Hon'ble CHAUHAN, J.—Polonius, in Shakespere's play Hamlet, advised his son, Laertes “neither a borrower nor a lender be”. This piece of advice is seldom followed by the people. This case is a classic example of what happens to the borrower and the lender. The petitioner, the borrower, has challenged the notice dated 19.11.96 whereby the Rajasthan Financial Corporation ('the RFC', for short), invoking its power under Section 30 of the State Financial Corporations Act, 1951 (`the Act', for short), has recalled the loan amount of Rs.12,76,630/-. The petitioner has also challenged the order dated 11.2.1997, whereby the RFC, invoking its power under Section 29 of the Act, has informed the petitioner that it will take over the possession of the assets of the petitioner company on 28.2.1997. 2. The facts of the case are that earlier run as a firm, the petitioner Company, is engaged in manufacturing of iron and steel items. For the purpose of its business, it took three different loans from RFC namely, first loan on 31.1.1980 for an amount of Rs.10 lacs to be repaid with interest @ 14% p.a. plus 5% penal interest; second loan, on 13.2.1981 for an amount of Rs.5 lacs to be repaid with interest @ 15% p.a. plus 5% penal interest; third loan on 30.3.1988 for an amount of Rs.1.68 lacs. The said loan was interest free. Thus, the petitioner firm had taken three loans totaling Rs.16.68 lacs from the RFC. However, in this case the controversy is restricted only to the penal interest chargeable on the first two loans mentioned above. During the course of business, the firm found it profitable to transfer its assets to a company incorporated under the Companies Act,1956. Thus, with effect from 19.11.1988, the firm was transformed into a company, in the name and style of M/s. R.S. Industries (Rolling Mills) Ltd. The petitioner company duly informed the RFC. The Dy. General Manager, RFC, in turn, informed the petitioner company that necessary correction about the name and style of the company has been made. Since the Company faced certain difficulties in running its business, since it was unable to repay the loan amount, the petitioner was liable to pay the penal interest on the defaulted amount. But, vide letter dated 30.8.1988, the petitioner company requested the RFC to waive the entire amount of penal interest, so that total outstanding amount could be squared up. Since the Company faced certain difficulties in running its business, since it was unable to repay the loan amount, the petitioner was liable to pay the penal interest on the defaulted amount. But, vide letter dated 30.8.1988, the petitioner company requested the RFC to waive the entire amount of penal interest, so that total outstanding amount could be squared up. Vide letter dated 26.9.1988, the petitioner reiterated the same request to the RFC. Vide letter dated 4.10.1988, the petitioner brought it to the notice of the RFC that, at the relevant time, the RFC had a scheme for waiving the penal interest if closure of the company's unit occurred due to problem in power supply. It further pointed out that the company's unit was closed from 1.12.1982 till August, 1984 due to problem in power supply—a factor beyond the petitioner's control. It also clearly pointed out that the RFC has already agreed to reschedule the outstanding loan amount. It was also stated that the petitioner has regularly paid the monthly instalments in accordance with rescheduled scheme from 1.4.1982 till March, 1986. Moreover, in order to make good all irregularities, it made a payment of Rs. 5.75 lacs between February and March, 1988. Furthermore, it continued to pay monthly instalments after October, 1988. Further, along with the letter dated 26.9.1988, the petitioner sent a cheque of Rs.40,000/- to the RFC. In response to this letter, vide letter dated 24.12.1988 the RFC informed the petitioner to contact the Dy. General Manager (F.R.) on 2.1.1989. As a culmination of negotiations between the petitioner and the Dy. General Manager (F.R.), vide letter dated 11.1.1989 the RFC informed the petitioner that it is willing to waive the penal interest, for the closure period during which the unit was out of commercial production for reasons beyond its control. The RFC also stated that the monthly payment, agreed between the parties in the rescheduled scheme, would be considered to have been made in the month itself, if they are paid within the same quarter of the same financial year. For this purpose, the quarters were taken as January-March, April-June, July-September and October-December. It is pertinent to point out that this letter was written by the Manager (F.R. II) to the Dy. General Manager (F.R.), with a copy endorsed to the petitioner. A responsibility was imposed both upon the Dy. For this purpose, the quarters were taken as January-March, April-June, July-September and October-December. It is pertinent to point out that this letter was written by the Manager (F.R. II) to the Dy. General Manager (F.R.), with a copy endorsed to the petitioner. A responsibility was imposed both upon the Dy. General Manager (FR) and the petitioner to verify and calculate, within a period of one week, the total liability of the petitioner. The letter also clearly stated that the benefit of waiver of penal interest of the closure period, and benefit for repayment of monthly instalments would be given provided the party clears its outstanding amount before 31.1.1989. Lastly, in case the amount is so deposited by the said date, then the benefit of the current scheme would also be given to the petitioner. According to the petitioner, immediately it contacted the RFC and placed the entire relevant record to show that its unit was closed from 1.12.1982 till August, 1984. Vide letter dated 21.1.1989, the petitioner also sent three cheques of Rs.1 lac each in favour of the RFC. It further requested that total amount owed by the petitioner to the RFC should be calculated immediately in terms of the letter dated 11.1.1989. Simultaneously, vide letter dated 21.2.1989, the petitioner again requested the RFC to calculate the entire amount and to inform it, so that the total outstanding loan amount could be paid. As the RFC did not respond to the letters written by the petitioner, the petitioner continued to make oral requests. According to the letter dated 25.3.1989, a cheque of Rs.3 lacs was issued in favour of the RFC with a view to finally settle the loan amount. In the letter, the petitioner had clearly pointed out that it had already paid Rs.5.75 lacs in the financial year 1987-88, and Rs.11.80 lacs in the year 1988-89. The petitioner, therefore, requested that a clearance certificate be issued with regard to the two loan accounts of Rs.10 lacs and Rs.5 lacs, respectively. However, instead of issuing the clearance certificate, vide letter dated 12.3.1990, the RFC informed the petitioner that after a detailed examination of the petitioner's request for waiver of penal interest, the RFC has decided to waive the penal interest only from 5.4.1988 (i.e. the date on which request for change in the constitution was made to the RFC) till 12.3.1990. However, instead of issuing the clearance certificate, vide letter dated 12.3.1990, the RFC informed the petitioner that after a detailed examination of the petitioner's request for waiver of penal interest, the RFC has decided to waive the penal interest only from 5.4.1988 (i.e. the date on which request for change in the constitution was made to the RFC) till 12.3.1990. This concession would also apply provided that the petitioner were to clear the entire dues before 31.3.1990. Vide letter dated 9.5.1990, the petitioner expressed his shock and dismay about the letter dated 12.3.1990. For, the said letter was contrary to the letter dated 11.1.1989. However, instead of addressing the petitioner's anxiety, vide letter dated 14.6.1990, the RFC informed the petitioner that in case the entire loan amount were not paid by the petitioner, the RFC would take necessary legal action against it. Vide letter dated 24.1.1991, the petitioner again requested the RFC to forward a copy of statement of account, so that accounts could be verified and the amount be repaid. However, instead of sending the statement of accounts, vide letter dated 21.3.1991, the RFC informed the petitioner that the RFC has decided not to extend the benefit of waiver to the petitioner. The petitioner immediately wrote to the RFC and pointed out, firstly that it has been paying the monthly instalments on regular basis; secondly, that the RFC was going back on its waiver as expressed in the letter dated 11.1.1989. Therefore, the petitioner again requested that the benefit of waiver be given to it. However, instead of acting on the request made by the petitioner, vide letter dated dated 4.7.1991 the RFC informed the Manager (Branch) RFC, Vishwakarma Industrial Area, Jaipur that the relief granted to the unit vide letter dated 11.1.1989 has been disallowed. But, surprisingly, thereafter the RFC maintained a studied silence for five years. Suddenly, vide letter dated 9.2.1996, the RFC demanded the repayment of Rs.10.01 lacs from the petitioner. It threatened that in case the said amount were not repaid, it would take action against the petitioner under sections 29 and 30 of the Act. Immediately, on 23.3.1996, the petitioner reiterated its position and reminded the RFC that the RFC had waived the penal interest vide its letter dated 11.1.1989. The petitioner also requested the RFC to furnish latest statement of accounts w.e.f. 1.4.1988. Immediately, on 23.3.1996, the petitioner reiterated its position and reminded the RFC that the RFC had waived the penal interest vide its letter dated 11.1.1989. The petitioner also requested the RFC to furnish latest statement of accounts w.e.f. 1.4.1988. However, vide letter dated 18/21.5.1996, the RFC refused to reconsider its decision regarding recalling of the waiver of penal interest. In response thereto, on 11.9.1996 the petitioner submitted a representation to the Chairman-cum-Managing Director, RFC. The petitioner again requested for reconsidering the waiver of penal interest in terms of the letter dated 11.1.1989. However, vide letter dated 14/17.10.1996 the said request of the petitioner was categorically refused. Still hoping that the RFC would see reason, vide letter dated 13.11.1996, the petitioner requested the RFC to furnish certain documents, since the documents which were in petitioner's possession were destroyed in a fire which broke out in the petitioner's office in 1994. A registered letter to the same effect was sent on 14.11.1996. However, instead of acting on the said request, the RFC invoked its power under section 30 of the Act, and vide notice dated 19.11.1996 directed the petitioner to pay the total loan amount of Rs.12,76,301/-. Vide letter dated 3.12.1996, the petitioner informed the Dy. Manager, RFC that the petitioner is yet to receive statement of accounts. In the absence of such statement of accounts, it would be difficult for the petitioner to verify the veracity of the amount claimed by the RFC in its letter dated 19.11.1996. Vide letter dated 13.12.1996, the petitioner again brought it to the notice of RFC that a quixotic situation has developed: on the one hand, the RFC is refusing to furnish statement of accounts clearly showing the outstanding loan amount due against the petitioner. Yet on the other hand, it is demanding Rs.12,76,301/-. Simultaneously, it is threatening to take action under sections 29 and 30 of the Act. Instead of responding to the petitioner's letter dated 13.12.1996, the RFC directed the petitioner to first clear the overdues in the loan account. The RFC further informed the petitioner that the documents would be supplied only after the overdue amount is cleared. Vide order dated 11.2.1997, finally, the petitioner was informed that its assets would be taken over under section 29 of the Act. Hence, this petition before this court challenging the notice dated 19.12.1996 and the order dated 11.2.1997. The RFC further informed the petitioner that the documents would be supplied only after the overdue amount is cleared. Vide order dated 11.2.1997, finally, the petitioner was informed that its assets would be taken over under section 29 of the Act. Hence, this petition before this court challenging the notice dated 19.12.1996 and the order dated 11.2.1997. Even during the pendency of this writ petition, the RFC had floated a One Time Settlement Scheme (`OTS Scheme', for short) for those who had taken loans between Rs.2,00,000/- to Rs.50,00,000/-. Since the petitioner was eligible for the same, it applied to the RFC for being given the benefit of the said scheme. Vide letter dated 15.7.1997, the petitioner not only requested that the benefit of the scheme be given to it, but it also claimed that as it had overpaid the due amount, the excess amount should be refunded. The petitioner sent reminders on 11.8.1997 and 23.8.1997. Vide letter dated 4.9.1997, the RFC informed the petitioner that although it is welcome to take advantage of the OTS scheme, but the excess amount deposited with the RFC, the same would not be refunded. Vide letter dated 15.9.1997, the petitioner claimed that despite the promise made in the OTS scheme about complete waiver of penal interest, the same was not being granted by the RFC. Moreover, vide letter dated 29.9.1997, the petitioner pointed out that in case the entire penal interest were waived, as promised under the OTS scheme, then the petitioner has overpaid the due amount by Rs.3,65,655/-. Thus, it is entitled to the refund of the said amount. Yet, despite the apparent eligibility of the petitioner, inspite of its repeated requests, the RFC is sitting over the entire issue like a Pharah's statue. 3. Mr. Alok Sharma, the learned counsel for the petitioner, has vehemently raised a plethora of contentions before this Court: firstly, in order to recover the outstanding loan amount due to it, the RFC has three options under the Act: firstly, under section 30 of the Act, the power to recall full loan amount read with the power under section 29 of the Act to take over the possession of the assets and management of the industrial concern, as well as the right to transfer the property which has been pledged, hypothecated or assigned with the Financial Corporation. Secondly, the power under section 31 of the Act, to move an application for recovery of loan amount; thirdly, the power under section 32 G of the Act, to have the property attached through the concerned Collector. Thus, various options have been bestowed upon the RFC. However, the discretion should be exercised in a reasonable, just and fair manner. For, a discretion cannot be exercised in an arbitrary, capricious or whimsical manner. The RFC should be alive to the fact that the powers bestowed upon it range from the softest power under section 31 of moving an application before the District Judge, to the harsher power under section 32 G of recovery and attaching the property of the borrower, to the harshest power under section 29 of taking over the assets and the management of the company. While exercising these powers, the RFC should initially opt for softest power under section 31, then should opt for the harsher power under section 32 G, and in the rarest of rare cases, should it invoke its harshest power under section 29 of the Act. For, section 29 sounds the economic death-knell of the business. Thus, in the present case, instead of invoking its power under sections 31 and 32 G at the first instance, the RFC has suddenly invoked its powers under sections 30 and 29 of the Act. Therefore, it has arbitrarily exercised its discretion. Secondly, the petitioner had made the last payment to the RFC on 29.3.1989. Yet, the impugned notice was issued on 11.2.1997 i.e. almost after eight years. Therefore, the RFC has invoked its power under section 29 of the Act after a lapse of almost eight years. But according to the Limitation Act, 1963, a debt can be realised only within three years from the date the debt becomes due. Thus, the RFC cannot invoke its power under section 29 of the Act after an inordinate delay of almost eight years. For, after three years, the recovery proceedings would be hit by limitation. Thirdly, “the amount due” has to be an amount, which is “legally due” and which can be recovered through “a legal remedy”. But, the RFC cannot recover an amount after it is hit by limitation. For, the moment the limitation comes into picture, the RFC is prevented from seeking a legal remedy. Thirdly, “the amount due” has to be an amount, which is “legally due” and which can be recovered through “a legal remedy”. But, the RFC cannot recover an amount after it is hit by limitation. For, the moment the limitation comes into picture, the RFC is prevented from seeking a legal remedy. In order to buttress this contention, the learned counsel has relied upon State of Kerala vs. V.R. Kalliyani Kutty ( (1999) 3 SCC 657 ), Maharashtra State Financial Corporation vs. Ashok Kumar Agrawal, ( AIR 2006 SC 1584 ), and upon RFC vs. M/s. Anis Ahmed Habib Khan & Ors. (2009(2) WLC 63). Since the RFC did not invoke its power within three years from the last date of payment i.e. 29.3.1989, it cannot invoke its power under sections 29 and 30 of the Act in the year 1997. Fourthly, after some negotiations, the RFC had agreed to waive the penal interest for the period for which the unit was closed due to reasons beyond the petitioner's control. Such a waiver was expressly stated in the letter dated 11.1.1989. Once this waiver was made, the RFC could not back track from the said waiver. However, vide letter dated 12.3.1990, the RFC suddenly made a “U turn” and reduced the period of waiver. Initially, according to the letter dated 11.1.1989 the period of waiver extended from the date of founding of the unit till payment of the loan amount. But, according to the letter dated 12.3.1990, the waiver was to be granted only from 5.4.1988, the date on which request for change of constitution was made by the petitioner, till 12.3.1990. The sudden reduction in the period of waiver, according to the petitioner, is an arbitrary exercise of power. Fifthly, according to the letter dated 11.1.1989 a responsibility was reposed upon the Dy. Manager to examine the company's accounts, returns of sales-tax, returns of income-tax and other record in order to decide the period for which the unit was closed for reasons beyond the control of the petitioner. According to the petitioner, immediately it had submitted all the relevant documents for the perusal of Dy. Manager. However, instead of taking a decision about the period of closure, as required by the letter dated 11.1.1989, the RFC maintained a studied silence. According to the petitioner, immediately it had submitted all the relevant documents for the perusal of Dy. Manager. However, instead of taking a decision about the period of closure, as required by the letter dated 11.1.1989, the RFC maintained a studied silence. Moreover, after a lapse of about one year, without giving any opportunity of hearing to the petitioner, suddenly, the RFC changed its stand and narrowed the period of waiver. Therefore, the RFC has acted in most arbitrary, most unfair, and most unjust manner. Sixthly, According to section 63 of the Contract Act a promisee can waive repayment of a loan. Once the right has been exercised, then the promisee cannot wriggle out of the waiver. For, it would be hit by the doctrine of promissory estopple. In order to buttress this contention, the learned counsel has relied upon Jagad Bandhu Chatterjee vs. Smt. Nilima Rani and Others ( (1969) 3 SCC 445 ), Hari Chand Madan Gopal and Others vs. State of Punjab ( (1973) 1 SCC 204 ), and Mardia Chemicals Ltd. Etc. vs. Union of India & Others ( (2004)4 SCC 311 ). Seventhly, the entire conduct of the RFC is questionable. Instead of dealing with the petitioner in a fair manner, it has dealt with the petitioner in most unfair manner: it made a promise to waive the penal interest for the period when the unit was closed, then resiled from the said promise. Without giving an opportunity of hearing, without holding any negotiation with the petitioner, the RFC has unilaterally reduced the period of waiver. When the petitioner protested against the reduction of the period, the RFC went into coma for five long years. Meanwhile, during this period the interest kept on accumulating. Suddenly, after a lapse of five years, the RFC woke up and demanded the repayment of loan. Even during the pendency of this petition, the RFC did float an OTS scheme. However, despite the petitioner's repeated requests that it be given the benefit of said scheme, the RFC has maintained an enigmatic silence over the entire issue. Since, the RFC is a facet of the State, its action should be fair, just and reasonable. However, in the instant case, the conduct of the RFC is, both, whimsical and capricious. Hence, it is in violation of Article 14 of the Constitution of India. Since, the RFC is a facet of the State, its action should be fair, just and reasonable. However, in the instant case, the conduct of the RFC is, both, whimsical and capricious. Hence, it is in violation of Article 14 of the Constitution of India. Eighthly, Section 24 of the Act requires that the RFC should act in a just, fair and reasonable manner. Yet, the RFC has failed to act in a just, fair and reasonable manner. Thus, its action is in violation of the spirit of Section 24 of the Act. Lastly, that exercise of power under Secs. 29, 30, 31 and 32-G of the Act is amenable to judicial review. In case the RFC were to act in an arbitrary, capricious or whimsical manner, this Court has ample power under Art. 226 of the Constitution of India to set things right. In order to buttress this contention, the learned counsel has relied upon M/s. Ormi Textiles & Another vs. State of U.P. & Ors. ( (2008) 5 SCC 194 ); N. Lokanadham vs. Chairman Telecom Commission and Others ((2008) 5 SCC 156), M/s. Everest Wools Pvt. Ltd. and others vs. U.P. Financial Corporation and others ( (2008) 1 SCC 643 ), and M/s. Mahendra Saree Emporium vs. G.V. Srinivasa Murthy ( (2005) 1 SCC 481 ). 4. On the other hand, Mr. Ashok Gaur, the learned counsel for the RFC, has strenuously opposed the contentions raised by the learned counsel for the petitioner. He has raised the following counter-contentions: firstly, three options have been given to the RFC—under sections 29 read with 30, under section 31, and under section 32 G of the Act. Instead of confining the discretion in strait-jacket formula by directing the RFC to invoke its softer option under section 31, then to move on the option of 32 G, and finally to invoke its harshest power under section 29 read with 30, “a total discretion” has to be left to the RFC to invoke any of the three powers under the facts and circumstances of each case. In short, the powers bestowed by the Act cannot be cribbed, cabined, and confined by a judicial interpretation. In order to buttress this contention, the learned counsel has relied upon the case of Karnataka State Industrial Investment and Development Corporation Limited vs. SKK Kulkarni and Others ( (2009) 2 SCC 236 ). In short, the powers bestowed by the Act cannot be cribbed, cabined, and confined by a judicial interpretation. In order to buttress this contention, the learned counsel has relied upon the case of Karnataka State Industrial Investment and Development Corporation Limited vs. SKK Kulkarni and Others ( (2009) 2 SCC 236 ). Further, relying on the case of A.P. Financial Corporation vs. M/s. Gar Re-Rolling Mills and Another ( (1994) 2 SCC 647 ), Mr. Gaur has contended that once there is a default in payment of loan, it is for the RFC to decide whether to proceed under section 29, or under section 31 of the Act. In fact, the RFC can invoke its power under section 29 of the Act, even after it has invoked its power under section 31 of the Act. Thus, an absolute discretion has been granted to the RFC with regard to utilization of its powers under the Act. Secondly, Sections 29 and 31 of the Act operate in two different fields. Although both these sections provide remedies to the RFC, although prima facie the remedies could be termed as “legal remedies”, since they are provided by the Law, but a distinction has to be made between the two remedies under sections 29 and 31 of the Act. According to the learned counsel, while the remedy under section 31 requires the initiation of a judicial process, the remedy under section 29 does not warrant involvement of a court. Invocation of the judicial process would certainly be subject to the law of limitation. Once a judicial process is hit by limitation, the right to a remedy is extinguished. However, merely because a right to a remedy is barred by limitation, it does not extinguish the debt. In case the RFC has other means—or remedy— without involving a court, as it does under section 29 of the Act for the recovery of its loan amount, it can certainly invoke the said means of recovery. After all, the debt continues to exist even if the right to remedy is extinguished. In order to buttress this contention, the learned counsel has relied on a decision of the Constitutional Bench of the Hon'ble Supreme Court in the case of Bombay Dyeing and Manufacturing Co. After all, the debt continues to exist even if the right to remedy is extinguished. In order to buttress this contention, the learned counsel has relied on a decision of the Constitutional Bench of the Hon'ble Supreme Court in the case of Bombay Dyeing and Manufacturing Co. vs. The State of Bombay and Others ( AIR 1958 SC 328 ), and upon the case of M/s. Kumar Chemicals and Fertilisers (P) Ltd. and Anr. vs. Andhra Pradesh Industrial Development Corporation and Anr. ( AIR 2008 A.P. 101 ). Hence section 29 of the Act is not hit by limitation. Therefore, the RFC was justified in invoking its power under section 29 read with section 30 of the Act even after a lapse of seven years. Thirdly, waiver has to be unconditional in nature. A waiver cannot be conditional in its ambit and scope. The letter dated 11.1.1989 had clearly imposed two conditions: firstly, on the RFC and secondly on the petitioner. According to the said letter, the RFC was to examine the relevant documents produced by the petitioner and to decide as to the period in which the unit was closed due to reasons beyond the control of the petitioner. But simultaneously, a duty had been imposed upon the petitioner to make full and final payment of outstanding dues by 31.1.1989. Since the letter had imposed conditions, therefore it does not amount to a waiver under section 63 of the Contract Act. Fourthly, that the benefit of waiving the penal interest vide letter dated 11.1.1989, was granted for a period when the firm existed, and the Company had not come into existence. But, the said benefit could not be given to the Company, for a period in which the Company did not exist. Therefore, the RFC was justified in curtailing the period of benefit and limiting it from 5.4.1988 till 12.3.1990. Therefore, the learned counsel has supported the letter dated 12.3.1990. Fifthly, the petitioner is a chronic defaulter who has not paid a single penny since 1989. Therefore, he deserves no mercy from this Court. Lastly, since the petitioner has not paid the principal amount, interest amount and the penal interest from 1984, the RFC was justified in issuing the letter dated 12.3.1990 and in insisting that the penal interest be paid by the petitioner. 5. In rejoinder, Mr. Therefore, he deserves no mercy from this Court. Lastly, since the petitioner has not paid the principal amount, interest amount and the penal interest from 1984, the RFC was justified in issuing the letter dated 12.3.1990 and in insisting that the penal interest be paid by the petitioner. 5. In rejoinder, Mr. Alok Sharma has contended that sections 29, 31 and 32 G would have to be interpreted cohesively. For, all the three Sections provide legal remedies. Since limitation covers the cases under sections 31 and 32 G of the Act, ipso facto, it would also cover the case falling under section 29 of the Act. Secondly, section 29 of the Act uses the expression “where any industrial concern, which is under a liability to the Financial Corporation”. The word “liability” does not include a “time-barred debt”. Therefore, once the remedy under section 29 of the Act is hit by limitation, the repayment of debt is no longer a “liability”. For, by the flux of time, the remedy under section 29 of the Act cannot be invoked. Thirdly, even if it is held that the RFC can choose any of the three remedies available to it, such a selection would have to be fair, just and reasonable. However, in the present case, the RFC is not justified in invoking its power under section 29 of the Act. For, the RFC has never informed the petitioner about the total amount due from it. Despite the fact that repeatedly the petitioner has sought the said information from the RFC, the RFC has not divulged the said information. Since the RFC has not revealed the total amount due, it cannot justifiably claim that the petitioner has “defaulted in repayment of the loan amount”. Thus, the RFC is unfairly invoking its power under section 29 of the Act. Fourthly, that the interest is payable only from the date a proper demand has been made. Until and unless, the RFC reveals the total amount due, it cannot be said that “a proper demand” has been made. After all, claims of the RFC are subject to the verification by the petitioner. However, in the present case, although the petitioner has sought the said information, the RFC has refused to divulge the same. Thus, it has not made a “proper demand”. After all, claims of the RFC are subject to the verification by the petitioner. However, in the present case, although the petitioner has sought the said information, the RFC has refused to divulge the same. Thus, it has not made a “proper demand”. Lastly, that as a debtor, the petitioner does have a legitimate expectation that, the RFC, being a facet of State, would act in a reasonable and just manner. However, the conduct of the RFC clearly proves that it has acted in most unreasonable and unjust manner. Therefore, the petitioner's rights under the doctrine of legitimate expectation have been violated by the RFC. 6. Heard learned counsel for the parties, examined the impugned notices, perused the material available on record, and considered the case law cited at the Bar. 7. This case raises a number of interesting legal issues:- i) What is the nature, scope and ambit of sections 29, 30, 31 and 32 G of the Act? ii) Whether limitation applies to section 29 of the Act, or not? iii) Whether the RFC is duty bound to first invoke its power under section 31, then to invoke its power under section 32 G and ultimately to invoke its power under section 29 of the Act, or not? iv) Whether the power of the RFC in invoking sections 29, 31 and 32 G is subject to judicial review or not? v) Whether the letter dated 11.1.1989 tentamounts to a waiver under section 63 of the Contract Act or not? vi) Whether the RFC can narrow down the period of relief unilaterally without giving any opportunity of hearing to the petitioner, or not? vii) Whether the RFC was justified in narrowing down the period for which relief in payment of penal interest was granted, or not? viii) Whether under the facts and circumstances of this case, the RFC was justified in invoking its power under section 29 of the Act or not? ix) Whether the action of the RFC is in violation of section 24 of the or not? x) Whether the action of the RFC is in violation of legitimate expectation or not? xi) Whether the action of the RFC is in violation of Article 14 of the Constitution of India or not? 8. Section 29 of the Act is as under:- 29. Rights of Financial Corporation in case of default. x) Whether the action of the RFC is in violation of legitimate expectation or not? xi) Whether the action of the RFC is in violation of Article 14 of the Constitution of India or not? 8. Section 29 of the Act is as under:- 29. Rights of Financial Corporation in case of default. (1) Where any industrial concern, which is under a liability to the Financial Corporation under an agreement, makes any default in repayment of any loan or advance or any instalment thereof or in meeting its obligations in relation to any guarantee given by the Corporation or otherwise fails to comply with the terms of its agreement with the Financial Corporation, the Financial Corporation shall have the right to take over the management or possession or both of the industrial concern, as well as the right to transfer by way of lease or sale and realise the property pledged, mortgaged, hypothecated or assigned to the Financial Corporation. (2) Any transfer of property made by the Financial Corporation, in exercise of its powers under sub-section (1), shall vest in the transferee all rights in or to the property transferred as if the transfer had been made by the owner of the property. (3) The Financial Corporation shall have the same rights and powers with respect to goods manufactured or produced wholly or partly from goods forming part of the security held by it as it had with respect to the original goods. (4) Where any action has been taken against an industrial concern under the provisions of sub-section (1), all costs, charges and expenses which in the opinion of the Financial Corporation have been properly incurred by it as incidental thereto shall be recoverable from the industrial concern and the money which is received by it shall, in the absence of any contract to the contrary, be held by it in trust to be applied firstly, in payment of such costs, charges and expenses and, secondly, in discharge of the debt due to the Financial Corporation, and the residue of the money so received shall be paid to the person entitled thereto. (5) Where the Financial Corporation has taken any action against an industrial concern under the provisions of sub-section (1), the Financial Corporation shall be deemed to be the owner of such concern, for the purposes of suits by or against the concern, and shall sue and sued in the name of the concern. Section 31 of the Act is as under:- 31. Special provisions for enforcement of claims by Financial Corporation. (1) Where an industrial concern, in breach of any agreement, makes any default in repayment of any loan or advance or any instalment thereof or in meeting its obligations in relation to any guarantee given by the Corporation or otherwise fails to comply with the terms of its agreement with the Financial Corporation or where the Financial Corporation requires an industrial concern to make immediate repayment of any loan or advance under section 30 and the industrial concern fails to make such repayment then, without prejudice to the provisions of section 29 of this Act and of section 69 of the Transfer of Property Act, 1882 (4 of 1882), any officer of the Financial Corporation, generally or specially authorized by the Board in this behalf, may apply to the District Judge within the limits of whose jurisdiction the industrial concern carries on the whole or a substantial part of its business for one or more of the following reliefs, namely:- (a) for an order for the sale of the property pledged, mortgaged, hypothecated or assigned to the Financial Corporation as security for the loan or advance; or (aa) for enforcing the liability of any surety; or (b) for transferring the management of the industrial concern to the Financial Corporation; or (c) for an ad interim injunction restraining the industrial concern from transferring or removing its machinery or plant or equipment from the premises of the industrial concern without the permission of the Board, where such removal is apprehended. (2) An application under sub-section (1) shall state the nature and extent of the liability of the industrial concern to the Financial Corporation, the ground on which it is made and such other particulars as may be prescribed. Section 32 G of the Act is as under:- 32 G. Recovery of amounts due to the Financial Corporation as an arrear of land revenue. Section 32 G of the Act is as under:- 32 G. Recovery of amounts due to the Financial Corporation as an arrear of land revenue. Where any amount is due to the Financial Corporation in respect of any accommodation granted by it to any industrial concern, the Financial Corporation or any person authorised by it in writing in this behalf, may, without prejudice to any other mode of recovery, make an application to the State Government for the recovery of the amount due to it, and if the State Government or such authority, as that Government may specify in this behalf, is satisfied, after following such procedure as may be prescribed, that any amount is so due, it may issue a certificate for that amount to the Collector, and the Collector shall proceed to recover that amount in the same manner as an arrear of land revenue. 9. At the first blush, there are certain similarities between sections 29 and 31 of the Act. Both the sections come into operation once an industrial concern has defaulted in repayment of loan, or instalments thereof, or in meeting its obligation in relation to any guarantee given to the Corporation, or otherwise fails to comply with the terms of the agreement with the Financial Corporation. Under section 29 of the Act, the Financial Corporation has the power to take over the management or possession, or both, of the industrial concern. Similarly under section 31 of the Act, the Corporation can request the District Judge to transfer the management of the industrial concern to the Corporation. Moreover, under section 29 of the Act, the Corporation has the power to transfer, by way of lease or sale and realise the property pledged, mortgaged, hypothecated or assigned to the Financial Corporation. Similarly, under section 31 the Corporation can request the Court for an order for the sale of the property pledged, mortgaged, hypothecated or assigned to the Financial Corporation as security for the loan or advance. 10. However, a closer examination of these two provisions reveals vast differences between them: firstly, while section 29 deals with industrial concern or the property of a debtor, it does not deal with the liability of a surety. It is, in fact, section 31 which empowers the Corporation to move against the surety as well. 10. However, a closer examination of these two provisions reveals vast differences between them: firstly, while section 29 deals with industrial concern or the property of a debtor, it does not deal with the liability of a surety. It is, in fact, section 31 which empowers the Corporation to move against the surety as well. The Hon'ble Supreme Court noticed this fact in the case of Karnataka State Financial Corporation vs. N. Narsimahaiah & Ors. (2008) 5 SCC 176 ), when it observed:- The intention of Parliament in enacting Section 29 and 31 of the Act was not similar. Whereas Section 29 of the Act consists of the property of the industrial concern, Section 31 takes within its sweep both the property of the industrial concern and as that of the surety. None of the provision control each other. Parliament intended to provide an additional remedy for recovery of the amount in favour the Corporation by proceeding against a surety only in terms of Section 31 of the Act and not under section 29 thereof. Secondly, section 29 does not require intervention of a court, whereas section 31 clearly requires the interference of a court. In the case of Gar Re-rolling Mills & another (supra), the Hon'ble Supreme Court while interpreting the scope and ambit of sections 29 and 31 of the Act observed as under:- Section 29 provides both the rights and remedies as also the procedure for enforcement of the rights and is a complete code in itself. It is open to the Corporation to act under section 29 to realise the dues from the defaulting concern by following the procedure prescribed there under. The Corporation does not require the assistance of the court to enforce its rights while invoking the provisions of Sec. 29 to recover its dues from the defaulting concern. Similarly, in the case of Ormi Textiles & Another (supra), the Apex court observed, “whereas section 29 confers a power to sell the property unilaterally, section 31 provides inter alia for the same power only, through the intervention of the Court.” As regards section 31 of the Act, it observed that the substantive right under section 31 of the Act is “something in the nature of an application for attachment of property in execution of a decree before the judgment” In N. Narsimahaiah & Ors. (supra) the Apex Court observed as under:- “However, what can be done by invoking section 29 of the Act can inter alia be done by invoking Section 31 thereof also but therefor a different procedure has to be adopted.” Thirdly, section 29 is akin to section 69 of the Transfer of Property Act. For, both the provisions grant a right to the creditor to realise the debt without taking recourse to a court of law. Thus, sections 29 and 31 of the Act, in effect, operate on two different plains, although they may share common factors. But for our purpose, the most important difference to note is that while the remedy under section 31 requires the initiation of a judicial process, the remedy under Sec. 29 does not. 11. On the other hand, while dealing with section 32-G of The Act in the case of Delhi Financial Corporation vs. Rajiv Anand ( (2004) 11 SCC 625 ), the Apex Court has interpreted the scope and ambit of the said provision. The Court held as under:- “Undoubtedly, the provision is in the nature of an execution proceeding but it is not a recovery proceeding pursuant to a decree of a court. It is a recovery proceeding on the amount being found to be due by a simple verification by the State Government or the authority appointed by it.” It has further stated that: Since the remedies available under Sections 29, 31 and 32 were found to be inadequate, therefore, by Section 32 G one more remedy of recovery is given to a financial corporation. Merely, for execution of a decree of a court no such provision is required. Once a decree is passed, it can be executed in the normal manner. That Section 32 G is not for execution of a decree of a court is also clear from the fact that it does not use the word “decree”. All that Section 32 G contemplates is that where an amount is due an officer will make an application to the State Government, the State Government or an authority appointed by them would, after following procedure as may be prescribed, issue a certificate for that amount to the Collector and the Collector shall proceed to recover that amount as arrears of land revenue. Hence, sections 29, 31 and 32 G of the Act provide three different legal remedies to the RFC. Hence, sections 29, 31 and 32 G of the Act provide three different legal remedies to the RFC. However, these remedies differ in their nature. While the power under section 29 of the Act can be invoked unilaterally i.e. without involvement of a court, the power under section 31 of the Act requires the interference of the court. Meanwhile, the power under section 32 G requires the intervention of the government. Of course, there are other differences between these provisions. But as they are not germane to the present controversy, presently they are not being enumerated. 12. It is, indeed, a settled principle of law that limitation comes in the way of enforcement of a legal remedy. Thus, a distinction has to be made between the word “remedy”, and the word “legal remedy”. 13. Mr. Alok Sharma has argued, at length, that sections 29, 31 and 32 G of the Act should be interpreted cohesively vis-a vis the applicability of limitation. According to him, these provisions provide “legal remedies”, and all legal remedies are subject to limitation. Since sections 29 and 31 of the Act provide “legal remedies”, therefore section 29 is as much subject to limitation as is section 31 of the Act. However, this argument is untenable: firstly, as pointed out above, these three provisions are different in their scope and applicability. Therefore, it is a doubtful proposition that “all the three provisions are subject to limitation”. In fact, one of the moot questions in this case is, whether section 29 of the Act is subject to limitation or not? A legal remedy is a remedy provided by law. But there can be different kinds of remedies provided by law. In fact, in the present case, the Act provides for two distinct kinds of remedies, namely the first under section 29 of the Act--where the intervention of the court is not needed; the second under section 31 of the Act, where the intervention of the court is required. A bare look at the Limitation Act reveals that limitation comes into operation only in those cases where a legal proceeding is required to be initiated. It does not apply to other legal remedies where the court does not come into picture. Since section 29 of the Act does not need the interference of the court, therefore the provisions of the Limitation Act are inapplicable to it. It does not apply to other legal remedies where the court does not come into picture. Since section 29 of the Act does not need the interference of the court, therefore the provisions of the Limitation Act are inapplicable to it. Secondly, the settled principle of law is that while limitation extinguishes the access to a legal remedy, limitation does not extinguish the debt. The debt and its enforceability continue to exist. In the case of Bombay Dyeing & Manufacturing Co. Ltd (supra) the Hon’ble Supreme Court observed that, “Now it is settled law of this country that the statute of Limitation only bars the remedy but does not extinguish the debt.” Citing Corpus Juris Secundum, Vol. 53, page 922, it observed, “The general rule, at least with respect to debts or money demands, is that a statute of limitations bars, or runs ‘against the remedy and does not discharge the debt or extinguish or impair the right, obligation, or cause of action’. “ Therefore, limitation does not discharge the debt. The debt continues to exist. Similarly, the creditor’s right to the repayment of the debt continues to exist, provided he can realise the debt without the interference of a court. As stated above, the remedy under section 29 of the Act does not require the intervention of the court. It is a remedy independent of a judicial proceeding. Hence, section 29 of the Act is not subject to limitation. Thirdly, a bare perusal of section 31 of the Act reveals that section 29 of the Act and section 69 of the Transfer of Property Act have been placed at part with each other. Like the latter provision, the former provision does not require the intervention of a Court. Although both these remedies have been provided by law and hence are “legal remedies”, but they are not subject to limitation. Mr. Alok Sharma has relied upon the cases of V.R. Kalliyanikutty (supra), Ashok Kumar Agrawal (supra) and M/s Anis Ahmed Habib Khan & Ors (supra) to buttress his contention that section 29 of the Act is subject to limitation. However, these cases do not come to his rescue. For, none of these cases deal with the applicability of Limitation Act on section 29 of the Act. However, these cases do not come to his rescue. For, none of these cases deal with the applicability of Limitation Act on section 29 of the Act. The case of V. R. Kalliyanikutty (supra) dealt with the interpretation of sections 69 (2), 70, and 71, of the Kerala Revenue Recovery Act, 1968. Secondly, the said case dealt with the interpretation of the words “due” and “amount due”. Thus, the said case was not concerned with the applicability or inapplicability of limitation on section 29 of the Act. Similarly, the case of Ashok Kumar (supra) dealt with the application of limitation on section 31 and 32 G of the Act. It did not deal with the application of limitation on section 29 of the Act. Likewise, this court in the case of M/s Anis Ahmed Habib Khan & Ors. (supra) dealt with section 31 of the Act and not with section 29 of the Act. Therefore, none of these judicial pronouncements throw any light on the controversy involved in the present case. In the case of M/s. Kumar Chemicals and Fertilisers (P) Ltd. & Another (supra) the Hon’ble Andhra Pradesh High Court squarely dealt with the issue involved in the present case. Relying on the case of Bombay Dyeing and Manufacturing Co. Ltd (supra), Their Lordship concluded that “a time barred debt can be recovered by the creditor by enforcing the lien for obtaining the satisfaction of the debt even though an action thereon would be time barred.” Thus, the Court held that provisions of the Limitation Act are inapplicable to section 29 of the Act. This court is in agreement with the views expressed by the Hon’ble Andhra Pradesh High Court. 14. Mr. Alok Sharma has further argued that the RFC cannot invoke its power under section 29 of the Act as it does not have the possession of the assets of the petitioner. Hence, it does not have the ‘lien’ over the said assets. However, this argument, too, must fail. For, when a loan is given, the creditor does have a constructive possession over the assets which are pledged, mortgaged, hypothecated or assigned to him/ it. Since the RFC has the constructive possession over such assets, it has a ‘lien’ over them. Hence, under section 29 of the Act, the RFC can realize its outstanding amount by transferring by way of lease or sale etc. of such assets. Since the RFC has the constructive possession over such assets, it has a ‘lien’ over them. Hence, under section 29 of the Act, the RFC can realize its outstanding amount by transferring by way of lease or sale etc. of such assets. But, merely because the period of limitation is inapplicable to the power under section 29 of the Act does not mean that the RFC can afford to be lethargic in invoking the said power. It cannot afford to sleep like Rip Van Winkle. In catena of cases both the Hon’ble Supreme Court and this court have held that where a period of limitation is not prescribed or is inapplicable, even then the power should be exercised within “a reasonable time”. What is a reasonable time would depend on the facts and circumstances of each case. No mathematical formula can be proposed in order to gauge the reasonableness of time required for invoking a power. But as a general proposition, the Hon’ble Supreme Court is of the opinion that a power or a right should ordinarily be exercised within one year. Hence, the RFC should have exercised its power under section 29 of the Act within one year from the date the amount became due. According to the petitioner, the last payment was made on 29.3.1989. Yet, the notice under section 29 of the Act was issued on 11.2.1997, i.e. after an inordinate delay of almost eight years. This court would revert back to this aspect of the case when it discusses the conduct of the RFC hereinafter. Suffice it to say, for the moment, that an inordinate delay in use of the power makes it an abuse of the power. Mr. Alok Sharma has further pleaded that the power under sections 29, 31 and 32 G of the Act ranges from a soft power to the harshest power. Thus, before the RFC exercises its harshest power under section 29 of the Act, it should take recourse to the softest power under section 31 of the Act. For, section 31 of the Act provides an opportunity to the debtor to place his case before a judicial forum, whereas under section 29 of the Act, the debtor is left to the mercy of the RFC. For, section 31 of the Act provides an opportunity to the debtor to place his case before a judicial forum, whereas under section 29 of the Act, the debtor is left to the mercy of the RFC. According to the counsel, since the power under section 29 of the Act may cause the economic death of the debtor, it should be invoked in the rarest of the rare case. 15. In the case of M/s Gar Re-Rolling Mills & Ano. (supra) the Apex Court observed as under: On a conjoint reading of Sections 29 and 31, it appears that in case of default in repayment of loan or any installment or any advance or breach of an agreement, the Corporation has two remedies available to it against the defaulting industrial concern, one under Section 29 and another under Section 31. Since, the Corporation must be held entitled and given full protection by the Court to recover its dues it cannot be bound down to adopt only one of the two remedies provided under the Act. It further observed as under: The doctrine of election, as commonly understood, would, thus, not be attracted under the Act in view of the express phraseology used in Section 31 of the Act, viz., "without prejudice to the provisions of Section 29 of this Act,. While the Corporation cannot simultaneously pursue the two remedies, it is under no disability to take recourse to the rights and remedy available to it under Section 29 of the Act even after an order under Section 31 has been obtained but without executing it and withdrawing from those proceedings at any stage. The use of the expression "without prejudice to the provisions of Section 29 of the Act" in Section 31 cannot be read to mean that the Corporation after obtaining a final order under Section 31 of the Act from a court of competent jurisdiction, is denuded of its rights under Section 29 of the Act. To hold so would render the above-quoted expression redundant in Section 31 of the Act and the courts do not lean in favour of rendering words used by the Legislature in the statutory provisions redundant. To hold so would render the above-quoted expression redundant in Section 31 of the Act and the courts do not lean in favour of rendering words used by the Legislature in the statutory provisions redundant. The Corporation which has the right to make the choice may make the choice initially whether to proceed under Section 29 of the Act or Section 31 of the Act, but its rights under Section 29 of the Act are not extinguished, if it decides to take recourse to the provisions of Section 31 of the Act. It can abandon the proceedings under Section 31 of the Act at any stage, including the stage of execution, if it finds it more practical, and may initiate proceedings under Section 29 of the Act. It further said as under: Thus, the intention of the Legislature in using the expression "without prejudice to the provisions of Section 29 of the Act" clearly appears to be that recourse to the provisions of Section 29 of the Act is not prohibited, where an order or decree under Section 31 of the Act obtained by the Corporation has not been complied with or honoured by the defaulting concern or is otherwise insufficient to satisfy the dues of the Corporation and the Corporation withdraws and abandons to pursue further proceedings under Section 31 of the Act. Similar views have also been expressed in the case of SKK Kulkarni and Others (supra). 16. However, a discretionary power is not absolute in its nature. For, power corrupts, and absolute power corrupts absolutely. Thus, the discretion has to be exercised moderately and judiciously. It should be guided by principles of fairness, reasonableness and justness. It cannot be influenced by mala fide, by ulterior motives, by colorable exercise of power, by violation of principles of natural justice, by irrationality, by arbitrariness. Although a certain “play at the joints” should be given to the RFC, but the RFC cannot take recourse to its powers under the provisions of the Act as a “knee-jerk reaction” to a given situation. It must apply its mind and choose the remedy best suited to the given facts and circumstances of each case. Of course, it is not for this court to prescribe a strait-jacket formula for exercise of the power. It must apply its mind and choose the remedy best suited to the given facts and circumstances of each case. Of course, it is not for this court to prescribe a strait-jacket formula for exercise of the power. However, as the power under section 29 of the Act is the harshest and the widest power, generally it should be exercised rarely. For, the wider the power, the less it should be exercised, lest the authority acts like a bull in a china town. 17. But is the discretion of RFC subject to judicial review? That is the next question. Of American parentage, conceived and delivered as it was by Chief Justice John Marshal in the famous case of Marbury vs. Madison (5 US (1) (Cranch) 137), the doctrine of judicial review was declared as a basic structure of the Indian Constitution in the case of Kesavanand Bharti vs. State of Kerala ( (1973) 4 SCC 225 ). Under this power, every action of the Executive and of the Legislature can be placed under judicial magnifying glass and can be examined by the Court. Lord Diplock in the case of Council of Civil Service Union & Others vs. Minister for the Civil Services ((1984) 3 All. E. R. 935), observed that administrative action is subject to control by judicial review under three heads: (1) illegality, where the decision-making authority has been guilty of an error of law, e.g. by purporting to exercise a power it does not possess; (2) irrationality, where the decision-making authority has acted so unreasonably that no reasonable authority would have made the decision; (3) procedural impropriety, where the decision-making authority has failed in its duty to act fairly. Of course, these three broad categories are merely illustrative and not exhaustive in nature. Relying on the case of Firestone Tyre and Rubber Company vs. Richard Bruch etc. (489 U.S. 101), Justice Breyer of the American Supreme Court, in the case of Metropolitan Life Insurance Company vs. Wanda Glenn (128 S.C.T. 2243), observed, one of the grounds of judicial review of executive action is “abuse of discretion”. Thus, every action of the RFC is subject to judicial review. In case of N. Narasimahaiah & Others (supra), the Apex Court observed that “Section 29 of the said Act, therefor, confers an extraordinary power upon the Corporation. Thus, every action of the RFC is subject to judicial review. In case of N. Narasimahaiah & Others (supra), the Apex Court observed that “Section 29 of the said Act, therefor, confers an extraordinary power upon the Corporation. The corporation being “State”, within the meaning of Article 12, is expected to exercise its statutory powers reasonably and bonafidely.” 18. Similarly, in case of Everest Wools Private Ltd. & Others (supra), the Apex Court, having declared the Financial Corporation as “State” within the meaning of Article 12 of the Constitution, observed as under:- The Corporation, no doubt, is entitled to realise its dues, but it must be borne in mind that it has been conferred with a special statutory power in terms of sections 29 and 31 of the Act 1951 therefor. Such a power in the Corporation was conferred by an Act of Parliament, inter alia, keeping in view the fact that it being statutory authority, and, thus, being “a State” within the meaning of Article 12 of the Constitution of India, will act fairly and reasonably.” The Apex Court further held that “when it takes over possession of the plant and machinery in exercise of its statutory power, apart from its obligation as a “bailee” it also acts as a “trustee”. Its action otherwise must be fair and reasonable. It is true that fairness cannot be a one way street, but then whereas the Corporation indisputably has a right to realise its dues, it must act strictly in terms of the statutory and constitutional Scheme. If it acts unfairly, it fails the system. While it exercise its enormous statutory powers, it is expected to perform its duties also. Such a duty is envisaged not only under the law but also under Article 14 of the Constitution. A person aggrieved by the action of the State may have an effective remedy. However, in the case of Karnataka State Financial Corporation vs. Micro Cast Rubber & Allied Products (P) Ltd. & Ors. Such a duty is envisaged not only under the law but also under Article 14 of the Constitution. A person aggrieved by the action of the State may have an effective remedy. However, in the case of Karnataka State Financial Corporation vs. Micro Cast Rubber & Allied Products (P) Ltd. & Ors. ( (1996) 5 SCC 65 ), the Apex Court has cautioned that “in the matter of a sale by the State Financial Corporation in exercise of the power conferred on it under section 29 of the Act the scope of judicial review is confined to two situations, namely, (1) there is a statutory violation on the part of the State Financial Corporation, or (2) where the State Financial Corporation acts unfairly, i.e. unreasonably. While exercising its jurisdiction under Article 226 of the Constitution, the High Court does not sit as an appellate authority over the acts and deeds of the State Financial Corporation”. Similar view was also expressed in the case of Haryana Financial Corporation & Another vs. M/s. Jagdamba Oil Mills & Anr. ( (2002) 3 SCC 496 ). Thus, under Article 226 of the Constitution of India the High Court does have the power to examine the reasonableness or unreasonableness, fairness or unfairness, bonafide or malafide action of the RFC. But, simultaneously, the Court cannot sit as an appellate court above the decision of the RFC. The court has to examine whether the action of the RFC is legally justifiable or not? If the action of the RFC is patently unreasonable, unjust, unfair, or suffers from illegality, or from ulterior motive, or from virus of non-application of mind, or from abuse of discretion, this Court would be justified in invoking its power of judicial review against the RFC. Therefore, in the present case, this Court will have to examine the conduct of the RFC in order to decide whether the action of the RFC suffers from any legal infirmity. After all, the Constitutional requirement of reasonableness is limited not just to administrative area, but also extends to the commercial arena. Reasonableness of an action is not only the requirement of public law, but is also an essential element of private law. 19. After all, the Constitutional requirement of reasonableness is limited not just to administrative area, but also extends to the commercial arena. Reasonableness of an action is not only the requirement of public law, but is also an essential element of private law. 19. A bare perusal of the record submitted by the RFC clearly reveals that the petitioner had been trying to persuade the RFC to waive its penal interest for the period during which the unit was closed for reasons beyond its control. It had informed the RFC that the unit was closed from December, 1982 till August, 1984. The DGM (R) recommended the petitioner's case for waiving of the penal interest. The recommendation was noted by Dy. Manager (FR-5) on 6.8.1999. The General Manager (D), thereafter directed that the matter be discussed. Eventually a meeting took place on 3.1.1989. The meeting was attended by General Manager (D), Dy. General Manager (FR), and Dy. General Manager (R), Branch Manager, VKIA, Dy. Manager (FR-5), and a representative of the petitioner. According to the order-sheet dated 3.1.1989, after discussing all the relevant points, following decisions were taken:- The meeting was arranged to discuss and decide whether the Corporation should grant necessary benefit in penal interest charged in the loan amount of the unit. In this respect earlier para S.No. 216/N to 246/N may kindly be perused. After having discussed all the relevant point the meeting was concluded with the following decisions: (i) The request of the unit for grant of benefit in penal interest for closure period should be accepted. However, the closure period is subject to verification by the DGM(R) as well as Branch Manager, VKIA. The closure period should be verified from the books of accounts, return of sales tax, returns of income tax and from other records which may be deemed fit by both the officials. After verifying the closure period DGM(R), Jaipur should certify the same. (ii) The unit's request for waiver of penal interest for the period when they have made regular payments in accordance to the informal/ formal reschedulement granted by the Corporation. It has been decided that if the unit had adhered to the reschedulement granted by the Corporation and made the payment according to that reschedulement then the Corporation should consider the request of the unit for waiver of penal interest for that period when the unit made payments on regular basis. It has been decided that if the unit had adhered to the reschedulement granted by the Corporation and made the payment according to that reschedulement then the Corporation should consider the request of the unit for waiver of penal interest for that period when the unit made payments on regular basis. For ascertaining whether the unit is regular or not. Payment in a period of 3 months (i.e. quarterly) should be considered for ascertaining whether the unit is paying regularly or not as it was indicated during the course of discussion that unit did not pay the dues @ 40,000/- p.m. strictly in accordance to the reschedulement granted to it. (iii) The Manager (Br.), RFC, VKIA should calculate the quantum of penal interest to be waived in consultation with DGM(R), Jaipur and simultaneously the unit may be asked to pay the entire balance outstanding except this penal interest at the earliest possible but latest by 31st March, 1989. This decision was communicated verbally to all the participant hence the further action is to be taken at the end of DGM(R) as well as Manager (Br.), VKIA. The formal approval of the competent authority for waiver of penal interest would be obtained at HO after receipt of report of figures from B.O./ R.O. The matter is submitted for consideration and further necessary orders. Sd/- Dy. Manager (FR) 03.01.1989 The decision was communicated to the petitioner vide letter dated 11.1.1989. It is pertinent to note that the meeting had not only discussed “all the relevant points”, but the discussion was held between the higher manage-ment officers and the petitioner. A bare perusal of the decision, and of the letter dated 11.1.1989 further reveals that the RFC had agreed to waive the penal interest for the period during which the unit was closed for reasons beyond the control of the petitioner. A duty had been imposed on the petitio-ner to submit all the relevant documents to the RFC so that the RFC could decide the period during which unit was closed for reasons beyond its control. Further, a duty had been imposed upon the officers of RFC to decide the said period. Since the petitioner was required to make the payment by 31.1.1989, naturally the RFC was required to take its decision prior to the said date. 20. Further, a duty had been imposed upon the officers of RFC to decide the said period. Since the petitioner was required to make the payment by 31.1.1989, naturally the RFC was required to take its decision prior to the said date. 20. The order-sheet further reveals that the petitioner had submitted all the necessary documents to the RFC. After going through the necessary documents, according to order-sheet dated 16.11.1989, the RFC had decided that the petitioner's unit, in fact, remained closed from November, 1982 till August, 1984 for reasons beyond its control. Thus, the petitioner had fulfilled his duty by submitting the necessary documents. Equally, the RFC had calculated the period during which the unit was closed. Thereafter, the RFC was merely required to calculate the amount owed by the petitioner, excluding the period during which the unit was closed. According to order-sheet dated 15.1.1990, the petitioner's file was sent to DGM (R) for getting the calculation done in light of the decision taken on 3.1.1989. However, instead of calculating the amount due, suddenly, on 2.3.1990 the RFC took a “U turn”. According to order-sheet dated 2.3.1990, General Manager (S) wrote a long note wherein he raised an objection that initially the petitioner company was constituted as a Firm and subsequently was changed into a Company. Since the period during which the unit remained closed was the period when the petitioner was acting in its capacity as a Firm, therefore, the petitioner company cannot be given the benefit of the said period. The General Manager (S) observed in para 283 as under:- In view of the said changes there appears no justification for considering any relief in penal interest prior to the date of take over of the unit by the present management. However, the penal interest after take over of the unit by present management may be considered to waive. The DGM(R) has approved the change in management vide his letter dated 23.7.88 (P-232/C) with reference to party's request dated 5.4.88 and therefore the penal interest may be considered to waive from 5.4.88 to date provided the unit clears the entire outstanding before 31.3.90 failing which the legal action against the unit should be taken to recover the dues as the change in constitution was approved with a condition to clear the entire overdues. The file is submitted for re-consideration. The file is submitted for re-consideration. Sd/- GENERAL MANAGER (S) 2.3.90 The said decision culminated in the letter dated 12.3.1990, whereby the RFC has suddenly reduced the period for waiving of the penal interest from 5.4.1988 till 2.3.1990. 21. The issue before this Court is whether the sudden change of RFC between 3.1.1989, when the meeting took place, and the decision expressed in letter dated 12.3.1990, is legally justifiable or not? The word “waiver” has not been defined in the Contract Act. But the word “waiver” has been defined in the Webster Dictionary as giving up of a right, claim, or privilege by one party in favour of another party. Section 63 of the Contract Act empowers the promisee to dispense with or remit performance of the promise. In other words, to waive his right to the performance of a promise. Section 63 reads as under:- 63. Promisee may dispense with or remit performance of promise.- Every promisee may dispense with or remit, wholly or in part, the the performance of the promise made to him, or may extend the time for such performance, or may accept instead of it any satisfaction which he thinks fit. Thus, the section permits a promisee to waive wholly or in part, the performance of a promise etc. The said section does not require that a waiver must be an absolute one. Therefore, like a contract, a waiver, too, can be a conditional one. Hence, the contention raised by Mr. Ashok Gaur that waiver, which is conditional in nature, is not a waiver in the eyes of law is untenable. Vide letter dated 11.1.1989 the RFC had clearly waived its right to charge the penal interest for the period during which the unit was closed for reasons beyond the control of the petitioner. It is relevant to note that this decision was taken by the RFC in its meeting on 3.1.1989 after considering “all the relevant points”. Since the constitution of Firm was changed prior to the said meeting, it can safely be presumed that the change in the constitution of firm was also discussed. Thus, after discussing all the relevant points, a high power Committee, in negotiations with the petitioner, decided to waive the penal interest. Of course, the waiver was a conditional one, but as noted above, the petitioner had fulfilled his part of the condition by submitting all the relevant documents. Thus, after discussing all the relevant points, a high power Committee, in negotiations with the petitioner, decided to waive the penal interest. Of course, the waiver was a conditional one, but as noted above, the petitioner had fulfilled his part of the condition by submitting all the relevant documents. It was, then, for the RFC to calculate the amount due. Naturally, until and unless, the amounts were calculated, the petitioner cannot be expected to repay the said amount. But, instead of calculating the amount and informing the petitioner about it, suddenly, the RFC changed its mind. Once the RFC had waived the penal interest, once the petitioner had acted on the promise, then under the doctrine of promissory estopple, the RFC cannot be permitted to wriggle out of its commitment. Thus, the RFC is estopped from changing its stand. 22. In catena of cases the Hon'ble Supreme court has held that Financial Corporation stand in the capacity of a trustee. Thus, there is a fiduciary relationship between the petitioner and the RFC. Therefore, the petitioner has legitimate expectation that once a high power Committee had taken a decision, and had waived the penal interest, and once the RFC had calculated the period during which the unit was closed, then it would calculate the amount due and inform the same to the petitioner. It is not only a legitimate expectation but is also reasonable one. For, an instrumentality of the State is expected to act reasonably towards a person/ company. Therefore, by suddenly changing its stand, the RFC is violating the petitioner's right under the doctrine of legitimate expectation. 23. The order-sheets clearly reveal that the RFC and the petitioner were negotiating both about the waiver of penal interest, as well as the total amount owed by the petitioner to the RFC. The decision dated 3.1.1989 was taken after hearing the petitioner. Further, and most importantly, the opinion of the General Manager (S) dated 2.3.1990 was formulated without giving any opportunity of hearing to the petitioner. Since, the first decision was an outcome of a negotiation, the second decision should equally have been an outcome of a negotiation. Moreover, once the RFC had bestowed certain right upon the petitioner with regard to penal interest, for the period during which the unit was closed, the said right could not have been withdrawn without giving an opportunity of hearing to the petitioner. Moreover, once the RFC had bestowed certain right upon the petitioner with regard to penal interest, for the period during which the unit was closed, the said right could not have been withdrawn without giving an opportunity of hearing to the petitioner. It is, indeed, trite to state that a right once bestowed, cannot be denied without following the principles of natural justice. Therefore, the decision conveyed through letter dated 12.3.1990 is in violation of the principles of natural justice. Undoubtedly, the RFC has a discretionary power to decide the period for which penal interest would be waived. But the discretion is circumscribed by legal limitations. The discretion could have been exercised only after giving ample opportunity of hearing to the petitioner. Since the decision dated 12.3.1990 is in violation of principles of natural justice, therefore, the action of the RFC amounts to “abuse of discretion”. Hence, the decision dated 12.3.1990 is legally unsustainable. 24. Further examination of the record reveals that after the opinion dated 2.3.1990 was formulated, a tug of war ensued, both within the RFC, as well as, between the RFC and the petitioner. This tug of war continued for almost a year till 1991. Vide letter dated 21.3.1991, the RFC informed the petitioner about its decision not to extend of benefit of waiver to the petitioner. Surprisingly, after 1991, for the next five years, the RFC went into coma. For five long years, the RFC neither calculated the amount due, nor informed the petitioner about the same. Suddenly, vide letter dated 9.2.1996, like a titan arising from a deep slumber, the RFC demanded the repayment of entire loan amount of Rs.10.01 lacs. It started threatening the petitioner that in case the entire amount were not repaid, it would take action under sections 29 and 30 of the Act. Despite the repeated pleas of the petitioner on 21.3.1996, 18.5.1996, and 11.9.1996, vide letter dated 14/17.10.1996 the RFC categorically refused and shut the door upon the petitioner. Although the petitioner still pleaded that the RFC should reconsider its decision. Vide letter dated 19.11.1996, the RFC invoked its power under section 30 of the Act and directed that total loan amount Rs.12,76,300/- should be repaid. The petitioner requested the RFC to calculate the amount due, but instead of considering the said request, the RFC kept a studied silence over the entire issue. Vide letter dated 19.11.1996, the RFC invoked its power under section 30 of the Act and directed that total loan amount Rs.12,76,300/- should be repaid. The petitioner requested the RFC to calculate the amount due, but instead of considering the said request, the RFC kept a studied silence over the entire issue. Vide letter dated 13.12.1996, the petitioner had brought to the notice of RFC that an anomalous situation has arisen; while the RFC is refusing to calculate the exact amount due, it is pressurising the petitioner to repay the entire loan amount. But, instead of acceding to the petitioner's request, vide letter dated 11.2.1997, the RFC informed the petitioner that it would take over the possession of the company under section 29 of the Act. Even during the pendency of this writ petition the RFC had floated an OTS Scheme. The petitioner had applied for the said scheme. Despite the peti-tioner's request that the penal interest be waived, in accordance with the OTS Scheme, the RFC maintained an errie silence. When the petitioner claimed that it may have overpaid the loan, the RFC refused to examine the claim. 25. A bare perusal of all these facts clearly reveals that instead of acting as a welfare State, the RFC continued to act like Shylock demanding 'a pound of flesh'. The RFC was not created for the purpose of harassing a businessman; it was created for encouraging businessmen to invest in Rajasthan. Since Rajasthan happens to be one of the backward states of India, rapid industrialisation and investment in business is the need of the hour. In order to attract businessmen, in order to convince them to invest their capital in Rajasthan, both Rajasthan Financial Corporation and Rajasthan State Industrial Development and Investment Corporation ('RIICO', for short) were created. The RFC being a facet of the State is constitutionally bound to act fairly, justly and reasonably with a businessman. The RFC cannot be allowed to be apathetic, to be technical, to be highhanded, to be arrogant, to be insensitive to the plight of a businessman. 26. It is not only a constitutional mandate that the RFC should act reasonably, it is also the requirement of section 24 of the Act. Section 24 of the Act requires “the Board should act on business principles, due regard being had by it to the interest of industry, commerce and the general public”. 26. It is not only a constitutional mandate that the RFC should act reasonably, it is also the requirement of section 24 of the Act. Section 24 of the Act requires “the Board should act on business principles, due regard being had by it to the interest of industry, commerce and the general public”. In case, the RFC were to act in a whimsical or capricious or arbitrary manner, it certainly would not act on the basis of “the principles of business”, or in the interest of industry, commerce, or the general public. Therefore, the RFC is also required by the Act to function in a reasonable, fair and just manner. 27. Initially, without any rhyme or reason, in utter violation of principles of natural justice, the RFC changed its decision about waiver. Secondly, knowing fully well that the interest continues to accrue, the RFC went into a coma for five long years. And when it woke up, it refused to calculate the exact amount, which was owed by the petitioner to RFC. Instead of releasing the relevant information to the petitioner, it started hammering and harassing the petitioner to repay the entire loan amount. It is extremely difficult to understand as to how a borrower could repay the loan amount, when the exact amount due from it is unknown. The omission on the part of RFC to reveal the exact amount is highly arbitrary, unjust, and unfair. Moreover, while keeping this information in enigma, the RFC invoked its power under section 30, then under section 29 of the Act, that too after a lapse of seven long years. Of course, as held above, the power under section 29 of the Act is not bound by the concept of limitation, but the said power should have been exercised within a reasonable time. If correspondence was continuing between the petitioner and the RFC, the RFC should have exercised its power within a year of last of payment i.e. from 29.3.1989. But the RFC hibernated for five long years. The RFC resurrected itself after five years. In its new avtar, it became more aggressive and more arbitrary. In a cat and mouse game, it kept on pouncing the petitioner by invoking the harshest remedy available to it under sections 29 and 30 of the Act. But the RFC hibernated for five long years. The RFC resurrected itself after five years. In its new avtar, it became more aggressive and more arbitrary. In a cat and mouse game, it kept on pouncing the petitioner by invoking the harshest remedy available to it under sections 29 and 30 of the Act. The State may be leviathan in its size, colossal in its power, but under the Constitution of India, it is required to act as a benevolent, as a generous State. In a democracy, the common man is the focus of the State action. It is the common man who needs to be protected and promoted. According to the constitutional mandate, the State cannot be tyrannical in its nature, or oppressive in its power. Therefore, this court has no hesitation in holding that the omission and the acts of the RFC in changing its stand, in invoking its power under sections 29 and 30 of the Act are absolutely unfair, unjust and unreasonable. It is an abuse of its discretion, an abuse of its power. Hence, the notice dated 19.11.1996 and the order dated 11.2.1997 are legally unsustainable. They are, hereby, quashed and set aside. 28. But, before concluding this judgment, this Court takes note of the fact that the petitioner is still ready to repay the loan amount to the RFC, provided the period during which the unit was closed for reasons beyond its control, the said period is excluded and no penal interest is charged for the said period. According to the RFC itself, the unit was closed from November, 1982 till August, 1984. Therefore, in the light of the decision taken on 3.1.1989, the RFC is directed to waive the penal interest of the said period. 29. The petitioner has not sought the relief that the penal interest from 4.7.1991 till 9.2.1996, the period during which the RFC maintained studied silence, should also be excluded from the payment of the penal interest. But such an omission on the part of the petitioner, does not preclude the Court from moulding the relief so as to do complete justice to the parties. As observed above, the RFC has been most unreasonable, and most arbitrary in its action and omission. But such an omission on the part of the petitioner, does not preclude the Court from moulding the relief so as to do complete justice to the parties. As observed above, the RFC has been most unreasonable, and most arbitrary in its action and omission. The RFC has not submitted an iota of evidence to show the steps it had taken, during the intervening period from 4.7.1991 to 9.2.1996, in order to realise the debt owed by the petitioner. Since the RFC had been lethargic in its action, it possibly cannot claim the penal interest for this period. Therefore, the penal interest for this period should also be waived. 30. There is still considerable debate between the petitioner and the RFC about the exact amount owed by the former to the latter. There is still a considerable distrust between the two parties. Therefore, in the interest of justice, this Court directs both the petitioner and the RFC to submit their relevant documents before an independent Chartered Accountant, namely, S.S. Bhandari & Co., within a period of one month from the date of receipt of certified copy of this judgment. The learned Chartered Accountant, Mr. Surendra Singh Bhandari is directed to examine the relevant documents and calculate the exact amount owed by the petitioner to the RFC within a period of one month thereafter. While calculating the amount owed, the learned Chartered Accountant shall waive the penal interest for the period from November, 1982 till August, 1984 and the period from 4.7.1991 till 9.2.1996. The amount so calculated by the learned Chartered Accountant, shall be final. For his services both the parties shall jointly pay Rs.75,000/- to S.S. Bhandari & Co. The said amount shall be shared equally by the petitioner and the RFC. In case after assessing the amount, it transpires that the petitioner has overpaid the loan amount to the RFC, the RFC shall refund the said overpaid amount along with interest at the rate of 9% per annum from the date when the loan amount was overpaid. The refund shall be made within a period of three months from the date of the decision of the learned Chartered Accountant. However, in case it is discovered that the petitioner still owes money to the RFC, the petitioner shall pay the said amount within a period of three months from the date of decision of the learned Chartered Accountant. 31. However, in case it is discovered that the petitioner still owes money to the RFC, the petitioner shall pay the said amount within a period of three months from the date of decision of the learned Chartered Accountant. 31. The Deputy Registrar (Judicial) is directed to inform to Chartered Accountant S.S. Bhandari & Co. about the direction given by this court by sending a copy of this judgment and to request them to carry out the necessary exercise. On receipt of the report from the learned Chartered Accountant, the same shall be placed before this Court. 32. With above observations, the writ petition is, hereby, partly allowed. There shall be no order as to costs.