- (1.) Heard learned Counsel for the Appellant and also the learned Counsel for the Respondent.
(2.) The Appellant has filed this appeal as against the order passed by the Civil Judge, Muzaffarnagar, allowing injunction application of the Respondent to sell his unit in pursuance of the recovery sought by the Appellant in a proceeding under Section 29 of the U.P. Financial Corporation Act. The case of the Appellant is that the loan of Rs. 4,98,000/- was sanctioned to the plaintiff-Respondent out of which first disbursement was made on 30.10.85 amounting to Rs. 4,96,400/-. Respondent only paid a total amount of Rs. 45,020.38 till December, 1987 and thereafter it did not pay any amount or even a single paise to the Corporation and even though the said unit of the Respondent was continuously running. It is on account of This the Corporation, the Appellant issued Notice under Section 29 on 6.10.89 for recovery of a sum of Rs. 7,99,847.30 which was due as on 30.9.89. Further case of the Appellant is that the Respondent even though was running its unit but in order to create obstacle in the said recovery the Respondent wrote a letter to the General Manager for declaring the said unit to be a sick unit. This letter was sent to Appellant which was Respondent asking the Respondent to first clear its dues before taking any recourse for rehabilitation of the said unit. It seems that thereafter the Respondent started communicating to the DIstrict Industries Centre for declaring the said unit as a sick unit. This communication was initiated in view of the G.O. dated 17.10.88 issued by the Commissioner and the Director of Industries, U.P. Further allegation is that in fact, the possession of the said unit was also taken over by the Appellant but the present suit was filed seeking permanent injunction not to interfere with the possession and further as aforesaid under which the earlier ex parte injunction order was passed restraining the Appellant from taking possession. Subsequently after objection was filed, it was disposed of by means of the impugned order granting injunction in favour of the Respondent's Unit. It is not necessary for us to go into details of the documents which have been referred during the course of the argument before us. The main argument raised in defence by the Respondent is that inspite of various communications annexed as annexures to the counter affidavit by the Respondent, which according to the Respondent, are on record show that the Respondent's unit being a sick unit, the rehabilitation grant is under process and in view of This it would not be appropriate for the Appellant to take recourse of the recovery for the said dues by way of taking recourse under Section 29 of the said Act. On the other hand, the Appellant has laid stress that by reading over the documents, there is no such document showing the declaration of the said unit to be the sick unit even though the communication is going on inter se between the District industries centre and also the Respondents and some of which have been communicated to the Appellant also. The contention is that even though consideration of rehabilitation grant could only be made after a declaration is made by the appropriate authority/body which in This case has yet not been done and no such document has been filed in the suit, hence the question of withstalling one recovery on account of any other letter even if on record, the consideration of rehabilitation is not binding on the Appellant. thus the grant of injunction is illegal and liable to be set aside.
(3.) Having considered the arguments raised both, on behalf of the Appellants as well as the Respondent we make observation that in the matter of granting financial assistance to any unit the person taking financial assistance has to first follow certain financial discipline in the matter in order to make possible viability on one hand and when the loan is advanced, it is obligatory on every unit to pay in accordance with the terms and conditions the instalments due so that such unit first get benefit out of the said finance and the financial institution may also continue its functions effectively. On the other hand, if it could be found that for some reason the default has been committed not on account of negligence of a person taking such financial assIstance but due to circumstances some time beyond the control or situation arising in the social order giving set back to the said unit either to its productivity or effective functions for running the unit, the strict contractual obligation of recovery through selling the said unit avoided and what is the normal viability keeping running of the unit to the benefit of the society at large it to be considered. In case it is possible that the said Unit is able to pay back the defaulted sum if some financial assIstance is advanced to it then such assIstance is provided so that the said unit may recover. Various policies have been laid down by means of various orders issued by the state Government and other authorities involved in it. Under the aforesaid policies if the Government if feels that any unit is to be declared sick, then the said policies are to be complied by the said unit. In a package deal within the said recovery order the further procedure of package deal is implemented for the said purpose. Under it acceptable time is given to the unit in question to pay back the loan and also to run the unit. Within this consideration the said unit has to function within time bound even though not prescribed by law because every financial institution advances money has to exist itself and if its very resource is drawn out by advancement of loan and the same is never paid back for one reason or the other, the very foundation of giving help to the unit also ceases. Thus in order to keep it in motion it has further to be seen whether a unit is sick.;