Public auction required for mortgaged property sales; private negotiation allowed only after an adequately publicised auction fails to secure a fair price.

A State Financial Corporation exercising power to sell mortgaged property must act fairly and secure the best price through a properly publicised public auction; private negotiation is permissible only if the auction does not yield a satisfactory result. Publication in only one vernacular daily was treated as inadequate, and a sale process lacking wide publicity was vulnerable to judicial review for breach of fair play and natural justice. Non-joinder of the negotiated purchaser did not bar challenge where the Corporation's own decision was under attack. The sale process was quashed and a fresh auction with adequate publicity was directed before any negotiated sale could be considered.

---

---

Issues: (i) Whether the Corporation's decision to dispose of the mortgaged property through a sale process lacking wide publicity and culminating in private negotiation was lawful under section 29 of the State Financial Corporations Act, 1951. (ii) Whether non-joinder of the negotiated purchaser barred relief in the writ petition.

Issue (i): Whether the Corporation's decision to dispose of the mortgaged property through a sale process lacking wide publicity and culminating in private negotiation was lawful under section 29 of the State Financial Corporations Act, 1951.

Analysis: The Corporation's power to enforce its security and sell mortgaged property was accepted, but that power had to be exercised fairly and in a manner consistent with public law standards. Judicial review was available where the Corporation acted contrary to statutory requirements or unfairly. The governing principle was that the best price for public property is ordinarily secured through public auction with adequate publicity and maximum participation. Private negotiation could be resorted to only when the Corporation failed to secure the best price through public auction. Publication of the sale notice in only one vernacular daily was held insufficient, the plea of financial constraint was rejected, and the negotiated sale was found to be inconsistent with fair play and natural justice.

Conclusion: The sale process and the impugned action were unlawful and liable to be set aside.

Issue (ii): Whether non-joinder of the negotiated purchaser barred relief in the writ petition.

Analysis: The purchaser had not been impleaded, but the dispute arose from the Corporation's own decision and the petitioners were not parties to the private negotiation. The purchaser's presence was not necessary for adjudication of the legality of the Corporation's action, which itself was under challenge.

Conclusion: The petition was not defeated by non-joinder of the purchaser.

Final Conclusion: The writ petition succeeded, the impugned sale process was quashed, and the Corporation was directed to restart the sale by public auction with adequate publicity before considering any private negotiation if the auction did not yield a satisfactory price.

Ratio Decidendi: A State Financial Corporation exercising power to sell mortgaged property must first attempt a properly publicized public auction aimed at securing the best price, and may resort to private negotiation only thereafter if the auction does not produce a satisfactory result; a sale process lacking adequate publicity is vulnerable to judicial review for breach of fair play and natural justice.

---