G.P.Mathur, J. - (1.) The prayers made in the first writ petition are for issuing a writ of certiorari to quash the agreement dated 3.4.1996 and for issuing a writ of mandamus commanding the Uttar Pradesh Financial Corporation to refund Rs. 20,65,279.89 along with the interest to the petitioner. The prayer made in the second writ petition is that the order dated 20.4.2001 passed by the Regional Manager. Uttar Pradesh Financial Corporation, Meerut be quashed and the respondents be restrained from Initiating any recovery proceedings against the petitioners. The controversy involved in both the writ petitions is interconnected and, therefore, they are being disposed of by a common order.
(2.) The case set up in Writ Petition No. 21789 of 1999 is as follows : The petitioner No. 1 M/s. Greenfield Corporation Ltd., is a public limited company and the petitioner No. 2 Sri Sunil Dublish is the Managing Director of the company. The petitioner No. 1 took loan from the Uttar Pradesh Financial Corporation (hereinafter referred to as the U.P.F.C.). An agreement was executed by petitioner No. 1 on 3.4.1996 whereunder the U.P.F.C. purchased 1.50,000 equity shares of face value of Rs. 10 of petitioner No. 1. It was also agreed by petitioner No. 1 that it shall buy back 75,000 equity shares within six months of the Investment in the issue at a price of Rs. 11.80 per share and the remaining 75,000 equity shares within six to twelve months of the Investment in the issue at a price of Rs. 13.60 per share. The agreement provided that the U.P.F.C. shall also have the right to off-load the equity shares in phased manner in open market. In pursuance of the agreement, the U.P.F.C. made an application on 8.4.1996 for purchase of 1,50,000 equity shares along with a bank draft of Rs. 15 lakhs. The petitioner company approached the U.P.F.C. for grant of working capital term loan of Rs. 35 lakhs and Brand Equity Loan of Rs. 20 lakhs in March. 1997. The request of the petitioner was accepted and the U.P.F.C. agreed to grant the aforesaid loans. After sanctioning the two loans, the U.P.F.C. issued a cheque for Rs. 14,34,720.12 only as an amount of Rs. 20,44,279.89 was deducted towards buy back of shares in accordance with agreement dated 3.4.1996, a sum of Rs. 15.600 towards incidental expenses and a sum of Rs. 3,500 towards L.R. Account were also deducted and in this manner Rs. 20,65,279.89 was deducted from out of the sanctioned loan of Rs. 35 lakhs. The petitioners contend that the agreement dated 3.4.1996 contravenes Section 77 of the Indian Companies Act and consequently, the same was not enforceable and, therefore, the U.P.F.C. is not entitled to deduct any amount from the sanctioned loan of Rs. 35 lakhs and the amount of Rs. 20,65,279.89 deducted by it should be refunded to the petitioner.
(3.) The stand of U.P.F.C. in the counter-affidavit filed by it is that the petitioner No. 1 was initially a private limited company which became a pubic limited company on 12.6.1995 and it came out with a public issue sometimes in February, 1996. The petitioners vide their letter dated 5.2.1996 requested U.P.F.C. to purchase 1.50,000 equity shares of petitioner No. 1 having the face value of Rs. 10 on the terms and conditions which may be mutually agreed upon. The matter was personally discussed by the petitioner No. 2 with the officers of U.P.F.C. and it was agreed that in case of failure of petitioner No. 1 to repurchase the shares within the time specified in the agreement, the repayment of the petitioner towards principal and interest shall be first adjudged towards buy back of equity shares- It was the petitioners who induced U.P.F.C. to purchase the shares of petitioner No. 1 by assuring that the annualised return on the shares would be 36% and by promising that within the specified period, the petitioners would repurchase the shares. It is averred in para 15 of the counter-affidavit that after expiry of the period of six months, the U.P.F.C. asked the petitioners on various occasions to repurchase the shares in accordance with the agreement but they refused to do so. Subsequently, the petitioners approached the U.P.F.C. for grant of working capital loan and Brand Equity Loan and at that time, they requested the U.P.F.C. to disburse loan after adjusting the price of the shares under the buy back arrangement, It was on this understanding and arrangement that the second loan was sanctioned to the petitioner and the amount was disbursed after adjusting the price of the shares.;