JUDGMENT - B.U. WAHANE, J.:---This appeal is directed against the order below Exh. 1 dated 4-10-1982 in M.J.C. No. 126/81 decided by Shri R.D. Deshpande, Joint Civil Judge, Akola.

2. The facts giving rise to the instant appeal are as under:

The respondent is the statutory corporation established for the State of Maharashtra, under the State Financial Corporation Act, LX-III of 1951. The appellant No. 1 is the proprietor of the Proprietary concern of M/s. New Maharashtra Iron Industries, situated in M.I.D.C. Area at shed No. W-9, Akola having its office at A.S. Ansari building, Azad Park Road, Old City, Akola.

On 9th December, 1976 the appellants/non-applicants hypothecated to the respondent/applicant all the plant, machinery, electric and other installations, impliments, equipment, tools, appliances, accessories, moveable assets described in General terms which were incorporated in the schedule and to that effect entered into the hypothecated agreement for consideration of Rs. 81,000/- and all the terms and conditions were made known to the non-applicants for which there is no dispute. On 9th December, 1976, Rs. 66,100/- were advanced to the appellants and the receipt was passed in acknowledging the receipt of the amount. On 4th February, 1977, a sum of Rs. 2,200/- was paid by the respondent and the same was duly acknowledged. Again on 8th March, 1977, a amount of Rs. 9,100/- was paid and it was duly acknowledged by issuing receipt. Thus, the total amount of Rs. 77,400/- was advanced by the applicant to the non-applicants. The balance loan of Rs. 3,600/- was cancelled by the Regional Manager on 21st October, 1978.

The non-applicants inter alia agreed and convenanted to pay the principal amount within a period of 10 years by 17 half yearly instalments. The first 16 half yearly instalments of Rs. 4,800/- each and 17th instalment being last of Rs. 4,200/-. The first instalment was payable on 20th December, 1978 and the subsequent instalments were on 20th June and 20th December of each succeeding year and the last 17th instalment was payable on 9th December, 1986 with interest @ 14½% was to be charged and calculated at the end of every month on the loan outstanding shall be payable half yearly on the 15th June, and December of every year.

That, the appellants/non-applicants have committed default in respect of or in payment of instalments of principal sum and also interest. By 31st August, 1979 the respondent/application had to recover the principal sum of Rs. 9,600/- and also the interest amounting to Rs, 30,954.66 plus expenses of Rs. 488/-. Consequently, the Regional Manager of the respondent by an order dated 7th August, 1979 under the authority confirmed on him by the Board of Directors of the petitioner corporation by its resolution dated 28th February, 1977 decided to recall the entire loan together with interest and expenses, initiated the proceedings under section 31 of the State Financial Act of 1951. A recall notice dated 26th September, 1979 was issued under the registered cover to the non-applicant directing to pay the entire outstanding amount within a week from the receipt of that notice i.e. the principal amount of Rs. 77,400/- plus interest amounting to Rs. 30,954.66/- plus expenses of Rs. 488, total outstanding being Rs. 1,08,842.66. The non-applicants not only committed the defaults in payment of instalments due but also not submitted the annual accounts, not commenced production regularly, stopped functioning and also committed serious breaches of terms and conditions and not obtained prior written permission of the respondent for shifting the part of the machinery. The non-applicants did not comply with the notice dated 26th September, 1977. Therefore, according to the respondent/applicant in the circumstances, the Corporation became entitle to the payment of the hypothecated debt and also entitled to call back the entire loan due under the hypothecation also under section 31 of the State Financial Act. Similar

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