The court cannot exercise its powers under the Industrial Finance Corporation Act, 1948, in a manner that would undermine the objective of the Sick Industrial Companies (Special Provisions) Act, 1985, to salvage viable companies.

( 1 ) HEARD the learned counsel for the parties.

( 2 ) THE present application has been moved by the Industrial Finance Corporation of India, a body corporate established under the Industrial Finance Corporation Act, 1948 (Act No. XV of 1948) (hereinafter referred to as the Act) under S. 30 of the Act for the sale of the mortgaged property under S. 30 (1) (b) (c) of the Act and for the appointment of the Receiver over the same.

( 3 ) ACCORDING to the petitioner No. 1, the respondent No. 1 as an incorporated company, on 7-11-1972 took a loan of Rs. 52 lacs for its project for manufacture of mild steel ingots in the State of U. P. The said loan was taken on the terms and conditions contained in the Loan Agreement dt. 5-7-1973. It was entered into between the petitioner No. 1 and respondent No. 1. A security for the said loan together with interest etc. was agreed to and a Deed of Hypothecation was also made in favour of petitioner No. 1 by the respondent No. 1. Similarly a further security for the said loan in favour of petitioner No. 1 was made by deposit of title deeds of the immovable properties on 5-11-1974. On 7-7-1978 the petitioner No. 1 further advanced a loan of Rs. 15 lacs for the project of the respondent No. 1 and it was advanced on the terms and conditions contained in the Loan Agreement it. 12-4-1979. Similarly security for this loan was also taken by the petitioner No. 1 according to its satisfaction. On account of breach of the terms and conditions of the Loan Agreement as aforesaid committed by the respondent No. 1, the details of which have been mentioned in paragraph No. 19 of the application, is the cause for making the present application. On account of the said breach, the petitioner No. 1 exercised its powers under the said Agreements by means of letter dt. 2-9-87 by which it recalled the entire amount due for principal, interest and other monies in respect of the said loans and called upon the respondent No. 1 to pay forthwith an aggregate amount of Rs. 92,09,563/ -. It is further urged that the respondent No. 1 has suspended its production since Feb. , 1987 and the factory has been lying closed since then. The plant and machinery have been lying idle and are rapidly deteriorating in value for want of maintenance and proper care to the detriment of petitioner No. 1 and is also in danger of being damaged, destroyed, pilfered and removed, since there is no proper security arrangement in respect of the said properties. It is also averred that the properties which have been mortgaged and charged, the value of which would not be sufficient for realisation of the amount which the petitioner No. 1 is entitled even if the entire property is sold (this part of the averment has been resiled by the other side ). It is in the light of the present petition, a prayer for ad interim order was made for passing the order under S. 30 (3) of the Act.

( 4 ) AFTER hearing the learned counsel for the petitioners this Court on 5-10-1987 passed the necessary orders in terms of prayer (d) of the petition and further called upon the respondent No. 1 to show cause why an order be not granted as sought in terms of prayers (b) and (c ). It is after notice given to the other side and after their appearance and after the counter-affidavit being filed, the present application has come up before me for the grant of reliefs (b) and (c) as prayed in the said application. The prayer (b) is for the appointment of the Receiver in respect of the said properties and prayer (c) is for the attachment of the said properties mentioned in prayer (a ).

( 5 ) IN the counter-affidavit filed it is stated respondent No. 1 was incorporated in the State of Maharashtra and financial assistance thereof had been sanctioned by the State Industrial and Investment Corporation of Maharashtra Limited and about 40 acres of land had been allotted and handed over to the company by Maharashtra Industrial Development Corporation Limited in its industria