JUDGMENT- H.W. DHABE, J.:---Parties by Counsel. Rule. Heard forthwith.

2. The petitioner challenges in this Writ Petition the action of the Maharashtra State Financial Corporation i.e. the respondent No. 1 in disposing of the unit of the petitioner for non-payment of loan advanced to it for the purpose of the said unit. It also claims that the possession of its unit should not be handed over to the Intervener i.e. M/s. Indian Ice-Creams Limited, Bombay, but should be handed over back to it. It further claims that the respondent No. 1 should grant all the facilities for rehabilitation of its unit.

3. The facts are that the petitioner is a Private Limited Company registered under the Companies Act, 1956. According to the petitioner, it was established with an object to manufacture all kinds of milk products and ice-creams etc. It applied to the respondent No. 1 for grant of loan of Rs. 35,00,000/- on 7-12-1988. The respondent No. 1, however, sanctioned it a loan of Rs. 32.5 lakhs on 7-12-1988. After the loan was sanctioned, the petitioner Company executed necessary documents in favour of the respondent No. 1. A charge was created as per the Mortgage Deed dated 3-9-1989 upon the assets of the petitioner Company for securing payment of loan advanced to it by the respondent No. 1. The petitioner, thereafter, installed its unit in question. However, according to it, there was escalation in prices during the period of the installation of its unit because of which there was paucity of funds for its proper functioning. It could not thus make proper arrangements for marketing of its product. It, therefore, asked for additional term loan of Rs. 5.5 lacs on 14-1-1990 but the same, according to it, was not given to it by the respondent No. 1 on the ground that it did not pay even the interest upon the amount of loan already advanced to it by reason of which it was a defaulter.

4. After the Unit of the petitioner started functioning, it is its case that it was required to face fierce competition from other reputed units. Further, for lack of funds, it could not advertise its product properly. The result, according to it, was that its Unit became sick as its product did not have much demand and could not be sold profitably.

5. The petitioner submits that it was in these circumstances that it was not able to pay any instalment of loan to the respondent No. 1. It is material to see that the petitioner has not uptill now paid a single pie to the respondent No. 1 towards its loan and interest. After waiting for a long time, when the respondent No. 1 found that the petitioner had not paid any instalment towards its loan and interest, it issued to it a notice on 30-12-1991 under section 29 of the State Financial Corporations Act, 1951 (for short "the Act") for taking over possession of its entire unit, if it failed to clear its dues before 15-1-1992. The petitioner, but its letter dated 8-1-1992, submitted its explanation to the aforesaid notice dated 30-12-1991 issued under section 29 of the Act by the respondent No. 1. It explained in its aforesaid letter dated 8-1-1992 the difficulties faced by it and the reasons why it was not able to pay the dues of the respondent No. 1 within time. The respondent No. 1 thereafter granted 15 days' time to the petitioner to clear off the dues but the dues were not paid by the petitioner within the stipulated time. The respondent No. 1 did not still take possession of the Unit of the petitioner immediately, but there was further correspondence between the parties upon the question of taking over possession of the Unit of the petitioner.

6. It appears from the letter of the respondent No. 1 dated 16-5-1992 that alongwith the letter dated 6th March, 1992, the petitioner had enclosed a post-dated cheque in the amount of Rs. 50,000/- which was returned back unpaid. The respondent No. 1 had then informed the petitioner by the said letter dated 16-6-1992 that no arrangements were made by it for paymen

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