BIHAR STATE FINANCIAL CORPORATION versus M/S. CHHOTANAGPUR MINERALS AND ORS.

The Bihar State Financial Corporation could exercise its statutory powers of sale only over mortgaged properties. Its sale of assets not mortgaged was illegal and it is liable for damages for the loss caused by such unauthorized action.

Parties: Appellant: Bihar State Financial Corporation; Respondent No. 1: M/s Chhotanagpur Minerals; Respondent No. 2: Atma Lal Agrawal; Respondent No. 3: State Bank of India
Jurisdiction: India
Judgment Date: 12 December 2008
Procedural Posture: Civil Appeal / Final Judgment on Appeal
Outcome: Appeal dismissed
Legal Topics: Mortgage, Statutory Powers Under State Financial Corporations Act, Damages, Unauthorized Sale of Property

Banking Law Property Law Mortgage Statutory Powers Under State Financial Corporations Act Damages Unauthorized Sale of Property

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Parties

Bihar State Financial Corporation

Appellant

M/s Chhotanagpur Minerals

Respondent No. 1

Atma Lal Agrawal

Respondent No. 2

State Bank of India

Respondent No. 3

Procedural Posture

Civil Appeal / Final Judgment on Appeal

Legal Issues

1 Whether the State Financial Corporation was entitled to sell properties not mortgaged to it under Sections 29 and 30 of the State Financial Corporations Act, 1951
2 Whether the Corporation is liable for damages for unauthorized sale of property not subject to mortgage

Ratio Decidendi

Court Disposition

Appeal dismissed

Orders

Appellant to pay decretal amount (for damages relating to Schedule A property) to State Bank of India (respondent No. 3) together with interest as directed by courts below within six months
No order as to costs