector, Mahabubnagar personally visited Neosun Biotech India Pvt., Ltd.,
Hyderabad and on enquiry found that 1000 strips of Rabpraz tablets were sold to
Sadguru Pharmaceuticals by them through sales invoice dated 08.11.2007.  On
11.02.2010, incharge drugs inspector addressed notice to A-1 under Section 18(B)
and 22(1)(cca) of the Act to confirm the manufacture and sale of the sample drug
and to submit details of manufacturing licences manufacturing and analytical
records.  On 22.04.2010, reply was received from A-1 stating that the product is
already expired and it is not available in the market and their control samples
found quality based over expiry.  Hence, Assistant Director who is incharge
drugs inspector, Mahabubnagar District filed complaint in the lower Court
against A-1 to A-5 for punishing them under the above provisions for the alleged
violations.  The complaint was filed before the Magistrate on 04.08.2010.  The
Magistrate took cognizance and issued summonses to A-1 to A-5 by order dated
14.11.2011.
        2) Form 17 of the Drugs Inspector, Mahabubnagar contains details of sample
taken in this case.  The sample drug is from Batch No.AP75L73, manufactured in
July, 2007 and date of expiry in June, 2009.
        3) It is contended by the petitioners' counsel that the analyst report in
this case was received by Drugs Inspector on 06.07.2009 by which month the
sample drug expired and the complaint was filed before the Magistrate thereafter
on 04.08.2010 and the offences were taken cognizance by the Magistrate on
14.11.2011 and therefore, the petitioners/accused have lost their valuable right
of sending second sample to the Central Drugs Laboratory for second analysis and
for revised report, challenging report of the Government analyst, Hyderabad.
The relevant provisions of the Act on this aspect are Sections 25(3) and 25(4)
which read as under:
"25. Reports of Government Analysts:- --------------------- --------------------
--------------------------------------------------------------
(3) Any document purporting to be a report signed by a Government Analyst under
this Chapter shall be evidence of the facts stated therein, and such evidence
shall be conclusive unless the person from whom the sample was taken or the
person whose name, address and other particulars have been disclosed under
Section 18-A has, within twenty-eight days of the receipt of a copy of the
report, notified in writing the Inspector or the Court before which any
proceedings in respect of the sample are pending that he intends to adduce
evidence in controversion of the report.
(4) Unless the sample has already been tested or analysed in the Central Drugs
Laboratory, where a person has under sub-section (3) notified his intention of
adducing evidence in controversion of a Government Analyst's report, the Court
may, of its own motion or in its discretion at the request either of the
complainant or the accused cause the sample of the drug or cosmetic produced
before the Magistrate under sub-section (4) of Section 23 to be sent for test or
analysis to the said Laboratory, which shall make the test or analysis and
report in writing signed by, or under the authority, of the Director of the
Central Drugs Laboratory the result thereof, and such report shall be conclusive
evidence of the facts stated therein.
--------------------------------------------------------------------------".
        4) Under Section 25(3) of the Act, the accused has got right to receive
copy of the analysis report of the Government Analyst and within 28 days of
receipt of copy of such report, right to notify his intention in writing either
to the Inspector or to the Court before which the proceedings in respect of the
sample are pending to adduce evidence in controversion of the analysis report.
In such an event, sub-section (4) of Section 25 of the Act makes it incumbent on
the Court either suo motu or at the request of either of the parties to send
another sample of the drug to the Central Drugs Laboratory for analysis and
report.  Under Sub-section (5) thereof, it is for the Court to direct either the
complainant or the accused to bear expenses for the exercise under sub-section
(4).  The exercise under sub-section (4) of Section 25 of the Act could be of
use in case quality life of the sample drug did not expire by then.  In the
present case, sample drug expired by June, 2009.  Unfortunately, analysis report
dated 26.06.2009 was received by the complainant on 06.07.2009 after expiry date
of the sample drug.  There is inordinate delay in analysing the sample by the
Government analyst and sending report of analysis.  It is left unexplained.  On
the same date of obtaining sample i.e., on 05.09.2008, the Drugs Inspector
dispatched one part of the sample to the Government analyst for analysis along
with necessary forms.  The analysis report reads that sample was received by the
Government analyst on 08.09.2008 itself.  In spite of it, analysis of the sample
drug could not be made and analyst report could not be prepared till 26.06.2009.
All the events subsequent to the date of receipt of analysis report become
futile, as by the respective dates, quality life of the sample drug had expired.
        5) Drugs Inspector could have taken steps under Section 18(A) of the Act
immediately after obtaining the sample and sending the same for analysis and
without waiting for receipt of the analysis report.  Similarly, Drugs Inspector
could have taken steps under Section 18(B) and 22(1)(cca) of the Act even before
receipt of the analysis of report, as the Drugs Inspector obtained samples
suspecting the drug to be of not standard quality and has reason to believe the
same.  Instead, Drugs Inspector took prolonged steps even after receipt of
analysis report stage by stage.  When there is label declaration giving
manufacturer's name as A-1 together with its address, there was no reason for
the Drugs Inspector to wait till the end to address A-1 for information under
Sections 18(B) and 22(1)(cca) of the Act.   Thus, unnecessary delays could have
been avoided by Drugs Inspector in case he acted swiftly after obtaining
suspected drug sample and sending the same to the Government Analyst for
analysing and even before receipt of analysis report.  In any event, Drugs
Inspector cannot be responsible for the delay in this case as analysis report
was received by him from the Government analyst on 06.07.2009 after expiry date
of the sample drug.
        6) In Medicamen Biotech Limited V. Rubina Bose1 of the Supreme Court it
was held that the delay deprived valuable right under Sections 25(3) and 25(4)
of the Act and it should necessitate quashing of the proceedings against the
accused.
        7) It is contended by the Additional Public Prosecutor that in order to
send second sample to Central Drugs Laboratory for second analysis, the accused
could have notified his intention in writing under Section 25(3) to adduce his
evidence in controversion of the report of the Government analyst.  Such
expression of intention by notification in writing arises only in case the
proceedings are started even before expiry date of the sample drug.  In this
case, the question of exercising option or notifying intention under Section
25(3) of the Act does not arise, as report of the Government analyst was
received after expiry date of the sample drug.  In such a case, the accused has
no opportunity to notify his intention under Section 25(3) of the Act as even if
such intention is notified, there is no subsistence of shelf life of the sample
drug as the sample drug had already expired.  In these circumstances, the
accused suffered great prejudice as the accused is deprived of valuable right of
defence of having opportunity to get correctness of analysis report of the
Government analyst challenged.  Hence, continuation of proceedings in the lower
Court for further trial becomes futile exercise.
        8) Accordingly, the Criminal Petition is allowed quashing proceedings in
C.C. No.102 of 2011 on the file of Judicial Magistrate of the First Class,
Atmakur, Mahabubnagar District.

_______________________________    
SAMUDRALA GOVINDARAJULU, J        
August 27, 2012

under Section 138 of the Negotiable Instruments Act In the present case, the accused has not disputed her signature on Ex.P-1, the cheque. But according to her, the blank cheque was issued in favour of Ushodaya Finance Company in which complainant's son is a partner and the complainant misused the same for filing the complaint and she further pleaded that she has not borrowed any amount from the complainant and he has no capacity to lend the amount. PW.1 in the beginning of the chief examination has stated that the accused borrowed the amount on 26.10.1998 and subsequently has stated six months prior to 26.10.1998 and in cross-examination he has deposed that he does not remember as to why he agreed to lend money and actually when he lent the money to the accused and his evidence is inconsistent with regard to date on which the amount was lent to the accused. The complainant as PW.1 has stated that he retired from service in the month of April, 1995 and according to him after one year he has received the retirement benefits and from the date of his retirement till he lent the money to the accused, he kept the money with him in the hands. According to him the amount was lent to the accused in the month of April or October, 1998 and there is a gap of nearly two years in lending the amount to the accused and according to the complainant he kept the said amount in his house for all these two years. The trial Court has rightly disbelieved said version of keeping such a huge amount without investing the same in his house. PW.1 further deposed that the accused has executed a bond on her own hand- writing after receiving the said amount of Rs.1,90,000/- and in the cross- examination he has deposed that the said bond was returned by the complainant one week or ten days prior to the issuing Ex.P-1 cheque. The trial Court has rightly disbelieved that version as no prudent man would return the bond executed by the borrower without obtaining the cheque in lieu of said bond and more particularly when there is a dispute with regard to the property between the accused and her daughter as per paper publication made in Vaartha newspaper. According to PW.3 P.Dharma Reddy, he has gone to the house of the accused along with the complainant and in his presence the accused has issued the said cheque to the complainant but he could not state about the location of the house or identity of the house of the accused. The accused has got marked Ex.D-2 a letter written by her to the bank requesting stop payment of the disputed cheque stating that she has issued two blank cheques bearing No.384351 (marked as Ex.P-1) and No.132958 to Ushodaya Finance Company and she had no liability to the said firm and in the event of presentation of the said cheque for encashment, the payment may be stopped. Admittedly, the said letter was addressed to the State Bank of Hyderabad on 08.10.1998 and the same was acknowledged by the said bank. The said letter was addressed by the accused to the said bank much prior to the date of issuing the cheque Ex.P-1. PW.1 admitted that he himself scribed the contents of Ex.P-1 cheque. Admittedly, the accused was working as a teacher as on that date and if really she has issued a cheque for Rs.1,90,000/- she would have written the blanks in the said cheque with her own hand writing. Thus, the complainant has scribed the same in his hand- writing supports the contention of the accused that she issued two blank cheques in favour of Ushodaya Finance Company. The above circumstances create a doubt with regard to lending of the money by PW.1 to the accused and the accused issued the cheque in favour of the complainant. Thus, the accused by relying upon the evidence produced by the complainant could able to rebut the presumption available under Section 139 of the N.I. Act by preponderance of possibilities. Thus, the trial Court has rightly held that the complainant has failed to establish the offence under Section 138 of the N.I. Act and rightly dismissed the complaint basing on the material available on record. In the result, the Criminal Appeal is dismissed.

HON'BLE SRI JUSTICE P.DURGA PRASAD        

CRIMINAL APPEAL NO. 439 OF 2005    

17-08-2012

R.Indrasena Reddy,

M.Prabhavathi and another.

Counsel for the Appellant: Sri P.Nageshwara Rao, Advocate.

Counsel for the Respondent No.1:        Sri V.Ramachander Goud, Advocate  

Counsel for the Respondent No.2:        Public Prosecutor

< Gist:

> Head Note:

 ? Cases referred:
1. (2009) 1 SCC 492
2. (1999) 7 SCC 510
3. (2001) 8 SCC 458
4. (2006) 6 SCC 39
5. (2009) 2 SCC 513
6. (2010) 11 SCC 441

JUDGMENT:  

        This appeal is directed against the acquittal of the accused in C.C.No.274
of 1999 by the I Additional Judicial I Class Magistrate, Warangal on 10.09.2004.

        The appellant herein is the complainant and he has filed the complaint for
the offence under Section 138 of the Negotiable Instruments Act (for short "the
N.I. Act") against the respondent No.1 herein.

According to the complainant, he retired as Superintendent of Central Excise and
after retirement he received Rs.3,00,000/- towards retirement benefits.  The
accused was working as teacher in Government Aided Andhra Balika High School and  
she is a colleague of the complainant's wife.  The accused approached the
complainant through his wife and obtained a hand loan of Rs.1,90,000/-  for
settlement of the debts of the son of the accused, which he incurred in the
Frontier Computers Software Technology with a promise to repay the same within
six months but in spite of several demands, the accused began dodging and it was
very difficult to locate the accused at her residence and the complainant and
his relative P.Dharma Reddy could locate her and on 26.10.1998 the accused in
the presence of said Dharma Reddy gave a cheque bearing No.384351 drawn on State  
Bank of Hyderabad, Warangal Main Branch.  The said cheque was deposited in the
complainant's account but the same was returned on 02.11.1998 with an
endorsement of insufficient funds and party reported to stop operations in the
account.  Thereafter, complainant contacted the accused on 19.11.1998 and the
accused promised to instruct the bank and she will make efforts to deposit
sufficient funds to clear the said cheque.  So the complainant re-deposited the
said cheque on 20.11.1998, again the said cheque was returned with the same
endorsement.  The accused with an intention to defraud complainant, was scheming
to get her house bearing No.16-10-1338, situated at Shivanagar, Warangal
conveyed in the name of her unmarried daughter and subsequently the complainant
came to know that a lawyer's notice was appeared in Vaartha newspaper on
12.10.1998 with regard to transfer of said property in the name of her daughter.
Immediately on 25.11.1998 a lawyer notice was sent to an advocate Chamanti
Prabhakar Rao, which was served on him on 25.11.1998.  Along with the said
notice, a copy of the lawyer's notice dt.25.11.1998 addressed to the accused was
sent to the said advocate with a request to inform the same to the accused.
Thereafter the accused got issued a reply notice on 09.12.1998 to the counsel of
the complainant.  Hence, the accused has committed the offence punishable under
Section 138 of the N.I. Act.

The accused denied the allegations when she was examined under Section 251 of
Cr.P.C.  During the course of trial, the complainant himself examined as PW.1
and examined the Deputy Manager of SBH, Warangal Main Branch as PW.2 and one    
P.Dharma Reddy as PW.3 and got marked Exs.P-1 to P-7 on his behalf.  No oral
evidence was adduced on behalf of the accused.  During the course of examination
under Section 313 of Cr.P.C., the accused marked Exs.D-1 and D-2 on his behalf.

The Magistrate by taking into consideration said oral and documentary evidence
and by relying upon various decisions of the Apex Court and this Court, held
that the complainant failed to establish that the accused issued Ex.P-1 cheque
towards legally enforceable debt or liability due to the complainant and thereby
found the accused not guilty and acquitted her.

Aggrieved by the said acquittal, the complainant therein has filed the present
appeal.

The counsel appearing for the appellant has pleaded that the accused has not
disputed her signature on the said cheque Ex.P-1 and when once the cheque was
issued the presumption under Section 139 of the N.I. Act is available to the
complainant and the burden is on the accused to disprove that the said cheque
was not issued in discharge of any liability or legally enforceable debt and as
the complainant has not examined herself nor produced any evidence to rebut the
same the trial Court committed an error in dismissing the complaint and
acquitting the accused.

The counsel appearing for the respondent No.1, on the other hand, pleaded that
the presumption available under Section 139 of the N.I. Act is a rebuttable
presumption and it can be established by the evidence available on record and
there is no need to examine the accused to establish the defence and the trial
Court has rightly come to the conclusion that initial burden is on the accused
to prove that the said cheque was issued in discharge of legally enforceable
debt and the trial Court has rightly dismissed the complaint and acquitted the
accused.

The trial Court by relying upon the decisions of this Court in A.Bhoosanrao v.
Purushothamdas Pantani and another [1997(1) ALD (Crl.) 794 (AP)] and G.B.Lingam
v. Vitta Murali Krishna Murthy [1998(1) ALD (Crl.) 940 (AP)], held that the
initial burden is on the accused to prove the said cheque, which was issued in
discharge of legally enforceable debt and then the burden shifts on the accused
to disprove the same and as the complainant failed to discharge the initial
burden, come to the conclusion that the complainant has failed to prove that the
said cheque was issued for the legally enforceable debt.

In P.Venugopal v. Madan P.Sarathi1, the Apex Court held that "the facts and
circumstances of a debt or other liability has to be proved in the first
instance by the complainant and in discharge of the said debt or liability the
accused issued the cheuqes and the burden shifts on the accused and in the said
case as the appellant could not discharge the burden, the appeal was dismissed."

In the present case, the complainant examined himself as PW.1 and stated that
the accused borrowed the amount of Rs.1,90,000/- from him, on demand she has
issued the cheque Ex.P-1 for discharging of the said debt.  PW.3 also stated
that the accused issued the cheque in favour of the complainant.  From the
evidence of PW.2, it is evident that the said cheque was dishonoured when
presented by the complainant for collection. Thus, prima facie the complainant
could establish that the said cheque was issued in discharge of legally
enforceable debt and the presumption under Section 139 of N.I. Act is available
to the complainant.  Now the burden shifts on the accused to disprove the same.
The complainant's counsel contends that the accused could rebut the said
presumption either by examining himself or producing any evidence on his behalf
and thus, the lower Court erred in acquitting the accused.

In K.Bhaskaran v. Sankaran Vaidhyan Balan2, the Apex Court held that "as the
signature in the cheque is admitted to be that of the accused, the presumption
envisaged in Section 118 of the Act can legally be inferred that the cheque was
made or drawn for consideration on the date which the cheque bears.  Section 139
of the Act enjoins on the Court to presume that the holder of the cheque
received it for the discharge of any debt or liability.  The burden was on the
accused to rebut the aforesaid presumption."

In K.N.Beena v. Muniyappan3, the Apex Court held that "in view of the provisions
contained in Sections 118 and 139, the Court has to presume that the cheque had
been issued for discharging a debt or liability.  However, the said presumption
could be rebutted by the accused by proving the contrary.  Mere denial or
rebuttal by accused in the reply to the legal notice sent by the complainant is
not enough.  The accused had to prove by cogent evidence that there was no debt
or liability."

In M.S.Narayana Menon v. State of Kerala4, the Apex Court held that "the initial
burden of proof is on accused to rebut the said presumptions by raising a
probable defence.  If he discharges the said burden, the onus thereafter shifts
on to the complainant to prove his case.  Whether the initial burden has been
discharged by the accused is a question of fact.  The accused need not disprove
the prosecution case in its entirety.  He can discharge its burden on the basis
of preponderance of probabilities through direct or circumstantial evidence.
For the said purpose, he can also rely upon evidence adduced by the
complainant."

In Kumar Exports v. Sharma Carpets5, the Apex Court held that "the accused in a
trial under Section 138 of the Act has two options.  He can either show that
consideration and debt did not exist or that under the particular circumstances
of the case the non-existence of consideration and debt is so probable that a
prudent man ought to suppose that no consideration and debt existed.  To rebut
the statutory presumptions an accused is not expected to prove his defence
beyond reasonable doubt as is expected of the complainant in a criminal trial."

In Rangappa v. Sri Mohan6, the Apex Court held that "when an accused has to
rebut the presumption under Section 139, the standard of proof for doing so is
that of preponderance of probabilities.  Therefore, if the accused is able to
raise a probable defence which creates doubts about the existence of a legally
enforceable debt or liability, the prosecution can fail.  The accused can rely
on the materials submitted by the complainant in order to raise such a defence
and it is conceivable that in some cases the accused may not need to adduce
evidence of his/her own."

In view of the above said decisions, the presumption, which is available under
Section 139 of the N.I. Act can be rebutted by producing necessary evidence or
he can also rely upon the evidence produced by the complainant and the material
available on record without examining himself.  The burden can be discharged by
the accused on the basis of preponderance of possibilities.

In the present case, the accused has not disputed her signature on Ex.P-1, the
cheque.  But according to her, the blank cheque was issued in favour of Ushodaya
Finance Company in which complainant's son is a partner and the complainant
misused the same for filing the complaint and she further pleaded that she has
not borrowed any amount from the complainant and he has no capacity to lend the
amount.

PW.1 in the beginning of the chief examination has stated that the accused
borrowed the amount on 26.10.1998 and subsequently has stated six months prior
to 26.10.1998 and in cross-examination he has deposed that he does not remember
as to why he agreed to lend money and actually when he lent the money to the
accused and his evidence is inconsistent with regard to date on which the amount
was lent to the accused.  The complainant as PW.1 has stated that he retired
from service in the month of April, 1995 and according to him after one year he
has received the retirement benefits and from the date of his retirement till he
lent the money to the accused, he kept the money with him in the hands.
According to him the amount was lent to the accused in the month of April or
October, 1998 and there is a gap of nearly two years in lending the amount to
the accused and according to the complainant he kept the said amount in his
house for all these two years.  The trial Court has rightly disbelieved said
version of keeping such a huge amount without investing the same in his house.
PW.1 further deposed that the accused has executed a bond on her own hand-
writing after receiving the said amount of Rs.1,90,000/- and in the cross-
examination he has deposed that the said bond was returned by the complainant
one week or ten days prior to the issuing Ex.P-1 cheque.  The trial Court has
rightly disbelieved that version as no prudent man would return the bond
executed by the borrower without obtaining the cheque in lieu of said bond and
more particularly when there is a dispute with regard to the property between
the accused and her daughter as per paper publication made in Vaartha newspaper.
According to PW.3 P.Dharma Reddy, he has gone to the house of the accused along  
with the complainant and in his presence the accused has issued the said cheque
to the complainant but he could not state about the location of the house or
identity of the house of the accused.  The accused has got marked Ex.D-2 a
letter written by her to the bank requesting stop payment of the disputed cheque
stating that she has issued two blank cheques bearing No.384351 (marked as
Ex.P-1) and No.132958 to Ushodaya Finance Company and she had no liability to
the said firm and in the event of presentation of the said cheque for
encashment, the payment may be stopped.  Admittedly, the said letter was
addressed to the State Bank of Hyderabad on 08.10.1998 and the same was  
acknowledged by the said bank.  The said letter was addressed by the accused to
the said bank much prior to the date of issuing the cheque Ex.P-1. PW.1 admitted
that he himself scribed the contents of Ex.P-1 cheque.  Admittedly, the accused
was working as a teacher as on that date and if really she has issued a cheque
for Rs.1,90,000/- she would have written the blanks in the said cheque with her
own hand writing.  Thus, the complainant has scribed the same in his hand-
writing supports the contention of the accused that she issued two blank cheques
in favour of Ushodaya Finance Company.  The above circumstances create a doubt
with regard to lending of the money by PW.1 to the accused and the accused
issued the cheque in favour of the complainant.  Thus, the accused by relying
upon the evidence produced by the complainant could able to rebut the
presumption available under Section 139 of the N.I. Act by preponderance of
possibilities.  Thus, the trial Court has rightly held that the complainant has
failed to establish the offence under Section 138 of the N.I. Act and rightly
dismissed the complaint basing on the material available on record.

In the result, the Criminal Appeal is dismissed.
_______________________  
JUSTICE P. DURGA PRASAD      
Date: 17-08-2012

whether an MBBS seat which fell vacant in the year 2010 could be carried forward to the year 2012 so as to accommodate a candidate who was in the merit list published in the year 2010.- We, therefore, hold that a seat which fell vacant in a particular year cannot be carried forward or created in a succeeding year, in the absence of any rule or regulation to that effect. 15. We are, therefore of the view that the Division Bench of the High Court has rightly dismissed the claim made by the appellant. The appeal is, therefore, dismissed. There will be no order as to costs.

                                                                  REPORTABLE
                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPEALLATE JURISDICTION
                        CIVIL APPEAL NO. 6346 OF 2012
               [Arising out of SLP (Civil) No. 20614 of 2012]

Faiza Choudhary                                    .. Appellant
                                   Versus
State of Jammu & Kashmir &  Another                .. Respondents

                               J U D G M E N T

K. S. RADHAKRISHNAN, J.

1.    Leave granted.
2.    We are, in this case, concerned with  the  question  whether  an  MBBS
seat which fell vacant in the year 2010 could  be  carried  forward  to  the
year 2012 so as to accommodate  a  candidate  who  was  in  the  merit  list
published in the year 2010.

3.    We may, for answering  the  above  question,  refer  to  few  relevant
facts.   Admissions  to   various   professional   courses   like   medical,
engineering, dental etc. are being made by the  Jammu  &  Kashmir  Board  of
Professional  Entrance  Examination   (for   short   ‘Board’),   which   was
constituted under the J & K Board of Professional Entrance  Examination  Act
2002.   The Board is vested with the statutory  duty  of  conducting  common
entrance test for selecting meritorious  candidates  for  admission  to  the
various professional courses in the  State  of  Jammu  &  Kashmir.   In  the
academic year 2010,  249  seats  for  MBBS  courses  in  various  Government
Medical Colleges of Jammu & Kashmir State had to be  filled  up.  The  Board
initiated steps for making selection for the meritorious candidates  against
the above mentioned seats.  In terms of Section 9 of  the  Jammu  &  Kashmir
Reservation Act, 2004, 50% of the total number of seats had to be filled  up
from amongst female candidates in both open  merit  and  reserved  category.
The  Scheduled  Tribe  Gujjar  Bakerwal  (for  short  ‘STGB’)  category  was
allotted 15 seats.  Out of 15 seats allotted to STGB category, 7 seats  each
were allotted to male and female candidates  respectively.   The  Board  had
taken a decision that the 15th odd seat in the year 2010 was to be  allotted
to a female candidate by way of rotation as prior to  that,  that  seat  was
allotted to  a  male  candidate.   Appellant  was  also  subjected  to  that
selection process initiated by the Board.  She was also in the  merit  under
STGB category, but lower in merit.  Details of candidates  who  had  secured
more marks than the appellant are given below:


      |S. No. |Roll No.  |Name of the     |Sex   |Category  |Mark      |Rank      |
|       |          |Candidate       |      |          |          |          |
|1      |312173    |Nusrat Rashid   |F     |STGB      |121       |1817      |
|2      |301491    |Mehrul-Nisa     |F     |STGB      |118       |2081      |
|3      |302510    |Farah Chowan    |F     |STGB      |118       |2200      |
|4      |302178    |Abida Parveen   |F     |STGB      |117       |2208      |


All the above mentioned  candidates  were  female  candidates  and,  as  per
merit, the first female candidate Nusrat Rashid should have  got  that  15th
odd seat.  One Azhar Navid, a male candidate, who  had  secured  146  marks,
much more than the female candidates, filed a writ petition No. OWP No.  806
of 2010 before the Jammu & Kashmir High Court  raising  a  claim  over  that
seat stating that there could be no discrimination between male  and  female
candidates.  In that writ petition, beside one Rehana Bashir, Nusrat  Rashid
who had secured 121 marks, was also impleaded as a party.  All of  them  had
claimed that seat in MBBS course under the STGB category in the  year  2010.


4.    The Court vide its order dated  4.8.2010  restrained  the  Board  from
taking any decision regarding the selection  against  that  seat  under  the
STGB category till 18th August, 2010.   Writ petition was however  dismissed
by the Court on 8.7.2011 since Azhar Navid, the petitioner  therein  by  the
time got admission in the subsequent  selection  process.   Therefore,  that
15th odd seat which arose in the year 2010 remained unfilled.

5.    Appellant though lower in marks than the candidates mentioned  in  the
above chart submitted a representation in the year  2011  before  the  Board
seeking admission in that seat which fell vacant in the year 2010 under  the
STGB category.    Since  no  decision  was  taken  on  that  representation,
appellant filed OWP No. 1010 of 2011 on 25.7.2011  seeking  a  direction  to
the Board to offer that seat to her.   Writ petition  came  up  for  hearing
before a learned single Judge of the High Court on 19.3.2012, and the  Court
allowed the same holding that the appellant was entitled  to  get  admission
to that unfilled MBBS of the year 2010.  Learned single Judge  also  gave  a
direction to the Board to seek extension of the time schedule, laid down  in
Mridul Dhar (Minor) and Another v. Union of India and Others  (2005)  2  SCC
65.  Learned single Judge further directed that in the event  time  schedule
was not extended, the appellant should be granted  admission  for  the  MBBS
course in the year 2012.

6.    The Board, aggrieved by the judgment  of  the  learned  single  Judge,
filed an appeal LPAOW No. 29 of 2012, before the Division Bench of the  High
Court.  Appeal was allowed by the Division Bench taking the view that  since
the merit was  the  guiding  criterion  for  making  for  selection  to  the
professional courses, more particularly for MBBS course, a duty was cast  on
the Board to allot that seat to Nusrat  Rashid  on  the  basis  of  superior
merit.  It was held that the appellant had no right  in  law  to  stake  any
claim over that unfilled MBBS seat, which arose in  the  year  2010  in  the
year 2011.  The Court also took the  view  that  an  unfilled  seat  of  one
academic year could not be filled up after the cut-off date or  directed  to
be filled up in the next academic year.  The  Division  Bench,  accordingly,
allowed the appeal, against which this appeal has been preferred.
7.    Shri Bhim Singh, learned senior counsel appearing for  the  appellant,
submitted that it was the appellant and appellant alone who had submitted  a
representation before the Board raising claim over  that  unfilled  seat  of
the year 2010, after the dismissal of writ petition No. OWP No. 806 of  2010
filed by Azhar Navid.  Other candidates who had  acquired  more  marks  than
the appellant, by that time, had  got  admission  either  for  MBBS  or  BDS
courses and were not interested in that seat which fell vacant in  the  year
2010.  Learned senior counsel referred to the Judgments  of  this  Court  in
Neelima Shangla v. State of Haryana and Others (1986)  4  SCC  268,  Haryana
Urban Development Authority v. Sunita Rekhi (1989)  Suppl.  2  SCC  169  and
submitted that persons who had agitated the rights at the  appropriate  time
are entitled to get reliefs from this Court and  not  those  who  had  slept
over their rights.

8.    Learned senior counsel also submitted  that  the  appellant  had  been
waiting for  the  outcome  of  the  writ  petition  filed  by  Azhar  Navid,
otherwise, she would have got admission for the BDS course.  Learned  senior
counsel submitted that the learned  single  Judge  of  the  High  Court  had
rightly found that the appellant could stake her claim for the  vacant  seat
and that, in appropriate cases, this Court can extend the time  limit  fixed
for admission  to  the  professional  courses.  Learned  senior  counsel  in
support of his contention referred to the various judgments  of  this  Court
such as Anil Kumar Gupta and Others v. State of  Uttar  Pradesh  and  Others
(1995) 5 SCC 173, Dolly Chhanda v. Chairman, JEE and  Others  (2005)  9  SCC
779, Vijay Jamini v. Medical Council of India and Others (2005) 13 SCC  461,
Mridul Dhar (Minor) and Another v. Union of India and Others (2008)  17  SCC
435 and Medical Council of India v. Manas Ranjan Behera and Others (2010)  1
SCC 173.

9.     Shri  Sunil  Fernadez,  learned  counsel  appearing  for  the  Board,
submitted that the appellant has  no  legal  right  to  raise  a  claim  for
admission in that vacant MBBS seat of the year  2010,  especially  when  she
had secured only 117 marks, while there were four  other  female  candidates
who had secured more marks than the appellant.  Those female candidates  did
not make any claim for that MBBS seat since there was a stay of  filling  up
of that seat and if they had not accepted BDS seats, they  would  have  lost
those seats as well.  Learned counsel submitted that the Division  Bench  of
the High Court was justified in dismissing the appellant’s  claim  for  that
vacant seat which fell vacant in the year 2010.

10.   Shri Amit Kumar, learned counsel appearing for the Medical Council  of
India, submitted that it would not be possible to reserve an MBBS  seat  for
the appellant for  the  year  2012  at  the  expense  of  other  meritorious
candidates.  Even otherwise, learned counsel submitted that  this  Court  in
several judgments held that this Court cannot  be  generous  or  liberal  in
issuing directions to Medical Council of India  to  enhance  seats  for  the
MBBS course.

11.   We have heard learned counsel on either side.  We are of the view,  on
law as well as on facts, that the appellant has no right to make  any  claim
for the vacant MBBS seat of the year 2010 in the  year  2011  or  subsequent
years.   The  Board  should  have  allotted  that  seat  to  another  female
candidate  that  is  Nusrat  Rashid  who  had  secured  121  marks.    Since
litigation was on she could not have waited indefinitely for that  seat  and
hence she had accepted the BDS seat.  Next two candidates in line  of  merit
were Mehrul-Nisa and Farah Chowan, who had secured 118 marks  each,  however
got admission to the MBBS course.  Another candidate  Abida  Parveen  ranked
above the appellant had to satisfy herself with a BDS seat  because  of  the
then ongoing litigation, lest, she might lose that seat as well.  Appellant,
never got herself impleaded in the  writ  petition  filed  by  Azhar  Navid,
raised any claim over that seat in  the  year  2010.   Only  when  the  writ
petition filed by Azhar Navid was dismissed on  08.07.2011,  for  the  first
time, she had filed a representation in the year 2011 raising a  claim  over
that 2010 unfilled seat, by that time the cut-off date fixed by  this  Court
i.e. 30th September for 2010 for admission was over.   Further,  few  female
candidates who had secured more marks than appellant  had  to  contend  with
BDS seats.  If that 2010 unfilled MBBS seat is offered to the  appellant  in
the year 2012, that will be a great injustice to candidates who were  ranked
above the appellant.  The appellant did not claim  that  seat  in  the  year
2010 but only in the year 2011, by filing OWP No. 1010 of 2011 on  25.7.2011
claiming an unfilled seat of the year 2010.

12.   A medical seat has life only in the year it falls that too  only  till
the cut-off date fixed by this Court i.e. 30th September in  the  respective
year.  Carry forward principle is unknown to the professional  courses  like
medical, engineering, dental etc.   No rule or regulation has  been  brought
to our knowledge conferring power on the Board to  carry  forward  a  vacant
seat to a succeeding year.  If the Board or the Court indulges  in  such  an
exercise, in the absence of any rule or regulation,  that  will  be  at  the
expense of  other  meritorious  candidates  waiting  for  admission  in  the
succeeding years.

13.   The Medical Council of India Act provides that admission can  be  made
by the medical colleges  only  within  the  sanctioned  capacity  for  which
permission under  Section  10A/recognition  under  Section  11(2)  has  been
granted.  This Court in State of Punjab and  Others  v.  Renuka  Single  and
Others (1994) 1 SCC 175, held that the  High  Court  or  the  Supreme  Court
cannot be generous or liberal in issuing such directions which in  substance
amount to directing authorities concerned to  violate  their  own  statutory
rules and regulations, in respect of admissions  of  students.   In  Medical
Council of India v. State of Karnataka (1988) 6 SCC  131,  this  Court  held
that the number of students admitted cannot be over and above that fixed  by
the Medical Council as per the Regulations and that  seats  in  the  medical
colleges cannot be  increased  indiscriminately  without  regard  to  proper
infrastructure as per the regulations of the Medical  Council.   In  Medical
Council of India v. Madhu Singh and Others (2002)  7  SCC  255,  this  Court
held that there cannot be telescoping of unfilled seats  of  one  year  with
permitted seats of the subsequent year.  Recently, this Court in  Satyaprata
Sahoo and Others v.  State  of  Orissa  and  Others  JT  2012  (7)  500  has
reiterated that it would not be possible to increase seats  at  the  expense
of candidates waiting for admission in the succeeding years.

14.   Learned senior counsel appearing for the  appellant  referred  to  few
judgments of this  Court  stating  that  this  Court  had  previously  given
certain directions to accommodate candidates in the  succeeding  years,  but
that was done in our view only in extraordinary circumstances and issued  in
view of the mandate contained in  Article  141  of  the  Constitution  which
cannot be treated as a precedent for  this  Court  or  the  High  Courts  to
follow.  We, therefore, hold that a seat which fell vacant in  a  particular
year cannot be carried forward or created  in  a  succeeding  year,  in  the
absence of any rule or regulation to that effect.

15.   We are, therefore of the view that the  Division  Bench  of  the  High
Court has rightly dismissed the claim made by  the  appellant.   The  appeal
is, therefore, dismissed.  There will be no order as to costs.



                                          ….…..…………………………J.
                                          (K. S. RADHAKRISHNAN)






















                                          …………………………………J.
                                          (DIPAK MISRA)
New Delhi,
September 6, 2012.

whether the Division Bench of the Orissa High Court was justified in directing Orissa State Financial Corporation (OSFC) and Industrial Promotion and Investment Corporation of Odisha Ltd. (IPICOL) to offer afresh the benefit of One-Time Settlement Scheme (OTS) to M/s Hotel Torrento Limited, 1st respondent herein, which had earlier been offered vide communications’ dated 18.3.2006 and 3.4.2006, but was not availed off by complying with the terms and conditions stipulated therein. The further question is whether the High Court was right in ordering dispossession of the appellant (auction purchaser) and put 1st respondent back in possession.- In our view, the High Court has committed an error in holding that off-set price of property was not valued before the conduct of auction and that there was no due publication of auction.We find no illegality in the procedure adopted by the Corporation, since 1st respondent had failed to comply with the directions issued by the co-ordinate Bench of the Orissa High Court in writ petition No. 13376 of 2008, which gave liberty to the Corporations to proceed in accordance with Section 29 of SFC Act. We are of the view that the Division Bench of the High Court had overlooked those vital facts as well as the binding judgment of a co-ordinate Bench in writ petition No. 13376 of 2008 and had wrongly reopened a lis and issued wrong and illegal directions. 29. In the said circumstances, we are inclined to allow both the appeals and set aside the judgment of the Division Bench of the Orissa High Court. However, in the facts and circumstances of the case, there will be no order as to costs.

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO. 6347 OF 2012

               [Arising out of SLP (Civil) No. 32610 of 2011]


M/s Micro Hotel P. Ltd.                                  .. Appellant
                                   Versus
M/s Hotel Torrento Limited & Ors.                  .. Respondents
                                    WITH
                        CIVIL APPEAL NO. 6348 OF 2012
                [Arising out of SLP (Civil) No. 1125 of 2012]


                               J U D G M E N T


K. S. RADHAKRISHNAN, J.


1.    Leave granted.


2.    Common questions arise for consideration in  both  these  appeals  and
hence we are disposing of both the appeals by a common judgment.

3.    We are, in  these  appeals,  called  upon  to  consider  the  question
whether the Division Bench  of  the  Orissa  High  Court  was  justified  in
directing  Orissa  State  Financial  Corporation   (OSFC)   and   Industrial
Promotion and Investment  Corporation  of  Odisha  Ltd.  (IPICOL)  to  offer
afresh the  benefit  of  One-Time  Settlement  Scheme  (OTS)  to  M/s  Hotel
Torrento Limited, 1st respondent herein,  which  had  earlier  been  offered
vide communications’ dated 18.3.2006 and 3.4.2006, but was not  availed  off
by complying with the terms and conditions stipulated therein.  The  further
question is whether the High Court was right in  ordering  dispossession  of
the  appellant  (auction  purchaser)  and  put  1st   respondent   back   in
possession.

4.    This case has a chequered  history,  therefore,  it  is  necessary  to
examine the facts at some length to appreciate the real controversy  between
the parties and to reach a proper and just decision, on facts as well as  on
law.  OSFC, 2nd respondent herein, disbursed a term loan  of  Rs.51,27,200/-
and loan in lieu  of  subsidy  of  Rs.23.30  lakhs  to  1st  respondent  for
establishing a hotel project at Janugarji, Balasore in the State of  Odisha.
 The project was  jointly  financed  by  OSFC  and  IPICOL,  for  which  1st
respondent had entered into a loan agreement and mortgaged the  title  deeds
and extended a registered lease deed dated 8.2.1988.  Lease was valid for  a
period of 25 years with a renewable clause.  There was default in  repayment
of the  loan  amount,  which  led  OSFC  issuing  a  demand  notice  to  1st
respondent on 7.2.1991, followed by a recall notice  dated  30.11.1991.  The
respondent was also  served  with  a  show  cause  notice  dated  16.12.1994
followed by recall notices dated 4.1.1995 and 13.3.1996.

5.    1st respondent then filed a Writ  Application  No.  2513  of  1996  on
20.3.1996 before the High Court of Orissa to quash the recall  notice  dated
13.3.1996 and for rehabilitation.   The High Court  disposed  of  that  writ
application with a direction to respondents 2  and  5  (OSFC  &  IPICOL)  to
consider the request of  1st  respondent  for  rehabilitation  package.   On
9.3.2006, an OTS scheme was introduced by OSFC and  1st  respondent  applied
for settlement of its loan account under that scheme.    On  18.3.2006,  the
benefit of the scheme was extended to 1st respondent by OSFC and  agreed  in
principle to settle the term loan account on payment of Rs.1,16,21,200/-  on
or before 18.4.2006, subject to certain terms and conditions which  were  as
follows:
     1. The settlement amount shall either be paid in one lump  sum  on  or
        before Dt. 18.04.06 (within 30 days of this settlement order)  with
        3% discount on the settlement amount.
                            OR
            Installments as per the sequence mentioned below:


           a) Up front payment of Rs.23,61,400.00 (Rupees twenty three lakh
              sixty one thousand four hundred only) (i.e.25% of  settlement
              amount less initial deposit) shall be  paid  along  with  the
              acceptance letter (format enclosed herewith) on or before Dt.
              16.04.06, within 30 days.


           b) The balance settlement amount of Rs.87,15,900.00 (75%)  shall
              be paid on or before Dt. 15.06.06.



     2. Any other expenses chargeable/incurred/debited in the loan accounts
        towards misc. expenses on L/A with effect from Dt.  11.07.05  (date
        of application) till the final settlement of loan accounts shall be
        paid by you along with the settlement amount.


     3. It may be noted that (NDC) can only be issued in your favour  after
        liquidation of all the loans availed.



     4. You shall have to submit  the  consent/decree/permission/withdrawal
        order (wherever applicable) before  issue  of  No  Due  Certificate
        (NDC).



           In case of failure on payment of the aforesaid amount within the
      stipulated dates, the one time settlement of dues considered  in  your
      favour including relief and  concession  thereon  shall  be  withdrawn
      without further reference to you.”


6.    IPICOL also approved the request for OTS at Rs.45 lacs with waiver  of
Rs.1,88,21,099 subject to  certain  terms  and  conditions,  which  were  as
follows:
      “(a)  The OTS amount is Rs.45 lacs (Rupees forty-five lacs  only)  and
           the resultant sacrifice(s) by way of  waiver  is  Rs.1,88,21,099
           (Rupees one crore twelve lakhs seventeen thousand  five  hundred
           twenty nine only on account of funded interest and Rs.76,03,570/-
            (Rupees seventy six lakhs three thousand five  hundred  seventy
           only) on account of overdue interest.


      (b)   The OTS amount shall be paid within a period of 1 year from  the
           date of this letter as per the schedule given below:


           Rs.6,75,000 towards 25% of upfront  payment  (including  initial
           payment made by you) within 30 days and balance 75% amounting to
           Rs.33,75,000/-  within  a  period  of  1  year  in  4  quarterly
           installments, carrying simple interest @ 14%  p.a.  on  reducing
           balance.


      (c)   The above OTS is subject to cancellation, if it  is  found  that
           you  have  provided  incorrect  details   and   information   or
           suppression of any material facts for getting  the  sanction  of
           OTS.  The decision of IPICOL is final in this regard.


      (d)   In  case  of  non  payment,  IPICOL  shall  have  the  right  of
           requital.”


7.    We notice that despite of waiver of Rs.2,26,85,800 and  Rs.1,88,21,099
by OSFC and IPICOL respectively, 1st respondent  did  not  comply  with  the
terms and conditions of  the  OTS  scheme,  consequently,  OSFC  and  IPICOL
informed 1st respondent that they had withdrawn OTS offer.

8.    We find, on 31.3.2007, yet another OTS scheme of 2007 was launched  by
OSFC and, again, an offer was  made  to  1st  respondent  to  avail  of  the
benefit of that scheme.   OSFC, on 4.10.2007, requested  1st  respondent  to
pay  the  settlement  amount  of  Rs.1,16,21,200  with  delayed  payment  of
interest within 10 days.  1st respondent did not comply  with  that  request
as well, consequently, OSFC, on 28.12.2007, withdrew the offer  and  advised
1st respondent to pay the entire dues as per the  agreement,  failing  which
1st respondent was informed that recovery  proceedings  would  be  initiated
for realization of the  dues.   Later,  OSFC  sent  a  demand  notice  dated
22.8.2008 stating that the total  loan  outstanding  as  on  31.12.2007  was
Rs.4,52,94,691 and 1st  respondent  was  called  upon  to  pay  the  amount,
failing which it was informed that recovery proceedings would be initiated.

9.    1st respondent then, on 10.09.2008, filed a Writ  Petition  No.  13376
of 2008 before the Orissa High  Court  to  quash  the  demand  notice  dated
22.08.2008 and for a direction to consider its claim under the  OTS  scheme.
On 31.10.2008, OSFC had, however,  issued  a  notice  recalling  the  entire
amount along with interest and informed  1st  respondent  that  in  case  of
failure to make payment, further action would be taken under Section  29  of
the State Financial Corporation Act (SFC Act).  Writ Petition  came  up  for
hearing before the Orissa High Court on 4.12.2008, and  the  Court  directed
OSFC to maintain status-quo and on 7.4.2010, the Court passed an  ad-interim
order directing 1st respondent to inform as to whether they were willing  to
deposit the amount or Rs.1 Crore for  consideration  of  their  claim  under
OTS.   On 26.11.2008, IPICOL  also  made  a  request  to  OSFC  to  initiate
proceedings under Section 29 of SFC Act and to take over the assets  of  the
unit.

10.   Writ Petition  No.  13376  of  2008  came  up  for  final  hearing  on
21.4.2010, and the Court enquired whether 1st respondent was willing to  pay
Rs.1 Crore, as suggested by the Court on 4.12.2008.  The Court was  informed
that a petition had been filed on 21.4.2010  along  with  a  bank  draft  of
Rs.17,50,000 drawn in favour of  the  Registrar,  Orissa  High  Court.   1st
respondent had also made a request to the Court for time up to 26.2.1010  so
as to pay the amount of Rs.1 Crore.  The Court ordered  the  return  of  the
draft to the 1st respondent since the  amount  was  due  to  both  OSFC  and
IPICOL.  The Court was informed by OSFC that 1st respondent had not  availed
of the earlier proposal for OTS and no new OTS scheme was  available,  still
the Court passed the following order:
           “The learned counsel  for  the  Corporations  submits  that  the
      earlier proposal for one-time settlement had been considered  by  both
      the Corporations and the matter had been settled.  But the  petitioner
      did not pay the amount for which  it  had  to  be  cancelled  and,  at
      present there is no scheme for one-time settlement.


           Be that as it may, the Petitioner having defaulted in payment of
      huge amount we  dispose  of  the  writ  petition  directing  that  the
      petitioner may deposit a sum of Rs.50,00,000/-  (Rupees  fifty  lakhs)
      each before each of the two Corporations by 20.6.2010 and applications
      shall be filed before both the Corporation for settlement of the dues.
       If any such application is filed the same shall be considered on  its
      own merit by  both  the  Corporations  either  separately  or  jointly
      provided there is any scheme available  for  such  settlement  by  the
      Corporations.


           In the event, the Petitioner  fails  to  deposit  the  aforesaid
      amount by 20.6.2010, both the Corporations shall be at liberty to take
      such action  as  permissible  under  law  under  the  State  Financial
      Corporation Act.”


                                                            (emphasis added)


11.   1st respondent did not comply with even  the  above  mentioned  order.
OSFC then issued a  registered  notice  dated  8.7.2010  to  1st  respondent
pointing that since it had failed to comply with the above  mentioned  order
of the Court, OSFC would be at liability to initiate  proceeding  under  the
SFC Act.  The 1st respondent was, therefore, asked to liquidate  the  entire
outstanding amount  as  on  30.6.2010,  failing  which  1st  respondent  was
informed that OSFC would be initiating action under Section 29 of  SFC  Act.
Later, OSFC issued a seizure order dated 2.8.2010 of the property  and  that
order was executed on 15.9.2010 and the possession of  the  unit  was  taken
over “as is where is” basis.

12.    OSFC,  during  seizure,  got  prepared  a  valuation   report   dated
17.09.2010 from its panel valuer.   Based upon that valuation  report,  off-
set price of the unit was fixed at Rs.1,75,45,000.  Later, the  sale  notice
was published in the Daily newspapers, Samaj and the New Indian  Express  on
18.9.2010.  On 21.9.2010, again, OSFC issued a notice to 1st  respondent  to
clear the outstanding dues with up  to  date  interest  of  Rs.6,18,62,238/-
collected up to 30.6.2010  before  Default-cum-Disposal  Advisory  Committee
(DDAC) on 29.9.2010 so also to get the assets released. 1st  respondent  was
informed of the sale notice published in the daily newspapers requesting  to
clear up  the  dues  before  the  DDAC  meeting  scheduled  to  be  held  on
29.9.2010.  1st respondent was also informed  that  in  the  event  of  non-
payment of dues, it could still match or better the highest bid price.   1st
respondent, however, did not take any steps to clear the  outstanding  dues,
but preferred a Review Petition No. 99  of  2010  for  reviewing  the  order
passed by the Orissa High Court on 21.4.2010 in Writ Petition No.  13376  of
2008. The Court rejected the  review  petition  on  22.9.2010.   The  Court,
after  noticing  that  1st  respondent  had  not  deposited  any  amount  in
pursuance to its order dated 21.4.2010, held as follows:
        “Apart from the above, from the conduct of the petitioner, we  find
        that the petitioner did not pay any amount  when  the  account  was
        settled under the scheme earlier  and  waited  for  another  demand
        notice.  Even in  the  writ  petition  though  the  petitioner  was
        directed to deposit Rs.50,00,000/- (Rupees fifty lakhs)  each  with
        the two Corporations, the same was not complied with.  In course of
        hearing of this review petition, the petitioner  has  offered  only
        Rs.40,00,000/- (Rupees forty lakhs) to be deposited  with  the  two
        Corporations against the outstanding dues of more than seven crore.
         We are,  therefore,  of  the  view  that  the  petitioner  has  no
        intention to clear the dues  of  the  two  Corporations  which  had
        financed for establishing a hotel.  In the meantime  possession  of
        the said hotel has been taken by OSFC under section 29 of the State
        Financial Corporation Act and the  same  has  been  advertised  for
        sale.  The sale notice, a copy whereof was produced before us shows
        that the loanee can appear before the DDAC on the date  fixed  i.e.
        29th of September, 2010 for the  purpose  of  getting  release  the
        seized asset.”

                                                            (emphasis added)


13.    1st  respondent  then  submitted  a  proposal  to  DDAC,  which   was
considered by DDAC on 29.9.2010 and the order was communicated  to  the  1st
respondent.

14.   DDAC, in pursuance to the  auction  notification  in  the  newspapers,
received altogether 9 bids and, after  negotiations  with  the  auctioneers,
the offer of the appellant was found to  be  the  highest  at  Rs.774  lacs,
which was accordingly accepted     OSFC  delivered  the  possession  of  the
land, building and machinery/furniture and fixtures to  the  appellant  vide
possession letter dated 11.10.2010.
15.   1st respondent, as already stated, then  approached  the  Orissa  High
Court and filed the present writ petition No. 17711 of  2010  to  quash  the
cancellation of the OTS dated 28.12.2007, sale letter  dated  1.10.2010  and
also for other consequential reliefs, which were  granted  by  the  Division
Bench of the Orissa High Court, the operative  portion  of  which  reads  as
follows:
         “For the reasons stated supra the writ petition is allowed.   Rule
         issued.  The letters dated 28.12.2007 and 1.10.2010 (Annexure-5  &
         Annexure-8 series) cancelling the proposal for OTS  and  rejecting
         the representation dated 29.9.2010, the public sale  notice  dated
         19.9.2010 (Annexure-6), the sale letter dated 1.10.2010 (Annexure-
         8 series), the sale agreement dated 11.10.2010 (Annexure-A/5)  and
         the alleged delivery of possession are hereby quashed.  The Orissa
         State Financial Corporation and IPICOL are directed to place fresh
         demand with the petitioner, within four weeks  from  the  date  of
         receipt of this order, with regard to the amount of OTS offered in
         the communications dated 18.3.2006 and 3.4.2006 of  the  OSFC  and
         IPICOL along with interest at the rate of 9% on  the  said  amount
         from that date till  the  date  of  payment  or  at  the  rate  of
         interest, stipulated  under  the  OTS  Scheme,  2007  in  case  of
         similarly placed persons.  The  petitioner  is  directed  to  make
         payment within six weeks thereof.  Thereafter  the  possession  of
         the property  shall  be  delivered  to  the  petitioner  within  a
         reasonable time.  If the petitioner fails to deposit  the  amount,
         as directed, the OSFC and IPICOL are at liberty to proceed in  the
         matter in accordance with law.”

16.   Shri C.A. Sundram, learned senior counsel appearing for the  appellant
(auction purchaser) submitted that the High  Court  has  completely  misread
and misunderstood  the  facts  of  the  case  which  resulted  in  incorrect
reasoning, leading  to  wrong  conclusions.   Learned  senior  counsel  also
submitted that the judgment in writ petition No. 13376 of 2008  as  well  as
the order in Review Petition No. 99  of  2010  had  attained  finality  and,
consequently, the orders dated  28.12.2007  and  01.10.2010  cancelling  the
proposal for OTS cannot be questioned.  Learned senior counsel also  pointed
out that the conditions stipulated in the above mentioned orders  were  also
not complied with by 1st respondent, consequently, the only course  open  to
1st respondent was to pay the entire amount demanded  by  OSFC  and  IPICOL.
The 1st respondent did not pay the amount demanded,  hence,  Section  29  of
SFC Act was rightly invoked.

17.   Ms. Shubhranshu Padhi, learned counsel appearing for the appellant  in
SLP(C) No. 1125 of 2012  fully  supported  the  arguments  advanced  by  the
learned senior counsel Shri C.A. Sundaram and explained  the  various  steps
taken by OSFC which resulted in invoking Section 29 of SFC Act.
18.   Shri Ashok Panigrahi, learned  counsel  appearing  on  behalf  of  the
respondent, however,  supported  the  judgment  of  the  Hon’ble  Court  and
submitted that there is no justification in interfering  with  the  judgment
of the Hon’ble Court, since the conditions laid  down  in  OTS  Scheme  were
onerous and that procedures were not followed for the sale of the  mortgaged
properties.

19.   We express our strong disapproval of the manner in which the  Division
Bench of the High Court has virtually sat in judgment over the  judgment  of
another co-ordinate Bench.   We are of the view that the Division  Bench  of
the High Court overlooked some vital facts which have  considerable  bearing
on the outcome of this dispute,  consequently,  reopened  a  lis  which  has
attained finality, due to non-compliance of the  various  directions  issued
by the co-ordinate Bench of the High Court.   Failure  to  comply  with  the
various directions issued by the co-ordinate  Bench  in  Writ  Petition  No.
13376 of 2008 and the order passed in Review Petition No.  99  of  2010  was
completely overlooked by the Division Bench.



Appreciation of Facts

20.   Litigations in courts are won or lost mainly on  facts  more  on  law.
Duty is cast on all the parties who appear in a court of law  to  place  the
correct facts so that the court can draw correct inferences which enable  it
reach a logical, reasonable and just conclusion.  Wrong facts lead  a  Court
to wrong reasoning and wrong conclusions.  Duty is also cast  on  the  Court
to take note of the facts which are correctly  placed.   Wrong  appreciation
of facts leads to wrong reasoning and wrong conclusions and justice will  be
the  casualty.   Deciding  disputes   involves,   according   to   Dias   on
Jurisprudence, knowing the facts, knowing the law applicable to those  facts
and knowing the just way of applying the law to them.  If any of  the  above
mentioned ingredients is not satisfied, one gets a wrong verdict.   A  Judge
has to reason out truth from falsehood, good from evil which enables him  to
deduce inferences from facts or propositions.  Facts  are  correctly  stated
in the instant case but the Division Bench wrongly  understood  those  facts
and wrongly applied the law, consequently, wrong inferences were  drawn  and
ultimately reached wrong conclusions.
21.   Following are the facts and conclusions  overlooked  by  the  Division
Bench:
     1) OSFC introduced an OTS scheme in the year 2006 and  1st  respondent
        had applied for settlement of its loan account under  that  scheme.
        On 18.03.2006, the benefit  of  the  scheme  was  extended  to  1st
        respondent and OSFC agreed in principle to  settle  the  term  loan
        account  on  payment  of  Rs.1,16,21,200/-,  subject   to   certain
        conditions.  IPICOL also approved the request of 1st respondent for
        OTS at Rs.45 lacs  with  waiver  of  Rs.1,88,21,099/-,  subject  to
        certain conditions.
     2) OSFC and IPICOL, therefore, waived an  amount  of  Rs.2,26,85,800/-
        and Rs.1,88,21,099 and gave the benefit of the OTS  scheme  to  1st
        respondent, subject to few other conditions like period of payment,
        interest etc.
     3) The 1st respondent had  failed  to  comply  with  those  conditions
        imposed, consequently, OSFC and IPICOL had to withdraw the benefits
        extended under the OTS scheme.
     4) OSFC lodged another OTS scheme in the year 2007.   Opportunity  was
        given to 1st respondent again to  avail  of  the  benefit  of  that
        scheme.  OSFC on 04.10.2007 requested 1st  respondent  to  pay  the
        settlement amount  of  Rs.1,16,21,200/-  with  delayed  payment  of
        interest within 10 days.  The benefit of the said  scheme  was  not
        availed of by  1st  respondent,  consequently  OSFC  on  28.12.2007
        withdrew that offer as well and advised 1st respondent to  pay  the
        entire dues as per the agreement, failing  which  it  was  informed
        that recovery proceedings would be initiated.
     5) 1st respondent filed a Writ Petition No.13376 of 2008 to quash  the
        demand notice dated 22.08.2008 where it was  pointed  out  by  OSFC
        that 1st respondent had not availed of all the benefits of the  OTS
        scheme extended by the Corporation, consequently they had to cancel
        the said scheme.  Further, it was also  stated  that  in  spite  of
        public notification and their intimation and frequent requests, 1st
        respondent did not apply for the OTS 2007 Scheme.
     6) When Writ Petition came up for hearing on 07.04.2010, the Court had
        enquired whether 1st respondent would be still willing  to  deposit
        the amount of Rs. 1 crore for consideration of  their  claim  under
        OTS.  The matter again came up  for  hearing  before  the  Division
        Bench on 21.04.2010  on  which  the  Court  disposed  of  the  writ
        petition directing 1st respondent to  deposit  Rs.50,00,000/-  each
        before each of the two Corporations by 20.6.2010, failing which  it
        was ordered that the Corporations would be at liberty to take  such
        action  as  permissible  under  law  under  the   State   Financial
        Corporation Act.
     7) OSFC issued a loan recall notice to  1st  respondent  on  8.7.2011,
        since it did not comply with the directions in WP No. 13376 of 2008
        with a request to pay the  entire  outstanding  amounts  within  30
        days, failing which the 1st respondent  was  informed  that  action
        would be taken under Section 29 of SFC Act.
     8) OSFC issued a seizure order on 02.08.2010  and  during  seizure,  a
        valuation report dated 17.09.2010 was  prepared.   Based  upon  the
        valuation  report,  off-  set  price  of  the  unit  was  fixed  at
        Rs.1,75,45,000/-.   Sale  notice  was  published   in   the   Daily
        newspapers “Samaj” and the “New Indian Express” on 18.09.2010.   On
        21.09.2010, again OSFC issued a notice to 1st respondent  to  clear
        the outstanding dues with up-to-date interest of Rs.6,18,62,238/-.
     9) Review Petition No. 99 of 2010 filed  by  1st  respondent  in  writ
        petition No. 13376 of 2008 came up for hearing before the  Division
        Bench on 22.9.2010.  While  dismissing  the  Review  Petition,  the
        Bench found that 1st respondent had no intention to clear the  dues
        of the Corporations which had financed for  establishing  a  hotel.
        The court also noticed that the  mortgaged  properties  were  taken
        over by OSFC invoking Section 29 of  SFC  Act  and  advertised  for
        sale.
    10) 1st Respondent filed a  representation  before  DDAC  on  29.9.2010
        which was rejected and the order of rejection was communicated vide
        letter dated 1.10.2010 and 1st respondent  was  informed  that  the
        assets were already taken over under  Section  29  of  SFC  Act  on
        15.9.2010 and was put to public auction, with due intimation.
    11) Auction was concluded as per rules and  ultimately,  the  appellant
        was found to be the  highest  bidder  at  Rs.774,00,000  which  was
        accepted  and  sale  letter  dated  1.10.2010  was  issued  to  the
        appellant, who had paid the entire amount by 11.10.2010.
    12) Sale Memo, Agreement to Sale was executed  with  the  appellant  on
        11.10.2010 and possession was handed over to the appellant on  that
        date.
    13) 1st respondent then on 11.10.2010 filed the present  WRIT  Petition
        No. 17711 of 2010.


22.   We are of the view that the above  mentioned  facts  had  considerable
bearing for rendering a just and proper judgment in writ petition No.  17711
of 2010, but those vital facts were completely overlooked  by  the  Division
Bench and it had also ignored the binding judgment of the co-ordinate  Bench
rendered in writ petition No. 13376 of 2008 and the order passed  in  Review
Petition No. 99  of  2010  and  the  steps  taken  by  the  Corporations  as
permitted by the Division Bench.

23.   A 3-Judge Bench of this Court in  Haryana  Financial  Corporation  and
Another v. Jagdamba Oil Mills and Another, (2002) 3 SCC  496  while  dealing
with the scope of Section 29 of SFC Act held as follows:
        “6. The Corporation as an instrumentality of the State  deals  with
        public money.  There can be no doubt that the approach  has  to  be
        public oriented. It can operate effectively  if  there  is  regular
        realization of the instalments. While the Corporation  is  expected
        to act fairly in the matter of disbursement of the loans, there  is
        corresponding duty cast upon the borrowers to repay the instalments
        in time, unless prevented by unsurmountable difficulties.   Regular
        payment  is  the  rule   and   non-payment   due   to   extenuating
        circumstances is the exception.       If  the  repayments  are  not
        received as per the scheduled  time  frame,  it  will  disturb  the
        equilibrium of the financial arrangements of the Corporations. They
        do not have at their disposal unlimited funds.   They have to cater
        to the needs of the intended borrowers with the available  finance.
        Non-payment of the instalment by a defaulter may stand on  the  way
        of a deserving borrower getting financial assistance.”


24.   The Court again reminded of the fact that  the  fairness  required  of
the Corporations could not be carried to the extent of disabling  them  from
recovering what is due to them and held as follows:
        “13. …….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,  for  the
        decision of the Corporation…...”

25.   The Court while explaining and over-ruling Mahesh Chandra v.  Regional
Manager, U.P. Financial Corporation and Others, (1993) 2  SCC  279  held  as
follows:
          “Indulgence shown to chronic defaulter would amount to flogging  a
          dead horse without any conceivable result being expected.  As  the
          facts in the present case show not even a minimal portion  of  the
          principal amount has been repaid.  That is a factor  which  should
          not have been lost sight by the courts below.  It is one thing  to
          assist the borrower who has intention to repay, but  is  prevented
          by insurmountable difficulties in meeting the  commitments.   That
          has to be established by adducing material.  In the case  at  hand
          factual aspects have not even been dealt with, and solely  relying
          on the decision    in Mahesh Chandra's cases (supra),  the  matter
          has been decided.”

26.   We are of the view that the principles laid down by this Court in  the
above judgments apply to the  case  on  hand,  if  the  facts  are  properly
appreciated.  The Division Bench, in the impugned judgment,  took  the  view
that the Corporations had not followed the  guidelines  laid  down  by  this
Court in Kerala Financial Corporation v. Vincent Paul and Another, (2011)  4
SCC 171.  In our view, this is factually  incorrect.   This  Court,  in  the
above judgment, indicated that the authority concerned should serve  to  the
borrower a notice of 30 days for sale of immovable assets.   In  this  case,
Corporation had issued the recall notice dated 08.07.2010 with a request  to
pay the entire outstanding dues within 30 days otherwise, failing which,  it
was stated that action under section  29  of  SFC  Act  would  be  initiated
against the 1st respondent.  Seizure order was  issued  by  the  Corporation
and the entire assets of the unit were taken over under Section  29  of  the
Act on 15.09.2010 which was after the expiry of 30 days  from  the  date  of
notice dated 08.07.2010.  Therefore the guidelines laid down  in  the  above
referred judgment  have  also  been  complied  with.   Even  otherwise,  the
guidelines issued by this Court in Vincent  Paul  case  would  operate  only
prospectively and that too depends upon the facts and circumstances of  each
case.

27.   We have found that the procedure laid down under  Section  29  of  SFC
Act  has  been  followed  by  the  Corporations.   The  independent   valuer
submitted his report on 17.09.2010 and the off-set price  of  the  unit  was
fixed after getting it valued by an independent valuer.  It was  based  upon
the valuation report that the  off-set  price  of  the  unit  was  fixed  at
Rs.1,77,45,000/- on 17.09.2010.  Sale  notice  was  published  in  the  News
Papers on 18.09.2010 and the auction was conducted on  29.09.2010.   In  our
view, the High Court has committed an error in holding  that  off-set  price
of property was not valued before the conduct of auction and that there  was
no due publication of auction.   Sale notice, it is seen, was  published  in
the “Samaj” a vernacular paper and also in the “New India Express” a  widely
circulated English newspaper on 18.09.2010 and the Corporation had  received
nine offers and after protracting negotiations with  all  the  bidders,  the
offer of the appellant was accepted  being  the  highest.   The  Corporation
before putting the appellant in  possession  again  issued  a  notice  dated
21.9.2010 to 1st respondent enquiring whether  he  would  match  the  offer.
1st Respondent did not avail of that opportunity as well.  It is under  such
circumstances that sale letter dated 1.10.2010 was issued to  the  appellant
with a copy to all  the  Directors/Promoters/Guarantors  of  1st  respondent
company.  The appellant paid the balance consideration of Rs.5,65,20,000  on
11.10.2010 and the Sale Memo was extended on that date and the property  was
also delivered.

28.   We find no illegality in the procedure  adopted  by  the  Corporation,
since 1st respondent had failed to comply with the directions issued by  the
co-ordinate Bench of the Orissa High Court in writ  petition  No.  13376  of
2008, which gave liberty to the Corporations to proceed in  accordance  with
Section 29 of SFC Act.   We are of the view that the Division Bench  of  the
High Court had overlooked those vital facts as well as the binding  judgment
of a co-ordinate Bench in writ petition No. 13376 of 2008  and  had  wrongly
reopened a lis and issued wrong and illegal directions.


29.   In the said circumstances, we are inclined to allow both  the  appeals
and set aside the judgment of the Division Bench of the Orissa  High  Court.
However, in the facts and circumstances of the case, there will be no  order
as to costs.

                                             ……………….……………………..J.
                                             (K. S. RADHAKRISHNAN)








                                             ………………………………….…..J.
                                             (DIPAK MISRA)
New Delhi
September 6, 2012