- (1.) This Special Appeal is directed against the judgment of the learned single Judge dated 3.4.1991 whereby the learned single Judge, without going into the merits of the case has ordered the appellant Company to pay to the respondent-Corporation a sum of Rs. 6,66,666/- in three equal instalments. The first instalment was made payable on May 15, 1991, second on June 16, 1991 and the third on July 16, 1991. In case, the petitioner Company committed a single/default, the entire amount was held payable in a lumpsum. About the rest of the amount, it was ordered that the appellant company may pay it in easy instalments as fixed by the Corporation.
(2.) The facts necessary to be noticed for the disposal of this special appeal briefly stated are that the Corporation, vide its notice Annexure-10 dated 20.10.1989 has claimed that a principle sum of Rs. 18,76,459/- is due against the petitioner Company as on 1.10.1989 and a sum of Rs. 1,50,242/- is due to it against the interest and thus, it is a defaulter for non-payment of a sum of Rs. 20,26,701. The petitioner Company's properties are mortgaged with the respondent Corporation and the State Financial Corporation by virtue of the provisions of s. 29 of the State Financial Corporation Act of 1951 (hereinafter referred to as 'the Act of 1951') has the power to transfer those properties to itself and sell them and recover the amount due to it. A notice was, therefore, issued to the petitioner-company to pay this amount, failing which action will be taken against it under s. 29 read with s. 30 of the Act. On receipt of this notice, the Petitioner Company gave a written reply and claimed that it has already paid the entire amount due against it and rather Rs. 9 lacs are payable to it by the respondent Corporation because they have paid that amount in excess of the amount due from them. The claim of the petitioner- Company is that a loan of Rs. 30 lacs was sanctioned to it on February 13, 1979 by the respondent Corporation, to be repayable in 8 years in equal instalments. The instalments were to fall due on the 1st day of the 24th month reckoned from the date of the disbursement of the first instalment. The interest rate was fixed at 5% above the bank rate prevailing from time to time with 1/2% rebate for timely payment. It was, however, stipulated that in no case the minimum rate of interest after allowing the rebate shall fall below 13-1/2% per annum. The interest was made payable in equal instalments payable on January 1, April 1, July 1 and October 1, each year. In case, re-finance is granted by the Industrial Bank of India, Corporation agreed to charge interest on concessional rate i.e. 9-1/2% per annum and in case of default, the Corporation will charge 5% above concessional/normal rate of interest, without any rebate, on the amount in default and for the period of default. The sanction letter issued by the respondent Corporation has been filed as Annexure-1. The formal deed of Terms of loan, as executed by the petitioner-company in favour of the non-petitioner Rajasthan Financial Corporation dated April 18, 1979 has been filed as Annexure-2. It is alleged that only Rs. 29,50,000/- were disbursed by the respondent Corporation to the petitioner-Company from 25.4.1979 to 15.9.1980, the details of which have been given in para 6 of the petition. As per them, the payment of Rs. 50,000/- was illegally stopped. However, due to unforeseen circumstances, the instalments could not be paid in time and, therefore, Industrial Reconstruction Bank of India was approached and they granted financial assistance to the petitioner company and that resulted in re- schedulement of the payment of the amount due. The re- schedulement was sanctioned by a letter of the respondent- Corporation dated September 2, 1983, marked as Annexure-3. The rate of interest to be charged was mentioned as 15% per annum. The petitioner-company made a payment of Rs. 12,44,000/- to the respondent Corporation between 26.11.1981 and 30.3.1987. As the petitioner-Company was facing difficulty in repayment because of recession in the market, shortage of electricity supply, continuous famine in western Rajasthan, it again requested the respondent Corporation for re-schedulement of the payment of instalments by its letter dated March 18,1988 marked as Annexure-4. The respondent Corporation asked the petitioner Company to make a payment of the principle amount disbursed to it, i.e. Rs. 29,50,000/-, by paying Rs. 18,50,000/- within seven days i.e. by March 25, 1988 and Rs. 12,00,000/- by March 28, 1988. It was not known how Rs. 30,50,000/- were claimed as payment of principal against the sanctioned loan' of Rs. 29,50,000/- when Rs. 12,44,000/- have already been paid to them against the principal amount. However, inspite of it, the petitioner company paid Rs. 9,25,000/- on 24.3.1988, Rs. 9,25,000/- on 28.3.1988 and Rs. 11,50,000/- on 30.3.1988. Thus, a sum of Rs. 30,00,000/- was paid between 24.3.1988 to 30.3.1988 against the non-payment of the principal amount of Rs. 17,06,000/-. On account of re-finance made by the Industrial Development Bank of India, interest rate could have been charged only at 9-1/2% per annum and that was to be paid in equal instalments every year. It is claimed that after reschedulement, there has been no default. Thereafter, on March 18,1989, the respondent Corporation asked the petitioner Company to further make a payment of Rs. 10,50,000/- to it and if that was done, they will waive the penal interest for a period from January 1,1985 to March 31, 1989 amounting to more than Rs. 7,00,000/-. The petitioner company made a payment of Rs. 10,50,000/- on March 28, 1989 alongwith their letter Annexure-8, still the penal interest was not waived and they again demanded a sum of Rs. 18,76,459/- as principal and Rs. 1,50,242/- as interest, by including the penal interest amounting to about Rs. 7.70 lacs. It has been claimed by the petitioner company that they have made a payment of Rs. 59,04,084.58 P. to the Corporation as per para 2 of the Memo of appeal against the loan of Rs. 29,50,000/- and thus, they have paid Rs. 9,00,000/- in excess. The Corporation, inspite of its promise as contained in Annexure-4 read with Annexure- 7 to waive penal interest, did not do so and issued a notice under s. 30 of the Act to take away the assets of the company with effect from November 4, 1989 vide their notice dated October 20, 1989. That notice, as stated above, has been marked as Annexure-10. Thereafter, certain more correspondence was exchanged between the parties and ultimately this writ petition came to be filed, in which it has been claimed that the Corporation has to act in a business-like manner because that is the sole object of the scheme, as per the Act of 1951. They cannot act in a wooden manner and throttle the companies. Even the subsidy, which was sanctioned in favour of the petitioner-company for which a cheque amounting to Rs. 1,07,674/- was received by the respondent Corporation has also not been paid to the appellant company and it has been illegally retained by them. The petitioner-company, therefore, prayed for quashing of the notice dated October 20,1989 and to proceed against the Corporation under s. 29 read with s. 30 of the Act of 1951. They further sought the relief directing the respondent Corporation to pay them the amount of subsidy and to charge interest only as per the contract and not to charge penal interest from them. Alongwith the writ petition, all relevant documents from Annexures-1 to Annexures-15 have been filed.
(3.) The respondent Corporation has filed its reply on 28.3.1990 pleading inter-alia that against a loan of Rs. 30,00,000/- only Rs. 29,50,000/- were paid because for the rest of the amount of Rs. 50,000/- the petitioner-company did not fulfil the eligibility criteria for this purpose. The interest was payable in quarterly instalments and, therefore, compound interest was chargeable with quarterly rests. The instalments were not paid in time. Even after re-schedulement, the petitioner-company did not pay instalments in time. The re-schedulement was accepted vide Annexure-4. A look at Annexure-4 would show that it was clearly stipulated in it that the petitioner was to clear the entire amount which has fallen due as per the reschedulement with documented rate of interest, excluding penal interest and after 1.1.1985, Rs. 30,50,000/- were to be paid upto 28.3.1988 and the remaining amount which has become to be paid upto 1.4.1988 was to be paid on 30.4.1988 and the remaining instalments and interest were to be cleared as and when they fall due. But that was not done. It is wrong to contend that the payment of Rs. 12,44,000/- was to be adjusted against the principal. Actually, initially the payment has to be adjusted against interest only. The statements of the accounts have been sent to the petitioner and the interest is not being charged contrary to the terms of stipulation. It is absolutely in accordance with the agreement arrived at between the parties from time to time. The waiver of the penal interest was subject to timely payment, otherwise it was likely to be forfeited. It has been claimed that inspite of repeated and persistent efforts on the part of the answering respondent, grievances are being raised against the respondent. Annexure-7 was never endorsed to the petitioner and the petitioner has not disclosed the source from which he got the copy of Annexure-7. It appears that he has smuggled out this document from the record. It has been admitted that the petitioner did make a payment of Rs. 30,00,000/- and Rs. 10,50,000/- as claimed but no such assurance was given by the Corporation that the penal interest will be waived even when timely payment is not made. It was made clear vide Annexure-6 that if party clears the entire overdues on or before 31.7.1989 and future instalments and interest are paid in time then penal interest from 1.1.1985 to 31.1.1989 shall be considered for waivemenl. While making payment, the petitioner company only conveyed to Branch Office, Jodhpur that some assurance for waivement of penal interest has been made. That fact has been conveyed to the Head Office by the Branch Office of Jodhpur for its internal consumption and copy of Annexure-7 was not endorsed to the petitioner and, therefore, he cannot claim any relief under it. No firm assurance to waive the penal interest was given. the Central subsidy was credited against the outstanding and, therefore, the amount was not paid to the petitioner. The proceedings under s. 30 of the Act are totally justified. The validity of ss. 29, 30 and 31 is not open to question because the Hon'ble Court has repeatedly upheld its validity and that was upheld even by the apex Court in North India Caterer's case. The interest, as per the respondent, is being recovered as per the terms of the contract and, therefore, no grievance can be raised about it. Alongwith the reply, Annexure-R/1 has been filed.;