1990 INSC 0002
Bihar State Financial Corporation Through Its Managing Director
v.
S Nagina Singh
(Supreme Court Of India)
Civil Appeal No. 65 Of 1990 | 09-01-1990

( 1 ) Special leave is granted.

( 2 ) This appeal is directed against the judgment of the Patna High court
allowing the Writ petition C. W. J. C. No-2964 of 1989 filed by the
respondents.

( 3 ) The appellant Corporation advanced a loan to the respondents against a
mortgage in respect of the properties which are the subject-matter of the present
dispute. In view of the order we are proposing to pass, it is not necessary to give
all the facts leading to the present appeal and it will be sufficient to state that
according to the case of the appellant-corporation, there was default in payment
of the loan which entitled it to take steps under s. 29 of the Bihar State Financial
Corporation Act, 1951. Accordingly a notice dated 21/2/1989 was issued under
the said S. and a further notice dated 73. 1989 was published inviting tenders in
respect of the proposed sale of the mortgaged assets. The notices were
challenged by the debtor-respondents before the High court by the aforesaid
writ petition which was allowed by the impugned judgment.

( 4 ) According, to the case of the respondents, Nagina Singh, respondent No. 1,
is the sole owner of the mortgage properties as well as of the small scale
industry for the benefit of which the loan bad been taken. The second
respondent is his son. Before the High court the respondents offered to pay the
entire dues if they were permitted to sell portion of the mortgaged properties.
The High court permitted them to sell certain lands on the condition that they
paid a sum of Rs. 2,00,000. 00 to the Corporation within a week of the order
which was actually paid. The appellant Corporation has challenged the
judgment before this court on several grounds. After the case was heard for
sometime, it was indicated by the learned counsel for the parties that the entire

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dispute might be amicably settled if the case was adjourned and the respondents
were permitted to negotiate with intending purchasers for the sale of the
disputed property. We, therefore, adjourned the case for 8 weeks on 25. 9. 1989
after passing an interim order. The case was later heard on 18/12/1989 when it
was stated by the learned counsel for the respondents that a proposed
transaction of sale with respect to a portion of the property in question had been
approved by the appellant Corporation in accordance with the interim order and
that the entire dues of the Corporation would be paid off if the case was further
adjourned till after the Christmas holidays. Learned counsel for the parties. also
mentioned certain details in that regard. The case was, therefore, again
adjourned for the 8th of January, 1990. When the case was taken up yesterday
for further hearing, it was stated that according to the agreement between the
parties a sum of Rs. 12,61,000. 00 would be paid to the Corporation through its
learned counsel in court and thereupon the mortgaged property would be
released for being sold. Mr. A. K. Sen the learned counsel for the Corporation,
however stated that the total dues of the Corporation exceeded the aforesaid
amount by several lakhs; on the other hand. Dr. L. M. Singhvi, the learned
counsel appearing for the respondents, asserted that the Corporation was not
entitled even to realise Rs. 12,61,000. 00. According to the respondents' case, on
a proper accounting the sum payable to the Corporation was a smaller amount.
Mr. Senfurther contended that initially the respondents were required to pay
interest only at 8%, but in view of the undue delay in making the payment they I
are liable to pay higher rate of interest for a period of about 10 years. We do not
propose to decide this dispute at this stage. It was suggested by the learned
counsel for the parties, that the aforesaid controversy may be left for decision by
the High court and the present appeal be allowed permitting the respondents to
pay to the learned counsel for the Corporation the said amount of Rs. 12,61,000.
00 and allowing the respondents to file a bank guarantee in the High court for
an additional sum of Rs. 3,00,000. 00 to be handed over to the appellant
Corporation for realisation of any additional amount found by the High court to
be payable by the respondents to the appellant on account of the controversy
mentioned above; and on such payment being made and the bank guarantee
filed, the respondents be allowed to deal with the hypothecated properties in any
manner they like. We think the joint suggestion is reasonable.

( 5 ) With our permission the learned counsel for the respondents handed over a
sum of Rs. 12,61,000. 00 in the form of 33 bank drafts to Sri M. P. Jha, the
learned counsel for the appellant Corporation in court. We further permit the
respondents to file a bank guarantee for a sum of Rs. 3,00,000. 00 in the Patna

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High court within a period of one month from today to cover any additional
amount which, according to the High court, may be payable by the respondents
to the Corporation over and above the aforesaid amount of Rs. 12,61,000. 00.
Within a period of one week of the filing of the bank guarantee the Corporation
shall return to the respondents the title deeds of the hypothecated properties so
that they may be able to deal with them in any manner they wish to.

( 6 ) The question as to what is the exact amount that the Corporation is entitled
to realise from the respondents shall be decided by the High court after hearing
the parties, and our judgment shall not be treated to have decided that issue. It
will be open to the respondents to claim before the High court that the actual
amount is even less than Rs. 12,61,000. 00, which has already been paid. The
present arrangement is without prejudice to the rights of the parties which will
be finally decided by the High court.

( 7 ) Dr. Singhvi suggested that the respondents should be permitted to negotiate
and sell at least some of the properties in question immediately that is even
before the bank guarantee for Rs. 3,00,000. 00 is filed in the High court. After
considering all the circumstances, we permit the respondents to deal with the
plot nos - 424, 432 and 455, mentioned in the impugned judgment of the High
court, without waiting for the filing of the bank guarantee.

( 8 ) The appeal is disposed of in the above terms.

(9)The impugned judgment of the High court is set aside and the case is
remitted to it for fresh decision in accordance with the observations made
above.

(10) There will be no order as to costs.

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