2006 (8) TMI 630

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....e 1st respondent were mortgaged.   It was decided to expand the existing unit and procure some machinery therefor. The Respondent also placed orders for other and further equipments/machinery necessary for expansion of the said scheme. Allegedly, the Managing director of the Corporation visited the 1st respondent's factory on 29.1.1988 and having satisfied himself that there existed justification for expansion of the capacity utilization had agreed to sanction an additional term loan to the tune of Rs. 15 lakhs on terms and conditions mentioned therein, some of which are as under :   "Clause 7 : The concern will have to submit the following papers before the execution of the legal documents :- (a) Income Tax Cleara....

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...., from which the 1st respondent had also taken loan, has also filed a suit for recovery of the loan granted to it.   Mr. S.B. Sanyal, learned Senior counsel appearing on behalf of the respondent, on the other hand, contended : i) The Corporation could not have refused to fulfil its solemn promise to advance the additional subsidy of Rs. 15 lakhs.   ii) The requirement of furnishing of D.G.T.D. Registration Certificate was not applicable in the case of a Small Scale Industry and in any event, the Corporation having registered the said documents, the order sanctioning the amount could not have been refused to be honoured.   At the outset, we may notice that on a query made by this Court as to whether the respondent-....

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....In the writ petition the High Court was not concerned with the question as to whether the respondent had complied with the terms and conditions of the loan agreement in the matter of repaying of the installments in time, but was concerned with the question as to whether the Corporation being a statutory organization, could take a stand different from the one passed in its order. The High Court evidently proceeded on the basis that it could not have been done. The High Court may not be entirely correct in its approach as the transactions were governed by a statute and were essentially commercial in character. Unfortunately, however, the contentions, which have been raised before us, were not raised before the High Court.   This Court....