- (1.) Heard Shri S.D. Singh, Senior Counsel assisted by Shri Krishna Dev Vyas for the petitioners. Shri Gautam Baghel appears for UP Financial Corporation-respondent nos. 1 and 2.
(2.) M/s Jwala Spinning Mill (P) Ltd. was incorporated as a company under the Companies Act, 1956 on 19.11.1997. The petitioners were the directors of the company amongst the first five directors. The company applied for and was sanctioned a term loan of Rs. 85 lacs by the UP Financial Corporation (UPFC) to set up a spinning mill, for which it mortgaged land & building and hypothecation of plant & machinery as security besides personal guarantees of all the directors of the company including the petitioners. It is stated that the company raised Rs. 95 lacs through share capital, and that Rs.18.70 lacs were to be raised as a secured loan. The first instalment of the sanctioned loan was disbursed of UPFC on 16.6.1999. The UPFC disbursed Rs.55,57,300/- out of which Rs.4,42,302.26 was adjusted towards interest due upto 25.3.2000 when the loan was disbursed, and Rs.49,000/- towards service charges.
(3.) The Board of Directors removed Shri Ghanshyam Das, one of the directors from the board on 20.4.2000. He made complains against the petitioners with regard to irregularities in purchase of plant & machinery, on which the UPFC issued a show cause notice dated 25.5.2000 to the company. The Manager (Law), UPFC held a meeting with the petitioners on 1.6.2000 and decided not to take any action at that stage. On 20.6.2000 the company paid Rs.1.25 lacs towards interest. In March, 2002 the company went into trial production. The UPFC, however, did not disburse the balance amount of loan of Rs. 30 lacs on which the company arranged the necessary finance through share capital and secured loan.;