LexKERALA FINANCIAL CORPORATION versus VINCENT PAUL & ANR.
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A B [2011) 3 S.C.R. 862 KERALA FINANCIAL CORPORATION v. VINCENT PAUL & ANR. (Civil Appeal No. 3446 of 2003) MARCH 14, 2011 [P. SATHASIVAM AND DR. B.S. CHAUHAN, JJ.] CONTRACT: c Tender - Non-compliance of conditions - Condition of the tender to deposit 25% of sale price within one week - Letter issued to the sole tenderer to deposit the amount of sale price after adjusting the earnest money - Another letter sent to the bidder that further proceedings could be finalized only after D the temporary injunction was vacated by court - Held: Unless the conditions were fulfilled, the bidder cannot take advantage of mere remittance of a sum towards earnest money - Trial court rightly dismissed the suit for specific perfo mance of agreement of auction sale - High Court in an E effoneous assumption effed in concluding that there was a valid contract and for granting a decree for specific performance - Judgment of High Court set aside - Specific performance of contract - Suit. F STATE FINANCIAL CORPORATION ACT, 1951: s.29 - Taking over of the borrower firm and attachment. and sale of its security in discharge of debt - Notice inviting tenders published by KFC in a local news paper- Negotiation wit the sole tenderer - Held: KFC has not strictly followed the G procedure in bringing the property to sale - State Government has not framed Rules or guidelines for sale of properties owned by them - Till such formation of Rules or guidelines or orders, KFC is directed to adhere to the directions for sale of properties owned by it, as issued by the H 862 · KERALA FINANCIAL CORPORATION v. VINCENT 863 PAUL & ANR. Court in the judgment - Contract. A The Kerala Finance Corporation (KFC), for recovery of its loan amount from a firm, took over the borrower firm u/s 29 of the State Financial Corporation Act, 1951, on 11.09.1987. On the same day the firm filed O.S. No. 2194/ 8 87 with an application for temporary injunction restraining KFC from taking over the firm. KFC invited tenders and held negotiation with sole bidder, namely, the respondent, in respect of the property of the firm, and issued a letter on 31-10-1988 to the respondent expressing the willingness to sell the property for Rs. 8.25 C lakh subject to certain conditions. On 01.11.1988 the firm filed another suit being O.S. No. 2109/88 for injunction to restrain the KFC from taking any action pursuant to the auction/sale proceedings, and the trial court directed to maintain status quo as on 31.10.1988. Eventually, both D the suits were dismissed. The firm filed A.S. No. 56 of 1992 against the dismissal of O.S. No. 2109/88 and A.S. No. 146of1993 against dismissal of O.S. No. 2194of1987. On 6.12.1994 the respondent filed O.S. No.1522/94 for specific performance of agreement of sale. Subsequently, E both the appeals filed by the firm were dismissed. The suit of the respondent was also dismissed and he filed A.S. No. 557 of 2000. On 17.09.2001 the KFC invited fresh tenders for sale of the assets and one 'KKU' offered Rs. 55,55,555/- which was the highest bid. Meanwhile on , F 27 .11.2001, the appeal of the respondent was allowed and his suit for specific performance of agreement of sale was decreed by the High Court. KFC challenged the judgment of the High Court by filing C.A. No. 3446 of 2003, and KKU filed C.A.No. 3450 of 2003. KKU also filed C.A .• G No. 3451 of 2003 against the order of the High Court dismissing his O.P. No. 33834 of 2001. as ·infructuous . . Disposing of the appeals, the Court f-!ELD: 1.1. KFC is incorporated u/s 3 of the State H 864 SUPREME COURT REPORTS (2011) 3 S.C.R. A Financial Corporation Act, 1951; Section 29 of the Act empowers the KFC to attach and sell the security in discharge of debts and provides for speedy recovery. The procedure of attachment and sale of property though available under the Code of Civil Procedure, 1908, it shall B apply only when there is a decree at the instance of any of the parties. In the instant case, the KFC had not proceeded through the Civil Court but has taken independent action u/s 29 of the Act. [para 6-7] [871-G- H; 872-A-B] c 1.2. By notice under Ext. B1, KFC invited tenders from inte·nding buyers for purchase of immovable property attached by it. The last date for submission of tender was 31.10.1988. The respondent submitted a tender quoting an amount of Rs. 7.5 lakh as bidding D amount and the price was, ultimately, fixed at
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