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Issues Involved:
1. Whether the application has been properly signed and filed by a duly authorized person? 2. Whether the provisions of the Usurious Loans Act are applicable to the loan sanctioned by the petitioner to respondent No. 1? If so, whether the rate of interest stipulated under the loan agreement violates the provisions of the Usurious Loans Act? If so, to what effect? 3. Whether the mortgage by deposit of title deeds and the hypothecation created by respondent No. 2 in favor of the petitioner are illegal? 4. Whether section 30 of the Industrial Finance Corporation Act is ultra vires the Constitution? 5. Whether the petitioner is disentitled from bringing the present proceedings as alleged in paragraph 4 of the preliminary objections of respondent No. 1's reply? 6. Did failure to pay rupees four lakhs out of the promised sum of rupees twenty-nine lakhs hamper the viability of the project of the industry concerned? If so, to what effect? 7. Whether respondent No. 1 failed to comply with the terms and conditions of the loan agreement? If so, to what effect? 8. What is the amount due to the petitioner in respect of the loan and from whom? 9. Relief. Issue-wise Detailed Analysis: Issue No. 1: The petition was instituted under section 30 of the Act by Shri H.C. Sharma, Assistant Manager of the IFCI, duly authorized by the board of directors through a resolution. The court found that the application was properly signed and verified by a duly authorized person, thus answering this issue in favor of the petitioner. Issue No. 2: The onus was on the respondents to prove the applicability of the Usurious Loans Act. The loan agreement stipulated a maximum interest rate of 9% per annum, with a rebate for punctual payment. The court noted that the proceedings under section 30 of the Act are not in the nature of a civil suit and do not attract the provisions of the Civil Procedure Code or any other statute. Therefore, the provisions of the Usurious Loans Act do not apply. This issue was decided against the respondents. Issues Nos. 3 and 4: These issues, concerning the legality of the mortgage and the vires of section 30 of the Act, were not pressed during arguments and thus require no further discussion. Issue No. 5: Respondent No. 1 contended that the IFCI was estopped from initiating proceedings due to its involvement in the management of the company. The court rejected this contention, stating that the agreement between IFCI and the company created statutory rights for the IFCI. The court held that the presence of IFCI representatives on the board did not absolve the company of its financial liabilities. This issue was answered against the respondents. Issue No. 6: The respondents argued that the failure to disburse the balance loan of Rs. 4,00,000 hampered the project's viability. The court found that the IFCI was justified in withholding the amount due to the company's breaches of the loan agreement. The court held that the failure to disburse the balance amount did not affect the financial viability of the company to the extent that it would disentitle the petitioner from enforcing the loan agreement. This issue was answered against the respondents. Issue No. 7: The court found that the company failed to comply with several terms and conditions of the loan agreement, including the appointment of a whole-time technical director, payment of installments, and taking adequate insurance cover. The court held that the IFCI was within its rights to terminate the loan and initiate proceedings under section 30 of the Act. This issue was determined in favor of the petitioners. Issue No. 8: The court found that the company owed a sum of Rs. 49,13,715.29 to the petitioner as of July 31, 1982. This amount included the principal, interest, commitment charges, and insurance premium. The court upheld the petitioner's right to recover this amount by selling the mortgaged and hypothecated properties. This issue was determined in favor of the petitioners. Relief: The court confirmed the order of attachment and directed the recovery of the amount due by selling the properties of respondent No. 1. The court noted that the properties were mortgaged to both petitioner No. 1 and respondent No. 2 on a pari passu basis. However, the court left the question of respondent No. 2's claim to be determined by the company judge, as the order was not executable without prior permission from the company judge. The court also directed that the IFCI be reimbursed for the receiver's fees and expenses from the sale proceeds. No order was made as to costs.
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