PUNJAB FINANCIAL CORPORATION Vs. GARG STEEL

JUDGEMENT

(1.) HEARD learned counsel on both sides. Leave granted.

(2.) BY consent, matter taken up for final hearing and disposed of.

(3.) THIS Court had issued notice to Respondent No. 1 at the admission stage as this Court was, prima facie, of the view that writ petition filed in the High Court was misconceived. Accordingly, we heard the parties at length on the averments made in the original writ petition. On going through the writ petition, the following circumstances are alleged: That a loan application was made for an amount of Rupees thirty lakhs, including Soft loan, which was accepted by P. F. C. ; that Rs. 21. 25 lakhs was agreed to be disbursed in advance against collateral security of commercial plots and residential plot; that the loan was granted at the contractual rate of interest at 15. 5 per cent; that the loan consisted of the Term loan and the Soft loan; and that there was a back-to-back re-finance arrangement between P. F. C. and Small Industries development Bank of India [respondent No. 2 in the original writ petition] in respect of the Soft loan. This last circumstance of back-to-back re-finance arrangement is important, particularly in view of the fact that by this writ petition, the Borrower is, in effect, seeking, indirectly, enforcement of the said back-to-back transaction between P. F. C. and S. I. D. B. I. Further, there was no privity of contract between the Borrower and s. I. D. B. I. Lastly, the point to be noted is that, as on the date of the filing of the original writ petition, respondent No. 1 was a Debtor to P. F. C. . It also appears from the averments in the original writ petition that p. F. C. had also insisted on execution of documents by the said Borrower in respect of further disbursals of the Term loan which the Borrower refused.