IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA FAO (Ord.) No.291 of 2002. Reserved on: 12.05.2008. Date of decision: May 22, 2008. H.P.Financial Corporation … Appellant Versus M/s.Jiwan Cements & Ors. … Respondents. Coram The Hon’ble Mr. Justice Kuldip Singh, Judge. Whether approved for reporting?1 No For the Appellant : Mr.Ashwani K. Sharma, Advocate. For Respondent No.5 : Mr.S.D.Gill, Advocate. Kuldip Singh, Judge. This appeal is directed against the order dated 15.5.2002 passed by learned District Judge, Sirmaur in HPFC Petition No.01-HPFC/2 of 2000/1999 whereby it has been held that appellant / petitioner is entitled to get the outstanding loan amount of Rs.1,51,80,559 and funded interest amounting to Rs.35,97,952 recovered along with interest as agreed from respondents No.1 to 3 by the sale of the properties detailed in mortgage / hypothecation deeds after filing an execution petition and also for attachment of the properties of respondents No.2 and 3 to be mentioned in the application to be filed under Order 21 Rule 66 C.P.C. Whether the reporters of the local papers may be allowed to see the Judgment? Yes …2… 2. The facts of the case, in brief, are that Himachal Pradesh Financial Corporation (for short ‘Corporation’) filed a petition under Section 31 of the State Financial Corporations Act, 1951 for realization of a term loan of Rs.1,51,80,559 as on 30.11.1999 including interest up to 30.11.1999 with future interest at the rate of 19.50 % per annum with half yearly rests till whole amount is cleared, funded interest Rs.35,97,952 as on 30.11.1999 including interest up to 30.11.1999 with future interest at the rate of 14.50% per annum on simple basis from 30.11.1999 till whole amount is realized. It has also been prayed that liability of respondents may be enforced under Section 31(1)(aa) by attachment and sale of their properties. The liability of respondents No.4 to 9 sought on the ground that they have inherited the estate of Shadi Lal Sharma, therefore, they are liable to pay the amount in question. It has also been stated that details of the properties would be given by the appellant in the application under Order 21 Rule 66 C.P.C. 3. The further pleaded facts are that respondent No.1 Company executed loan / hypothecation / mortgage deeds dated 7.8.1984, 30.3.1987 and 10.8.1994 in favour of Corporation. The respondent No.2 Smt.Suman J. Sharma, respondent No.3 J.K.Sharma and Shadi Lal Sharma deceased were also the guarantors for the said loan. The respondents No.4 to 9 inherited the property of Shadi Lal Sharma, therefore, they are also liable to pay the loan dues along with interest after the death of Shadi Lal Sharma. 4. The respondents No.1 to 3 contested the petition and admitted the financial assistance received from Corporation but they …3… have submitted that agreement dated 30.3.1987 and 10.8.1994 were not signed and executed by Shadi Lal, therefore, respondents No.4 to 9 are not liable to satisfy the claim of the petitioner. They have disputed the rate of interest also. The respondent No.5 has filed the reply and has submitted that he has not inherited the property of Shadi Lal and, therefore, petition against him is not maintainable. He challenged the authority of B.S.Thakur, Manager (Legal) to file the petition on behalf of the Corporation. The respondents No.6 to 9 were proceeded ex-parte. 5. On the pleadings of the parties, the following issues were framed: i) Whether the respondent No.1 company took a loan of Rs.60,00,000/- through its Directors, respondents No.2 to 4 from the petitioner and executed the loan hypothecation agreements on 7.8.1984, 30.3.1987 and 10.8.1994, as alleged? OPP ii) Whether Shadi Lal, the predecessor-in-interest of respondent No.3 to 9 stood surety for the repayment of the loan amount by respondent No.1 company, if so, to what effect? OPP iii) If issue No.1 is proved, to what rate of interest and the amount, the petitioner is entitled to recover from respondent company? OPP iv) If issue No.1 and 3 are proved, what is the amount outstanding against the respondents No.1 to 4 at the time of filing of petition on 27.12.1999? OPP …4… v) Whether respondent No.1 company has mortgaged the Building and the land in favour of the petitioner on 10.8.1994, as alleged, if so its effect? OPP vi) Whether the petitioner has issued a recall notice under Section 30 of the State Financial Corporation Act on 8.4.1999, if so its effect? OPP vii) To what amount the petitioner is entitled to recover and from whom? OPP viii) Whether this Court has no jurisdiction to try the petition, as alleged? OPR-1 to 4 ix) Whether the petition is bad for mis-joinder of necessary respondent No.5, as alleged, if so, its effect? OPR-5. x) Relief. The learned District Judge ultimately allowed the petition, as noticed above. The Corporation has come in appeal. 6. I have heard Mr.Ashwani Kumar Sharma, learned counsel for the appellant / petitioner and Mr.S.D.Gill, learned counsel for respondent No.5 and gone through the record. Mr.Ashwani Kumar Sharma has submitted that the Corporation may be held entitled to recover the entire amount along with interest, cost etc. from respondents No.1 to 9 and appropriate order for attachment and sale of the properties in terms of Section 31(1)(aa) of the Act may be passed against said respondents as per loan documents. The …5… learned counsel for respondent No.5 has submitted that Shadi Lal Sharma, predecessor-in-interest of respondent No.5, has not signed the documents dated 30.3.1987 and 10.8.1994, therefore, Shadi Lal and after him respondent No.5 cannot be made liable on the basis of documents dated 30.3.1987 and 10.8.1994. He has submitted that on the basis of guarantee deed dated 7.8.1984 liability cannot be fastened on respondent No.5 through Shadi Lal. 7. Mr.Ashwani Kumar Sharma has pointed out that Ext.P-8 loan agreement dated 7.8.1984, agreement of hypothecation Ext.P-9 dated 7.8.1984, Ext.P-10 dated 7.8.1984 deed of guarantee were signed and executed by Shadi Lal Sharma, Suman J. Sharma and J.K.Sharma. He has relied clause 6 of Ext.P-10 and has submitted that as per this clause, the guarantee given by Shadi Lal Sharma, Suman J. Sharma and J.K.Sharma was continuing guarantee for all amounts advanced or to be advanced by the Corporation to the loanees of the agreement Ext.P-8. The precise submission of Mr.Ashwani Sharma, learned counsel for the appellant, is that in view of clause 6 of guarantee deed Ext.P-10 the guarantors in Ext.P-10 undertook to pay all amounts of the loanees which Corporation had given to the loanees from time to time after the execution of Ext.P-10. This submission of Mr.Sharma has no force. The clause 6 of guarantee deed Ext.P-10 is for payment of loan amounts paid under loan agreement Ext.P-8. The guarantee deed Ext.P-10 was continuing for all amounts advanced or to be hereinafter advanced by the Corporation under loan agreement Ext.P-8 and not for any new loan. The perusal of loan agreement Ext.P-14 dated 30.3.1987 would …6… show that corporation had agreed to pay Rs.37.12 lacs. This amount of Rs.37.12 lacs included Rs.7.12 lacs additional term loan and outstanding amount payable to the Corporation from earlier loan dated 7.8.1984 and this amount of Rs.37.12 lacs was considered as ‘the loan amount’ as per clause II of Ext.P-14. ‘The loan amount’ was agreed to be disbursed to the company in installments. ‘The loan amount’ of Rs.37.12 lacs in Ext.P-14 was an independent new loan. The agreement dated 30.3.1987 Ext.P-14, agreement of hypothecation dated 30.3.1987 Ext.P-15, deed of guarantee dated 30.3.1987 Ext.P-17, loan agreement dated 10.8.1994 Ext.P-19, agreement of hypothecation dated 10.8.1994 Ext.P-20 and deed of guarantee dated 10.8.1994 Ext.P-22 are signed and executed by Suman J. Sharma and J.K.Sharma and not by Shadi Lal. In these circumstances, on the basis of Ext.P-14, Ext.P-15, Ext.P-17, Ext.P- 19, Ext.P-20 and Ext.P-22 liability could not be fastened on Shadi Lal during his lifetime and after his death on the basis of these documents liability cannot be fastened on his heirs respondents No.4 to 9. It is different matter that respondents No.2 and 3 who are signatories to documents Ext.P-14, Ext.P-15, Ext.P-17, Ext.P-19, Ext.P-20 and Ext.P-22 and, therefore, they are liable to pay the loan amount on the basis of these documents. The learned District Judge has rightly appreciated the material on record by ordering that outstanding loan amount and funded interest along with interest can be recovered from respondents No.1 to 3 by sale of the properties detailed in mortgage / hypothecation / mortgage deeds. It is clarified that outstanding loan amount, funded interest, along with interest can …7… also be recovered from the properties of respondents No.1 to 3. The appellant has failed to make out any case for interference. Resultantly, the appeal is dismissed. No costs. May 22, 2008(soni) ( Kuldip Singh ) Judge.