JUDGMENT :

Leave granted.

2. The short question which arises for determination in this Civil Appeal is: Whether the High Court erred in law in holding, by the impugned judgment, that the Bangalore court has no territorial jurisdiction to hear the matter in view of the provisions of Section 31(1) of the State Financial Corporation Act, 1951?

3. M/s. Mullur Cylinders Pvt. Ltd., defendant No.6, is a company registered under the Companies Act. Defendants No.1 to 5 are its Promoters/Directors. For the manufacture of gas cylinders, defendant No.6 approached appellant-Corporation for loan of Rs.37.50 lakhs. The loan was sanctioned vide letter dated 1st September, 1984. Defendants also executed a Deed of Hypothecation whereby the assets of defendant No.6 Company stood mortgaged in favour of the appellant-Corporation. The loan amount was released. It was fully utilized by the borrowers. However, when it came to the question of repayment, defaults occurred. Ultimately, a legal notice came to be issued on 8th August, 1988 calling upon defendants to pay the entire loan with interest. Dispute consequently resulted.

4. Appellant exercised its power under Section 29 of the State Financial Corporat