Arijit Pasayat, J. - (1.) Haryana Financial Corporation (hereinafter referred to as 'Corporation') assails judgment dated 6-10-2000 of the Punjab and Haryana High Court in regular second appeal No. 3801/2000 whereby judgment and decree in Civil Suit No. 86 of 1995 instituted before the Civil Judge (Senior Division), Ambala and judgment and decree in Civil Appeal No. 37 of 1998 before the Addl. District Judge, Ambala affirming them were upheld. Respondents filed the suit seeking a decree for permanent injunction restraining the Corporation and its functionaries from auctioning the unit of the respondents which was seized by the Corporation.
(2.) The factual background of the case in a nutshell is as under : Respondent No. 1 a concern represented by its proprietor (respondent No. 2) applied to the Corporation for grant of loan and in terms of the sanction letter dated 16-10-1992 a sum of Rs. 7,48,000/- was sanctioned. The loan was to be repaid in 8 years, to be counted from the date of execution of the mortgage deed. The repayment of the loan was to be made in 15 half yearly instalments. Said repayment was to commence within 13 months from the first disbursement of the loan. The first 13 instalments of payment were to be of Rs. 50,000/- each and the last two instalments were to be of Rs. 49,000/- each, towards principal. Apart from the repayment of principal amount, the respondents were required to pay, inter alia, interest which became due along with the respective instalment towards the principal amount. Respondent No. 1 mortgaged its land, building and machinery in favour of the Corporation. In the mortgage deed it was categorically mentioned that loan instalments were to be disbursed on the basis of securities created by the borrowers and as and when enough securities were created, the loan amount was to be disbursed. According to the Corporation, the said method was adopted so as to safeguard the interest of the Corporation and also to ensure that the money taken as a loan from the Corporation is being utilized for the purpose for which it was sanctioned as per the loan agreement. The Corporation disbursed the first instalment of loan on 25-2-1993 upon creation of the mortgage. The last instalment was disbursed on 26-2-1994. The total loan availed by the respondent No. 1 was Rs. 7.45 lacs. As per the terms and conditions stipulated in the loan agreement, respondent No. 1 was required to deposit a sum of Rs. 1,29,551/- on 1-3-1994. But there was failure to deposit the same. Respondent No. 1, however, requested the Corporation to reschedule the repayment schedule. The request was accepted and reschedulement was done. Thereafter on 1-9-1994 Rs. 1,24,409- fell due. There was again default in making the deposit. Respondent No. 1 again requested to reschedule the instalment. The request was again accepted. Notwithstanding such change in the schedule of payments, respondents did not make any payment. Thereafter on 1-3-1995 an instalment of Rs. 1,31,046/- fell due. As in the past, the respondent defaulted in making the payment of the said instalment. As the respondent No. 1 was a chronic defaulter in making payment of the instalments action under Section 29 of the State Financial Corporations Act, 1951 (in short 'the Act') was taken, after recalling the loan under Section 30 of the Act. Possession of the unit of the respondent was taken by the Corporation. Respondents instituted Civil Suit No. 86 of 1995 in the Court of the Civil Judge (Senior Division), Ambala seeking a decree for permanent injunction restraining the Corporation and its functionaries from auctioning the unit which was seized. The said suit was decreed by the trial Court. It was, inter alia, observed that since the defendants (meaning the Corporation and its functionaries) did not give breathing time to the unit and its possession was taken within the period of one year from the date of last instalment, the action cannot be sustained. Reliance was placed on the decision of this Court in Mahesh Chandra vs. Regional Manager, U.P. Financial Corporation and Ors. (1993) 2 SCC 279. The matter was carried in appeal. The Addl. District Judge, Ambala in Civil Appeal No. 37 of 1998 upheld the view of the trial Court. Reliance was also placed by the first Appellate Court on the decision in Mahesh Chandra's case (supra). The matter was again carried in Second appeal before the Punjab Haryana High Court. In the said appeal, by the impugned judgment, the challenge was negatived. It was held that there was no merit in the appeal in view of what has been stated by this Court in Mahesh Chandra's case (supra).
(3.) In support of the appeal, learned counsel for the Corporation submitted that the Courts below erred in placing reliance on the decision in Mahesh Chandra's case (supra) without noticing the distinguishing factual backgrounds. It was submitted that the Courts below did not apply the decision of this Court in U.P. Financial Corporation vs. Gem Cap (India) Pvt. Ltd. Ors. (1993) 2 SCC 299 which was squarely applicable. The principles to be applied in a case where action under Section 29 of the Act is sought to be taken by the Corporation have been elaborately dealt with in the said case. It is also submitted that the decision in Mahesh Chandra's case (supra) requires reconsideration in view of what has been stated in latter decisions, more particularly, in Gem Cap's case (supra). It is submitted that on the facts as noted by the Courts below, ample opportunity was granted to the respondents to make payment. Requests for rescheduling the instalments were accepted. Notwithstanding such adjustments, respondents did not bother to make payment, and till date, not even a minor fraction of the principal amount has been paid.;