Section 29 recovery power upheld: courts cannot rewrite dues or replace a financial corporation's commercial judgment absent arbitrariness.

Interference with a State Financial Corporation's recovery action under Section 29 is limited to cases of statutory violation, clear arbitrariness, unreasonableness, or mala fides. Where the borrower repeatedly defaulted, ignored notices, and declined concessions or restoration schemes, the court could not substitute its own view of the contractual interest rate, order fresh recalculation of dues, or require a general review of pending matters. The later line of authority on Section 29 therefore governed, and the earlier contrary approach was held inapplicable. The corporation's recovery action was upheld and the writ petition dismissed.

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Issues: Whether the High Court was justified in holding that the financial corporation acted unfairly and unreasonably in exercising power under Section 29 of the State Financial Corporations Act, 1951, in directing a fresh calculation of interest and in ordering review of pending cases involving compounding of penal interest.

Analysis: The corporation's power under Section 29 is a statutory recovery power exercised by an autonomous public financial institution that must act fairly and reasonably, but the court's interference is confined to cases of statutory violation or demonstrable arbitrariness, unreasonableness, or mala fides. The borrower had repeatedly defaulted, failed to respond to notices, did not accept concessions offered for rescheduling and reduction of interest, and did not avail the restoration schemes. In that background, the High Court could not substitute its own view on the contractual rate of interest, compel fresh recalculation of dues, or direct a general review of pending cases. The principles in the later decisions governing Section 29 prevailed, and the earlier contrary approach was not applicable.

Conclusion: The High Court's findings on unfairness, the direction to reduce interest, and the direction to review pending cases were unsustainable, and the corporation's action under Section 29 was upheld.

Final Conclusion: The appeal succeeded and the writ petition stood dismissed after restoration of the corporation's recovery action.

Ratio Decidendi: Interference with a State Financial Corporation's action under Section 29 is permissible only for statutory violation or clear arbitrariness, unreasonableness, or mala fides, and a court cannot rewrite contractual recovery terms or substitute its commercial judgment for that of the corporation.

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