LexM/S. MICRO HOTEL P. LTD. versus M/S. HOTEL TORRENTO LIMITED & ORS.
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(2012] 8 S.C.R. 233 MIS. MICRO HOTEL P. LTD. A v. MIS. HOTEL TORRENTO LIMITED & ORS. (Civil Appeal No. 6347 of 2012 etc.) SEPTEMBER 6, 2012 B [K.S. RADHAKRISHNAN AND DIPAK MISRA, JJ.] State Financial Corporation Act, 1951 - s. 29 - Hotel project financed by State Financial Corporation and State Industrial Promotion and Investment Corporation - Loan c agreement - Default - Demand Notice - Various offers by the Corporations to the borrower for One Time Settlement Scheme - Borrower failing to comply with the terms and conditions of the Scheme - Order of Division Bench of High Court giving benefit of One Time Settlement to the borrower D failing which court giving liberty to the Financial Corporation to take action under the Act - Failure on the part of the borrower to comply with the order - Proceedings under s. 29 - Auction of the borrower's property - Sale of the property to auction-purchaser - Borrower approaching court - Division E Bench of High Court offering afresh One Time Settlement Benefit to borrower and ordering dispossession of the auction- purchaser - On appeal, held: High Court by impugned judgment wrongly reopened a /is and issued illegal directions, overlooking the facts of the case and the binding judgment F of co-ordinate Bench - The manner in which the Division Bench of High Court sat in judgment over the judgment of co- ordinate Bench is disapproved - Judicial Propriety. Respondent No. 2 (State Financial Corporation) and G respondent No. 5 (Industrial Promotion and Investment Corporation) jointly financed a hotel project launched by respondent No. 1. The parties entered into loan agreement. As there was default in payment of the loan, • respondent No. 2 made demand. In 2006 respondents 233 H 234 SUPREME COURT REPORTS [2012] 8 S.C.R. A introduced One Time Settlement (OTS) Scheme. The benefit of the Scheme was extended to respondent No. 1 waiving certain loan amount, subject to certain terms and conditions. Since respondent No. 1 did not comply with the terms and conditions, respondent Nos. 2 and 5 B withdrew the OTS offer. In 2007, again another OTS Scheme was launched by respondent No. 2 and offer was made to avail the benefit thereof. As respondent No. 1 did not comply with the request, respondent No. 2 withdrew the offer and demanded the entire dues. c Respondent No. 1 filed writ petition before High Court seeking quashing of the demand notice and for direction to consider its claim under the OTS Scheme. The High Court disposed of the petition directing respondent No. 1 to deposit Rs. 50,00,000 each to each D of the two Corporations (respondent Nos. 2 and 5) failing which, the Corporations were given liberty to take action under State Financial Corporation Act. As respondent No. 1 did not comply with the direction of the High Court, respondent No. 2 made a demand for the entire E outstanding loan amount. Respondent No. 2 issued seizure order of the property and the same was executed and possession thereof was taken over. Set-off price of the unit was fixed F on the basis of valuation report. Thereafter sale notice was published in local as well as National newspapers. Even after that respondent No.2 made a demand of outstanding dues from respondent No. 1 so as to get the assets released. Respondent No. 1 instead of clearing the G outstanding dues, preferred Review Petition and the same was dismissed by High Court. Thereafter the property was auctioned and the appellant, being the successful bidder was given possession of the property. Thereupon, respondent No. 1 again filed writ petition H seeking to quash the cancellation of OTS Scheme of 2007 MICRO HOTEL P. LTD. v. HOTEL TORRENTO 235 LIMITED & ORS. and the sale to the auction-purchaser (appellant). High A Court allowed the writ petition holding that the respondent No. 2 - Corporation did not follow the guidelines laid down in Kera/a Financial Corporation vs. Vincent Paul and Anr. (2011) 4 SCC 171; and that the off- set price of property was not valued before the conduct B of auction; and that there was no due publication of auction. Hence the present appeals. Allowing the appeals, the Court HELD: 1.1. The manner in which the Division Bench C of the High Court has virtually sat in judgment over the judgment of another co-ordinate Bench is strongly disapproved. The Division Bench of the High Court overlooked some vital facts which have considerable beari
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