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Lotus Hotel Private Ltd. Vs. Gujarat State Financial Corporation, Ahmedabad - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtGujarat High Court
Decided On
Case NumberSpl. Civil appln. No. 1399 of 1979
Judge
Reported inAIR1981Guj212; (1981)GLR982
ActsEvidence Act, 1872 - Sections 115; State Financial Corporations Act, 1951 - Sections 30
AppellantLotus Hotel Private Ltd.
RespondentGujarat State Financial Corporation, Ahmedabad
Appellant Advocate V.R. Patel, Adv.
Respondent Advocate G.N. Shah, Adv.
Excerpt:
commercial - estoppel - state financial corporations act, 1951 - petitioner applied for loan after fulfillment of necessary conditions to finance corporation - petitioner mortgaged property to get money - petitioner started construction work in bonafide belief that loan will be granted to him - petitioner did not get money from respondent - petitioner filed writ petition - public body in exercise of statutory powers invites someone - person changes position and incurs certain liabilities and expense huge amount of money - public body cannot escape from liabilities - loan must be granted to petitioner - petition allowed. - - order 1. this is an interesting as well as disturbing petition, interesting because it raises some important questions of law but disturbing because, as i shall.....order1. this is an interesting as well as disturbing petition, interesting because it raises some important questions of law but disturbing because, as i shall show in the course of this judgment, a public corporation like the gujarat state financial corporation the respondent herein, which floats funds for the purpose of assisting entrepreneurs resorts to strange methods in order to avoid its statutory obligations to achieve which such corporations are conceived and are made to be born.2. a few facts require to be noted in details in order to understand various questions raised in this petition. the petitioner is a private limited company registered under the companies act, 1956. the primary object of the company is to carry on the business of a hotel and to do incidental things for that.....
Judgment:
ORDER

1. This is an interesting as well as disturbing petition, interesting because it raises some important questions of law but disturbing because, as I shall show in the course of this judgment, a public corporation like the Gujarat State Financial Corporation the respondent herein, which floats funds for the purpose of assisting entrepreneurs resorts to strange methods in order to avoid its statutory obligations to achieve which such corporations are conceived and are made to be born.

2. A few facts require to be noted in details in order to understand various questions raised in this petition. The petitioner is a Private Limited Company registered under the Companies Act, 1956. The primary object of the Company is to carry on the business of a hotel and to do incidental things for that purpose. The petitioner-Company had on hand an ambitious plan to establish a Four-star Hotel on Survey No. 512/2/1 in the city of Baroda. The requisite municipal permission was procured by the Managing Director of the Company, Mr. Chandulal Jethalal Jaiswal who had started the construction work also. An application for loan was made by the petitioner-company to the respondent-Corporation, which is a financial Corporation established under Section 3 of the State Financial Corporations Act, 1951. The Board of Directors of the Corporation by its resolution passed on 24-7-1978 sanctioned a loan to the petitioner to the tune of Rs. 29.93 lakhs on a security of equitable mortgage of the land and building and hypothecation of machinery. It is to be noted that the municipal permission for construction of the hotel building was procured as back as on 21-7-1973. The Secretary of the respondent-Corporation's Board by his letter dated 24-7-1978 communicated to the petitioner the sanction of the Board of Directors of the respondent in respect of the said loan. The sanction was subject to the other conditions set out in the annexure attached to, and forming part of sanction letters under which the Corporation reserved a right to appoint a Nominee Director on the Board of Directors of the Corporation sic). Annexure 'A' to the petition is the said sanction letter dated 24-7-1978. The investigation of the title of the properties to be mortgaged was conducted by M/s. H. Desai and Co., Solicitors, one of the approved solicitors on the list of approved solicitors of the Corporation. The Manager (Law) of the respondent-Corporation had collected some further information from the said solicitors. The Collector of Baroda also by his order dated 31-8-1978 was pleased to grant permission for creating equitable mortgage on revenue survey No. 512/24 of Baroda and the nominee of the respondent-Corporation, one Mr. Upendra M. Patel, was appointed by the petitioner-Company as one of its directors. The resolution to this effect was passed by the petitioner-company on 10-10-1978. Meeting the queries made by the Manager (Law) of the respondent-Corporation the Solicitors mentioned above reiterated and reaffirmed their opinion about the marketable title of the petitioner to the land etc. to be mortgaged with the Corporation. A certificate, Annexure 'E' dated 23-1-1979, was also furnished by M/s. M. M. Chokshi and Co., Chartered Accountants on the panel of the Corporation, certifying that the petitioner had spent Rs. 1,33,248.90 for the construction of the building and had raised the share capital of Rs. 7,64,000/-. Then on 1-2-1979 the petitioner-Company executed several documents in favour of the respondent-Corporation. They are listed at paragraph 8 of the petition. The regular deed of guarantee for repayment of the amounts to be disbursed also was executed by the petitioner-Company's directors except the nominated one. A memorandum also was executed between the parties regarding the deposit of title deeds of the properties in token of creation of equitable mortgage in favour of the respondent-Corporation. Thus, whatever was required to be done by the petitioner-Company was done by that time and only the amount of loan was awaited. The month of February 1979 rolled by; the middle of March 1979 arrived but the respondent-Corporation's officers did not rise from their slumber. The petitioner, therefore, sent a telegram on 15-3-1979. The said telegram reads as under:

'Document executed on first February till not received cheque disbursement loan. Please send same immediately otherwise, project suffering heavy loss.'

This telegram was followed by a second telegram and a representation dated 9-4-1979 addressed to the Minister-in-Charge of Home and Industry. The certificate of the Architect dated 26-4-1979 was also dispatched pointing out that the construction work was in progress and was likely to suffer considerable loss and damage if expeditious action of the release of the amount of loan was not effected. Still there was no response from the respondent-Corporation. Getting exasperated by this inaction on the part of the respondent-Corporation, the petitioner addressed a telegram on 3-5-1979, which reads as under:

'With mala fide intention you have not released our disbursement loan. Please release immediately otherwise we will, take legal action at your risk and responsibility.'

This also did not move the respondent-Corporation's officers and they continued to maintain their stone silence. In compliance with the requirements, the petitioner had raised 50 per cent of the authorized share, capital. The assets of the petitioner were also insured against the risk of fire, riot, etc. Even as back as on 1-1-1980, the respondent Corporation had asked the petitioner to renew the insurance policy covering the risk of fire, riot, etc. as per the letter Annexure 'I'. That requisition also was complied with by the petitioner.

3. The petitioner further alleged that he bad started constructing the building for hotel in good faith and incurred huge amount by way of expenses and had made commitments and had thus materially changed its position upon the promise made by the respondent-Corporation. The petitioner by his amendment elaborated how he had come to be prejudicially affected. By that time he filed the amendment application, huge amount of Rs. 7.5 lakhs had been spent is certified by the Chartered Accountants of the petitioner as per the report Annexure II. The petitioner also complained that because of the equitable mortgage already effected in favour of the respondent Corporation, it was not in a position to re-mortgage the property and the prices of building materials had risen to great heights. The petitioner stated that only on the item of cement, it was required to spend Rs. 1,90,000/- more, and Rs. 7.35 lac more on steel. The yearly profits estimated by the petitioner were also lost. The petitioner, therefore, alleged that the respondent-Corporation was precluded from with drawing the disbursement of loan since the -petitioner bad altered its position relying on the promise of the respondent-Corporation.

It was further alleged that the respondent. Corporation's action was ex facie arbitrary and it was trying to pick up amuses for the purpose of avoiding its statutory obligations. The petitioner ultimately, therefore, prayed as follows:

(a) to command the respondent-Corporation to, forthwith disburse to the petitioner loan amounts in accordance with the Agreement dated 1-2-1979 executed by the petitioner in favour of the respondent-Corporation and other related documents; and

(b) to restrain, pending the hearing and final disposal of this petition, the respondent Corporation from withholding the disbursement of any loan amount to the petitioner in accordance with the said Agreement dated 1-2-1979.

4. On behalf of the respondent-Corporation, its Manager (Law) had filed the affidavit-in-reply and the affdavit-in-rejoinder was filed on behalf of the petitioner. It was inter alia contended by the Manager (Law) that no writ petition could be issued to enforce the contractual rights, that the respondent-Corporation was not able to grant financial assistance because the Industrial Development Bank of India (IDBI) was unwilling to refinance this transaction; that the IDBI had closed the chapter of refinance; and that the Board of Directors of the respondent-Corporation had at its meeting held on 24-4-1979. Resolved not to make any disbursement because of the note at Annexure 'D' made by its General Manager.

5. On behalf of the respondent-Corporation a rigorous plea was put forth to the effect that this High Court's writ jurisdiction was not attracted it all and the only, remedy that the Petitioner could pursue was to file a suit for the specific performance of the contract, if at all it is open to the petitioner to do so. It was urged that the relationship between the parties was that of the contracting parties and none other and consequently the only forum that could be approached by the petitioner for the abovementioned two reliefs was the Civil Court and not the High Court exercising its prerogative writ jurisdiction under Article 226 of the Constitution of India. I am required to deal with this preliminary question first.

6. In this connection heavy reliance was placed by Mr. G. N. Shah. The learned advocate appearing for the respondent-Corporation, on two judgments of the Supreme Court. The first judgment is in the case of Radhakrishna Agarwal v. State of Bihar reported in (1977) 3 SOC 457 - (AIR 1977 SC 1496).

In that case it is held that upon the State is acting in its executive capacity in a contractual plane and certain rights and liabilities are claimed to have arisen on that account, the High Court's jurisdiction under Art. 226 of the Constitution of India is not open to be invoked unless the statutory terms or obligations or the constitutional provision like Art. 14 get attracted. It was a group of petitions that was disposed of by that judgment. The petitions were directed against the orders of the State Government revising the rate of royalty payable by them under the lease granted to them by the State, through its Forest Department, permitting them to collect Sal seeds from the forest area. As found by the Supreme Court the case of the petitioners primarily was that of a breach of contract for which the State would be liable ordinarily to pay damages if it had broken it. The Supreme Court in that case ultimately held, reiterating the classification of possible cases at the hands of the Patna High Court that only in certain cases the High Court's jurisdiction would be attracted. Three types of cases were envisaged by the Patna High Court as noted in paragraph 12. They are:

(i) Where a petitioner makes a grievance of breach of promise on the part of the State in cases where on assurance or promise made by the State he has acted to his prejudice and predicament, but the agreement is sort of a contract within the meaning of Art. 299 of the Constitution;

(ii) Where the contract entered into between the person aggrieved and the State is in exercise of a statutory power under certain Act or Rules framed there under and the petitioner alleges a breach on the part of the State; and

(iii) Where the contract entered into between the State and the person aggrieved is non-statutory and purely contractual and the rights and liabilities of the parties are governed by the terms of the contract, and the petitioner complains about breach of such contract by the State.

The Supreme Court ultimately held that the cast before them fell under the third category and that the writ jurisdiction was not invokable.

7. The second judgment is in the case of Premji Bbai Parmar v. Delhi Development Authority, reported in (1980) 2 SOC 129: (AIR 1980 SC 738). There also the Supreme Court held that a petition to the Supreme Court under Article 32 of the Constitution of India was not a proper remedy not was the Court a proper forum for reopening the concluded contracts with a view to getting back a part of the purchase price paid and the benefit taken. The Supreme Court accepted the contention that the respondent-authority was covered by Article 12 and therefore was a State but it clarified that while determining the price of flats constructed by it, it acted purely in its executive capacity.

8. Both the cases stand on a clearly different footing. As elaborated by the Supreme Court in the said two citations, the State in its executive capacity had entered into certain agreements or contracts which bad no moorings in the statutory liability. According to Mr. G. N. Shah for the respondent-Corporation, the, facts of the ease on hand are identical but it is difficult to agree with him. Two principles clearly emerge which go to distinguish these cases from the case on hand. The first distinguishing feature is that the respondent-Corporation, an instrumentality of State, and therefore, a State under Article 12 of the Constitution of India, is created for the sole purpose of assisting industrial concerns as defined in Clause (c) of Section 2 of the State Financial Corporations Act. 1951. As the Statement of Object-, and Reasons shows it was an act made 'inorder to provide medium and long-term finance to industrial undertakings which fail outside the normal activities of commercial banks.' In order to achieve this objective, the respondent -Corporation, as per Section 24 and Section 25 of the State Financial Corporations Act, J951 is authorised to conduct its business, of course, on business principles but with 'due regard being had by it to the interest of the commerce and general public.' So the respondent-Corporation is a sort of a utility statutory service and stands on a different footing from The normal banks or normal agencies carrying out money-lending activities.

9.The facts of the case which have been set out by me above go to show that by its resolution dated 24th July 1978, the Board of Directors of the respondent-Corporation had offered to advance the loan of Rs. 29.93 lakhs on the security of equitable mortgage of the land and building and hypothecation of machinery, as narrated in Annexure 'A'. Amongst the terms and conditions that are annexed to that letter, the important one is the Condition No. 2 which is reproduced below.

'Rate of interest will be 121/2 % p. a, if refinance is available from Industrial Development Bank of India; otherwise it will be 13 % p. a. Higher sate of interest at 6 % over the normal rate of interest will be charged on the amount in default.'

This above-mentioned Condition No. 2 in the letter of offer is to be specially noted because it cuts at the root of one plea of defence put forward in the affidavit-in -reply and also before me at the time of hearing. It was urged that this sanctioning of the loan was Subject to refinancing by the IDBI. If it was so, there was nothing to prevent the respondent Corporation from expressly stating so or impliedly suggesting so. On the contrary, The fact that the respondent-Corporation said that higher rate of interest by 1/2 per cent would be charged if there was no facility of refinance would clearly go to show that refinancing by IDBI was not a necessary condition imposed to the advancement of the loan. In my view, there is no escape from this position in view of the term No. 2 put in black anti white. It appears that this defence which is final analysis is the only defence except the technical defence raised in this preliminary objection is put forth as an excuse for the purpose of avoiding the statutory obligation of assisting any industrial concern like the petitioner's. It is nowhere stated in the affidavit in-reply that the respondent-Corporation never advanced loans except when there is countervailing arrangement with the IDBI. When the arguments were about to reach the final stage an attempt was sought to be made to show that more often than not the loans are countervailed by the loans borrowed by the respondent-Corporation from the IDBI but I did not permit this additional plea to be produced on the record because it was trying to make out a new case.

10. The petitioner-Company on the assurance or the promise made by the respondent-Corporation went ahead with its activities. It is a matter of common knowledge that against the expected arrival of finances entrepreneurs start planning their future course of action and even incur financial liabilities. The petitioner-Company, being no exception, did proceed, not only with its construction activities but also did all that it was called upon, to do. In other words, the offer made by the respondent-Corporation to advance the loan against the petitioner-Company having executed the mortgage deed and met with other requisitions, made the petitioner materially alter its position to its disadvantages. Quietly the respondent-Corporation took the deposit of title deeds and became the mortgage under the equitable mortgage. The respondent-Corporation called upon the petitioner to get the insurance of the property taken against fire, riot, etc. at considerable cost. Soon on completing the formalities on 1-2-1979, the petitioner-Company started requesting the respondent-Corporation to release the amount of loan and as the synopsis shows, for four months no reply was made. I fear it is not possible to brand it so. This inaction on the part of the Officers of the respondent -Corporation and the lack of courtesy even to acknowledge the pressing telegrams and representations of the petitioner smack of something underhand. At any rate, it can be safely concluded that the Officers of the respondent-Corporation were out to make this public body avoid its legal obligations. Why they did so is a matter of a mere suspicion with which a Court of law is hardly concerned. The fact remains that on the one side the petitioner went ahead with its construction activity of the building of the hotel and incurring liabilities which obviously would go on mounting and on the other side the petitioner was kept hanging on the hope that it would get the much needed amount of loan. In other words, by passing the resolution on 24-7-1978 by making the petitioner furnish proof of marketable title and executing various documents set out in paragraph 8 of the petition, the respondent-Corporation did make the petitioner substantially alter its position to its material disadvantages and ordinarily the principle of promissory estoppel would stand attracted.

11. Mr. G. N. Shah for the respondent Corporation, in this connection urged that the principle of promissory estoppel could be invoked only to the pre-conclusion stage of the contract and not to a concluded contract. Neither in law nor at logic, there is justification for this limitation on the scope of the principle of promissory estoppel, if it otherwise on facts applies. The Supreme Court had an occasion to deal with this principle in the case of Jit Ram Shiv Kumar v. State of Haryana, reported in AIR 1980 SC 1285. In paragraph 39 of the said reported judgment, the Supreme Court after analysing Indian and Foreign judgments, has observed as follows:

'The scope of the plea of doctrine of promissory estoppel against the Government may be summed up as follows:

(1) The plea of promissory estoppel is not available against the exercise of the legislative functions of the State.

(2) The doctrine cannot be invoked for preventing the Government from discharging its functions under the law.

(3) When the officer of the Government acts outside the scope of his authority, the plea of promissory estoppel is not available. The doctrine of ultra vires will come with operation and the Government cannot be held bound by the unauthorised acts of its officers.

(4) When the officer acts within the scope of his authority under a scheme and enters into an agreement and makes a representation and a person acting on that representation puts himself in a disadvantageous position, the Court is entitled to require the officer to act according to the scheme and the agreement or representation. The Officer cannot arbitrarily act on his mere whim and ignore his promise on some undefined and undisclosed grounds of necessity or change the conditions to the prejudice of the person who had acted upon such representation and put himself in a disadvantageous position.

(5) The Officer would be justified in changing the terms of the agreement to the prejudice of the other party on special considerations such as difficult foreign exchange position or other matters, which have a bearing on general interest of the State.

(Emphasis is supplied.)

Then in para 44, the Supreme Court lays down as follows:

'.... It was not necessary for this Court in the cases referred to above to refer to Union of India v. Anglo-Afghan Agencies Ltd. (AIR 1968 SC 718), or if property understood, it only held that the authority cannot go back on the agreement arbitrarily or on its mere whim .........'

The above underlined phrases would show that the principle of promissory estoppel is not limited to the pre-conclusion of the contract stage. Ultimately the Supreme Court in para 50 is reported to have said that 'the Court can enforce compliance by a public authority of the obligation, laid on him if he arbitrarily or on his mere whim ignores the promises made by him on behalf of the Government................'

12. Another case which could be referred to is the case of kasturi Lal Lakshmi Reddy v. State of Jammu and Kashmir, reported in (1980) 4 SCC I: (AIR 1980 SC 1992). The Supreme Court in that case had ultimately negatived the contentions of the petitioners before them. In para 15 of the said reported judgment the Supreme Court has laid down the law very clearly.

' The second limitation on the discretion of the Government in grant of largess is in regard to the persons to, whom such largess may be -granted. It -is now well settled as a result of the decision of this Court in Ramana D. Shetty v. International Airport Authority of. India (AIR 1979 ~SC 1628), that the Government is not free like an ordinary individual, in selecting the recipients for its largess and it cannot choose to deal with any person it, pleases in its absolute and unfettered discretion. The law is now well settled that the Government need not deal with anyone, but if it does so, it must do so fairly without discrimination and without unfair procedure. Where the Government is dealing with the public whether by way of giving jobs or entering into contracts or granting other forms of largess, the Government cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with some standard or norm which is not arbitrary, irrational or irrelevant .... '

13.In my view, therefore, where a public body like the respondent-Corporation in exercise of its-statutory powers and in fulfilment of its statutory duties leads a citizen to a particular position in which that person changes its position and incurs certain liabilities or undertakes any expensive activity, the public body like the respondent Corporation cannot then turn round and take shelter -against the spacious plea that as a contracting party, it is free to commit the breach of the contract and call upon the citizen to have his recourse in law and by seeking damages in a case like the one on hand. By having recourse to Section 14 of the Specific Relief Act, 1963 the specific performance of a contract of advancing money will not lie. What may be good for a contracting party may not necessarily be good for a public body like the respondent Corporation which, as laid, down by the Supreme Court in the above mentioned judgment, is not a free agent to act in a capricious or whimsical or irrelevant manner.

14. It is, therefore, held that in the facts and circumstances of this case, it is not open to the respondent-Corporation to request this Court to reject this petition in liming on the ground that the rights and liabilities of the parties flow, from purely contractual relationship.

15.This brings me to the merits of the matter. It was urged on behalf of the respondent-Corporation that the petitioner had misled the respondent-Corporation by filling in an incorrect fact in his application for loan. One of the columns of, the application form is whether the applicant is involved in any financial offences. The petitioner had stated in that application that it was not applicable to him. It was alleged that this information was vague and misleading. If it was vague, there was nothing to prevent the respondent-Corporation from soliciting further information or clarification. The petitioner categorically stated by necessary implication that there was nothing in the history of its Managing Director or Director that would show that he or they were involved in any economic offence. It is not even the positive say of the respondent-Corporation that the petitioner was involved in any such offence. A lame attempt was, however, made to show by reference to the minutes of the General Manager of the respondent-Corporation at page 49, being Annexure 'D' to the petition. I quote the whole of the letter here because, to me it appears that it is an unsuccessful attempt made by the respondent-Corporation at the time of hearing of the petition to throw a cloud of suspicion in respect of the credentials of the petitioner.

'The above company (Lotus Hotel Private Limited, the petitioner herein) has been granted a term loan of Rs. 29.93 lacs for setting up a 3 star hotel at Baroda by the Board 4of the Gujarat State Financial Corporation) in its meeting dated 24th July, 1978. The company approached for disbursement to the Corporation on 23rd Jan., 1.979. While considering disbursement of Rs. 3.67 lacs, an anonymous complaint was received by us addressed to IDBI and other agencies. The IDBI desired that the matter be investigated and they will not refinance the loan until the matter was cleared by Police, Custom and Income-tax authorities etc. In this connection, we have received a letter (Annexure 'A') from Collector, Customs and Central Excise, Ahmedabad, the contents of which are self explanatory.

In view of report of Collector, Customs and Central Excise and IDBI's view for not granting refinance to above hotel, the Board is requested to consider whether the disbursement should be made to M/s. Lot is Hotel Private Limited, Baroda.'

The General Manager in this Annex. 'D' does not state that there was any involvement of the petitioner's Director in economic offence on the part of the petitioner. All that these minutes Annexure 'D' state is that the IDBI had, received some anonymous, complaint and that, the, IDBI, desired that the matter be investigated and that they would not refinance the loan when the matter was taken by the police and customs authorities. The letter at Annexure 'A' was received from the Collector, Customs and Central Excise, Ahmedabad but that letter also shows nothing against the petitioner's Managing Director. The said letter is to be found at Exhibit 'C' and it clearly mentions that during the searches carried out nothing incriminating attracting action under Customs and Central Excise provisions had been recovered by them. On such an ipse dixit, the involvement in charge of economic offences is said to have been suppressed by the Managing Director of the applicant-Company. Is there any substance in it? It is to be noted with pertinence at this stage that the respondent-Corporation despite its statement containing the words not applicable, sanctioned the loan and invited compliance with certain formalities which the petitioner did. Even in the subsequent resolution dated 28-4-1979, the respondent-Corporation did not say that it was withdrawing the promise by treating the contract rescinded because of the suppression of facts on the part of the Managing Director of the petitioner-Company. On the contrary, the said resolution of the Board (dated 28-4-1979) of the respondent Corporation simply stated that the disbursement of the loan was deferred till the IDBI refinanced the transaction. If this be the second resolution followed by the fresh requisition from the respondent-Corporation calling upon the petitioner to get the mortgage property reinsured in The beginning of the year 1980, the alleged suppression of fact is, put forth by the respondent-Corporation expected to be fair, impartial and reasonable to pick up an excuse for the purpose of avoiding the discharge of its public duties. There is no substance whatsoever in this particular plea about the respondent Corporation having been misled by a false or incorrect representation on the part of the Managing Director of the petitioner- Company.

16.The third contention was that the loan was to be advanced if and only if the IDBI came as a willing party to refinance the transaction. When the petitioner has held out the promise in question, the IDBI did not figure in the picture. It is a matter exclusively between the respondent-Corporation on the one hand and the said IDBI on the other. How can the liability undertaken by the respondent-Corporation qua the petitioner be thwarted by invoking this plea?

The law does not provide that the respondent-Corporation is to meet with its statutory obligation if and only, if every project sought to he assisted by the respondent Corporation is guaranteed of the refinancing by the IDBI. It is not the say of. the respondent-Corporation that the respondent Corporation can have no funds except the fund s assured to it in the form of refinance by the IDBI.

17. It was then alleged that under S. 30 of the State Financial Corporations Act, 1951, the respondent-Corporation could withdraw its assistance. This argument instantly cuts at the plea about the relations between the parties to be one purely contractual. When the respondent-Corporation itself invokes the statutory provisions of Section 30 of the State Financial Corporations Act, 1951, it admits the position that it acts, not as a purely contracting party but as a statutory body having certain powers even in respect of the mutual dealings. However, Section 30, from the very nature of its text, cannot be applicable because it gives power to the Corporation to require any industrial concern to discharge forthwith in full its liability to the Corporation. It cannot be invoked for the purpose of avoiding the initial financial burden itself. Even if Section 30 can be pressed into service by implication. I am more than satisfied that in the facts and circumstances of the case, there is no justification on the part of the respondent-Corporation in refusing to advance the loan promised by the respondent-Corporation which promise was acted upon by the petitioner to its material disadvantage from which retracing of steps is not possible except by inviting colossal costs resulting into the loss of the very existence of the petitioner-Company.

18.Mr. G. N. Shah for the respondent Corporation by filing the affidavit today wanted to show that the respondent-Corporation was not in a position to spare the funds prayed for by the petitioner. This High Court cannot enter into the finding of facts of these things of complicated nature. Mr. V. B. Patel for the petitioner-Company, on the other hand, wanted to show by producing the balance sheet of the respondent- Corporation that the Corporation was having huge amounts, in the sense of those actual on hand and those in the bank accounts. Mr. Shah for the respondent-Corporation in this connection had invited my attention to the unreported judgment of P. D. Desai, J. in the Special Civil Application No. 1124 of 1980 decided on 28-8-1980.The learned Judge summarily rejected the said petition because he held 'having regard to the circumstances of the case, writ is not the proper remedy ' In that case the petitioner complained that the respondent-Corporation was not carrying out the promise on the basis of which the petitioner supplied machinery to the second respondent. The letter dated 15-5-1979 clearly indicated that the respondent-Corporation had agreed to release the amount in question on the condition that the second respondent would comply with the terms and conditions of the loan sanctioned. The case of the respondent-Corporation there was that the second respondent had not complied with the terms and conditions of the loan sanctioned and that, therefore, the Corporation was unable to make the payment to the petitioner in respect of the machinery supplied to the second respondent. The facts set out in the said order speak for them selves and cannot have even a remote resemblance with the facts on hand. 1, therefore, find that the respondent-Corporation is acting arbitrarily in this matter and has tried to bring into their operation irrelevant considerations and the purpose obviously appears to be to avoid the statutory obligation. I therefore pass the following order:

The petition is allowed. The respondent-Corporation is directed to disburse to the petitioner the loan amounts forthwith in accordance with the letter of offer dated 24-7-1978 followed by the agreement dated 1-2-1979 executed by the petitioner in favour of the respondent-Corporation. Rule is aciordIn0y made absolute with costs.

19. At The request of Mr. G. N. Shah for the respondent-Corporation, the opera6m of this order is suspended for a period of two weeks from today with the clear statement that no further stay will be granted by me. This stay is granted to enable the respondent-Corporation to have further recourse in accordance with law, if any.

20. Orders accordingly.


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