The Act's provisions for loan recovery and the conduct of the petitioners disentitled them to equitable relief under Article 226 of the Constitution.

ORDER : - As common questions of law arise for determination in these case, I propose to dispose of them by a common order.

2. A public limited company called 'Hegde and Golay Limited,' (hereinafter referred to as the holding Company) incorporated under the Companies Act in Bangalore City is engaged in the business of manufacture of wristwatches with swiss collaboration on the outskirts of Bangalore City. One Sri B.T. Shaker Hegde, is its Chairman and Managing Director and his wife Smt. Shaila S. Hegde is one of its Directors. Both these persons are the moving spirits of the holding company and its subsidiaries. In the same complex, there are 18 other private limited companies which are subsidiary companies or ancillary units called, (i) Shree Shyla Repetative Parts Limited; (ii) Shree Shyla Precision Components (P) Limited; (iii) Shree Shyla Watches and Rotors (P) Limited; (iv) Shree Shyla Stamping (P) Limited; (v) Shree Shyla Tooling and Accessories (P) Limited; (vi) Shree Shyla Metal Treaters Limited; (vii) Shree Shyla Precision Lever and Assortments; (viii) Shree Shyla Graphic (P) Limited; (ix) Shree Shyla Jig and Fixtures (P) Limited; (x) Shree Shyla Horologicals (P) Limited; (xi) Shree Shyla Crowns and Screws (P) Limited; (xii) Shree Shyla Precision Staff and Stems (P) Limited; (xiii) Shree Shyla Screen Printers (P) Ltd; (xiv) Shree Shyla Gears and Prinions (P) Limited; (xv) Shree Shyla Automats (P) Limited; (xvi) Shree Shyla Ceramics (P) Limited; (xvii) Shree Shyla Escapements (P) Limited; and (xviii) Shree Shyla Barrels and Arbors (P) Limited incorporated under the Companies Act engaged in the manufacture of various components of watches that are assembled and sold by the holding company.

3. Some time in 1973, the 18 subsidiaries individually and separately applied to the Karnataka State Financial Corporation (hereinafter referred, to as the Corporation) established and functioning under the provisions of the State Financial Corporations Act, 1951 (Central Act 63 of 1951) (hereinafter referred to as the Act) for grant of Indian and Foreign currency loans of varying amount which were sanctioned by it.

4. The 18 subsidiaries have drawn the respective amounts sanctioned to them by the Corporation and have executed various documents to secure their repayment on the terms and conditions set out thereto. Broadly those documents have secured the mortgage of immovable properties and hypothecation of plant and machinery and other movables owned by the respective subsidiaries. Secondly, those documents provide for repayment of the borrowed amounts with interest thereon in fifteen half yearly instalments.

5. The Directors of the subsidiaries have also stood as guarantors for repayment of the loans borrowed by the subsidiaries. On further applications made thereto by the units the Corporation has granted them additional loans in the year 1975-76 which also have been drawn and utilised by them.

6. Unfortunately, the subsidiaries did not exhibit the same anxiety for repayment of the amounts drawn, interest or the over due interest due by them except making one or two payments at the initial stage towards interest only evidently to induce the Corporation to sanction the additional loans.

7. After protracted correspondence and unsuccessful demands, and being unable to recover a huge sum of Rs. 3,72,88,521/51 that had then become due to it by the 18 subsidiaries, the Corporation on different dates in September, October and November 1979 presented 18 applications against the 18 subsidiaries under section 31 of the Act before the District Judge, Bangalore in Misc. Petitions Nos. 37, 38, 40 to 43, 45, 46, 49, 51 to 53, 55 to 60 of 1979 for recovery of the amounts due by the respective subsidiaries by the sale of the mortgaged and hypothecated properties, an injunction to restrain the units from disposing of, transferring or removing the plant and machinery or equipment detailed in the schedules to the petitions and for an order of atta