Public financial recovery powers upheld, with implied notice and opportunity requirements to ensure fair play and guided discretion.

A public financial corporation's power to take over and sell a defaulting unit without court intervention was upheld as an administrative recovery mechanism, not a quasi-judicial determination of liability. The court read in a requirement of reasonable notice and opportunity to explain, reply, or pay, so that minimal natural justice and fair play are preserved. It also held that the availability of both section 29 and section 31 did not create unguided discretion or hostile discrimination, because the statutory scheme and object of speedy industrial recovery supplied sufficient guidance. The constitutional challenge therefore failed, subject to fair notice and opportunity in individual cases.

---

---

Issues: (i) Whether section 29(1) of the State Financial Corporations Act, 1951 is unconstitutional for conferring a power of takeover and sale without court intervention and without hearing. (ii) Whether the availability of action under section 29 alongside the remedy under section 31 creates unguided discretion and hostile discrimination under article 14.

Issue (i): Whether section 29(1) of the State Financial Corporations Act, 1951 is unconstitutional for conferring a power of takeover and sale without court intervention and without hearing.

Analysis: The power under section 29 was held to be an administrative power exercised by a public financial corporation for speedy recovery of dues after default, and not a quasi-judicial adjudication of liability. The provision was read in the light of the scheme of the Act, the duty of the board to act on business principles, and the object of promoting industrial growth and quick credit. The Court held that reasonable notice, opportunity to explain, reply, or make payment must be implied, so that fair play and the minimal requirements of natural justice are observed. The absence of a formal hearing, appeal, or review did not by itself invalidate the provision, because improper or unfair action under the section would still be open to challenge in appropriate proceedings.

Conclusion: Section 29(1) was upheld as valid and not violative of articles 14, 19, 21, or 300A of the Constitution.

Issue (ii): Whether the availability of action under section 29 alongside the remedy under section 31 creates unguided discretion and hostile discrimination under article 14.

Analysis: The Court held that the existence of more than one recovery mode does not by itself create discrimination. The governing policy was held to be speedy and effective recovery of public funds for industrial development, and that policy supplied the necessary guidance for the choice of procedure. Section 31 was treated as an additional court-based remedy without prejudice to section 29, not as an exclusive or competing regime. The statutory scheme, its object, and the responsibility of the corporation's high officials were considered sufficient to prevent arbitrary selection, while actual abuse of power could still be corrected in individual cases.

Conclusion: The choice between sections 29 and 31 was held not to confer arbitrary or discriminatory power, and section 29 was not struck down under article 14.

Final Conclusion: The constitutional challenge failed, the petitions were dismissed, and the corporation was permitted to proceed in accordance with law, subject to fair notice and opportunity in individual cases.

Ratio Decidendi: A statutory power enabling a public financial corporation to recover defaulted dues without court intervention is valid where the statute's scheme and object supply a clear policy of speedy recovery and the power is exercised with fair notice and opportunity, so that the discretion is guided and not arbitrary.

---