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"1. That the PSIDC agrees to sell and the purchaser agreed to purchase the fixed assets of NSCL taken over by the PSIDC under Section 29 of the State Financial Corporation Act, more particularly described in the Schedule I attached to this agreement and forming part of hereof, for consideration of a sum of Rs. 45,00,00,007/- payable by the purchaser to the PSIDC and secured in the manner hereinafter mentioned.
2. That the purchaser has paid a sum of Rs. 11,24,00,002/- (Rs, Eleven crores Twenty five lakhs and two only) i.e. 25% of the consideration amount as per details given in Schedule II, the receipt of which is hereby acknowledged by the PSIDC. The purchaser shall be entitled to take over the possession of the assets as mentioned in Schedule I hereto and shall issue a certificate to the effect that the purchaser has taken over the possession of the assets to his entire satisfaction and no claim whatsoever regarding any discrepancy shall be entertained by PSIDC in this regard after the date of taking over the assets by the purchaser.
"whereas a tripartite agreement was entered into among PSIDC, SUGARFED and the said Cooperative Society on 24.6.1993 transferring all the ^assets and liabilities on "as is where is" basis to PSIDC.
and whereas vide another agreement dated 24.6.1993 was entered into between PSIDC had Northland Sugar Complex Limited further transferring all the assets and liabilities to Northland Sugar Complex Limited.
And whereas the borrower had undertaken to repay to the State Government through PSIDC a sum of Rs. 13,65,45,876.91, i.e., the amount spent by the Sugar Mills towards acquisition of land, construction of buildings and foundations, payment of machinery suppliers etc. along with interest from the date of acquisition of assets.

27. Preliminary contentions raised by the learned counsel for the respondent Corporation, having been repelled, time is now ripe to evaluate the contentions raised by the learned counsel for the petitioner on merits of the case. To appreciate the contentions advanced by learned counsel for the petitioner and a partial reference whereof has been given in preceding paragraphs, it would be relevant to revert to the basic clauses of the agreement, Annexure P-2 dated 9.10.1997. A prelude to the agreement is reference to the parties and the same has been reproduced above. Undisputedly, whereas Punjab State Industrial Development Corporation, which term shall include its successors and assign, has been described to be of the one part and M/s Chadha Papers Limited, a company registered under the Companies Act, which term shall include its successors and assign, of the second part. Further, M/s Chadha Papers Ltd. has been described as purchaser and which term includes its successors and assign. The first para of the agreement, after the prelude, only mentions that the Corporation had taken over the assets of M/s Northland Sugar Complex Ltd. under Section 29 of the Act. The second para of the agreement clearly mentions that a notice was published in the leading newspapers for sale of the assets for a consideration of Rs. 45,00,00,007/-. Last para on page 1 of the agreement further mentions that the Directors of the PSIDC had accepted the offer of the purchaser for purchase of the assets on "as is where is" basis for consideration of Rs. 45,00,00,007/- on 2.9.1997. The terms and conditions, insofar as the same are relevant, have been reproduced in the earlier part of the judgment. The first clause clearly mentions that the Corporation had agreed to sell and the purchaser agreed to purchase the fixed assets of NSCL taken over by the PSIDC under Section 29 of the State Financial Corporation Act, for consideration of a sum of Rs. 45,00,00,007/- payable by the purchaser to the PSIDC and secured in the manner hereinafter mentioned. The second clause mentions that the purchaser had paid a sum of Rs. 11,24,00,002/- i.e. 25% of the consideration. The purchaser by virtue of this clause is entitled to take over the possession of the assets as mentioned in Schedule I and was to issue a certificate to the effect that the purchaser has taken over the possession of the assets to its entire satisfaction. As per clause 3 of the agreement the balance price has to be paid in three equated yearly instalments with interest at the rate of 15% p.a. as per schedule. Clause 4 caters for default in payments. It says that in the event of default of payment as per schedule, penal interest @ 5% by way of liquidated damages for the period of default over the above normal interest of 15% p.a. shall be charged on defaulted amount of principal and interest. It could not be disputed and in fact has been conceded that till such time due date arrived i.e., 10.10.1998, nothing either towards principle or towards interest or damages was at all payable by the petitioner concern. Clause 5 stipulates that till the final payment is made by the purchaser, property transferred shall be in trust with the purchaser on behalf of the PSIDC, meaning thereby that even in the event of transfer of the property and in the event of petitioner having not made the payment, the purchaser would hold the property as trustee on behalf of the respondent Corporation. Clause 6 stipulates that the amount due together with interest and other charges shall be secured by way of hypothecation of movable assets hereby transferred. There has to be transfer by virtue of this clause as it is only thereafter that the amount and interest could be secured by way of hypothecation of movable assets. By virtue of Clause 7 of the agreement the amount has further to be secured by way of equitable mortgage by deposit of title deeds of the immovable properties including the plant and machinery permanently fastened to earth. By virtue of clause 8, the charged referred to above, i.e., hypothecation of movable properties and mortgage of immovable properties had to be created within 30 days of this agreement and were to be duly registered with the Registrar of Companies, Punjab, HP and Chandigarh. Clause 9 deals with irrevocable and unconditional guarantees in individual capacity of Kulwant Singh Chadha and Gurdeep Singh Chadha etc. for due payment of the amount along with interest. Clause 10 talks of consents and approval to be obtained by the purchaser which were necessary for running of the Sugar mill. Clause 12 stipulates that the purchaser and the guarantors as per clause 8 i.e., those who are to hypothecate and mortgage the movable and immovable properties, had agreed that in the event of default in payment of any instalment of principle or interest due, besides penal interest, it would be open to the respondent Corporation to recall the total amount payable. It is to this clause, i.e. Clause No. 12 that proviso has been attached and the same says that notwithstanding anything contained in this agreement, the amount outstanding shall be treated to be a loan in terms of Section 29 of the State Financial Corporation Act and the PSIDC shall be free to take over the assets in the event of default of either principal or interest or both. Clause 14 deals with registration charges to be borne by the purchaser. Clause 15 stipulates that documents of title relating to the sugar mill shall be retained by the PSIDC till, whole of the price is paid which is possible only after registration of the sale deeds.

(ii) If yes, how PSIDC could protect its interest and secure the balance amount recoverable from M/s Chadha Papers Limited in respect of sale of assets?

Ans:- If PSIDC does agree to the proposed assignment, it can protect its interest by insisting on the compliance with the provisions of agreement dated 9.10.1997 and in addition thereto certain further guarantees from CPL and GTBSL. In this regard, it may be pointed out that CPL in their letter dated 7.1.1998 (at page 166-167) have offered to give such guarantees that would protect the interest of PSIDC. PSIDC is primarily interested in recovering the full amount of Rs. 45,00,00,007/- out of which 25% i.e., Rs. 11,24,00,002/- have already been paid. The interest of PSIDC requires that the payment of the balance amount should be secured. This can be done by requiring CPL/GTBSL to furnish Bank guarantees for the said amount. Of course, the restrictive clauses already incorporated in the agreement dated 9.10.1997 will continue to apply."