JUDGMENT

P.B. Sawant, J.

1. The case of the appellant-State Financial Corporation [for short the "Corporation"] is that it was established under the State Financial Corporation Act, 1951 [hereinafter referred to as the "Act"]. On 10th December, 1975, it sanctioned a term loan of Rs. 30 lakhs to the 1st respondent - Company [for short the "Company"] payable in 17 half-yearly instalments by the 22nd of August, 1986. The Memorandum of Agreement executed between the Corporation and the Company and the Deeds of Mortgage and Hypothecation executed by the Company in favour of the Corporation, inter alia provided for recall of the entire balance of the loan in the event of default on the part of the Company in paying two instalments of the loan and further to recover the balance of loan as arrears of land revenue. Accordingly, the Corporation disbursed Rs. 18 lakhs to the Company in 1977 and Rs. 10 lakhs in 1978. In 1979, the Acetylene Gas plant of the Company was commissioned. In 1980, the Corporation disbursed the balance of Rs. 2 lakhs to the company thus making the total payment of loan of Rs. 30 lakhs. In July 1981, the Oxygen Gas plant of the Company was also commissioned.

2. The Compan