ORDER
A.M. Sapre, J.
1. This petition is filed for claiming following three reliefs in the form of seeking mandamus against the respondent i.e. M.P.F.G. under Article 226 of the Constitution of India:
“7(i) A writ, direction order as in the nature of mandamus or as deemed fit be issued directing the respondent No. 1 to settle the liability of the petitioners as per its rehabilitation and settlement norms after giving credit for the value of the assets taken over by it and the balance amount standing to the credit of the petitioners be utilised to meet the liability of the respondent No. 2 and other creditors of the petitioners.
(ii) That the respondent No. 2 be directed to recover and receive its dues from the respondent No. 1 out of the amount which is payable by the respondent No. 1 to the petitioners on account of the assets of the petitioners taken over by the respondent No. 1.
(iii) That the respondent No. 1 be directed to pay interest to the petitioners on the amount found to be due to the petitioners at the rate at which the respondent No. 1 itself charges from its borrowers.”
2. Heard Mr. S.C. Bagadia, learned Senior Counsel with Mr. D.K. Chhabra, learned Counsel for petitioner and Mr. S. Bhargav, learned Senior Counsel with Mrs. Ritu Bhargav, learned Counsel for respondents.
3. In support of these reliefs, learned Counsel for the petitioner contended that the respondents i.e. M.P.F.C. should have appointed a Commissioner to take inventory to settle the accounts.
4. I am unable to appreciate much less accept the submission of learned Counsel for the petitioner as in my view it has no merit whatsoever.
5. It is a case of takeover of unit by the respondents under Section 29 of State Financial Corporation Act. The petitioner being a defaulter in repaying the huge outstanding the respondents invoked Section 29 of the Act and tookover the Unit for realisation of their dues. The petitioner does not challenge the actual take over as such. It is clear when one peruse the relief clause. They are more aggrieved by the manner of accounting done by the respondents while working out the liability.
6. The question regarding the manner of exercise of power under Section 29 of the State Financial Corporation Act no longer remains res integra. It is now settled by the view of Supreme Court in the case of State Financial Corporation v. Jagadamba Oil Mills, reported in I (2002) BC 568 (SC)=I (2002) SLT 571=AIR 2002 SC 834 wherein Their Lordships while overruling the earlier view taken in Mahesh Chandra’s case held as under:
“6. The Corporation as an instrumentality of the State deals with public money. There an be no doubt that the approach has to be public oriented. It can operate effectively if there is regular realisation off the instalments. While the Corporation is expected to act fairly in the matter of disbursement of the loans, there is corresponding duty cast upon the borrowers to repay the instalments in time, unless prevented by insurmountable difficulties. Regular payment is the rule and non-payment due to extenuating circumstances is the exception. If the repayments are not received as per the scheduled time-frame, it will disturb the equilibrium of the financial arrangements of the corporations. They do not have at their disposal unlimited funds. They have to cater to the needs of the intended borrowers with the available finance. Non-payment of the instalment by a defaulter may stand on the way of a deserving borrower getting financial assistance.
15. The view in Mahesh Chandra’s case (supra) appears to have been too widely expressed without taking note of ground realities and the intended objects of the statute. If the guidelines as indicated are to be strictly followed, it would be giving premium to a dishonest borrower. It would not further interest of any Corporation and consequently of the industrial undertakings intending to avail financial assistance, it would only provide an unwarranted opportunity to the defaulter (in most cases chronic and deliberate) to stall recovery proceedings. It is not to be understood that in every case the Corporations shall take recourse to action under Section 29. Procedure to be followed, needless to say, has to be observed. If any reason is indicated or cause shown for the default, same has to be considered in its proper perspective and a conscious decision has to be taken as to whether action under Section 29 of the Act is called for. Thereafter, the modalities for disposal of seized unit have to be worked out. The view expressed in Gem Cap’s case (supra) appears to be more in line with the legislative intent, indulgence shown to chronic defaulter would amount to flogging a dead horse without any conceivable result being expected. As the facts in the present case show not the even a minimal portion of the principal amount has been repaid. That is a factor which should not have been lost sight by the Courts below. It is one thing to assist the borrower who has in tension to repay, but is prevented by insurmountable difficulties in meeting the commitments. That has to be established by adducing material. In the case at hand factual aspects have not even been dealt with, and solely relying on the decision in Mahesh Chandra’s case (supra), the mater has been decided.
16. Section 29 gives a right to the Financial Corporation inter alia to sell the assets of the industrial concern and realise the property pledged, mortgaged, hypothecated or assigned to the Financial Corporation. This right accrues when the industrial concern, which is under a liability to the Financial Corporation under an agreement, makes any default in repayment of any loan or advance or any instalment thereof or in meeting its obligations as envisaged in Section 29 of the Act. Section 29(1) gives the Financial Corporation in the event of default the right to take over the management or possession or both and thereafter deal with the property.”
If we examine the facts of the case in the context of what is laid down by Supreme Court in the case of Jagadamba (supra) then in my opinion, the petition has absolutely no merit.
7. It is not in dispute that petitioner is a defaulter and has failed to repay the loan. It is equally not in dispute that petitioner has not chosen to challenge the action taken under Section 29 of the Act. In view of this, the question regarding accounting, etc. cannot be made subject-matter off writ jurisdiction. It has to be settled either amicably or if not possible then by taking recourse to a remedy of filing suit for settlement of accounts.
8. I, thus, do not find any merit in the writ. It fails and is dismissed.
No costs.