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Judgment
Though this case is listed for admission, since the pleadings are complete, instead of passing an order, issuing directions on the memo filed by the
petitioner, the main petition itself is taken up for final disposal and the following order is passed:
The petitioner is seeking for a direction forbearing the respondent from foreclosing the loan sanctioned in the proceedings having
Ref.No.Projects 94-95/APEX/RT, dated 15.02.1995, as long as the petitioner pays the dues as per the schedule of payment offered in its letter
dated 18.12.1997. The question is whether the respondent, mortgagee herein is entitled in law to issue a foreclosure notice, impugned in this writ
petition?. In order to determine the said question and the entitlement of the petitioner for the relief prayed for in the petition and on the memo filed,
it is necessary to advert to certain essential facts and they ate set out hereunder:
The petitioner was sanctioned a Term Loan of Rs.30.00 lakhs on 13.2.1995 for the establishment of a new salt factory by a deed of mortgage
dated 28.3.1995 for a sum of Rs.0.50 lakhs and the deed of Hypothecation dated 28.3.1995 and equitable mortgage deed dated 28.3.1995 for
Rs. 29.50 lakhs and he mortgaged the lands, buildings hereditaments and premises together with all plaint and machinery, securing the dues of
repayment to the Corporation of the said principal amount with interest, commitment charges, sundry dues, expenses and other charges as
provided therein and also undertaken to comply with several terms and conditions stipulated therein. The petitioner has availed a sum of Rs. 19.15
lakhs towards reimbursement for the amounts spent on reclamation and development of land, construction of building, purchase and erection of
pumps, motors and for tractors with loader and dozer, but did not repay the dues and allowed the arrears in the account. Therefore, the
respondent was constrained to foreclose the loan vide its notice dated 19.11.1997, which is impugned in the present writ petition. In the said
notice, for the circumstances set out therein, without prejudice to all the rights reserved by the Corporation, it required the petitioner to pay within
fifteen days of receipt of the foreclosure notice, a sum of Rs. 27,14,907 being the entire principle of the loan and the interest thereon upto
31.10.1997 and other charges and dues amounting to Rs. 242 aggregating to Rs. 27,15,149 with further interest and additional interest at the
prevailing rates, till the date of payment failing which, the Corporation will, without any further intimation or references, proceed to exercise and
enforce the rights reserved to it under the said Deed of Mortgage/hypothecation including the right to exercise the power of sale, appointment of
receiver or filing a suit in a Court of Law or resorting to action under the provisions of the State Financial Corporations Act as extended to this
Corporation.
According to the respondent, the, show-cause notice, dated 19.3.1996 sent by Registered Post with Acknowledgment Due, was returned by
the postal authorities stating that it was not claimed by the petitioner. After a period of three months, the petitioner informed the respondent that
they were not available at the address given to the petitioner and requested to forward the unserved letter. Later, he received the letter on
26.6.1996 and the reply did not answer the points raised in the show-cause notice dated 19.3.1996: The respondent has alleged at para 8 of the
counter that this is an existing salt pan established in the year 1909 owned by the Government. The leasehold rights owned by the Government
changed hands frequently. Lastly, the lease was given to one Thiru K. Lakshmisaran, a partner of the petitioner herein with effect from 1.11.1986
by G.O.No.1285 (Revenue), dated 27.9.1991 for a period of 20 years. Thiru K. Lakshmisaran entered into a partnership on 21.12.1994 with
Tmt. Bhavani Lakshmisaran and approached the respondent Corporation for sanction of loan. The respondent was not aware of the existence of
the pans even before the sanction of loan. Had the respondent been aware of the same, the respondent would not have considered the loan for
reclamation and development of the pans. It is further submitted that the valuer valued the works completed by the petitioner and submitted the
report on 28.2.1996. The valuer has observed that he could not value the land development work, formation of the salt pan and bunds as the salt
pan was already in production. During the valuation, the respondent came to know that the salt pan was already in existence. Since the petitioner
concealed the material facts, the respondent issued a show-cause notice on 19.3.1996 as to why the loan should not be foreclosed. It is alleged
that the petitioner has also unauthorisedly moved the tractor and dozer hypothecated to this respondent Corporation without the permission of the
respondent and one of the notices marked to one of the partners of the petitioner firm was returned with the endorsement ""left"" by postal
authorities. It is also contended that the salt pans were taken possession by the respondent on 6.2.1998 and subsequently, he has unauthorisedly
and unlawfully entered the pans and is working the same and he is still liable to pay an amount of Rs.25.00 lakhs to the respondent.
u/s 29 of the State Financial Corporation Act, 1951 (hereinafter referred to as ''the Act'' in short) contemplates rights of financial Corporation in
case of default. Under this provision, where any 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 otherwise fails to comply with the terms of the agreement, the
Corporation shall have the right to transfer by way of lease or sale and realise the said amount. Section 30 of the Act empowers the Corporation
to call for repayment before the agreed period, notwithstanding anything in any agreement to the contrary, by issuing a notice in writing, if it
appears to the Board that false or misleading information in any material particular was given by the industrial concern in its application for the loan
or advance or if the industrial concern of if there is a reasonable apprehension that the industrial concern is unable to pay its debts or if without
permission of the Board, any machinery, plant or other equipment forming part of the security is removed from the premises of the industrial
concern and it can also take such other steps for such reasons which is necessary to protect the interests of the Financial Corporation.
The substance of para 8 of the counter is that the petitioner suppressed the existence of salt pans already established in the year 1909 owned by
the Government and leased under Government Order for a period of 20 years to one Thiru K. Lakshmisaran, a partner of the petitioner herein.
There is also an allegation that the petitioner has unauthorisedly moved the tractor and dozer hypothecated to the respondent Corporation without
the permission. Added to this, the petitioner did not repay the dues and allowed arrears in the account.
In these facts situation, when Sections 29 and 30 of the Act enables the respondent to resort to an appropriate action to protect the interest of
the Financial Corporation, this Court cannot give an advisory opinion under Article 226 of the Constitution of India, forbearing the respondent
from foreclosing the loan sanctioned and to act on the schedule of payment offered in its letter dated 18.12.1997. The petitioner having entered
into a contract with the respondent with full knowledge of conditions which it has to carry out in the conduct of its business on which it had willingly
and voluntarily embarked. The occurrence of a commercial difficulty, inconvenience or hardship in the performance of those conditions, can
provide no justification for not complying with the terms of the contract which it had accepted with open eyes. Therefore, the petitioner could not
invoke the jurisdiction of this Court to avoid the contractual obligations.
In Har Shankar and Others Vs. The Dy. Excise and Taxation Commr. and Others, , the Apex Court has held that the writ jurisdiction of High
Courts under Article 226 of the Constitution is not intended to facilitate avoidance of obligations voluntarily incurred. The mortgage money includes
both principal and interest. The interest is as much a charge on the property as the principal and the mortgage''s remedy is contemplated under the
Act.
No doubt, the powers of this Court under Article 226 of the Constitution are discretionary and no limit can be placed, but still such power has
to be exercised on recognised lines and not arbitrarily posing obstacles for collection of public revenue. Where the consequences of such order
would seriously prejudice or make it burdensome or inconvenient to the administration to realise the money lent by the Financial Institution, that
too, where the Statute empowers such actions, Article 226 of the Constitution need not be invoked. If invoked and orders as sought for if granted,
such orders will have potential public mischief of locking up recovery of public money and the other consequences enabling a party to disobey the
lawful action contemplated in law.
The learned senior Counsel for the petitioner, Mrs. Nalini Chidambaram, insisted for an order on the basis that the petitioner had paid certain
amount as per the interim direction of this Court and also filed a memo, undertaking to pay a sum of Rs. 1,00,000 on the first of every month
beginning from first of July, 1998 till the entire interest on arrears of Rs.10,000 is cleared and as far as the future interest and principal are
concerned, he will make a representation for the reschedulement to the Tamil Nadu Industrial Investment Corporation Limited, for their
consideration. Where the interim order was granted before completely hearing on merits and when in the final hearing, the relief prayed for is hot
available, such interim order will not clothe him to skulk from contractual obligations.
Where the dispute has arisen from a contract, which has been validly entered into, the rights of the parties shall be determined only in terms of
the contract and a mandamus will not issue to enforce a private contract and this Court normally refrain from intermeddling between the parties in
dealing with their financial matters, as it may amount to creating variation or contradiction in the existing terms of the contract.
For reasons aforestated, the respondent herein is entitled to issue foreclosure notice and from any point of view, this is not a fit case to issue
directions as prayed for by the petitioner in the main petition as well as on the memo.
The writ petition is dismissed. Parties to bear their own costs. Consequently, the connected miscellaneous petitions No. 30245 of 1997, 3066
of 1998 and 3067 of 1998 are also dismissed.