State Financial Corporations Act, 1951
29. Rights of Financial Corporation in case of default
(1) Where any industrial concern, which is under a liability to
the Financial Corporation under an agreement, makes any default in repayment of
any loan or advance or any installment thereof or in meeting its obligations in
relation to any guarantee given by the Corporation or otherwise fails to comply
with the terms of its agreement with the Financial Corporation, the Financial
Corporation shall have the right to take over the management or possession or
both of the industrial concern, as well the right to transfer by way of lease
or sale and realize the property pledged, mortgaged, hypothecated or assigned
to the Financial Corporation.
(2) Any transfer of property made by the Financial Corporation,
in exercise of its powers under sub-section (1), shall vest in the transferee
all rights in or to the property transferred as if the transfer had been made
by the owner of the property.
(3) The Financial Corporation shall have the same rights and
powers with respect to goods manufactured or produced wholly or partly from
goods forming part of the security held by it as it had with respect to the
original goods.
(4) Where any action has been taken against an industrial
concern under the provisions of sub-section (1), all costs charges and expenses
which in the opinion of the Financial Corporation have been properly incurred
by it as incidental thereto shall be recoverable from the industrial concern
and the money which is received by it shall, in the absence of any contract to
the contrary, be held by it in trust to be applied firstly, in payment of such
costs, charges and expenses and, secondly, in discharge of the debt due to the
Financial Corporation, and the residue of the money so received shall be paid
to the person entitled thereto.
(5) Where the Financial Corporation has taken any action against
an industrial concern under the provisions of sub-section (1), the Financial
Corporation shall be deemed to be the owner of such concern, for the purposes
of suits by or against the concern, and shall sue and be sued in the name of
the concern.