PRADEEP KUMAR SHARMA versus U.P.F.C. RAJPUR ROAD, DEHRADUN & ORS.

Citation: [2012] 9 S.C.R. 863 · Decided: 19-10-2012 · Supreme Court of India · Bench: P. SATHASIVAM · Disposal: Appeal(s) allowed

Judgment (excerpt)

[2012] 9 S.C.R. 863 
PRADEEP KUMAR SHARMA 
v. 
U.P.F.C. RAJPUR ROAD, DEHRADUN & ORS 
(Civil Appeal No. 7597 of 2012 etc.) 
OCTOBER 19, 2012. 
[P SATHASIVAM AND RANJAN GOGOi, JJ.] 
STATE FINANCIAL CORPORATION ACT, 1951: 
A 
B 
s. 29 - Default in repayment of loan -Property mortgaged c 
by borrower, sold by State Financial Corporation - Held: By 
virtue of sub-s. (2) of s. 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. 
CONSTITUTION OF IND/A, 1950: 
Art. 226 - Writ petition - Maintainability of - Held: In the 
instant case, essence of the dispute between the parties 
denuded the tis of a public law character - The issues raised 
D 
by the writ petitioner before the High Court really pertained to 
E 
the claim of better title of the writ petitioner to the property in 
question on the basis of the sale deed which was 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 appellant to the said property on the basis of F 
the sale made in his favour by the Corporation - The writ 
petition did not involve any issue arising out of public law 
functions of the State or its authorities - lri such a situation 
resort to the public law remedy should not have entertained 
by High Court - Order of High Court set aside. 
G 
The subject property was mortgaged by the 
borrower, by deposit of title deed, with respondent no. 1, 
U.P. Financial Corporation (Corporation), in security of 
863 
H 
864 
SUPREME COURT REPORTS 
[2012] 9 S.C.R. 
A the loan obtained by the borrower from the Corporation. 
When the borrower defaulted in payment, the Corporation 
invoked its powers u/s 29 of the State Financial 
Corporation Act, 1951 and issued an advertisement on 
22.9.1996 for sale of the mortgaged property. As no 
B suitable offer was received, the Corporation again issued 
another advertisement on 20.10.2002. Meanwhile, the 
borrower executed a sale deed in favour of two persons,, 
who in turn sold the property to one 'VOS' by sale deed 
dated 29.8.2001. Pursuant to the advertisement dated 
c 20.10.2002, the appellant in C.A. No. 7597 of 2012 (the 
appellant) submitted his offer, which was ultimately 
approved and the appellant deposited the entire amount 
with the Corporation. 'VOS' filed a writ petition before the 
High Court for quashing of the sale made in favour of the 
0 appellant. The High Court by an interim order directed the 
writ petitioner to deposit Rs. 5 lacs and by the final order 
while disposing of the writ petition directed the 
Corporation to withdraw the said amount of Rs. 5 lacs 
and out of it to repay the appellant the amount paid by 
E him to the Corporation. The High Court held that the sale 
made in favour of the appellant stood cancelled. 
Allowing the appeals, the Court 
HELD: 1.1 Under the provisions of s. 29 of the State 
F Financial Corporation Act, 1951, the 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 
G pledged, mortgaged, hypothecated or assigned to the 
Financial Corporation. By virtue of sub-s. (2) of s. 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. In the 
H instant case, the property in questiorl' was duly 
PRADEEP KUMAR SHARMA v. U.P.F.C. RAJPUR 
865 
ROAD, DEHRADUN & ORS. 
advertised for sale. The appellant had offered the highest A 
amount. The entire amount was paid and the sale was 
confirmed by the Corporation, though no sale deed was 
executed. The sale made by the Corporation in favour of 
the appellant was in exercise of the statutory powers 
vested in it. [para 12-13) [869-H; 870-A-B, E-G] 
B 
1.2 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 executed in his 'favour c 
by his vendors during the subsistence of the mortgage 
in favour of the Corporation and the rights of the 
appellant to the said property on the basis of the sale 
made in his favour by the Corporation pursuant to the 
advertisement dated 20.10

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