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TMI Blog2003 (2) TMI 323X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the respondent-Karnataka State Financial Corporation (for short "KSFC") and borrowed a loan to the tune of Rs. 90 lakhs and another loan of Rs. 19.12 lakhs was sanctioned for establishment of small scale industry in 1982, subject to certain terms and conditions set out in the KSFC sanction communication letters dated August 27, 1992, and the respondents, in Miscellaneous No. 6/200 (annexure K to the writ petition), stood as personal guarantors for the repayment of loan amount in case of default and necessary documents were filed. As the appellant could not repay the loan amount in time, the KSFC issued a notice and seized the industry of the appellant. The KSFC issued a further notice intimating that the assets seized would be sold in au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court in Andhra Pradesh State Financial Corpn. v. Gar Re-rolling Mills [1994] 80 Comp. Cas. 140; the decision of this Court in Mysore Chest Care Pain Therapy Centre (P.) Ltd. v. State of Karnataka [2001] 5 Kar. LJ 429 and the decision in Bags Cortons v. Haryana Financial Corpn. [1994] 80 Comp. Cas. 509 (Punj. Har.). 4. We have heard the contentions of learned counsel appearing for the appellant and perused the decisions relied upon by him. 5. As per the terms of agreement, in case of default in repaying the loan amount, the KSFC can invoke section 29 of the Act and also section 31 of the Act to proceed against the defaulter and the liability to repay the loan amount is joint and several. 6. Their L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29 of the Act once the proceedings have been initiated under section 31 of the Act. It is also held that there is no equity in favour of a defaulting party which may justify interference by the courts in exercise of its equitable extraordinary jurisdiction under arti cle 226 of the Constitution of India to assist it in not repaying its debts. The aim of equity is to promote honesty and not to frustrate the legitimate rights of the corporation, which after advancing the loan takes steps to recover its dues from the defaulting party. It is further held that when exercising its equitable jurisdiction under article 226 of the Constitution it must so act as to prevent perpetration of a legal fraud and the courts are obliged to do justice by prom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions relied upon by learned counsel for the appellant are not helpful. It is also to be seen that the pro ceedings under section 31(1)( a ) of the Act were initiated on February 27, 2002, much after invoking the provisions under section 29 of the Act on December 3, 1999, and therefore, in the present case the contention of the appellant that, since the Corporation had already initiated proceedings under section 31 of the Act no provision could be invoked under section 29 of the Act cannot be accepted. 9. The learned Single Judge has considered that the appellant was given an opportunity to bring the bidder for a higher rate and also considered the decision of the Apex Court in Haryana Finan cial Corpn. v. Jagdamba Oil Mills [2002] 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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