MAHESH CHANDRA versus REGIONAL MANAGER, U.P. FINANCIAL CORPORATION AND ORS.

MAHESH CHANDRA versus REGIONAL MANAGER, U.P. FINANCIAL CORPORATION AND ORS.

The Corporation acted contrary to law, failed to follow principles of fairness and business prudence, and violated Section 24 and principles of natural justice by not giving notice or opportunity to the debtor before accepting the tender. Section 29 powers must be exercised fairly, as trustee, with opportunity and transparency. Sale was vitiated and not binding on debtor.

Parties
Appellant: Mahesh Chandra; Respondents: Regional Manager, U.P. Financial Corporation and Ors.
Jurisdiction
India
Judgment Date
12 February 1992
Procedural Posture
Civil Appeal / Appeal From Allahabad High Court Judgment on Writ Petition
Outcome
Appeal allowed; writ of certiorari issued quashing sale.
Legal Topics
State Financial Corporations Act, Sale of Mortgaged Property, Natural Justice, Public Law Principles, Business Principles in Statutory Corporations
Banking & Finance Administrative Law State Financial Corporations Act Sale of Mortgaged Property Natural Justice Public Law Principles Business Principles in Statutory Corporations

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Parties

Mahesh Chandra

Appellant

Regional Manager, U.P. Financial Corporation and Ors.

Respondents

Procedural Posture

Civil Appeal / Appeal From Allahabad High Court Judgment on Writ Petition

Legal Issues

  1. 1 Whether the U.P. Financial Corporation acted lawfully and fairly in taking possession and selling mortgaged property under Section 29 of the State Financial Corporations Act, 1951
  2. 2 Whether principles of natural justice apply to sale of debtor’s property by Financial Corporation
  3. 3 Whether guidelines for sale of mortgaged property and conduct of statutory corporations are required

Ratio Decidendi

The Corporation acted contrary to law, failed to follow principles of fairness and business prudence, and violated Section 24 and principles of natural justice by not giving notice or opportunity to the debtor before accepting the tender. Section 29 powers must be exercised fairly, as trustee, with opportunity and transparency. Sale was vitiated and not binding on debtor.

Court Disposition

Appeal allowed; writ of certiorari issued quashing sale.

Orders

  • Mandamus to Corporation to immediately resume possession of hypotheca; implement directions in judgment.
  • Appellant entitled to redeem hypotheca by paying liability within specified period; otherwise, Corporation to sell property in open auction with wide publicity.