ORDER Om Prakash, J.
1. A usual petition is filed by the petitioner a partnership firm styled as M/s Kuber Dal and Oil Mills-constituted by two partners, namely, Ayodhya Prasad and Kanhiya Lal (though wrongly asserted a proprictnry concern in para 2 of the writ petition), engaged in the business of manufacture of pulses for quashing the impugned order dated 7-l-'l'99l (Annexure '1' to the writ petition), issued by the U.P. Financial Corporation (U.P.F.C.) calling upon the petitioner to pay the outstanding dues, aggregating to Rs. 6,01,700.88 p. break up of which is as follows :
The facts as succinctly stated are that a term loan to the tune of Rs, 4,53,000/- was sanctioned by the UPFC to the petitioner on 5-6-1986; that of the sanctioned amount only a sum of Rs. 4,49,918.00 was paid to the petitioner; that loan disbursed to the extent of Rs. 12,070/- was adjusted towards the interest and thus the difference of Rs. 4,49,918/- minus Rs. 12,070/-was actually disbursed to the petilioner; that the petitioner has paid a sum of Rs. 1,06,678.25 p. towards interest thereof during the period from 1987 to 1990, details of which are set out in para 3 of the writ petition; that gestation period which was due to commence after two years as per the recovery schedule set out in Anncxure '2' to the writ petition, would start from the dale of commencement of production and in any case that could not commence before the date of last disbursement; that as per the disbursement schedule set out in para 2 of the writ petition, last amount was disbursed on 30-9-1988 and, therefore, the gestation period would start upon the expiry of two years after 30-9-1988; that the petilioner was entitled to pay the first instalment after two years w.e.f, 30th September, 1988; that the petitioner expected to start production by the end of April, 1991 and the entire term loan would be repaid within seven years adhereing to the recovery schedule and, therefore, the action threatened to be taken under S. 29 of the 'State Financial Corporation Act (brieily, the Act) by the UPFC against the petitioner is illegal.
2. In the counter-affidavit filed for and on behalf of the UPFC it is stated that S. 29 notice was given on 23-2-1991; that working capital was to be arranged by the petitioner; that the petitioner made meagre payments aggregating to Rs. 1,52,219/- so far, which have been adjusted towards the interest as per the terms and conditions of the term loan agreement (Annexure ' 1' to the counter-affidavit); that though first disbursement was made on 2-5-1987, no instalment of principal amount has been paid so far by the petitioner; that the agreement (Annexure ' 1' to the counter-affi-
davit) clearly postulates that the first instalment would fall due for repayment after twenty four months from the date of the first advance of loan by the U.P.F.C. and every subsequent instalment would be paid half yearly together with interest on principal amount; that the gestation period would, therefore, come to an end after two years from the dale of the first advance of loan and that as no principal amount was paid by the petitioner, the respondents had no option but to resort to action as envisaged by S. 29 of the Act.
3. In para 15 of the counter-affidavit which was filed in November, 1996, it is averred that though a period of nine years has gone by, the entire principal amount coupled with huge interest aggregating to Rs. 13,36.448.47p. is outstanding against the petitioner. In para9 of the counter-affidavit, it is averred that the petitioner over a long period of nine years paid only a sum of Rs. 1,52,279/-. In para 3 of the writ petition, the petitioner has set outdetails of payment of interest aggregating to Rs. l,06,678.25p. paid during the period from 1987 to 1990. In para 8 of the rejoinder-affidavit which replies para 9 of the counter-affidavit, it is averred that correct details of repayment arc given in para 3 of the writ petition. Disbursement of loan havingcommenced from 2-5-1987 as gleaned from the details of disbursement set out in annexure '2' to the counter-affidavit, it is plain that considerable liability towards interest would have arisen against the petitioner and if that is added to the principal amount, admittedly, advanced to the petitioner, then it will be seen that as against the principal amount and the interest having accrued thereon, the petitioner has made slender repayment so far.
4. The question for consideration is whether any interference warranted under Art. 226 of the Constitution in the facts and circumstances of the case. In U.P.'Financial Corporation v. M/s Gem Cap (India) Private Limited, AIR 1993 SC 1435, the Apex Court dealing with similar situa-
ition said (para 10) :
"Indeed in a matter between the Corporation and its debtor, a writ Court has no say except in two situations : (1) there is a statutory violation on the part of the Corporation or (2) where the Corporation aclsunfairly, i.e. unreasonably. While the former does not present any difficulty, the latter needs a little reiteration of its precise meaning. What does acting unfairly or unreasonably mean? Does ii mean [hat the High Court exercising jurisdiction under Article 226 of the Constitution can sit as an Appellate Authority over the acts and deeds of the Corporation and seek to correct them? Surely, it cannot he. That is notthc function of the High Court under Art. 226. Doctrine of fairness evolved in administrative law was not supposed to convert the writ Courts into appellate authorises over the administrative authorities. The constraints -- self imposed undoubtedly -- of wriljurisdiction still remain. Ignoring them would lead to confusion and uncertainly. The jurisdiction may become rudderless."
5. From the above reproduced observation of the Supreme Court, it is patent that judicial review is possible under Art. 226 of the Constitution only when there is statutory violation on the part of the UPFC or where the UPFC has acted unfairly, i.e.. arbitrarily. So far as situation No. I is concerned, Sri R. P. Goyal, counsel for the petitioner has not pointed out an infraction of any statutory provision on the part of the UPFC and. therefore, we may unhesitatingly conclude that there was no statutory violation on the part of the UPFC in taking recourse to S. 29 of the Act.
6. Then the question is whether the UPFC arbitrarily issued impugned orderdated 7-1-1991 (Annexure '1' to the writ petition) calling upon the petitioner to pay the entire outstanding dues within seven days from the date of notice and whether the U.P. F.C. arbitrarily resorted to S. 29 of the Act, when the petitioner failed to comply with the impugned order dated 7-1-1991. As per the terms and conditions of the term loan agreement (Annexure '1' to the counter-affidavit), the first instalment had fallen due for repayment upon the expiry of 24 months from the date of the first advance of the loan: Details of disbursement have been set out in Annexure '2' to the counter-affidavit. ,The first disbursement of Rs. 97,000/-was made on 2-5-1987 and, therefore, in view of the termiloan agreement (Annexure '1' to the counter-affidavit), repayment of first instalment of the principal amount had become due upon the expiry of two years from 2-5-1987. Admittedly, no principal amount has been paid so i'ar. The petitioner having failed to make repayments as per the terms of the agreement and even after having received the impugned order dated 7-1-1991, was clearly in default and hence the UPFC had become entitled to take over the management or possession or both of the unit m question under S. 29 of the Act and, therefore, the submission of Sri Goyal that impugned order dated 7-1-1991 (Annexure '1' to the writ petition) and the notice under S. 29 of the Act are illegal and arbitrary, is wholly unsustainable.
7. To buttress his submissions, Sri Goyal relied on the case of Mahesh Chandra v. Regional Manager, U.P. Financial Corporation (1992) 2 JT (SC) 326 : (AIR 1993 SC 935). In this case also action was taken under S. 29 of the Act against the owner of the unit. The Court observed that power under S. 29 of the Act to take possession of a defaulting unit and transfer it by sale requires the authority to act cautiously, honestly, fairly and reasonably. Default inpayment of loan may attract S. 29. But that alone is insufficient cither to assume possession or to sell the property. Neither should be resorted to unless it is imperative. These observations were made by the Court in a different fact situation when possession of the property had been taken by the UPFC and the UPFC initiated sale proceeding of the said property. Before us in the case in hand, validity of sale proceeding has noi been challenged nor do we know that UPFC has at all initiated sale proceeding against the unit of the petitioner. The record simply indicates that a notice under S. 29 has been issued against the petitioner. It is not known what further proceedings have been taken pursuant to that notice against the petitioner and, therefore, the observations made in the Mahesh Chandra (supra) will not benefit the petitioner.
8. Sri Goyal also relied on the decision of a Division Bench of this Court in the case of Vivek Chand Jain v. U. P. Financial Corporation, 1991 All WC 128. The Division Bench held that the actions of statutory bodies are always subject to scrutiny and they must stand the test of fairness and reasonableness and. therefore action of the UPFC though under a contract, may be looked into. This legal proposition being well settled is not disputed.
9. Then we revert to the main question whether the UPFC rightly passed the impugned order dated 7-1-1991 (Annexure '1' to the writ petition) calling upon the petitioner to pay the entire outstanding dues. In para 6 of the writ petition, it is averred that the gestation period will start from the date of commencement of the production and inany case that will not commence before the date of last disbursement of the loan. On the contrary, the contention of Sri H. R. Misra, the learned Standing Counsel is that as per the agreement executed between the parties, the first instalment had become due for repayment immediately after the expiry of 24 months from the date of first advance of the loan by the UPFC. Sri Goyal has made an effort to show that the repayment of loan did not become due upon the expiry of two years from the date of first disbursement of loan but from the date of the last disbursement of loan or from the date of commencement of the production. The submission of Sri Goyal has to be rejected, because it is clearly stated in the agreement that the first instalment will fall due for repayment after 24 months from the date of first advance of loan. The pleadings as stated in para 6 of the writ petition run counter to the terms of the agreement and. therefore, the petitioner cannot succeed on them.
10. From the disbursement schedule(Annexure '2' to the counter-affidavit), it is clear that the entire loan was disbursed to the petitioner during the period ranging from 2-5-1987 to 30-9-1988.
Except a sum of Rs. 1,06,678.25 p. as slated in para 3 of the writ petition and para 8 of the rejoinder-affidavit, no other payment has been made by the petitioner, though the respondents have stated in para 9 of the counter-affidavit that the total payments made by the petitioner over a period of 9 years come to Rs. 1.52.279/- only. It is significant to note that after 15-10-1990 till date, that is over a period a little more than six years, no repayment has been, admittedly, made by the petitioner either towards the principal or interest amount.
11. In M/s Gem Cap (India) Pvt. Ltd. (AIR 1993 SC 1435) (supra), the Supreme Court held (para 10) :--
"The fairness required of the Corporation cannot be carried to the extent of disabling it from recovering what is due to it. While not insisting upon the borrower to honour the commitments undertaken by him, the Corporation alone cannot be shackled hand and foot in the name of fairness. Fairness is not a one way street, more particularly in matters like the present one.....
These Corporation are not silling on King Solomon's mines. They too borrow monies from Government or oilier financial corporations. They too have to pay interest thereon."
12. No principal amount having been, admittedly, paid so far and no repayment having been made over a period more than six years after 15-10-1990, can it be said that the 'UPFC has acted arbitrarily against the petitioner. The submission is that the petilioner was given liberty to make repayments over a period of seven years after the expiry of the geslalion period and, therefore, the impugned order dated dated 7-1-1991 (Annexure '1' to the writ petition) calling upon the petitioner to repay the entire outstanding amount in one lump and thereby scuttling the permissible period of repayments is unfair, unreasonable and unjust. Seemingly such submission appears to be attractive but looking to the terms of the agreement arrived at between the parties and the conduct of the petitioner having failed to pay the principal amount even till date and any amount over a period a little more than six years, it is manifest that it is the petitioner who has unreasonably withheld the amount outstanding and there is no arbitrariness in the impugned order.
13. There being no statutory violation and unfairness on the part of the UPFC. it must be held that no interference under Art. 226 of the Consti tution is warranted in the facts and circumstances of this case. In para 9 of the writ petition, it is averred that the unit set up by the petitioner would start production by the end of April, 1991 and then the petitioner would make full repayments within a period of seven years adhercing to the recovery schedule. Despite this solemn averment, no re payment has been made by the petitioner after 15-10-1990 and no serious and sincere effort was made on behalf of the petitioner even at the time of the hearing of the case in regard to the payment of the outstanding dues. Taking into consider ation the facts as they exisied when the impugned order was made and subsequent conduct of the petitioner who failed to pay any amount till date after the date of the impugned order, no interfer ence is warranted under Art. 226 of the Constitu tion with the impugned order.
14. It is contended by the petilioner that Ihc respondents were liable to pay the working capital to enable the petitioner to run the unit successfully. The respondents denied this submission and stated that there was no such obligation under the agreement on them to make the working capital available to the petitioner. The agreement does not indicate any obligation on the respon-
dents to furnish the working capital to the petitioner and, therefore, the respondents cannot be blamed for the default, committed by the petitioner.
15. The petition, therefore, fails and is dismissed. Interim order, if any, is vacated.
16. Petition dismissed.