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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 15^TH DAY OF NOVEMBER, 2021

BEFORE

THE HON9BLE MRS.JUSTICE S. SUJATHA

AND

THE HON9BLE MR.JUSTICE RAVI V.HOSMANI

MFA No.5469/2014

BETWEEN:

Karnataka State Financial Corporation,

No.1/1, Timmaiah Road,

Bengaluru -560 052.

Rep. by its Assistant General Manager.

&. Appellant

(By Sri. P.S. Malipatil, Advocate)

AND:

1. M/s. Mapsons CNC Presswork Pvt., Ltd.,

Having its registered office at

No.45, 1^st Floor, Madhavaraya Mudaliyar Road,

Fraser Town, Bengaluru 3 560005.

Rep. by its Managing Director.

2. Shri. A. Anbazhagan,

S/o. Late P.M. Appadurai,

Aged about 61 years,

Madhavaraya Mudaliyar Road,

Fraser Town, Bengaluru - 560 005.

3. A. Thamayathi,

W/o. A. Anbazhagan,

Aged about 52 years,

Madhavaraya Mudaliyar Road,

Fraser Town, Bengaluru -560005.

2

4. Smt. V. Parvathi Ammal,

W/o. Late P.M. Appadurai,

(Dead on 21/07/2010)

(Resp.No.2, S/o. R.4 was already on

record as such, fresh LR9s were not

brought on record)

&

Respondents

(By Sri. B. Vachan, Advocate for R1 to R3; R2 is LR of deceased R4)

This Misc. First Appeal is filed under Section 32(9) of the State

Financial Corporations Act, 1951, against the order dated 19.06.2014,

passed by the Principal District Judge, Bangalore Rural District in

Misc.Case No.106/2009 dismissing the petition filed under Sections

31(1)(aa) and 32(1) of the State Financial Corporations Act, 1951.

This appeal coming on for admission being heard and reserved

for judgment on 04.08.2021, this day, Ravi V. Hosmani J.,

pronounced the following:

JUDGMENT

Challenging the judgment and decree dated 19.06.2014

passed by Prl. District Judge, Bengaluru Rural Court, Bengaluru

in Misc. Case No.106/2009, this appeal is filed.

2. The appellant herein was the applicant while the

respondents Nos.1 to 4 herein are respondents before the Trial

Court. For the sake of convenience parties will hereinafter be

referred to as per their respective ranks before the Trial Court.

3. Brief facts as stated are that petitioner-appellant herein

had filed petition under Section 31(1)(aa) and Section 32(1) of

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the State Finance Corporation Act (hereinafter for short 8the

Act9) stating that respondent no.1, a private limited company

had obtained financial assistance from it for setting up a small

scale industry for manufacture of high accuracy sheet metal

components. Respondent no.1 was granted term loan of Rs.46.60

lakhs to be repaid in 24 quarterly installments with compound

interest with quarterly rest at 16.5% per annum and in case of

default, with interest at 19% per annum on defaulted sum.

4. For securing the loan, a deed of hypothecation was

executed on 29.11.1994. The respondents no.2 to 4 executed

irrevocable

continuing

deed

of

guarantee

on

29.11.1994

undertaking to pay liabilities of respondent no.1, in case of

default. Respondent no.1 represented by it9s Director also

executed registered mortgage deed, mortgaging the factory,

land, building as well as movables in favour of petitioner.

5. Thereafter, pursuant to request of respondent no.1, an

additional term loan of Rs.15.40 lakhs was sanctioned to it on

06.09.1995, for purchase additional machinery. Respondent no.1

represented by it9s Director agreed for creation of further charge

over factory, land and buildings to cover additional term loan.

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Deed of hypothecation was executed on 14.09.1995. Loan

agreement was also executed on 14.09.1995 agreeing to repay

additional term loan in 20 quarterly installments with compound

interest at 20% with quarterly rest and in default to pay interest

at 22.5% per annum on defaulted sum. Respondent nos.2 to 4

executed irrevocable continuing deed of guarantee on same day.

6. However, respondent no.1 defaulted in payment of loan

installments and sought rehabilitation package. Though, a

scheme was sanctioned, respondent no.1 did not avail it.

Therefore, petitioner recalled loan under