Honble CHAUHAN, J.–The repayment of loan of Rs. 1,36,04,491/- by the Appellants, M/s. N.L.P. Organics Pvt. Ltd. to the Rajasthan Financial Corporation (henceforth to be referred to as the Respondent, for short) along with an interest of 15% per annum forms the background of this appeal. The Appellants are challenging the Order dated 23.11.2004 passed by the Additional District Judge No. 1, Alwar where by the Learned Judge has allowed the application filed by the Respondent under Section 31 of the State Financial Corporation Act, 1951 (henceforth to be referred to as the Act of 1951, for short) and has directed the Appellants to pay the above mentioned amount at the abovementioned rate of interest.

(2). The Appellants applied for a loan of Rs. 40.28 Lakhs (revised to Rs. 30.90 Lakhs) to the Respondent. Vide Order dated 13.2.87, the Respondent sanctioned a loan of only Rs. 30,90,000/- for the industrial project at Bhiwadi for the manufacturing of drugs and drug formulation. It was agreed between the Respondent and the Appellant that the loan shall be repayable in five years in quarterly installments. As far as the interest rate was concerned, it was agreed that interest should be 5% above the Bank rate prevailing from time to time subject to a minimum of 15%. Pursuant to grant of loan, documents were executed, including the Dead of Hypothecation by which movable properties of the Company were hypothecated with the Respondent. A letter of trust, an affidavit, power of attorney and an undertaking were also prepared. It is also alleged that the Appellant mortgaged Plot No. A-590-B, Bhiwadi Industrial Area, Bhiwadi by way of equitable mortgage in favour of the Respondent. It was further alleged that the Appellant No. 2, 3 and 4 stood as guarantor for th repayment of the loan amount. Accordingly, Guarantee Dead dated 8.7.1987 was also executed. The Appellant also applied for a loan of Rs. 6,40,000/- for which similar documents were executed. However, against a loan of Rs. 37,30,000/- the Appellants availed of only Rs. 32,33,000/- and did not avail of Rs. 4,97,000/-. On 5.9.1987, a tripartite agreement was entered between the Appellant and the Respondent and the Indian Bank. It was agreed in between the parties that there would be first charge of the Respondent on the properties of the Company and second charge would be of the Bank. The Indian Bank gave loan facility of working capital of Rs. 1,25,000 enhanced to Rs. 46,50,000/-. However, allegedly, the Appellant failed to repay the loan as stipulated by the contract between the parties. On 20.1.1999, the Respondent issued a notice to the Appellant under Section 30 of the Act of 1951 and demanded the repayment of Rs. 1,08,06,174/-. However, the Appellant still did not repay the loan. Thus, through another notice dated 15.12.1999, the Respondent demanded the repayment of the loan amount. But, the Appellant denied the liability and desired for reschedule of payment. Although the Respondent agreed for the reschedulement of payment the Appellant still failed to repay the loan. Hence, the Respondent filed an application under Section 31(1)(a)(aa) of the Act of 1951. Since the Appellant No. 2, 3 and 4 were the guarantors for the repayment of the loan, they too were impleaded as parties in the said application.

(3). The Appellants No. 1 and 2 contested the application and claimed that against a loan of Rs. 31,34,000/-, they had already paid Rs. 42,13,695/- and another sum of Rs. 5,25,000/- was paid in the years 1990-2000. They denied the receipt of notice under Section 29 of the Act of 1951. They further denied the execution of guarantee deed and of the other loan documents. According to the Appellants, the Respondent took signatures on certain printed forms and then created the hypothecation deed, the mortgage contract and other documents.

(4). Vide Order dated 23.11.2004, the Learned Judge allowed the said application and directed the Appellant to pay a sum of Rs. 1,36,04,991/- to the Respon

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