GAJENDRA Vs. O.S.F.C

JUDGEMENT

(1.) This Appeal is against the order dated 8.12.1995 passed by the learned District Judge, Ganjam-Gajapati, Berhampur in M.J.C. No.29 of 1987 allowing the application under Section 31 of the State Financial Corporations Act, 1951 (for short, the Act).

(2.) R-1, Orissa State Financial Corporation (for short, the Corporation), is the applicant before the learned District Judge. Case of the Corporation is that on the application of the present appellant (O.P.No.1 before the learned District Judge), the Corporation sanctioned a loan of Rs.1,92,000/- on 16.7.1980. The appellant as the borrower executed a deed of hypothecation in respect of the vehicle for the purchase of which the loan was sanctioned. Deceased-Respondent No.2, who is O.P. No.2 before the learned District Judge, stood as the guarantor for the appellant-borrower. When the borrower failed to repay the loan in terms of the loan agreement, the Corporation took steps under Section 29 of the Act and seized the vehicle and then sold it on 5.11.1983 for a price of Rs.1,70,000/-. Even then a sum of Rs.76,186.72 remained unrealized. So, the Corporation filed the application under Section 31 of the Act. The application was once dismissed on 8.1.1989 but on appeal preferred by the Corporation (Misc. Appeal No.79/90) this Court vide order dated 16.7.1993 set aside the order of dismissal and directed the learned District Judge for redisposal of the application in accordance with law. Learned District Judge heard the parties, considered the materials on record and passed the impugned order allowing the application and holding both the borrower and the surety liable to pay the unrealized amount to the Corporation with interest payable on contractual rate.

(3.) During pendency of this appeal the surety (R-2) passed away. His L.Rs. were not substituted and thereby the appeal is allowed to abate as against R-2.