V.C. METAGUD AND ORS. Vs. KARNATAKA STATE INDUSTRIAL INVESTMENT & DEVELOPMENT CORPORATION LIMITED AND ORS.

JUDGEMENT

(1.) There is non-compliance with the order dated 09.09.2014 directing the appellants to deposit 50% of the amount directed to be paid by the appellants to the Karnataka State Industrial Investment and Development Corporation Limited (for short 'KSIIDCL'). Facts briefly stated are: the appellants stood as guarantee for the loan of Rs. 132.75 lakhs on 31.12.1992 and additional loan of Rs. 22.75 lakhs on 20.08.1996 extended to respondent No. 2 by KSIIDCL. On failure of the 2nd respondent to repay the amount together with interest, the amount became over-due.

(2.) The 2nd respondent, it is said, approached the Board for Industrial Investment and Financial Reconstruction under the Sick Industrial Companies (Special Provisions) Act, 1985, whence by order dated 02.04.2003, the Board opined that the 2nd respondent Company should be wound up under the said Act and forwarded its opinion to this Court. Respondent No. 1 Corporation took over the assets of the respondent No. 2, exercising jurisdiction under Section 29 of the State Financial Corporations Act, 1951 (for short 'SFC Act') and in view of the winding up proceeding pending before this Court, the assets could not be disposed of. Since, respondent No. 2 failed to repay the amount together with interest, as and when payable, respondent No. 1 is said to have rescheduled the repayment of loan, whereunder, interest payable was agreed at 21.5% per annum on the principal sum compounded quarterly and over-due interest at the rate of 24% per annum compounded quarterly.

(3.) Respondent No. 1/Corporation invoked personal guarantee of the appellants by issuing notice dated 28.06.2007, despite which payment was not effected, hence, filed Misc. No. 151/2007 before the II Additional District and Sessions Judge, Belgaum, invoking Section 31(1)(aa) of the SFC Act, to enforce the personal guarantee offered by the appellants and for recovery of Rs. 22,41,89,284/-.