The main legal point established in the judgment is the court's analysis of the plaintiff's entitlement to the loan amount under the relevant provisions of the Companies Act, 1956, State Financial Corporation Act, 1951, and the jurisdiction of the court under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

1. The plaintiff has instituted the present suit for recovery of Rs. 19,97,474/- with future interest at the rate of 19%. The case of the plaintiff as made out in the plaint is that it is a Company registered under the Companies Act, 1956 and M.K. Chaudhari its Financial Adviser is the authorised officer to institute suits on behalf of the plaintiff. One of the functions of the plaintiff is to provide financial assistance in the form of term loan, equity and soft loan under Seed Capital Scheme of Industrial Development Bank of India /Small Industries Development Bank of India. Defendant No. 1 through its Director, defendant No. 2 on 6-5-1992 applied to the plaintiff for grant of term loan of Rs. 14,00,000/- for setting up a unit for manufacturing Atta etc. which was sanctioned on 9-6-1992. The interest was to be paid by the defendants at the rate of 19% per annum with half yearly rests. To secure repayment of the said loan and the interest thereon, the defendants executed loan agreement, hypothecation agreement and also created an equitable mortgage by depositing the title deeds of the properties of the concern. Out of the sanctioned loan the defendants were paid Rs. 13.74 lacs during the period July, 1992 to Dec. 1992. Defendants No. 2 to 4 stood guarantors for the payment of the loan and executed deeds of guarantee. The loan was to be repaid in the half yearly instalments commencing from 10-6-1994 and the last instalment was payable on 10-12-2001. The defendants also availed term loan assistance of Rs. 60 lacs from pro forma defendant No. 5 who was co-financier. The defendants failed to comply with the terms and conditions of the loan and also failed to pay the instalments of the principal amount and the interest thereon on due dates, therefore, the defendants were served recall notice on 23-8-1994 and the hypothecated/mortgaged assets were taken over by defendant No. 5 and were sold on 27-1-1997 for Rs. 46,00,000/-. Out of the sale proceeds the plaintiff got Rs. 11,62,113/-. After adjustment of the sale proceeds so received the defendants are liable to pay Rs. 16,86,019 to the plaintiff. In addition to this amount there is liability of Sales Tax of Rs. 16,71,521/- on the defendants. It is payable to the Excise and Taxation Department, Government of Himachal Pradesh which department has claimed first charge on the assets of the defendant Company for realisation of the said Salex Tax. The share of the plaintiff in proportion to term loan works out the Rs. 3,11,455/-. The defendants are, therefore, liable to pay this amount also to the plaintiff. The defendants were asked to pay the aforesaid amount but they have failed . Hence the present suit.

2. Defendants Nos. 2 and 3 contested the suit. In their written statement they raised the preliminary objections that the suit was not maintainable against them, it is time barred and bad because of the act, conduct acquiescence of the plaintiff and is beyond the jurisdiction of this Court. On merits, the plaintiffs being a Registered Company under the Companies Act and execution of the loan documents and creation of equitable mortgage have been denied. The execution of any deeds of guarantee have also been denied. Receipt of any default notice/re-call notice has also been denied and it is claimed that the suit is pre-mature.

3. On the pleadings of the parties. the following issues were framed :-

1. Whether the plaintiff is entitled to the suit amount as prayed for ? OPP

2. Whether the present suit is not maintainable in its present form, as alleged ? OPD 2 and 3

3. Whether the suit is time barred, as alleged ? OPD 2 and

3.

4. Whether this Court has no jurisdiction to entertain the present suit as alleged? OPD 2 and

3.

5. Whether the suit is bad because of acts, conduct and acquiescence of the plaintiff, as alleged ? OPD 2 and

3.

6. Relief.

4. Parties led evidence. Arguments were heard. My findings on the above issues are as follows .

5. Issue No. 1 To prove this issue the planintiff relies on