M/S. INDUSTRIAL PROMOTION AND INVESTMENT CORPORATION OF ORISSA LIMITED versus M/S. TUOBRO FURGUSON STEELS PRIVATE LIMITED & OTHERS

Citation: [2011] 13 S.C.R. 445 · Decided: 05-12-2011 · Supreme Court of India · Bench: AFTAB ALAM · Disposal: Appeal(s) allowed
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Judgment (excerpt)

[2011] 13 (ADDL.) S.C.R. 445 
M/S. INDUSTRIAL PROMOTION AND INVESTMENT 
A 
CORPORATION OF ORISSA LIMITED 
v. 
M/S. TUOBRO FURGUSON STEELS PRIVATE LIMITED & 
OTHERS 
(Civil Appeal No.1850 of 2007) 
B 
DECEMBER 5, 2011 
[AFTAB ALAM AND RANJANA PRAKASH DESAI, JJ.] 
State Financial Corporation Act, 1951: s.29 - Contract C 
of sale -Corporation took over a Foundry Unit after its original 
promoters defaulted in payment of its dues - Publication of 
advertisement for sale of Unit - Sale of Unit to respondent 
on down payment of Rs. 8 lacs - Balance amount of Rs.32 
lacs was to be paid on installments - However, after taking 
D 
possession of the Unit, respondent did not take steps to 
complete the documentation as required in the sale letter -
Notice issued uls.29 to respondent and assets of the Unit 
taken over by the Corporation - Writ petition by respondent 
-
High Court directed the Corporation to refund to the 
E 
respondent Rs. 8 lacs along with interest - On appeal, held: 
High Court did not even refer to the sale advertisement, 
stipulations made in the sale Jetter and correspondences 
between the parties and completely overlooked that the 
parties, with their eyes widely open, had entered into the 
F 
contract for sale of the Unit which was subject to the terms and 
conditions clearly spelled out in the advertisement and in the 
sale letter; that in furtherance of the contract, payment was 
made and possession of the Unit changed hands - Both 
sides had acted on the basis of the contract, changing their G 
respective positions and assuming rights and obligations 
against each other - The contract having been acted upon, 
it could not be unilaterally abrogated on the sweet will of any 
of the two sides - Jn terms of the contract, the respondents 
445 
H 
446 
SUPREME COURT REPORTS [2011) 13 (ADDL.) S.C.R. 
A were obliged to pay the balance consideration amount of 
Rs.32 lacs along with interest as provided in the sale letter -
In default of payment, it was the statutory right of the 
Corporation to take possession of the Unit uls. 29 of the Act 
- Corporation had not only the right to retain Rs. 8 lacs paid 
B to it as part consideration but also to realise the balance 
amount of consideration, in accordance with law - Order of 
the High Court not sustainable. 
The appellant-Corporation took over a Foundry Unit 
C situated along with land, building, plant and machineries 
under Section 29 of the State Financial Corporation Act, 
1951, as its original promoters defaulted in payment of its 
dues. The taken-over Unit was put to sale by publishing 
advertisement in newspapers inviting offers for purchase 
of the Unit. In the advertisement, it was stipulated that the 
D sale would be on 'AS IS WHERE IS' basis. The intending 
purchasers were allowed inspection of the Unit-on-sale. 
In response to the advertisem1mt, the respondents 
made an offer to purchase the Unit for a total 
E consideration of Rs.40,00,0001- with down payment of 
Rs.8,00,0001-. The offer made by the respondents was 
accepted and the Corporation issued the sale letter. It 
was stated in the sale letter that possession of the Unit 
would be handed over to the respondents on payment 
F of Rs.8,00,0001- and the balance amount of Rs.32,00,0001 
- would be treated as fresh loan to respondent no.1 to be 
repaid within a period of 6 years in quarterly instalments 
after a moratorium of 18 months with interest at the rate 
of 18 per cent per annum from the date of handing over 
G the physical possession of the Unit. The sale formalities 
were required to be completed within 30 days from the 
date of issue of the letter. It was further stipulated in the 
letter that the sale would lapse and the earnest money 
forfeited if the documents were not executed within the 
H prescribed time. 
INDUS. PROM. AND INVES. CORPN. OF ORISSA LTD. v. 
447 
TUOBRO FURGUSON STEELS PVT. LTD. 
In furtherance of the sale, respondents made 
A 
payment of Rs.8,00,000/- to the appellant and following 
·- the payment, possession of the Unit was made over to 
respondents .. Before the delivery of possession, the 
Director and other technical persons of the respondent 
company verified/compared the assets with the inventory 
B 
of assets item-wise and thereafter, took over possession 
of the assets in presence of officers of the Corporation, 
OSFC and 581 and the security personnel. 
After taking possession of the Unit, the respondents 
did not take any step to complete the documentation
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