LAW FOR ALL

Mortgage - deposit of title deeds - default - sale underthe State Financial Corporation Act, 1951 - in meanwhile private sale - not valid - High court cannot set aside the corporation sale as it was done underthe State Financial Corporation Act, 1951= the property in question was duly advertised for sale pursuant whereto the fifth respondent had offered the highest amount. On acceptance of the said offer by the UPFC, the entire amount was paid and the sale was confirmed by the Corporation. No sale deed was however executed by the Corporation in favour of the fifth respondent. It also appears that before the property was put up for sale by the Corporation, the original owner, Smt. Nisha Devi Jaiswal had sold the same to the third and fourth respondents, who, in turn, had sold the same to the writ petitioner by sale deed dated 29.08.2001. The aforesaid sale by the original owners to the vendors of the writ petitioner and, thereafter, by said vendors to the petitioner himself was made when the property stood mortgaged in favour of the UPFC. It is in the above circumstances, that the writ petitioner had approached the High court seeking interference with the sale of the property made in favour of the fifth respondent pursuant to the advertisement dated 20.10.2002 issued by the UPFC and further for transfer of the property in favour of the writ petitioner besides restoration of possession thereof which was taken over by the Corporation. 13. The sale made by the UPFC in favour of the fifth respondent was in exercise of the statutory powers vested in the Corporation by Section 29 of the State Financial Corporation Act, 1951. Under the aforesaid provisions of the Act default in re-payment of any loan by an industrial undertaking vests in the Financial Corporation the right to take over the management or possession or both of the industrial concern along with the right to transfer the property pledged, mortgaged, hypothecated or assigned to the Financial Corporation. By virtue of sub-section (2) of Section 29 of the Act such transfer of property by the Corporation will vest in the transferee all rights in the property as if the transfer had been made by the owner thereof. 14. No serious issue either with regard to the validity of the exercise of the power under the Act or the manner of sale of the property by the Corporation pursuant to the advertisement dated 20.10.2002 had been raised in the Writ Petition. What was contended before the High Court is that the Writ Petitioner, Vishnu Dutt Sharma, had purchased the property by sale deed dated 29.08.2001 without any knowledge or information of the mortgage created by the original owner, Smt. Nisha Devi Jaiswal in favour of the Corporation and that the sale pursuant to the advertisement was also without notice to him. A right to the property based on certain equitable principles was also claimed to strengthen which, the offer covered by the interim order of the High Court dated 28.05.2003 was made by the writ petitioner. 15. The issues raised by the writ petitioner before the High court really pertained to the claim of better title of the writ petitioner to the property in question on the basis of the sale deed dated 29.08.2001. The validity of the sale deed dated 29.08.2001 executed in favour of the writ petitioner by his vendors during the subsistence of the mortgage in favour of the Corporation and the rights of the fifth respondent to the said property on the basis of the sale made in his favour by the Corporation pursuant to the advertisement dated 20.10.2002 are the issues that arose in the Writ Petition. Broad and expansive though the powers of the High Court under Article 226 may be, adjudication of the aforesaid questions, some of which also required proof of certain basic facts, in our view, was not appropriate in the domain of public law. Though the High Court in its order dated 05.12.2006 did not expressly say so, the affect of the several directions issued by it, in fact, amounts to an adjudication of the issues outlined above. 16. The essence of the dispute between the parties denuded the lis a public law character. Nor was any issue arising out of public law functions of the State or its authorities involved. In such a situation resort to the public law remedy should not have entertained by the High Court. (Vide Godavari Sugar Mills Ltd. vs. State of Maharashtra[1]). Even if the vindication of the writ petitioner’s rights under the sale deed dated 29.08.2001 is ignored and we are to proceed on the basis that the writ petitioner questioned the sale made by the Corporation, the writ petitioner would not be entitled to an adjudication of the rights of the parties inter se but at best to a judicial review of the administrative action of the Corporation with regard to the sale made (Vide Kisan Sahkari Chini Mills Ltd. and ors. vs. Vardan Linkers and others[2] ) But as already noticed neither the exercise of the statutory power under the Act by the Corporation in the matter of the sale of the property nor the process of the sale transaction was questioned in the Writ Petition either on account of lack of jurisdiction or abuse of authority. In the above facts, the High Court should have refused an adjudication of the Writ Petition and, instead, ought to have required the aggrieved parties to seek their remedies in an appropriate manner and before the competent civil forum. 17. In view of the above discussions, we allow both the appeals and set aside the order dated 05.12.2006 passed by the High Court of Uttarakhand at Nainital.