State Financial Corporations Act, 1951:

Section 29 -Uttar Pradesh State Financial Corporation-Loan to industrial concern- Default in payment of loan-Power of Corporation to take possession and sell the mortgaged property-Guidelines for exercising powers under section 29 issued.

Financial Corporation-Loan to industrial concern against hypothecated property-Default in payment of loan by debtor-Corporation's refusal to release hypotheca to debtor for private sale for repayment of debt-Taking possession of property by Corporation and sale by invitation of tenders without notice or opportunity to debtor-Corporation's action held contrary to Section 24 -Sale held vitiated and not binding on debtor-Held Corporation is an instrumentality of State-It is bound to act fairly and reasonably in selling the property of debtor-Section 29 does not exclude principles of natural justice. Section 24--State Financial Corporation are extended arms of Welfare State- Their approach should be public oriented-Board should discharge its functions on business principles. Words and Phrases. 'Business'-Meaning of

The appellant was owner of two plots. In one of the plots a rice mill was constructed by the partnership in which he was a managing partner. For taking a loan he hypothecated the mill and- the plots with U.P. Financial Corporation which sanctioned a loan of Rs. 4,28,000, but disbursed only Rs. 3,78,660 to him. Due to non-cooperation of other partners, lack of working capital and failure of the Financial Corporation to release the balance loan the mill landed into a rough weather. Consequently defaults were committed in repayment of loan. The appellant requested A the Corporation to release the vacant hypothecated plot to enable him to negotiate for private sale to pay off his debt and also stated that he was ready and willing to pay the outstanding amount of Rs. 5,03,165 towards principal and interest in full satisfaction under "one time settlement scheme". The Corporation rejected his request and exercising its power under section 29 of the State Financial Corporations Act, 1951 took possession of the hypotheca, invited tenders for its sale and without giving any notice or, opportunity to the appellant accepted the tender of Rs. 2,55,000 given by respondents 3 to 5. Pursuant to the sale the 3rd respondent took possession of the property and invested a large sums for the improvement of the mill. The appellant filed a writ petition in the High Court which was dismissed. Against the decision of the High Court the appellant filed an appeal in this Court.