AJAY BHANOT,J. - (1.) Petitioner made a request to the respondent No.2-U.P. Khadi and Village Industries Board, Lucknow for grant of loan facility to set up a unit for manufacture of handmade hard paper. The respondent-Board acceded to the aforesaid request of the petitioner and sanctioned the loan facility for the aforesaid purpose. A contract was made between the petitioner and the respondent-Board on 31.12.2005 wherein the respondent-Board agreed to disburse a loan to the petitioner to the extent of Rs.13,50,000/-. The terms and conditions agreed to between the parties and duly embodied in the loan agreement, which bear relevance to the controversy, are reproduced hereunder: "2. The Hypothecated property is hypothecated as security by way of first charge [unless property is already hypothecated with a State Government or Khadi and Village Industries Commission in which case the lender will have a second charge on the hypothecated property and if one of them has a second charge the lender will have the next charge] for the due repayment by the Borrower/s to the lender of the said sum of Rs.13.50 Lacks or the balance due to the lender at any time and the interest thereon all costs, charges and expenses incurred by the lender for the preservation, protection, defence and perfection of this security or for attempted or actual realization thereof and also for due repayment of all present and future indebtedness and liabilities of the Borrower/s to the Lender of any kind and in any manner whether solely or jointly, primary of collateral accrued or accruing with all relative interest, charges, costs and expenses. The expression "balance due to the Lender". In this and subsequent clauses of this agreement shall be taken to include the principal money from time to time due by the Borrower/s to the lender and also all interest thereon calculated at the rate specified in the schedule II hereto and the amount of all charges and expenses which the lender may have paid or incurred in any way in connection with the hypothecated property or the sale or disposal thereof. 3. The Lender may give to the Borrower/s the Loan by such installments and at such times as the lender may deem fit and the lender may at anytime without assigning any reason whatsoever discontinue to give any further Loan of the Borrower/s although the total of loans given under this agreement does not reach said limit of Rs.13.50 Lacks. 4. The said principal sum of Rs.13.50 Lakhs or so much thereof as may have actually been lent to the Borrower/s under these presents shall be repaid by the Borrower/s to the lender at office of the lender in the installments mentioned in schedule II, hereto together with interest on the outstanding amount at the rate mentioned in the said schedule II. 5. If there shall be any breach on the part of the Borrower/s of any of the terms of these presents or any one instalment of principal or interest is in arrears after the due date or if there is a reasonable apprehension (of which the lender shall be the sole judge) that the Borrower/s is/are unable to pay its/their debts or that liquidation or winding up proceedings may be commenced against the Borrower/s, the Lender may notwithstanding anything to the contrary contained in this Deed order the Borrower/s to repay in full-forthwith the outstanding amount of the loan and interest and all costs and expenses. SCHEDULE-II Rate of interest and repayment installments (To be filled in as per details given in sanction order) JUDGEMENT_675_LAWS(ALL)1_2018_1.html If it is utilized for the purpose/s noted below within one year 6 months as the case may be from the date of receipt thereof the amount shall immediately be refunded with interest as due. Final interest at the rate of 5% will be paid in addition to the interest due in case the funds are misutilized/not utilized for the purpose or for the installments paid in time."
(2.) Pursuant to the execution of the loan agreement, the first instalment of Rs.9,60,000/- was released in favour of the petitioner. It is asserted in the writ petition that a sum of Rs.3,90,000/- was released by the respondent-Board. This balance amount of Rs.3,90,000/- was to be released towards working capital. The averments in the writ petition further state that due to non-availability of the working capital, the production could commence. The petitioner defaulted in the payment of loan installments. The authorities adopted distraint proceedings against the petitioner for recovering the amounts due under the loan agreement. A recovery certificate of Rs.11,81,768/- along with interest was issued to the petitioner.
(3.) The petitioner being aggrieved by the initiation of recovery proceedings brought civil action against the respondent Board. The petitioner instituted a civil suit before the learned Civil Judge (Senior Division), Firozabad, which was registered as O.S. No. 134 of 2005, Rao Shiv Nath Singh Memorial v. U.P. Khadi and Village Industries Board . The reliefs sought in the aforesaid suit as produced in paragraph 16 of the writ petition are as under: "A. That by means of a prohibitory injunction order the defendants, their officers and officials be restrained from realizaing and recovering from plaintiffs Rs. 11,81,768/- and any kind of interest therein or any other kind of amount sum either as arrears of land revenue or by any other kind of means of coercive means or in any other manner whatsoever through whomsoever till the payment and release to plaintiffs the remaining working capital Rs.1,68,323/-. B. That by means of a mandatory injunction order the defendants be directed to pay and release to plaintiffs the margin money Rs. 3,37,500/- within such time/period as is deemed fit and proper by the Hon'ble Court. C. That by means of a declaratory decree it be declared that defendants are entitled to recover any kind of interest from the plaintiffs till the release and payment of remaining working capital Rs. 1,68,232/- to plaintiffs. D. That costs of the suit and such other relief as is deemed fit and proper in the eye of law be also awarded to the plaintiffs against the defendants.";