- (1.) This Letters Patent Appeal is directed against the judgment and order dated 10/07/1990, passed in F.A.O. No. 23 of 1985 by the learned single Judge. The appellants are the original respondents in an application under Section 31 of the State Financial Corporation Act, 1951 (hereinafter referred to as "the Act"). The learned Additional District Judge, Ludhiana, who heard the said application, by his judgment and order dated 13th December, 1984, held that the appellants are liable to pay Rupees 6,95,559.20 with future interest at the rate of 15% per annum from Ist August, 1980, till realisation. The appellants being aggrieved, filed the abovereferred appeal. The learned single Judge by his impugned judgment and order, dismissed the appeal. Against these two concurrent judgments, the appellants have filed this Letters Patent Appeal.
(2.) It may be stated that the learned single Judge heard batch of appeals involving identical issues and disposed them of by a common judgment. The learned single Judge in his judgment set out the facts from F. A. O. No. 23 of 1985 and we propose to follow the same.
(3.) The learned single Judge has very succinctly narrated the necessary facts and it would not be necessary to summarise all the pleadings in this judgment. We may summarise only few facts, which are necessary for disposal of this Letters Patent Appeal : First appellant-M/s. Amar Cold Storage and Ice Factory is a partnership firm of which appellants Nos. 2 and 3 are partners. They wanted to start the business of cold storage and ice factory at Jagraon (district Ludhiana). Since they needed financial help, they approached the Punjab Financial Corporation, the respondent (hereinafter referred to as "the Corporation") for grant of loan of Rs. eight lacs. Their application was processed and the Corporation sanctioned a loan of Rs. Seven lacs. Disbursement of the loan of Rs. Seven lacs was agreed to be made on certain terms and conditions and upon appellants' executed a mortgage-deed, signed by appellants Nos. 2 and 3 in favour of the Corporation. The said mortgage-deed is at Exhibit P-6. On the day of execution and registration of the mortgage-deed, the Corporation paid a sum of Rupees 81,000/-(cheque) to the appellants. The balance amount of Rs. 6,19,000.00 was agreed to be paid to the appellants within six months on certain terms and conditions, incorporated in the mortgage-deed. The relevant terms read thus :- (ii) Rs. 6,19,000.00 (Rs. Six lacs and nineteen thousand only) within six months of the first instalment, in the event of the mortgagors complying with all the obligations hereunder, subject to the conditions that the value of the fixed assets, i.e. land, building and machinery mortgaged to the Corporation, is not less than 4/3 times but on. racks two times the amount to the loan including the second instalment; provided that the industrial concern raises its capital to Rs. 1,83,000.00) (over and above the figure of Rs. 2,85,000.00) which are linked to the disbursement of the loan as under:- Capital Amount to be disbursed (over and above the figure of Rs. 2,85,000.00) Rs. 21,300/- Rs. 81,000/ Rs.1,61,700/-(more) Rs.6,19,000/-(more) Rs. 1,83,000/- Rs. 7,00,000/ The repayment schedule has been set out. There are certain terms and conditions, which are also incorporated and reference thereof will be made at appropriate places. It may also be stated that under the very same mortgage deed, it was agreed that the appellants will pay the interest at the rate of 61/2% above the bank rate, subject to a minimum of 151/2% p.a. It was agreed further that 3% rebate was to be allowed to the Industrial Concern in case of timely payments. As stated earlier, the Corporation paid ininitially a cheque of Rs. 81,000.00 to the appellants on 5/08/1975. Some difficuity arose because of calculations in working out the capital assets or value of the fixed assets and to sort out the said difficulty, it appears that the second appellant was called to the office of the Corporation and upon discussion, it was found that the total amount of capital assets (value of the fixed assets) was not correctly reproduced in the mortgagedeed and as a result thereof, there was difficulty in releasing instalments of loan to the appellants. In order to enable the appellants to get the loan amount in terms of the mortgage deed, the appellants wrote a letter dated 6/10/1975 (Exhibit PW 2D) to the Managing Director, agreement to raise the amount of capital assets (value of the fixed assets) by the firm. In terms of this letter dated 6/10/1975, the Board of Directors of the Corporation on 27/10/1975, passed a resolution (Exhibit PW 2B) raising value of the fixed assets to be tune of Rs. 5,83,000.00. Consistent with this agreement, Torlochan Singh and Parsin Kaur, appellants Nos. 2 and 3, executed a document, purporting to be an agreement (Exhibit PW 2-A) on 3/12/1975, on a stamp paper which was purchased on 6/10/1975. This agreement assumes some importance in the present proceedings and, therefore, we may reproduce the relevant portion, which reads thus:- "Whereas the Borrowers have executed a mortgage deed dated the 5th of August, 1975, registered with the Sub-Registrar, Jagraon, to secure a loan of Rs. 7,00,000.00 for the construction of building and racks and purchase of machinery and generating set.""Whereas it was agreed in clause 1 (ii) of the said mortgage deed that the industrial concern would raise the capital to Rs. 1,83,000.00(over and above the figure of Rs. 2,85,000.00) which would be linked to the disbursement of loans as under:- Capital Amount to be disbursed (over and above the figure of Rs. 2,85,000/-) Rs. 81,000/- Rs. 21,300/- Rs. 6,19,000/- (more) (more) 1,83,000/- Rs. 7,00,000/-" "and whereas it was also provided under clause 5 (xiv) that in particular capital shall not be allowed to fall below Rs.4,68,000/(Rs. four lacs and sixty eight thousand only) during the currency of the loan from the Corporation. Whereas the industrial concern is to set up a cold storage with a capacity to store 35,000 bags of potatoes and the total cost of the project estimated at Rupees 13,27,000/- is to be met as follows:- Loan from P. F. C Additional Capital 20% subsidy for generating set. Rs. 7,00,000/- Rs. 5,83,000/- Rs. 44,000/- Total Rs. 13,27,000/- And consequently the industrial concern is under obligation for the completion of the project to raise additional capital to the extent of Rs. 5,83,000.00" "Now this agreement witnessed as follows : The borrowers hereby agree to raise additional capital to the extent of Rs. 5,83,000/(over and above the original figure of Rs. 2,85,000.00 and consequently the disbursement of loan may be linked with the raising of capital as under:- Capital Amount to be disbursed Rs.3,06,000/- Rs.2,46,000/- Rs.5,62,000/- Rs.4,54,000/- (more) (more) Rs.8,68,000/- Rs.7,00,000/-" "The borrowers further agree that they shall not allow their capital to fall below Rs. 8,68,000.00 (Rs. Eight lacs and sixty eight thousand only) during the currency of the loan from the Corporation." "The other terms and conditions governing the loan of Rs. 7,00,000.00 (Rs. seven lacs only) as contained in the said mortgage deed dated the 5/08/1975, executed by the Borrowers in favour of the Corporation shall remain unchanged.";