1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION FIRST APPEAL NO.759 OF 1997 M/s.Pogul Spinning Mills Pvt.Ltd. & Anr. ....Appellants V/s. The Maharashtra State Financial Corpn.& Ors.....Respondents Mr.T.D. Deshmukh h/f Mr.A.A. Kumbhakoni for the Appellant. CORAM : B.H. MARLAPALLE & S.J. VAZIFDAR, JJ. DATE : 5TH MAY, 2009. P.C. : 1. This Appeal filed under section 96 of the Civil Procedure Code arises from the judgment and order dated 4.3.1993 in Civil Miscellaneous Application No.42 of 1989 filed under sections 31 and 32 of the State Financial Corporation Act, 1951. The Appellants were original Defendant Nos.1 and 2. The learned District Judge, Solapur by the impugned order allowed the recovery of Rs.41,79,903=20 ps. with future interest at the rate of 12% p.a. on Rs.30,00,000/- from the date of application till 20.1.1993 and thereafter at the rate of 12% p.a. on Rs.26,41.800/- till realization. The Plaintiff was also held entitled to sell the title, interest and the leasehold property of Respondent Nos.1 to 3 plot bearing Hissa No.1A+1C+2 x 1 / 2 and 1A+1C+2 x 2 together with the plant and machinery, electric and other installations, 2 implements, equipments, tools, utensils etc. 2. The Appellants before the trial Court i.e. Respondent No.1 is a Corporation established by the Maharashtra Government under the Maharashtra State Financial Act, 1951 and Respondent No.1 was a company incorporated under the Companies Act, 1956 with its registered office at 342, Sakhar Peth, Solapur and with its business activities at survey No.154, Hissa No.1A+1C+2 x 1 / 2 and 1A+1C+2 x 2. Respondent Nos.2 and 3 were authorized directors of Respondent No.1. Respondent No.4 is an undertaking of the State of Maharashtra and established as model agency for accelerating the industrial growth in the State of Maharashtra. By an indenture of mortgage dated 21.11.1980 and lodged for registration under serial No.2840 on the same day with the Sub Registrar of Assurance at Solapur made between Respondent No.1 company through its directors i.e. Respondent Nos.2 and 3 and pursuant to the resolution passed on 20.6.1980, an amount of Rs.30,00,000/- was agreed to be lent and advanced by the Applicant i.e. present Respondent No.1. The amount was to be disbursed in two installments, the first installment of Rs.20,50,000/- and the second installment of Rs.9,50,000/-. The letters of hypothecation dated 20.8.1980 and 20.10.1980 towards the purchase of machinery were submitted and an amount of Rs.20,50,000/- was realized on the basis of the mortgage deed dated 21.11.1980. The balance amount of Rs.9,50,000/- was disbursed to Respondent No.1 company in three installments. Rs.8,00,000/- were released on 8.12.1980, Rs.1,27,000/- were released on 22.10.1981 and the last installment of Rs.23,000/- was released on 21.10.1983, under the deed of 3 receipts at Exhibit-B, repayment was paid between nine years by 17 half yearly installments. 16 installments were of the same amount i.e. Rs.1,76,000/- and the 17th installment was of Rs.1,84,000/-. The first of such installment was to be paid on 20.8.1981 and the subsequent installments were to be paid on 28th day of February and August of each year. As per the agreement between the parties, the interest payable was at 14.5% p.a. and payable by half yearly payments to be added on 15th day of June and December of each year. If the payments were made on time, there is a rebate of 2% p.a. provided and in case of default of payment of installment, there is penal charge at 2% p.a. over and above the agreed rate of interest. In consideration of the disbursement of loan, Respondent Nos.1 to 3 had transferred and signed all the rights and title in the interest of the mortgage premises along with the structures standing thereon and the plant and machinery etc. 3. The Respondents could not pay the agreed installments. The principal amount of Rs.21,05,800/- along with the interest amounting to Rs.8,71,738=20 ps. was the defaulted amount and therefore the Applicant approached the District Court with an application under section 31 read with 32 of the Act. On 23.8.983, further indenture of charge was signed between Respondent No.1 of the first part and Respondent No.4 – SICOM in consideration of the sum of Rs.15,00,000/- and therefore SICOM was impleaded as Respondent No.4. The Applicant had made a total claim of Rs.41,79,903=20 ps. as on 9.2.1989 and to be recovered from Respondent Nos.1 to 3 with future interest at the rate of 15% p.a. with effect from 4 10.2.1989. 4. This application was opposed and the Applicant examined Mr.P.M. Bachute, the then Branch Manager (Exhibit-67), whereas Respondent Nos.1 to 3 filed a pursis at Exhibit-69 stating that they had no oral evidence to lead in support of their defence. However, they had produced the details of the payment made to the Applicant and also to show that during the pendency of the application, Respondent No.1 company was declared as a sick industry under the Sick Industrial Companies Act (SICA) . The trial Court framed the following issues and issue No.1 was answered in the affirmative. However, issue No.2 was answered in the negative. 1) Whether the applicant is entitled to recover the outstanding mortgage of Rs.41,79,903=20 ps. and future interest at the rate of 16.5% p.a. from the date of filing of this petition ? 2) Whether the respondent is entitled for the installment as prayed for and interest at the rate of Rs.6% p.a. from the date of the afran cement ? 3) What order ? The trial Court also waive of penal charges. The claim of interest at the rate of 16.5% was not entertained by the trial Court and instead had fixed the interest at 12% p.a. 5. The loan translation was not disputed. The Respondents had paid an amount of Rs.25,79,350/- from time to time but admittedly they were defaulters. The legal notice was issued at Exhibit-52 and finally on 10.2.1989, Respondent No.1 filed an application before the trial Court. We have gone through the reasons stated by the trial Court and the arguments advanced before us by the learned counsel for the Appellants. We do not see any error in the impugned order of the trial Court. It was noticed that the amount due as 5 on 20.1.1993 was Rs.26,41,800/- and with interest at 16.5% p.a. The said amount reached to Rs.35,77,107/-. This interest at 16.5% p.a. was slashed to 12% p.a. The issue of maintainability of the application was also rejected. We therefore, find that there is absolutely no case to cause interference in the impugned judgment and hence this Appeal succeeds. We must also note that the recovery was not stayed by this Court though the Appeal was admitted and there is no reason to believe that the recovery has not yet been made. 6. In the result, the Appeal stands dismissed with no order as to costs. (S.J.VAZIFDAR, J.) (B.H.MARLAPALLE, J.)