JUDGMENT

S.C. AGRAWAL, J.:—Leave granted.

2. We have heard learned counsel for the parties.

3. This appeal is directed against the Judgment of the Madras High Court dated February 23, 1994 in Writ Appeal No. 97 of 1994 arising out of Writ Petition No. 18048 of 1993 filed by Contromix Private Limited, respondent No. 1 herein.

4. Respondent No. 1, a company registered under the Companies Act, 1956, is engaged in the manufacturing of electronic instruments. The State Industries Promotion Corporation of Tamil Nadu Ltd. (for short SIPCOT) is a Financial Corporation established under the provisions of the State Financial Corporations Act, 1950 (hereinafter referred to as the Act). Respondent No. 1 applied for a term loan for setting up a project for manufacture of programmable logic controllers, control panels, electronic timer, temperature scanners, etc. On March 25, 1987 SIPCOT sanctioned a term loan of Rs. 38 lakhs. On June 16, 1987, IDBI soft loan of Rs. 6.8 lakhs was also sanctioned. Respondent No. 1 executed a registered mortgage on July 29, 1987 and created equitable mortgage and has executed other security documents. As per the terms of securities of the loan, respondent No. 1 was required to repay the term loan in instalments from December 1, 1989 to June 1, 1994 and the soft loan was to be repaid in instalments from September 18, 1990 till March 18, 1994. Respondent No. 1, did not adhere to the payment schedule and became a defaulter in payment of the principal amount as well as the interest. At the request of respondent No. 1, the repayment of the term loan was rescheduled to June 1, 1990 to June 1, 1994 and it was again rescheduled and respondent No. 1 was permitted to repay the loan from June 1, 1991 to June 1, 1994. In spite of the said rescheduling of the payment respondent No. 1 was not able to adhere to the revised schedule and committed default in payment. On August 8, 1991 SIPCOT issued a Show Cause Notice to respondent No. 1 where upon respondent No. 1 paid a sum of Rupees 1,00,000/- and promised to repay the entire dues within 2/3 months. Thereafter, the matter was reviewed on September 3, 1991 and respondent No. 1 was asked to pay 50 per cent of the interest overdues amounting to about Rs. 3.23 lakhs by December 31,1991 to enable SIPCOT to consider the rescheduling of the payment of the loan but respondent No. 1 did not make the said payment. On October 24, 1991 SIPCOT issued a notice under the provisions of the Act recalling the entire dues amounting to Rs. 47,22,303/-. After the said notice respondent No. 1 paid a sum of Rs. 1 lakh. In view of the assurances given by respondent No. 1 that the outstanding amount will be paid as early as possible, SIPCOT on February 2, 1992 agreed to modify the schedule of payment and also withdrew the foreclosure notice by letter dated February 26, 1992. Since respondent No. 1 failed to abide by the assurances a Show Cause Notice was again sent by SIPCOT on May 18, 1992 and the loan was foreclosed for a second time on June 17, 1992, when a foreclosure order was passed recalling the sum of Rs. 56,13,406.20 p. outstanding on May 31, 1992. By letter dated August 17,1992 respondent No. 1 was informed that the appellant will take possession of the unit on August 26, 1992. Respondent No. 1 thereupon paid a sum of Rs. 4,00,000/-. Thereafter Writ Petition No. 14479 of 1992 was filed in the Madras High Court and as per directions of the High Court respondent No. 1 paid a sum of Rs. 3,00,000/- on October 31, 1992. As regards the balance amount the High Court, by order dated December 7, 1992, gave directions fixing the amount of the instalment and the period for payment of the same. The entire amount was required to be paid by the end of August 1993 and the first instalment of Rs. 2,00,000/- was to be paid by December 31, 1992. The High Court also directed that if there was default in any one of the instalments, it would be open to the respondent Corporation to take proceedings under the St