TAMILNADU INDUSTRIAL INVESTMENT Vs. KALATHI AND CO

JUDGEMENT

(1.) This Original Petition has been filed under Sections 31(a), 31(aa) and 32 of the State Financial Corporation's Act, 1951 praying to determine the liability and direct the respondents 1 to 3 to pay jointly and severally a sum of Rs. 49,46,166/- to the petitioner corporation with interest at the rate of 18.50% p.a., from the date of the petition till the date of realization in full and order the sale of "A" Schedule property towards the realization of the above sum. In the Original Petition it is stated that the petitioner is a public financial institution incorporated under the Companies Act to grant loans and advances to industries in the State of Tamil Nadu and Pondicherry on the security of hypothecation and mortgages. The petitioner obtains funds from Apex Financial Institutions of India and lend the same to entrepreneurs at concessional rate of interest. The first respondent, to set up a Weaving Mill for manufacture of cotton fabrics approached the petitioner corporation for term loan. Petitioner corporation sanctioned a term loan for Rs. 2.50 lakhs towards purchase and erection of machinery on 13.7.1994. As per the terms and conditions, the term loan is to be repaid in 20 quarterly installments with interest at the rate of 17.50% per annum. Thereafter by letter dated 19.10.1994 the term loan has been enhanced to Rs. 3.00 lakhs from Rs. 2.50 lakhs.

(2.) The respondents hypothecated the machinery by the Deed of Hypothecation on 27.4.1995 for a sum of Rs. 3,00,000/- and the second respondent created equitable mortgage in respect of "A" schedule property for the loan amount and deposited title deeds as per "B" schedule with the petitioner corporation. The fact of deposit of title deeds was confirmed by the first respondent on 23.4.1995. Respondents made initial repayment by installments. But in respect of subsequent installments respondents defaulted. During December, 2000, petitioner advised the first respondent to remit Rs. 2,99,877/- alone to settle the loan under concessions. But the first respondent did not remit the same. The first respondent removed the machinery beyond the reach of the corporation. The first respondent has not remitted any sum as principal and Rs. 29,553/- as interest.

(3.) Therefore, the respondents are liable to pay the balance term loan in a sum of Rs. 2,99,877/- towards principal; the sum of Rs. 45,18,134/- towards interest and the sum of Rs. 1,27,988/- towards subsidy bridge loan interest and the sum of Rs. 167/- towards other dues totalling to a sum of Rs. 49,46,166/- as on 24.10.2010. The petitioner is entitled to recover the above sum from the respondents 2 and 3. The petitioner sent a notice to the respondents on 24.8.2010 calling upon them to repay the outstanding loan. Since the respondents did not repay the above amount, the Original Petition is filed.