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Issues: (i) whether the financial corporation could proceed under section 29 of the Karnataka State Financial Corporations Act, 1951, after initiation of proceedings under section 31 of that Act; (ii) whether the auction/sale of the secured assets could be interfered with on the ground of want of opportunity and unfairness.
Issue (i): whether the financial corporation could proceed under section 29 of the Karnataka State Financial Corporations Act, 1951, after initiation of proceedings under section 31 of that Act.
Analysis: The legal framework recognised that section 29 enables recovery of dues without intervention of the court, while section 31 operates as a supplementary remedy and does not control section 29. On the facts, the corporation first invoked section 29 and only later initiated proceedings under section 31. The saving of rights under section 31 did not bar recourse to section 29 once default had occurred, and the borrower's challenge that section 29 could not be invoked after section 31 was untenable.
Conclusion: The corporation was entitled to invoke section 29 notwithstanding the later initiation of proceedings under section 31, and the contention to the contrary failed.
Issue (ii): whether the auction/sale of the secured assets could be interfered with on the ground of want of opportunity and unfairness.
Analysis: The record showed repeated opportunities to clear the dues and to secure a higher bidder, but no repayment or better bid was brought forward by the borrower. In exercise of jurisdiction under article 226 of the Constitution of India, equitable interference was unwarranted where the borrower remained in default and the corporation acted to realise its legitimate dues. The sale process was therefore not shown to be unfair or illegal.
Conclusion: No ground was made out to set aside the sale or to interfere with the corporation's action.
Final Conclusion: The challenge to the corporation's measures failed, and the order of the learned Single Judge was left undisturbed.
Ratio Decidendi: A state financial corporation may pursue recovery under section 29 of the Karnataka State Financial Corporations Act, 1951, even after proceedings under section 31 have been initiated, and equitable interference under article 226 of the Constitution of India is not justified where the borrower remains in default and no illegality in the sale process is shown.
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