SHAMIMUDDIN v. The Bihar State Financial Corporation

the very first disbursement of Rs. 31,000/- was made, it was adjusted fully against outstanding interest. Though on paper the Corporation has done a great job for rehabilitation, but the money never reached rehabilitation to the needy. Petitioner then again for the third time sought to burn his finger. Again in 1986, third time loans were sanctioned but with no use as the disbursement thereof was adjusted against outstanding interest. Again on paper the petitioner received money which in fact never crossed the boundary of the Corporation as in the Accounts Section itself, the disbursement was eaten away by the accrued interest and the Unit left high and dry. Ultimately B.S.F.C. in exercise of its power under Section 29 of the Act advertised for auction sale of petitioner’s Unit which included lease hold land as aforesaid. In November, 1994, B.S.F.C. dispossessed the petitioner of the Industrial Unit.

This was the surety 4 (mortgage) which was given by the petitioner to B.S.F.C. for securing the loan. Thus in 1994 the securities were taken possession by the Corporation for discharge of liabilities of petitioner towards Corporation. This leads to the first grievance of the petitioner. The first grievance that once Corporation exercise its right to take over surety for realization of its debts then from the date onwards the Corporation can not charge any interest in the account because that is not permissible. The reason is simple. Surety was given for securing the debt, the Corporation can not appropriate the surety and keep the debt alive. At the same time the moment surety is appropriated towards the debts, to the extent debts get extinguished. What Corporation does with the surety is not material in this respect. It is not in dispute that even though in 1994 the petitioner was totally dispossessed of all his assets, Corporation kept charging compound interest in the account quarter after quarter and “book building” its assets, with what purpose one does not understand.

The object of the Corporation being industrialization was never achieved nor attempted to be achieved. On the plea of public finance the Corporation is acting only as a commercial banker which is not the terms of legislation under which it was born. 5 The second grievance of the petitioner is that having taken possession of the entire mortgaged assets, on the part of B.S.F.C., it took seven long years for auction sale. In the seven years the interest kept mounting and over Rs. 6,00,000/- that was realized from the sale process was not enough to even clear the accumulated interest liability, that is arbitrary, it is submitted. The third grievance is that having taken possession of petitioner’ Unit, about 1900 Sq. Ft. of petitioner’s area has been occupied by the B.S.F.C. for its Office use without payment of any rent or compensation to the petitioner. On behalf of Corporation it is submitted that these facts are not correct.

In fact BIADA. and the Corporation jointly requested to the District Magistrate, Biharsharif to take possession of the said land. The District Magistrate obliged and took possession of the Petitioner’s land. But in fact the possession was then retained by the BIADA. till it was made over to the Corporation in 2001. To this Court, it is difficult to accept this contention. The moment BIADA. and the Corporation join to ask the District Magistrate to take over possession and consequently the District Magistrate disposes petitioner and handed over the possession to BIADA., who 6 had jointly with Corporation prayed for such an action, it would be deemed that possession was with Corporation if not physically, in constructive manner with BIADA. It is also not in dispute that while in this status, in 1995 the advertisement for sale of Unit was issued, the Corporation sold about 3208 Sq Ft. to be in its possession which was ultimately sold in 2002.