JUDGMENT Hon’ble Tarun Agarwala, J.—We have heard Sri A.K. Gupta, the learned counsel for the petitioner and Sri A.A.Khan, the learned counsel for the Uttar Pradesh Financial Corporation Ltd. (hereinafter referred to as the Corporation). 2. The facts leading to the filing of this writ petition is, that the Corporation gave a loan to M/s. Hindustan Coir Products Ltd. and, in lieu thereof, the said company mortgaged its property situated at A-36, Industrial area Sikandrabad, District Bulandshahr. This company could not pay the loan amount and, accordingly, recovery proceedings under Section 29 of the State Financial Corporations Act, 1951 (hereinafter referred to as the Act) was initiated against the said company. The Corporation took possession of the mortgaged property, which was put to auction in which the petitioner’s bid was accepted. The Corporation executed a sale-deed dated 8.1.1992 in favour of the petitioner for a sum of Rs. 33.50 lakhs. Upon a down payment of Rs. 13.40 lakhs, the balance amount of Rs. 16.75 lakhs was to be paid by the petitioner in five installments. Much depends upon the recital made in the sale-deed. Relevant paragraphs and Schedule-II of the sale-deed are extracted hereunder: “3. The borrower for one reason or the other could not repay the said loan together with interest and other charges to the U.P. Financial Corporation as per schedule of repayment mentioned under the terms of mortgaged documents. The Corporation had accordingly initiated recovery proceedings under the provisions of Section 29 of SFC’s Act No. 63 of 1951 (Central Act) and in exercise of its power under the said Section 29 of the SFC’s Act decided to take over the physical possession of the said unit and to re-transfer the assets land building and plant and machinery (other than the share of the company if applicable) of the said Industrial concerned namely M/s. Hindustan Coir Products Ltd. situated at A-36 Industial Area, Sikandrabad Bulandshahr in favour of Vendee M/s. Super Coir India in consideration for a sum of Rs. 33.50 lacs out of the value of the land and building is Rs. 22.96 Lacs. 5. That the Vendor do hereby confirm that the property transferred through this sale-deed in favour of the Vendee is free from all charges or encumbrances except the unpaid dues of the Vendor presently amounting to Rs. 33.50 lacs out of the value of the land and building is Rs. 22.96 Lacs. 5. That the Vendor do hereby confirm that the property transferred through this sale-deed in favour of the Vendee is free from all charges or encumbrances except the unpaid dues of the Vendor presently amounting to Rs. 16.75 lacs which is a part of the sale consideration together with interest at the rate of 21% per annum with quarterly rests payable on 20th March, 20th June, 20th September and 20th December, of each English Calender year and other charges which the Vendee has agreed to repay as per revised repayment programme (given at Annexure II) or as may be decided by the Vendor. Further 7.5% interest shall be charged extra for the defaulted period on the defaulted amount. The borrower shall also pay interest tax @ 3% or any rate which may be applicable on the gross amount of interest due on quarterly basis i.e. 20th March, 20th June, 20th September and 20th December every year or at the time of making payment on account interest, if the borrower fails to pay interest tax on the rates specified hereinbefore, the same shall be adjusted from the amount paid by the such borrower either on account of interest or principal. The interest tax shall be in addition to the rate of interest as agreed by the borrower hereinbefore. 9. In the event of purchaser fails to adhere the terms and conditioins of this agreement in the manner prejudicial to the interest of the Vendor, the Vendor without recourse in general law, shall be entitled to take over the possession of the assets hereunder in exercise of rights conferred under State Financial Corporation Act or U.P. Public Money Act, 1972 without being answerable (rest of the contents are not legible). SCHEDULE II PAYMENT SCHEDULE 15.5.92 3,35,000.00 15.11.92 3,35,000.00 15.5.93 3,35,000.00 15.11.93 3,35,000.00 15.5.94 3,35,000.00 ——————— 16,75,000.00" ——————— 3. The petitioner alleges that upon the down payment of Rs. 13.40 lakhs, the possession of the property was given and since the last installment alongwith interest could not be paid by the petitioner, the proceedings under Section 29 of the Act was initiated. The Corporation, eventually, took possession of the unit in the year 2003 and sold of the property in the year 2005 for a sum of Rs. 110.25 lakhs. The Corporation, eventually, took possession of the unit in the year 2003 and sold of the property in the year 2005 for a sum of Rs. 110.25 lakhs. The petitioner approached the Corporation claiming the excess amount received by the Corporation from the sale of the property. Since the same was not done, the petitioner filed a writ petition No. 791 of 2007, which was disposed of by an order dated 12.1.2007 directing the Corporation to pass a speaking and reasoned order on the representation made by the petitioner. Based on the said direction of the Court, the Managing Director of the Corporation passed an order dated 9.4.2007 rejecting the request of the petitioner for refund of the excess amount. The petitioner, being aggrieved by the said order, has filed the present writ petition for the quashing the order of the Managing Director dated 9.4.2007 and for refund of the excess amount alongwith interest. 4. The counter-affidavit reveals that the petitioner failed to pay the balance amount and, accordingly, applied for One Time Settlement, which was granted in the year 1996. The petitioner did not honour the aforesaid settlement and again the request of the petitioner for One Time Settlement was revived in 1998, which the petitioner again failed to honour. It was alleged that since the petitioner was not interested in running the unit they abandoned the unit after selling the machinery and, eventually, the Corporation took possession of the unit in the year 2003 and sold it in May, 2005 for a sum of Rs. 110.25 lakhs. The Corporation has adjusted the amount of Rs. 110.25 lakhs in the following manner: 5. The Corporation has adjusted Rs. 66,29,015.84 towards interest payable by the original borrower, namely, Hindustan Coir Products Ltd. plus a sum of Rs. 30,80,785.83 payable by the petitioner. After adjustment of aforesaid two amounts, a sum of Rs. 13,15,198.33 remained as surplus amount in the hands of the Corporation. 6. According to the Corporation they received a letter dated 12.2.2007 from the DRT-II, Delhi directing them to remit the amount to the Tribunal pursuant to the recovery made by Union Bank of India against the petitioner. The Corporation further contended that the said amount was remitted to the DRT-II, Delhi in July, 2007 and that the amount is with the DRT-II, Delhi. The respondents, therefore, contended that no amount is payable to the petitioner. 7. The Corporation further contended that the said amount was remitted to the DRT-II, Delhi in July, 2007 and that the amount is with the DRT-II, Delhi. The respondents, therefore, contended that no amount is payable to the petitioner. 7. The petitioner has filed a supplementary-affidavit enclosing an order of the recovery officer of the DRT-II, Delhi dated 10.1.2008 indicating that a compromise has been arrived at between the petitioner and Union Bank of India and upon payment of the compromise amount the case has been closed and consigned to the records. The petitioner further, contended that he has not received any amount, which is lying with the DRT-II, Delhi 8. The petitioner contended that the recovery of the interest of Rs. 29,51,033.48 is wholly arbitrary inasmuch as the petitioner only defaulted in the payment of last installment of loan amount of Rs. 3,35,000.00 and by no stretch of imagination the interest of Rs. 29,51,033.48 could accrue on it. The learned counsel further contended that the interest amount payable by the original borrower Hindustan Coir Products Ltd. could not be fastened or recovered from the petitioner and, therefore, the action of the Corporation in adjusting the two amounts of interest from the petitioner, after selling off its unit, was wholly illegal and arbitrary. 9. On the other hand, the contention of the Corporation is, that they are entitled to recover the amount of the erstwhile company under Section 29(4) of the Act, which permits recovery of gross charges of the financial corporation especially in the absence of any contract to the contrary. The Corporation further contended that the petitioner not only defaulted in the payment of last installment but in the payment as per the schedule of payment as per the sale-deed and, consequently, the interest of Rs. 29,51,033.48 accrued on the basis of the terms and conditions specified in clause 5 of the sale-deed. The amount accrued was correctly calculated and was in accordance with the terms and conditions mentioned in the sale-deed. The learned counsel for the Corporation has also placed reliance on a decision of the Supreme Court in Haryana Financial Corporation and another v. Jagdamba Oil Mills and another, (2002) 3 SCC 496 , on the issue of exercise of powers by the Corporation under Section 29 of the Act. The learned counsel for the Corporation has also placed reliance on a decision of the Supreme Court in Haryana Financial Corporation and another v. Jagdamba Oil Mills and another, (2002) 3 SCC 496 , on the issue of exercise of powers by the Corporation under Section 29 of the Act. The learned counsel has also placed reliance on a Division Bench decision of this Court in Maria Plasto Pack (Pvt.) Ltd., Kanpur v. Managing Director, U.P. Financial Corporation, Kanpur and others, (2004) 2 SAC 382. 10. Having heard the learned counsel for the parties at some length, we find from a perusal of the recital of sale-deed that the Corporation had sold off the property in question to the petitioner for a sum of Rs. 33.50 lakhs and gave possession to the petitioner upon a down payment of Rs. 13.40 lakhs. The balance amount of Rs. 16.75 was required to be paid in five installments from 15.5.2002 to 15.5.2004 together with interest @ 21% with quarterly rest and 7.5% interest was chargeable for the defaulted period on the defaulted amount and that the petitioner was liable to pay interest @ 3% on the gross amount of interest due on quarterly basis. We find from the record that no evidence has been led by the petitioner to indicate that he only defaulted in payment of the last installment. On the other hand, we find that the petitioner entered into a One Time Settlement which they failed to honour and thereafter possession of the unit was taken in the year 2003 and the unit was sold in the year 2005. We are of the opinion that in the light of the contention raised by the Corporation in their counter-affidavit the interest of Rs. 29,51,033.48 charged on the petitioner is justifiable. The amount of Rs. 30,80,785.83 shown to be due against the petitioner is justifiable and we are not inclined to interfere in this. This calculation has been made as per the terms and conditions of the sale-deed. 11. Clause 5 of the sale-deed clearly indicates that the property transferred was free from all encumbrances. The Corporation sold the property to the petitioner for a sum of Rs. 33.50 lakhs. Upon receiving a payment of Rs. 13.40 lakhs, the balance amount of Rs. 16.75 lakhs only was required to be paid by the petitioner. We are of the opinion that only Rs. The Corporation sold the property to the petitioner for a sum of Rs. 33.50 lakhs. Upon receiving a payment of Rs. 13.40 lakhs, the balance amount of Rs. 16.75 lakhs only was required to be paid by the petitioner. We are of the opinion that only Rs. 30,80,785.83 could be recovered from the petitioner from the sale of the unit. Excess amount so recovered was liable to be refunded to the petitioner. The amount of Rs. 66,29,015.84 shown to be due against the principal borrower M/s. Hindustan Coir Products Ltd.could not be adjusted from the sale of the unit of which the petitioner was the ostensible owner pursuant to the execution of the sale-deed. There is no term or condition attached in the sale-deed to show that the dues of the erstwhile borrower M/s. Hindustan Coir Products Ltd. would also be payable by the petitioner. The amount of Rs. 66.29 lakhs could not be recovered from the assets of the petitioner. It was open to the Corporation to recover this amount from the erstwhile borrower at best but certainly not from the petitioner. Retaining this amount, consequently, amounts to unjust enrichment at the hands of the Corporation. This amount is, accordingly, liable to be refunded to the petitioner alongwith interest in the same manner as was charged by them on the defaulted amount from the petitioner, namely, @ 21% with quarterly interest. 12. We also find that the Corporation has deposited a sum of Rs. 13,15,198.33 before the DRT-II, Delhi. Proceedings before the DRT-II, Delhi has come to an end. This amount is liable to be taken back by the Corporation and repaid to the petitioner alongwith interest. 13. In the light of the aforesaid, the writ petition is allowed. A writ of mandamus is issued commanding the Corporation to refund the excess amount to the petitioner, namely, Rs. 66,29,015.84, wrongly adjusted towards the dues of M/s. Hindustan Coir Products Ltd., alongwith interest @ 21% per annum with quarterly rest from the date of the alleged sale till the date of actual payment to the petitioner. The Corporation will also take steps immediately and approach the DRT-II, Delhi for return of a sum of Rs. 13,15,198.33 alongwith interest accrued on it, if any. Upon return of the amount from the DRT-II, Delhi the same shall be refunded within a week thereafter to the petitioner alongwith interest, if any. The Corporation will also take steps immediately and approach the DRT-II, Delhi for return of a sum of Rs. 13,15,198.33 alongwith interest accrued on it, if any. Upon return of the amount from the DRT-II, Delhi the same shall be refunded within a week thereafter to the petitioner alongwith interest, if any. This exercise shall be carried out by the Corporation by paying the amount of Rs. 66,29,015.84 alongwith interest within six weeks from today. This exercise before the DRT-II, Delhi will also be carried out within the same period. ——————