Content Provider | Supreme Court of India |
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e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | State Financial Corporation Act 1951 |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Allowed |
Headnote | State Financial Corporation Act, 1951 - Sections 29 & 30-Default in repayment of loan-Seizure of defaulting unit-Duty cast upon the borrower to repay the instalments in time unless prevented by unsurmountable difficulties-Regular payment is the rule and non-payment due to extenuating circumstances is the exception-In the event of default Financial Corporations empowered to take over management/possession or both to deal with it. Legislative intent of the Act-To promote industrialisation by giving financial assistance-Realisation of objective-Financial Corporation has to recover the loan amounts so that fresh loan can be given to other industries so as to promote industrialisation. Administrative Law: Fairness-obligation to Act fairly-Financial Corporation being administrative authority has to ensure rule of law and to prevent failure of justice by following requisite procedure-If borrower adopts pretexts and ploy to avoid payment, he cannot take the plea that Corporation has not acted fairly-Administrative action-Review of-Courts not to review an administrative action as an appellate Court. Precedents-Applicability of-Judgments of the Courts are not to be construed as statutes-Observations of the Courts must be read in the context in which they appear-Significance of factual situation for applicability of a particular ratio-Discussed.Respondent No. 1 was granted loan by the appellant-Corporation. Repayment of loan with interest was to be made in instalments. Respondent No. 1 mortgaged its land, building and machinery in favour of the Corporation. It was mentioned categorically in the mortgage deed that instalments were to be disbursed on the basis of securities created by the borrowers and as and when enough securities were created, the loan amount was to be disbursed. Appellant disbursed the loan. Respondent failed to repay the instalments by due date; instead requested for rescheduling the payment schedule. Despite rescheduling, the respondent defaulted again. Respondent again requested for rescheduling the payment schedule but again failed to repay the due instalment by the due date. Since Respondent No. 1 was a chronic defaulter in making repayment of loan instalment, appellant initiated action against Respondent No. 1 under Section 29 of the State Financial Corporation Act, 1951 after recalling the loan under Section 30, and accordingly taken over possession of the unit of the respondent. The respondent filed suit in the Civil Court seeking a decree for permanent injunction restraining the appellant from auctioning the seized unit. Trial Court decreed the suit. Unable to succeed in appellate Court and the High Court, appellant-Corporation preferred appeal to this Court. It was contended for the appellant that Courts below erred in placing reliance on the decision in Mahesh Chandra's Case without noticing the distinguishing factual backgrounds; that they did not follow the decisions of this Court in Financial Corporation v. Gem Cap India (P) Ltd. which was squarely applicable; and that ample opportunity was granted to the respondents to make repayment of loan instalments but they failed to make payment. It was contended for the respondent that the Financial Corporation as trustee was not expected to act like any other individual money-lender. |
Judge | Hon'ble Dr. Justice Arijit Pasayat |
Neutral Citation | 2002 INSC 51 |
Petitioner | Haryana Financial Corporation And Anr. |
Respondent | M/s. Jagdamba Oil Mills And Anr. |
SCR | [2002] 1 S.C.R. 621 |
Judgement Date | 2002-01-28 |
Case Number | 607 |
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