M/S. Everest Wools Pvt. Ltd. And Others vs U.P. Financial Corporation And Others

3. M/s. Everest Wools Pvt. Ltd. of which Pradeep Kumar Agrawal is a Managing Director took loan from the U.P. State Financial Corporation (Corporation). The company applied for re-scheduling of the loan and the same was granted. Appellant company intended to expand their unit. It applied for grant of loan to the respondent No.3, the Pradeshiya Industrial and Investment of U.P. Ltd. (PICUP). Rs. 47 lacs was sanctioned by it. A sum of Rs. 41.60 lakhs was disbursed to it by March, 1992. Some other amount was also disbursed by way of State Capital Investment Subsidy by the Government.

4. Inter alia on the premise that the appellant-company had purchased some plants and machinery worth Rs.6.75 lacs from one of their financed units namely M/s. Uttrakhand Woolen Yarn Udyog Pvt. Ltd. and obtained financial assistance from PICUP, a notice was issued by U.P. State Financial Corporation to the appellant asking for its response thereto failing which it was threatened that action under Section 29 of the 1951 Act would be taken. An explanation, pursuant thereto, was submitted. However, entire loan was recalled inter alia on the premise that the company had committed defaults in paying the instalments. Some letters were exchanged between the parties. However, it appears that PICUP authorized U.P. State Financial Corporation to act as its agent as both of them are premium financial institutions of the State of U.P. A representation was again made by the appellants before the Financial Corporation for adjusting the over-due amount which was not acceded to. In exercise of its powers under Section 29 of the 1951 Act possession of the assets of the appellant company was taken over by the U.P. State Financial Corporation. A First Information Report was also lodged in respect of the purported purchase of plant and machinery by the appellant company from M/s. Uttrakhand Woolen Yarn Udyog Pvt. Ltd. On enquiry, the allegations against the appellant company were not found to be correct; whereafter a request was made by the appellant company to the Financial Corporation as also PICUP for handing over the possession of the unit to it as also for waiver of interest etc. PICUP, however, invoked the guarantees executed by the Directors of the appellant company. A recovery citation was also issued.

5. However, in the meantime some machinery parts were found to be missing, although security guards had been posted in the said factory. Valuation thereof was made and a sum of Rs.45,000/- was credited to the account of the appellant-company. Again some theft took place.

9. During the pendency of the appeals before this Court, an advertisement for sale of the unit was issued by the U.P. State Financial Corporation. An order of stay was passed on 15th November, 2002 by this Court restraining the respondent for finalizing the sale. By an order dated 31st March, 2003, on an oral prayer made on behalf of the appellants, this Court directed the respondents to permit the to have inspection of the plant and machinery and take photographs thereof, pursuant whereto an inspection was made and it was found as of fact that not only some plants and machinery were missing but the plant and machinery were also not being maintained.

14. In view of the order proposed to be passed by us, we do not intend to deal with all the rival contentions of the parties.

19. We, therefore, keeping in view the aforementioned factual matrix, are of the opinion that interest of justice would be met if the impugned judgment is set aside and the matters are remitted to the High Court for its consideration afresh. As technicalities may come in the way of the High Court for grant of proper reliefs in favour of the appellants, in the event they are found entitled thereto, we grant liberty to them to amend writ petitions suitably. Parties may bring on records subsequent events also by filing additional affidavits.

20. In the peculiar facts and circumstances of the case, the High Court is requested to consider all aspects of the matter and pass appropriate order(s) as it may seem fit and proper.

22. The appeals are allowed on the aforesaid terms. However, keeping in view the facts and circumstances of the case, there shall be no order as to costs.