Nagendra Rai, J.

1. This appeal is directed against the judgment dated 17.8.1999, passed by a learned Single Judge of this Court in C.W.J.C. No. 171 of 1994, by which he has allowed the writ application filed by Respondent No. 1 and has quashed the notice dated 20.12.1993 (Annexure 15 in the writ application), whereby the appellant-Bihar State Financial Corporation (hereinafter referred to as the Corporation) took action under Secs. 30 and 29 of the State Financial Corporation Act (hereinafter referred to as the Act) and directed the Corporation to release the remaining amount as per the agreement and also to make attempt to make the unit viable and put it in workable condition by discharging statutory duty provided under Sec. 24 of the Act and recover the loan amount and the interest accrued thereon by fixing instalment so that the unit comes into production and survives. The learned Single Judge also directed the Industries Department to release the amount of subsidy as sanctioned by it by letter dated 19.9.1991.

2. Necessary facts for disposal of the present appeal are that respondent No. 1 Dr. Dinesh Kumar Mani, a Homoeopathic Doctor, with a view to developing-the Homoeopathic Medicine decided to establish a Homoeo Medicine Industry at Muzaffarpur and got the respondent-Company incorporated as a Company under the provisions of the Companies Act in the name and style of M/s. Swad Pharmaceuticals Pvt. Ltd. in the year 1987. The respondent-Company approached the Corporation for loan for establishment of the said industry and a sum of Rs. 26 lakh was sanctioned by the Corporation on 23.2.1988 to set up the aforesaid Homoeopathic Medicine Manufacturing Unit, An agreement between the parties was executed on 3.2.1989. One of the clauses in the agreement was that the release of the sanctioned loan (quantum of release) would depend upon proportionate investment/contribution made by the promoter at the Project Site in creation of assets within the stipulated period. The said amount was sanctioned by the Corporation on the refinance by the Small Industries Development Bank of India (hereinafter referred to as the S.I.D.B.I.). The validity period of the sanctioned loan amount was fixed for two years, which was to lapse on 9.5.1990. On submission of the papers and the verification of the Plant, the Corporation released 5.07 lakh up to 14.3.1990. In the meanwhile, the refinance sanctioned by the S.I.D.B.I, lapsed on 9.5.1990 and the same was again revalidated by the Corporation up to 4.12.1990 and during this period a sum of Rs. 6.47 lacs was released to the respondent-Company.

3. The stand of the Respondent-Company is that due to delay and indifferent attitude of the Corporation, the project was not completed. In this connection, it is stated that between the period of two years i.e. from 9.5.1989 to 12.3.1991, only a sum of Rs. 10.85 lakh was disbursed to the Respondent-Company. Similarly, an amount of Rs. 3.84 lakh as the cost of machinery was released and disbursed after a long delay. Out of the amount disbursed, Rs. 75,000.00 was adjusted towards interests and the commitment charges. After last disbursement on 12.3.1991, no further disbursement was made on the ground that the sanction period of two years for disbursement and utilization had ended and unless the sanction was revalidated, no further disbursement would be made. The respondent-Company on 22.2.1991 sent a request letter to the Branch Manager of the Corporation for revalidation of the sanctioned loan, but nothing was done by the Corporation, on the other hand, it asked the Company to submit the programme for completion of the Project vide letter dated 20.7.1991. The Company approached for disbursement of the further amount for completion of the Project but nothing was done in spite of the several reminders sent by the Company, on the other hand, the appellant-Corporation treated the Company as a defaulter and placed the matter before the Advisory Committee on 25.