MAHARASHTRA TUBES LIMITED Vs. STATE INDUSTRIAL AND INVESTMENT CORPORATION OF MAHARASHTRA LIMITED

JUDGEMENT

(1.) Special leave granted,

(2.) The short but interesting question which arises for determination in this appeal is whether in a case where an industrial concern makes any default in repayment of any loan or advance or any instalment thereof or otherwise fails to meet its obligations under the terms of any agreement with the Financial Corporation, such as the respondent herein, can the latter take recourse to S. 29 and/or 31 of the State Financial Corporations Act, 1951 (hereinafter called the 1951 Act') notwithstanding the bar of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter called the ' 1985 Act') In order to answer the aforesaid question it is necessary to bear in mind the provisions of the aforesaid two statutes.

(3.) The 1951 Act was enacted to provide for the establishment of State Financial Corporations. Section 3 empowers the State government to establish a State Financial Corporation as a body corporate with an authorised capital of such sum as may be fixed by the State government in this behalf. Section 9 provides that the general superintendence, direction and management of the affairs and business of the Financial Corporation shall vest in a Board of Directors which may exercise all the powers and discharge all the functions which may be exercised and discharged by the Financial Corporation. Under Section 15 one of the Directors may be nominated by the State government to be the Chairman of the Board of Directors. Section 25 enumerates the business which the Financial Corporation may transact. These include among others, guaranteeing, on such terms and conditions as may be agreed upon, loans raised by industrial concerns which are repayable within twenty years and are floated in the public market, loans raised by industrial concerns from scheduled banks or State cooperative banks or other financial institutions and granting loans and advances to an industrial concern repayable within a period not exceeding twenty years from the date onwhich they are granted. Section 29, insofar as relevant for our purpose, then provides as under: