JUDGMENT

B. P. JEEVAN REDDY, J.:—The appeal is directed against the judgment and order of a Division Bench of the Allahabad High Court allowing writ petition 20544 of 1986 with certain directions. The first respondent-Gem Cap (India) Pvt. Ltd. is a private limited company. Second respondent is its Managing Director. At the request of the respondents, the appellant, U.P. Financial Corporation, sanctioned a loan of Rs. 29.70 lakhs. The terms and conditions of loan and the manner of repayment of the loan are contained in the agreement and hypothecation deeds executed in 1981. Suffice it to note that loan was repayable in certain specified instalments along with interest. A sum of Rs. 26,29,578/- was released to the respondents. The first respondent went into production in December 1982. Within a few months i.e., in March 1983 its operations ceased. By an order dated February 21, 1984 the first respondent-unit was declared a sick unit. The respondents did not make any repayment as stipulated in the agreement and hypothecation deeds whereupon the Corporation took steps to take over the unit under S. 29 of the State Financial Corporations Act, 1951 for recovering an amount of Rs. 38.57 l