Hon’ble Ajay Bhanot, J.—Petitioner made a request to the respondent No. 2-U.P. Khadi & Village Industries Board, Lucknow for grant of loan facility to set up a unit for manufacture of handmade hard paper. The respondent-Board acceded to the aforesaid request of the petitioner and sanctioned the loan facility for the aforesaid purpose. A contract was made between the petitioner and the respondent-Board on 31.12.2005 wherein the respondent-Board agreed to disburse a loan to the petitioner to the extent of Rs. 13,50,000/-. The terms and conditions agreed to between the parties and duly embodied in the loan agreement, which bear relevance to the controversy, are reproduced hereunder:

“2. The Hypothecated property is hypothecated as security by way of first charge [unless property is already hypothecated with a State Government or Khadi & Village Industries Commission in which case the lender will have a second charge on the hypothecated property and if one of them has a second charge the lender will have the next charge] for the due repayment by the Borrower/s to the lender of the said sum of Rs. 13.50 Lacks or the balance due to the lender at any time and the interest thereon all costs, charges and expenses incurred by the lender for the preservation, protection, defence and perfection of this security or for attempted or actual realization thereof and also for due repayment of all present and future indebtedness and liabilities of the Borrower/s to the Lender of any kind and in any manner whether solely or jointly, primary of collateral accrued or accruing with all relative interest, charges, costs and expenses. The expression “balance due to the Lender”. In this and subsequent clauses of this agreement shall be taken to include the principal money from time to time due by the Borrower/s to the lender and also all interest thereon calculated at the rate specified in the schedule II hereto and the amount of all charges and expenses which the lender may have paid or incurred in any way in connection with the hypothecated property or the sale or disposal thereof.

3. The Lender may give to the Borrower/s the Loan by such instalments and at such times as the lender may deem fit and the lender may at anytime without assigning any reason whatsoever discontinue to give any further Loan of the Borrower/s although the total of loans given under this agreement does not reach said limit of Rs. 13.50 Lacks.

4. The said principal sum of Rs. 13.50 Lakhs or so much thereof as may have actually been lent to the Borrower/s under these presents shall be repaid by the Borrower/s to the lender at office of the lender in the instalments mentioned in schedule II, hereto together with interest on the outstanding amount at the rate mentioned in the said schedule II.

5. If there shall be any breach on the part of the Borrower/s of any of the terms of these presents or any one instalment of principal or interest is in arrears after the due date or if there is a reasonable apprehension (of which the lender shall be the sole judge) that the Borrower/s is/are unable to pay its/their debts or that liquidation or winding up proceedings may be commenced against the Borrower/s, the Lender may notwithstanding anything to the contrary contained in this Deed order the Borrower/s to repay in full-forthwith the outstanding amount of the loan and interest and all costs and expenses.

SCHEDULE-II Rate of interest and repayment instalments (To be filled in as per details given in sanction order)
Sl. No.	Nature of Loan	Tenure	Rate of Intersest	Particulars of Instalment
1.	Loan for working Capital Rs. 3.90 Lacks	First Year	15 ½ % per annum (quarterly)	Not less than 20% is to be repaid at the beginning of the 2nd and 3rd year 20% at the end of the 4th year and