ANDHRA PRADESH STATE FINANCE CORPORATION REP BY ITS MANAGING DIRECTOR HYDERABAD Vs. GODAVARI RUBBER INDUSTRIES P LIMITED REP BY ITS DIRECTOR RAJAHMUNDRY

JUDGEMENT

(1.) THE respondent is a private limited company, and it established a small scale industry at Rajahmundry. It appears that it availed loan of about Rs.10 lakhs from the appellants. However, the industry did not function well, and has become sick. THE unit was taken over by the District Collector. THE circumstances under which, such taken over has occurred, are not immediately before this Court. THE consortium of creditors have entrusted the task of rehabilitation of the unit to the appellants. At one stage, the unit was brought to sale and in the auction a sum of Rs.21,50,000/- was fetched. At that stage, the respondent offered to pay Rs.22 lakhs in full and final settlement of the loan account. That was accepted by the appellants. THE amount was paid in installments.

(2.) COMPLAINING that the appellants have not issued 'No Dues Certificate', enabling it to assume possession of the property and other assets, the respondent filed O.S.No.58 of 1997 in the Court of I Additional Junior Civil Judge, Rajahmundry, for a declaration to the effect that the debt due to the appellants was cleared; and for consequential mandatory injunction, requiring the appellants to issue clearance certificate in favour of the respondent.

(3.) SRI V. SRImannarayana, learned counsel for the appellants submits that a specific proposal came from the respondent itself, that interest has to be levied from 01-10-1995 and still, the lower Appellate Court awarded interest only from 08-12-1995 onwards. It is stated that the respondent is estopped from pleading that it is not under obligation to pay interest, once the proposal has emanated through Ex.B-19.