The court emphasized the importance of detailed consideration of equitable considerations and the liability of the respondent upon trial, and highlighted the lack of reasoning in the impugned order.

1. This petition under Article 227 of the Constitution of India impugns the order [dated 9th March, 2017 in RCA No.05/2016 (Registration No.61775/2016) of the Court of Additional District Judge (ADJ) (Central)-10, Tis Hazari Courts, Delhi] of restraining the petitioner from initiating recovery proceedings against the respondent or from selling the factory premises of the respondent at F-22, Phase-I, Okhla Industrial Area, New Delhi subject to the respondent (appellant in the appeal) furnishing bank guarantee of Rs.20 lacs in favour of the petitioner (respondent in the appeal).

2. The petition was entertained and notice thereof issued.

3. The counsel for the respondent appears.

4. On the contention of the senior counsel for the petitioner that the learned ADJ has by the impugned order stayed recovery of public dues of over Rs.6 crores owed by the respondent to the petitioner, the petition has been taken up for hearing on priority.

5. The counsels have been heard.

6. The suit, against the order of rejection of plaint wherein the appeal is pending before the learned ADJ, was instituted by the respondent against the petitioner as far back as in the year 1992 and was pending as Suit No.1302/1992 of this Court.

7. It was the case of the respondent in the plaint i) that the petitioner has on 15th November, 1985 sanctioned a term loan of Rs.13.80 lacs in favour of the respondent; ii) that the respondent mortgaged its industrial plot No. F-22, Phase-I, Okhla Industrial Area, New Delhi with the petitioner for availing the said loan by executing a Mortgage Deed dated 10th March, 1986; iii) that the respondent applied for an additional loan of Rs.4.55 lacs to the petitioner and executed another Mortgage Deed dated 23rd February, 1987 in consideration thereof; iv) that however instead of Rs.4.55 lacs, only Rs.2.14 lacs was availed by the respondent; v) that the request of the respondent to the petitioner to allow the respondent to pay the overdue interest in small installments was acceded to by the petitioner on 4th July, 1988; vi) that though the respondent had paid an amount of Rs.10,15,070/- to the petitioner in repayment of the loan but a notice dated 17th March, 1992 under Section 29 of the State Financial Corporations Act, 1951 was issued by the petitioner claiming the balance due from the respondent as Rs.17,37,824.17 paise.

8. The respondent, in the plaint in the suit, sought the reliefs of a) restraining the petitioner from selling or taking possession of the factory premises of the respondent; and, b) issuance of a direction to the petitioner to give a statement of account relating to the loans advanced to the respondent along with details of interest charged thereon.

9. The aforesaid suit came up before this Court first on 8th April, 1992 when vide ex parte order the petitioner was restrained from selling the aforesaid factory premises of the respondent or from dispossessing the respondent therefrom.

10. I am informed that the said interim order continued.

11. The suit aforesaid, on enhancement of the minimum pecuniary original jurisdiction of this Court, was transferred to the District Court and as per its valuation assigned to the Court of Civil Judge.

12. The petitioner filed an application under Order VII Rule 11 of the CPC for rejection of the plaint. The learned Civil Judge-04, Central District, Tis Hazari Courts, Delhi vide order dated 27th November, 2015 rejected the plaint in the suit reasoning i) that the respondent / plaintiff in the plaint had admitted the factum of taking the loan from the petitioner / defendant and of having mortgaged his property to secure the said loan; ii) that the respondent / plaintiff had also admitted receipt of notice of demand of Rs.17,37,824.17 paise from the petitioner / defendant; iii) that though the respondent / plaintiff in the plaint had claimed the said notice to be wrongful and incorrect but had not sought any relief of declaration of the notice as incorrect or the consequential re