R.S.CHAUHAN, J. - (1.) POLONIUS , in Shakespere's play Hamlet, advised his son, Laertes "neither a borrower nor a lender be". This piece of advice is seldom followed by the people. This case is a classic example of what happens to the borrower and the lender.
(2.) THE petitioner, the borrower, has challenged the notice dated 19-11-96 whereby the Rajasthan Financial Corporation ('the RFC', for short), invoking its power under Section 30 of the State Financial Corporations Act, 1951 ('the Act', for short), has recalled the loan amount of Rs. 12,76,630/-. The petitioner has also challenged the order dated 11-2-1997, whereby the RFC, invoking its power under Section 29 of the Act, has informed the petitioner that it will take over the possession of the assets of the petitioner company on 28-2-1997. The facts of the case are that earlier run as a firm, the petitioner Company, is engaged in manufacturing of iron and steel items. For the purpose of its business, it took three different loans from RFC namely, first loan on 31-1-1980 for an amount of Rs.10 lacs to be repaid with interest @ 14% p.a. plus 5% penal interest; second loan, on 13-2-1981 for an amount of Rs.5 lacs to be repaid with interest @ 15% p.a. plus 5% penal interest; third loan on 30-3-1988 for an amount of Rs.1.68 lacs. The said loan was interest free. Thus, the petitioner firm had taken three loans totaling Rs.16.68 lacs from the RFC. However, in this case the controversy is restricted only to the penal interest chargeable on the first two loans mentioned above.
(3.) DURING the course of business, the firm found it profitable to transfer its assets to a company incorporated under the Companies Act,1956. Thus, with effect from 19-11-1988, the firm was transformed into a company, in the name and style of M/s. R.S. Industries (Rolling Mills) Ltd. The petitioner company duly informed the RFC. The Dy. General Manager, RFC, in turn, informed the petitioner company that necessary correction about the name and style of the company has been made.;