State Financial Corporation sale under Section 29 upheld where guidelines were substantially followed and no unfairness was shown.
Directions in the earlier precedent on sale of industrial units by State Financial Corporations under Section 29 of the State Financial Corporations Act were treated as guidelines for exercise of power, not rigid mandates. The Corporation substantially complied by informing the unit holder of the sale process, giving opportunities to revive the unit or improve offers, and assessing the unit before sale. The rejected competing offer was not shown to be superior when payment terms, electricity dues, down payment, and earnest money were considered. Article 226 interference was therefore limited to statutory breach or unfair, unreasonable action, and the High Court was not to re-evaluate the Corporation's commercial decision.
Issues: Whether the State Financial Corporation's sale of the industrial unit under Section 29 of the State Financial Corporations Act, 1951, and its acceptance of one set of offers while rejecting another, suffered from any statutory violation or such unfairness or unreasonableness as would justify interference under Article 226 of the Constitution of India.
Analysis: The directions in the earlier precedent governing sale of units by State Financial Corporations were treated as guidelines for exercise of power under Section 29, and not as rigid mandates. On the facts, the Corporation had substantially complied with those guidelines by informing the unit holder of the sale process, affording opportunities to revive the unit or bring better offers, and evaluating the unit before sale. The competing offer rejected by the Corporation was found not to be superior when compared with the accepted offers, having regard to payment terms, responsibility for electricity dues, down payment, and earnest money. The supervisory jurisdiction under Article 226 was held to be limited to cases of statutory breach or unfair and unreasonable action, and the High Court was not to sit in appeal over commercial evaluation by the Corporation.
Conclusion: The Corporation's decision was neither illegal nor unfair, and interference by the High Court was unwarranted.
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