V.K. Ahuja, J.-This judgment shall dispose of an appeal filed by the appellant under Section 32(9) of State Financial Corporations Act, 1951, hereinafter referred to as ‘the Act’, against the judgment and decree dated 7.4.2003 passed by the learned District Judge, Kangra at Dharamshala.

2. Briefly stated, the facts of the case are that a petition under Section 31 of ‘the Act’ was filed by the appellant before the Court of District Judge, Kangra at Dharamshala, for claiming the amount of Rs. 13,83,888/-inclusive of interest upto 31.7.1999 from the respondents. It was alleged that respondent No. 1 through its sole proprietor had approached the appellant for grant of loan for construction of a hotel and purchase of furniture and fixtures. Respondent No. 1 was granted term loan of Rs.6.50 and soft loan of Rs. 2.50 Lacs, which was availed by its sole proprietor. It was further alleged that for securing the repayment of the said loan and interest, respondent No. 1 execute hypothecated agreement in favour of the petitioner. Respondent No. 3 stood guarantor for the loan and they agreed to pay the amount alongwith interest at the rate of 20.5% per annum. The respondents also mortga