- (1.) The petitioner in this case has challenged the vires of Section 29 of the State Financial Corporation Act, 1951 (hereinafter referred to as the Act) and consequently for quashing the notice issued under Section 29 of the Act dated 19th October, 1989 (Annexure P-10) besides being arbitrary and erroneous.
(2.) The facts giving rise to this writ petition are as follows. The petitioner is a registered partnership firm and one of its partners namely K.K. Bhandari who has filed the writ petition floated the present partnership concern known as M/s Hans Tools Co. at Mohali, on 23rd February, 1979, the petitioner was allotted a two acre plot at Mohali by the Estate Officer, Urban States, Punjab (respondent No. 2) for a consideration of Rs. 1,59,720/- which was payable in instalments. The petitioner being in need of financial assistance approached the Punjab Financial Corporation (respondent No. 1) constituted under the Act for a term loan of Rs. 13 lacs and for special capital assistance to the tune of Rs. 72,000/-. The Corporation (respondent No. 1) agreed to the grant of a loan of Rs. 12,30,000/- and Rs. 72,000/- as special capital assistance subject to mortgage of immovable property. A regular mortgage deed in respect of Plot No. A-13, Phase VI, Mohali, which was allotted to Sh. K.K. Bhandari, a partner of the petitioner firm, as afore-mentioned, was executed on 31st March, 1980, between the petitioner and respondent Corporation, which is Annexure P-1. Out of the sum of Rs. 12,30,000/- being the loan amount, actual loan disbursed to the petitioner was 10,56,000/- while the special capital assistance paid to it by respondent No. 3, the Central Bank of India, Sector 17-B, Chandigarh, was Rs. 72,000/-.
(3.) The sum of loan and the special capital assistance as aforementioned was to be repaid by the petitioner in 17 half yearly instalments, the first instalment beginning on 15th September, 1981, and the last one to be paid on 15th September, 1989. However, the petitioner could not adhere to the schedule of repayment of various instalments and applied for rescheduling of the instalments to the Corporation and sought the assistance of respondent No. 3, the bank, for raising further loans in order to nurse its unit. Respondent No. 3 agreed to give the assistance subject to No Objection Certificate from the Corporation regarding creation of second charge. The Corporation gave a no objection certificate to the petitioner regarding creation of a second charge in favour of respondent No. 3, as per terms and conditions mentioned therein.;