- (1.) Leave granted.
(2.) The appellant no.1 company was carrying on business of manufacturing galvanised pipes. In November, 1992 the appellant-company approached the respondent for financial assistance amounting to Rs.1,42,000/- to meet a part of the cost for setting up a factory in village Madap, Taluq Kolhapur in the District of Raigarh for the manufacture of galvanised pipes. The said amount was duly sanctioned and the said sum of Rs.1,42,000/- was advanced by the respondent to the appellant company. An agreement was entered into for a term loan and the appellant-company also created a security for repayment of the amount by hypothecating its plant and machinery and creating an equitable mortgage of its factory premises situated in the above mentioned village. A loan agreement was executed on 30.3.1993 for repayment of the loan in various instalments. On the same day, the second appellant executed a personal guarantee for repayment of the loan amount in case of default by the appellant-company.
(3.) The appellant-company committed several defaults in repayment of the loan amount compelling the respondent to issue a notice on 16.10.98 calling upon the appellant-company to pay the overdue amount within a stipulated period. Despite such notice, the appellant-company failed to make payment and accordingly, by a further notice dated 10.1.1999 the respondent called upon the appellant-company to repay the entire amount due and payable to the respondent by 3.2.1999 failing which the possession of the assets of the appellant-company would be taken on 5.2.1999.;