Even though this section does not provide as such, but in view of the principles of natural justice and fair play it is necessary for the corporation to issue notice to the guarantor regarding the intended auction lest in the absence of serving of such notice, the corporation cannot carry on with the intended auction. In other words, both borrower and guarantor are entitled auction; Smt. Hiranyaprava, Samantray v. Orissa State Financial Corporation, AIR 1995 Ori l.

Where possession of factory premises of a company taken over by Financial Corporation was legal and valid action under this section, workers of debt company were held to be having no right of hearing in such circumstances. Writ Petition filed by workers challenging proceedings under this section is not maintainable; Mahabir Prashad Sharma v. Collector Rewari at Narnawl, AIR 1995 P&H  11.

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1. Subs. by Act 56 of 1956, sec. 14, for "right to sell".
2. The words "of sale and realisation" omitted by Act 56 of 1956, sec. 14.
3. Subs. by Act 56 of 1956, sec. 14, for "as if the sale".
4. Subs. by Act 56 of 1956, sec. 14, for sub-section (4).
5. Subs. by Act 77 of 1972, sec. 19, for certain words.
6. Subs. by Act 6 of 1962, sec. 14, for "charge and expenses properly incurred."
7. The words 'from such management, or transfer and realisation" omitted by Act 77 of 1972, sec. 19.
8. Subs. by Act 6 of 1962, sec. 14, for "the owner of the concern".
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Where after the rehabilitation package prescribed in respect of sick industry , the Sate Financial Bank and some other bank had agreed to give loan to the sick industry "but there was inordinate delay in releasing the loan and that was the prime cause of non-revival of the industrial unit in question and the industry had deposited the amount prescribed by the Court during the pendency of writ application, the State Financial Bank which had taken possession of the industry was directed to deliver possession of the unit to the entrepreneur and further directed both the banks to release the balance of the amount they had agreed to pay to industrial unit as the banks had not acted fairly; M/s. Surendra Steel Industries (P.) Ltd. v. Orissa State Financial Corporation, AIR 1995 Ori 48.

Seizure of an industrial unit can neither be said to be unfair for unreasonable if such action is resorted to by the State Financial Corporation concerned by reason of default in prepayment of loan by the former, M.D. Mishra v. State of Orissa, AIR 1995 Ori 52.

Under this section Financial Corporation can take possession of an industrial concern for realizing its debts from the borrower. It can further transfer it. To bring a case under this section Financial Corporation should have given the loan and the borrower should have been unable to pay the same; U.P. Financial Corporation v. Gajendra Cold Storage (P) Ltd., 1992(1) Bank CLR 769.

If a loanee is unable to pay the debt, the corporation is entitled to take the possession of the property and can further transfer it; Miss K.T. Sulochana Nair v. Managing Director, Orissa State Financial Corporation, AIR 1992 Ori 157.

State Financial Corporation can ask for its dues even if the industrial concern does not have working capital or power supply. The Industrial concern has no right to refuse the instalment due on the basis of above mentioned grounds; Jeenu Plast India 
(Private) Ltd. v. Orissa State Financial Corporation, AIR 1992 Ori 196.

If an industrial concern is taken over by the Corporation without giving any notice or hearing to that industrial concern than this act of the corporation is not justified; Bhabagrahi Panigrahi v. Union of India, AIR 1990 Ori 42.

Where the security valued at over rupees twenty lacs had been sold away for a  small amount that was actually due by the debtor to the Corporation it has been held that the sale is not valid and should be set aside; M/s Swastic Automobiles v. Bihar State Financial Corporation, AIR 1989 SC 1551.

Power to call for repayment before agreed period,- 

Notwithstanding anything in any agreement to the contrary, the Financial Corporation may, by notice in writing, require any industrial concern to which it has granted any loan or advance to discharge forthwith in full its liabilities to the Financial Corporation,-

if it appears to the Board that false or misleading information in any material particular was given by the industrial concern in its application for the loan or advance; or
if the industrial concern has failed to comply with the terms of its contract with the Financial Corporation in the matter of the loan or advance; or
if there is a reasonable apprehension that the industrial concern is unable to pay its debts or that proceedings for liquidation may be commenced in respect thereof; or
if the property pledged, mortgaged, hypothecated or assigned to the Financial Corporation as security of the loan or advance is not insured and kept insured by the industrial concern to the satisfaction of the Financial Corporation or depreciates in value to such an extent that, in the opinion of the Board, further security to the satisfaction of the Board should be given and such security is not given; or
if, without the permission of the Board, any machinery, plant or other equipment, whether forming part of the security or otherwise, is removed from the premises of the industrial concern without being replaced; or 
if for nay reason it is necessary to protect the interests of the Financial Corporation.

Where an industrial concern, in breach of any agreement, makes any default in repayment of any loan or advance or any instalment thereof 1[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 or where the Financial Corporation requires an industrial concern to make immediate repayment of any loan or advance under section 30 and the industrial concern fails to make such repayment, 2[then, without prejudice to the provisions of section 29 of this Act and of section 69 of the Transfer of Property Act, 1882 (4 of 1882)] any officer of the Financial Corporation, generally or specially authorized by the Board in this behalf, may apply to the district judge within the limits of whose jurisdiction the industrial concern carries on the whole or a substantial part of its business for one or more of the following reliefs, namely :-

for an order for the sale of the property pledged, mortgaged, hypothecated or assigned to the ³[Financial Corporation] as security for the loan or advance; or
⁴[for enforcing the liability of any surety; or]
for transferring the management of the industrial concern to the Financial Corporation; or
for an ad interim injunction restraining the industrial concern from transferring or removing its machinery or plant or equipment from the premises of the industrial concern without the permission of the Board, where such removal is apprehended.

An application under sub-section (1) shall state the nature and extend of the liability of the industrial concern to the Financial Corporation, the ground on which it is made and such other particulars as may be prescribed.