hXO IN THE HIGH COURT OF ANDHRA PRADESH :: AMARAVAT-J-fJ^/^ MONDAY, THE TWENTY SEVENTH DAY OF JANUARY TWO THOUSAND AND TWENTY FIVE PRESENT HONOURABLE SRI JUSTICE DHIRAJ SINGH THAKUR, CHIEF JUSTICE^ 3: i X O I* 3I| ^ AND HONOURABLE SRI JUSTICE RAVI CHEEMALAPATI- WRIT APPEAL Nos. 1065 AND 1077 OF 2014 WRIT APPEAL NO: 1065 OF 2014 Writ Appeal under clause ISncf the Letters Patent against the order dated 06.03.2014 in WP.No.15771 of 2010 on the file of the High Courts Between: M/s. Sriram Rice Mills Private Limited, Stone Housepet, Nellore District, Rep. by its Managing Director Sri Chidella Venkateswarlu, S/o Subbaramaiah, aged about 63 years. ...Appellant/Respondent No.4 AND Government of Andhra Pradesh, rep. by its Principal Secretary, Industries and Commerce Department, Secretariat Building, Hyderabad (State of A.P. rep. Principal Secretary, l&C Dept.) The Andhra Pradesh State Finance Corporation, Chirag Ali Lane, Hyderabad, by its Managing Director. Chirag Ali Lane, Hyderabad. The Committee on Petitions, A.P. State Legislative Council, Rep. by its Secretary to State Legislature, Hyderabad. 1. 2. 3. ...Respondents/Respondents M/s. Premier Agro Industries, rep. by its Partner, Sri C. Mohd. Hussain S/o Late Sardaruddin, R/o 22-2-700/4/A, Panjatan Colony, Darusifa, Hyderabad. 4. ...Respondents/Writ Petitioner ( Counsel for the Appellant: SRI SUDHESHNA YAKKALA ^ Counsel for the Respondent No.1: GP FOR INDUSTRIES & COMMERCE Counsel for the Respondent No.2: SRI Y. V. RAVI PRASAD, SC FOR^ APSFC Counsel for the Respondent No.3:GP FOR LEGISLATIVE AFFAIRS Counsel for the Respondent No.4:SRI C. SUMON ^ WRIT APPEAL NO: 1077 OF 2014 Writ Appeal under clause 15 of the Letters Patent against the order dated06.03.2014 in WP No.17435 of 2014 on the file of the High Court. Between: M/s. Sriram Rice Mills Private Limited, Stone Housepet, Nellore District, Rep. by its Managing Director Sri Chidella Venkateswarlu, S/o Subbaramaiah, aged about 63 years. ...Appellant/Writ Petitionee. AND 1. The Andhra Pradesh State Finance Corporation, Chirag Ali Lane, Hyderabad, by its Managing Director. Chirag Ali Lane, Hyderabad. 2. The Andhra Pradesh State Finance Corporation, Nellore, Sri Potti Sreeamulu Nellore Dist, by its Branch Manager, A.K.Nagar, Nellore, SPSR Nellore Dist. 3. M/s. Premier Agro Industries, rep. by its Partner Sri C. Mohd. Hussain S/o Late Sardaruddin, R/o 22-2-700/4/A, Panjatan Colony, Darusifa, Hyderabad. ...RESPONDENTS I.A. NO: 2 OF 2014fWAMP. NO: 2556 OF 2014^ Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to receive the certified copy of certification of the registration of M/s. r Premier Agro Industries, Nellore issued by Registrar of Firms, Nellore as additional document in the writ appeal 2014. Counsel for the Appellant: SRI SUDHESHNA YAKKALA Counsel for the Respondent No.1 & 2: SRI Y. V. RAVI PRASAD, SC-FOR APSFC Counsel for the Respondent No.3:SRI C. SUMON The Court made the following: COMMON JUDGMENT p / IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI Bench Sr.Nos:- 27&28 [3483] APHC010325372014 WRIT APPEAL NO: 1065 of 2014 along with W.A.No.1077 of 2014 W.A.No.1065 of 2014: ...Appellant M/s. Sriram Rice Mills Private Limited Vs. ...Respondents Government of Andhra Pradesh & 3 others ********** Ms. Sudheshna Yakkala Advocate for Appellant Mr. C. Sumon Advocates for Respondents CORAM :THE CHIEF JUSTICE DHIRAJ SINGH THAKUR SRI JUSTICE RAVI CHEEMALAPATI DATE : 27th January 2025 Per DHIRAJ SINGH THAKUR. CJ: The Writ Appeal bearing No.1065 of 2014 and W.A.No.1077 of 2014 both arise out of a common judgment and order, dated 06.03.2014. By virtue of the judgment and order impugned, W.P.No.17435 of 2008 filed by M/s. Sriram Rice Mills Private Limited/appellant herein was dismissed, whereas W.P.No. 15771 of 2010 filed by M/s. Premier Agro 2. Industries/respondent No.4 herein was allowed. Briefly stated the material facts are as under: 3. 2 HCJ & RCJ W.A.NOS.1065& 1077 of 2014 M/s. Sriram Rice Mills Private Limited/appellant herein is a company incorporated under the Companies Act, 1956. It obtained a term loan of Rs.50.25 lakhs from the Andhra Pradesh State Financial Corporation /respondent No.2 herein for setting up a rice mill unit. The said loan was sanctioned on 08.08.1998, which was to be repaid within a period of 5 years in 17 quarterly installments, which were to commence after one year from the date of disbursement of any part of the loan, which was meant for purchases of plant and machinery (Rs.44.10 lakhs), contingencies (Rs.4.4 lakhs), pre-operating expenses (Rs.1.20 lakhs) and erection expenses (Rs.0.55 lakhs). The loan was secured by mortgage of land and buildings and hypothecation of plant and machinery. The appellant is stated to have commenced its production in 2001, but became sick in 2002. The secured asset of the appellant's unit was seized on 21.01.2003. After seizure, the appellant appears to have approached the Finance Corporation with an offer to repay the loan amount and paid an initial amount of Rs.2 lakhs and issued postdated cheques of Rs.9 lakhs, with further assurance that it would pay the entire outstanding amount within a few days thereafter. 4. According to the stand of the Finance Corporation, the seizure, in those circumstances, was lifted on 25.01.2003. However, the postdated cheques submitted by the appellant were dishonoured, much less was the outstanding loan paid as per the promise. The unit of the appellant was then 5. 3 HCJ & RCJ W.A.NOS.1065& 1077 of 2014 again seized on 20.03.2003, but the seizure was lifted on 27.03.2003 by accepting the postdated cheques of Rs.8.60 lakhs, which were also not honoured. The unit was thus again seized on 05.03.2004. The seizure was again lifted on the advice of the Government of Andhra Pradesh by accepting Rs.1 lakh for adjusting the same towards the outstanding loan. The Finance Corporation then claims that it rescheduled the loan 6. however, on account of the cheques issued by the appellant having bounced subsequent to such a rescheduling, action under Section 29 of the State Financial Corporations Act, 1951, was initiated and recall-cum-sale notice dated 27.08.2007, was issued. The unit was again seized on 07.11.2007. According to the record, an advertisement notice was issued in 7. the Andhra Jyothi newspaper on 14.03.2008, inviting bids for sale of the property, which was a secured asset with the Finance Corporation, pursuant to which and in response thereto, two bids were received one from respondent No.4 and the other from Mr. S. Bhaskar Rao. The bidders were asked to increase the bid amount upon negotiation and, after considering the bids, the concerned committee, by following the procedure prescribed submitted a proposal to the Managing Director, recommending the bid of respondent No.4 for Rs.84.50 lakhs, which was found to be the highest. Payment was made by way of cheques and the possession of the asset was handed over to the said respondent immediately thereafter. 4 HCJ & RCJ W.A.Nos.1065 & 1077 Of 2014 Based on the recommendations of the ‘Committee on Petitions’ of the Andhra Pradesh Legislative Council, the Government directed the Managing Director, Andhra Pradesh State Finance Corporation Limited, by way of a letter, dated 18.05.2010, inter alia for cancellation of sale deed executed in favour of respondent No.4 and for re-conveyance of the property 8. to the appellant. Proceedings, dated 18.05.2010, were accordingly challenged in W.P.No.15771 of 2010 by respondent No.4, who had purchased the secured asset. The appellant herein, in the meantime, had already preferred W.P.No. 13487 of 2008, challenging the action of the Finance Corporation in selling the unit of the appellant, in which it was additionally prayed to not to confirm the sale in favour of respondent No.4 herein. 9. The said petition came to be dismissed on 01.07.2009 in view of the fact that the sale had already been confirmed and registered and that the appellant had already preferred W.P.No.17435 of 2008 questioning the confirmation of the sale. 10. 11. W.P.No.17435 of 2008 filed by the appellant herein and W.P.No. 15771 of 2010 filed by respondent No.4 herein came to be considered together by the learned single Judge. In W.P.No. 17435 of 2008 preferred by the appellant, the sale made in favour of respondent No.4 herein by the Finance Corporation was questioned inter alia on the following grounds; 5 HCJ & RCJ W.A.NOS.1065& 1077 of 2014 when Clause 2 of the tender notice required That even No.1 consideration of the offers after 90 days from the date of receipt of the bids, the bid submitted by respondent No.4 was considered and accepted on 86th day only, before the expiry of 90 days. The argument is advanced on the premise that in case the offer was to be considered beyond 90 days, it would enabled other bidders to submit additional bids and the property might have have been sold for a higher price. No.2 - That the bidding process could have been permitted to proceed further only if there were more than one bidders and since Mr. S. Bhaskar Rao of respondent No.4, therefore the bid ought to have been was a proxy rejected. No.3 - That before the finalization of the bid in favour of respondent No.4, the Finance Corporation was supposed to have followed guideline No.9, which reads as follows; '9. Once the sale proposal is accepted by the appropriate committee, the original promoters shall be intimated by the concerned BM/GM(0) / COM (O) / Asst. General Manager of A.M.C. about the offer received from the highest tenderer or bidder for giving an opportunity with 15 days' notice by offering the assets at the price offered by the highest tenderer / bidder on the same terms of down payment within the stipulated period as per norms." the light of the aforementioned guideline, it was the stand of the appellant before the learned single judge was that the 15 days’ notice was In 6 HCJ & RCJ W.A.Nos.1065 & 1077 of 2014 never given to the appellant with a view to enable it to pay the price as was offered by the highest bidder. - That the Finance Corporation could not have taken any action under Section 29 of the Act, 1951, in regard to sale of the Unit before the loan become overdue. No.4 it would be necessary to reproduce the relevant 12. At this stage, portion of the advertisement notice issued by the Finance Corporation which is relevant for the just disposal of the present writ appeal. Clauses 2 and 4 of the advertisement notice, dated 13.03.2008, is reproduced as under: '2. From this notification date within 90 days, it is valid. After 90 days unit shown above, for the satisfactory offers will be considered. for any Afterwards for the unit, the tender forms will not be issued. 3. 4. More than one tender if presented, bidding will be commenced, will be continued. The reasonable offer (for And further discussions committee pursuance) for seven days it will be kept in the notice board. learned single Judge vide judgment and order, dated 06.03.2014, rejected the grounds of challenge, some of which were yet again reiterated by learned counsel for the appellant before us. 13. The On a perusal of Clause 2 of the tender notice, dated 13.03.2008, that it nowhere prohibits the tendering authority from accepting an offer even before the expiry of 90 days, during which period the offers could be made by prospective bidders. The purpose of prescribing the period 14. it can be seen 7 HCJ & RCJ W.A.NOS.1065& 1077 Of 2014 ^ of 90 days appears to be primarily with a view to fix the deadline, during which period, the offers could have been made, whereafter it was made clear that the tender forms would not be issued. The issuance of the tender forms and submission of the bids, therefore, in any case, could not be extended beyond the 90-days prescribed limit, as per the tender notice. Although the effort of the appellant is that if the bid had not accepted on the 86th day and if the process of consideration was kept open till the 90th day, there could be a possibility of receiving higher bid for the secured asset. However, while that may be the fond hope of the appellant whose assets were mortgaged, yet it is nobody's case that a prospective bidder was prevented from submitting his bid between the 86*'' day up to the last date prescribed by the notice inviting tenders. If at all anybody could be said to be aggrieved, it would only be a prospective bidder, who would have that cause of action, otherwise, even a period of 86 days would be more than enough to receive bids for an asset which is put out to the world for purchase in the bidding process. In our opinion, the challenge on this ground, therefore, cannot succeed. 15. The other ground, which was urged before the learned single that before finalizing the bid and 16. Judge and reiterated before us, was confirming the sale. Clause 9 of the guidelines ought to have been followed and an opportunity should have been given to the appellant to meet the price offered by the highest bidder. This particular guideline admittedly was not 8 HCJ & RCJ W.A.Nos.1065 & 1077 of 2014 of the Finance Corporation, it was not followed f followed and as per the stand of the fact that the appellant was a chronic defaulter. on account Financial Corporation and another Vs. Jagdamba 17. In Haryana on Mills and another', the Apex Court considered the view expressed in the Financial of Mahesh Chandra Vs. Regional Manager, U.P. the Apex Court has prescribed guidelines including Guideline No. 9 relied upon by the appellant case Corporation^ in which Guideline 4a, which is akin to of reference, guideline No.4a in Mahesh Chandra case herein. For purposes is reproduced hereunder: ‘‘4(a). If unit holder is willing to offer the sale price, as the tenderer, then he should be offered same facility and unit should be transferred to him. And the arrears remaining thereafter should be rescheduled to be instalments with interest after the payment of last instalment recovered in fixed under the agreement entered into as a result of tendered amount. Bench of the Apex Court, however, in the case of 18. A three Judge Oil Mills held that the guidelines in Mahesh Chandra case and intent of Section 29 of the Act, 1951, and in that subsequent decisions rendered by the Apex Court in the were Jagadamba contrary to the letter case, relied upon the of Karnataka State Financial Corporation vs. Micro Cast Rubber & cases Allied Products (P) Ltd. & Ors.\ U.P. Financial Corporation and Ors. vs. and U.P. Financial 4 Naini Oxygen & Acetylene Gas Ltd. and Anr. \\ 1 (2002) 3 see 496 ^ (1993) 2 see 279 ^(1996) 5 see 65 "(1995) 2 see 754 9 HCJ & RCJ W.A.NOS.1065& 1077 of 2014 Corporation vs. Gem Cap (India) Pvt. Ltd. & Ors.^ For facility of reference, the case of Nos.17 and 18 of the judgment rendered in paragraph Jagadamba Oil Mills are reproduced hereunder; aforesaiid guidelines issued in Mahesh Chandra's the exercise of power by 17. The place unnecessary restrictions on case Financial Corporation contained in Section 29 of the Act by requiring the defaulting unit holder to be associated or consulted at every stage in the who has defaulted is hardly ever likely to sale of the property. A person cooperate in the sale of his assets. The procedure indicated in Mahesh will only lead to further delay in realization of the dues Chandra's case by the Corporation by sale of assets. It is always expected that the Corporation will try and realize the maximum sale price by selling the assets by following a procedure which is transparent and acceptable, after due publicity, wherever possible. 18. The subsequent decisions of this Court in Gem Cap's (supra), Naini Oxygen (supra) and Micro Cast Rubber (supra) run counter to the view expressed in Mahesh Chandra's case. In our of the said guidelines in Mahesh Chandra's case letter and the Intent of Section 29. In our view, the opinion, the issuance are contrary to the said obsen/ations in Mahesh Chandra's case do not lay down the correct law and the said decision is overruled.” In the present case, it can also be seen that the decision of the Finance Corporation to put the property to sale was not challenged on the much less has the appellant succeeded in proving 19. one ground of malafides against such an action of the Finance Corporation. of Jagadamba Oil Mills, under Section 29 of action under Section 29 of the As was held in the case the Act, 1951, the scope of judicial review in an Act, 1951, is confined to two circumstances; ^(1993) 2 see 299 \ !»*. 10 HQJ & RCJ W.A.NOS.1065& 1077 of 2014 a. where there is statutory violation on the part of Finance Corporation, b. where the State Finance Corporation acts unfairly and unreasonably. Other than the aforementioned two situations, it has been clearly held that the Courts ought not to interfere with such an action initiated under Section 29 of the Act, 1951. In the present case, it is not the case of the appellant that the guidelines have any statutory force or favour, and therefore, any violation thereof, would not warrant exercise of extraordinary writ jurisdiction under Article 226 of the Constitution of India by this Court. 20. In view of the fact that the property has already been sold and a lot of heavy investment is stated to have been made by respondent No.4, and considering the ratio of the aforementioned judgments, we do not find any merit in these writ appeals, which are, accordingly, dismissed. No costs. 21. Consequently, connected miscellaneous applications, if any, including implead petition, shall stand closed. Sd/- M.RAMESH BABU deputy REGISTRAR //TRUE COPY// OFFICER SEC To, 1. One CC to Sri Sudheshna Yakkala, Advocate [OPUCj 2. One CC to Sri C. Sumon, Advocate [OPUC] ^ 3. One CC to Sri Y. V. Ravi Prasad, SC for APSFC [OPUC]”^ 4. Two CCs to GP for Industries & Commerce, High Court o^ndhra Pradesh. [OUT] 5. Two CC’s to GP for Legislative Affairs, High Court of A.P. at Amaravati[OUT] 6. Three CD Copies. ssb 5 t HIGH COURT DATED:27/01/2025 COMMON JUDGMENT WA.Nos.1065 and 1077 of 2014 5 13 MAR 2025 ^ . Current Section . f DISMISSING THE WRIT APPEALS WITHOUT COSTS