Prior notice to guarantor is required before sale of mortgaged property; enforcement without notice is arbitrary and ultra vires.

Section 29 of the State Financial Corporations Act, 1951 permits enforcement against secured property on default, but it does not displace natural justice or fair play. Before taking over and selling a guarantor's mortgaged property, the Corporation must serve proper prior notice and give a reasonable opportunity to clear the dues from other sources. In the absence of such notice, the taking over of possession and publication of the sale notice were treated as unfair, arbitrary, and ultra vires, and the action was not legally sustainable.

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Issues: Whether the Financial Corporation could take over and sell the guarantor's mortgaged property under Section 29 of the State Financial Corporations Act, 1951 without first giving the guarantor prior notice and an opportunity to clear the dues, and whether the impugned action was arbitrary and violative of natural justice.

Analysis: Section 29 empowers the Corporation to take possession of and sell secured property on default, and the guarantor's liability may be co-extensive with that of the borrower. However, the provision does not exclude the principles of natural justice and fair play. The guarantor's undertaking was treated as a separate obligation, and before resorting to sale of his mortgaged property the Corporation was required to serve proper notice and afford a reasonable opportunity to make payment from other sources. In the absence of such prior notice, the subsequent taking over of possession and publication of sale notice were held to be unfair, unjust, unreasonable, arbitrary, and ultra vires.

Conclusion: The action of the Corporation was not legally sustainable; the notice and public sale notification were quashed and possession was directed to be restored to the petitioner.

Ratio Decidendi: Even where Section 29 permits enforcement against secured property, the Corporation must act fairly and give prior notice and opportunity to the guarantor before proceeding against the guarantor's mortgaged property.

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