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It is the petitioners case, as stated by them in the affidavit filed in support of the writ petition, that the 1st petitioner had borrowed Rs.5.00 crores in the year 2011 towards additional working capital requirements to make timely payment for the milk procured from farmers; the 2nd petitioner had approached the APSFC for sanction of a term loan of Rs.3.48 crores to set up two separate plants for processing milk and milk products; in compliance with the terms and conditions of the sanction letter, primary security for the said term loan was furnished by way of equitable mortgage of land admeasuring Acs.3.00 in Survey No.1847/1 of B.Kothakota Village, Chittoor District together with the building constructed thereon, and hypothecation of plant and machinery etc; the APSFC had sanctioned credit facilities; the assets, acquired under the term loan, were hypothecated to the APSFC as security for repayment of the term loan; the sanction letter did not stipulate any collateral security; the 1st petitioner had purchased land, of an extent of 1936 square yards in Survey No.92 of Mallampet Village, Quthbullapur Mandal, Ranga Reddy District under registered sale deed dated 30.05.2011; they had also purchased land, admeasuring 4477 square yards, in Survey No.91 of Mallampet Village, Quthbullabpur Mandal, Ranga Reddy District under registered sale deed dated 27.05.2011; the 2nd petitioner had purchased land, admeasuring 4719 square yards, in Survey No.92 of Mallampet Village, Quthbullapur Mandal, Ranga Reddy District vide registered sale deed dated 10.02.2010; these properties were offered as collateral security for the credit facility sanctioned to the petitioners and its sister concerns; for reasons beyond their control, the petitioners had suffered huge losses, and could not pay the instalments in accordance with the terms and conditions of the sanctioned term loan; the APSFC initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short the SARFAESI Act) for recovery of dues; a demand notice dated 21.12.2012 was issued, and thereafter a symbolic possession notice dated 09.05.2013 was also sent; thereafter a notice, under Rule 9(1) of the Secured Interest Enforcement Rules, 2002 (for short the Rules), was issued to put the subject secured properties to sale; however, the sale was not successful for want of bidders; the petitioners had, by their letter dated 10.03.2018, requested the APSFC to extend to them a One Time Settlement, and had remitted Rs.15.00 lakhs and Rs.7.50 lakhs through demand drafts as down payment for extension of the One Time Settlement facility; they had also requested the respondents to stop all further proceedings, including sale of the primary and collateral securities, as they intended to pay the amounts due under the One Time Settlement scheme; the petitioners came to know, after submission of the One Time Settlement proposal, that the APSFC had, in the exercise of its powers under Section 29 of the State Financial Corporations Act, 1951 (for short the Act), issued a notice for sale of the collateral securities belonging to the petitioners; the 1st petitioner had, vide letter dated 14.03.2018, requested the Managing Director of the APSFC to furnish certain documents; these documents were furnished by the APSFC without any covering letter; on a perusal of the said documents, the petitioners came to know that the APSFC had approved the offer of the 2nd respondent on 12.04.2016 for a consideration of Rs.4.60 crores; Clause (1) of the letter dated 13.04.2016 stipulated that the entire sale consideration of Rs.4.60 crores should be paid within 30 days from the date of the letter i.e on or before 12.05.2016; as per Clause (3), in case payments were not received, the EMD and other payments should be forfeited without any further reference to the bidder; APSFC informed the bidder, vide letter dated 18.06.2016, that they had only paid Rs.25.00 lakhs in addition to the EMD of Rs.5.00 lakhs; they had requested three months time to pay the balance sale consideration of Rs.4.30 crores; the APSFC had considered the said request, and had extended time for payment of the balance amount due till 10.08.2016, subject to payment of interest at 16.50% per annum from 12.05.2016 together with asset carrying costs incurred if any; the bidder was informed that, in case the full amount was not received as per the above schedule by 10.08.2016, the entire amount of Rs.30.00 lakhs would be forfeited; the bidder did not pay the said amount even by then, and yet further time was granted till 09.11.2016 by the APSFC vide its letter dated 21.10.2016; and the valuable property of the petitioners was sought to be knocked away behind their back.

We, therefore, see no merit in the submission, urged on behalf of the petitioners, that the Corporation should not be permitted to charge interest till the date of sale of the property, notwithstanding an agreement between the parties to the contrary. 
III.    CAN THE APSFC PUT THE COLLATERAL SECURITY            
OF THE BORROWER-INDUSTRIAL CONCERN TO            
SALE?
Sri Bankatlal Mandani, Learned Counsel for the petitioner, would submit that, in view of the judgment of the Supreme Court in Subhransu Sekhar Padhi v. Gunamani Swain , the APSFC was not entitled to proceed against the collateral security offered by the petitioners for availing the term loan, and could only have proceeded against the primary security offered by them.
Sri Y.N. Vivekananda, Learned Standing Counsel for the APSFC, would submit that the APSFC had sanctioned a medium term loan of Rs.5.00 crores on 27.07.2011 to the 1st petitioner, of which they had availed Rs.469.43 lakhs; while no primary security was offered as security for the said term loan, the 1st petitioner had offered certain lands, belonging to it, as collateral security; the APSFC had sanctioned a term loan of Rs.3.48 crores to the 2nd petitioner on 04.04.2010; this term loan was secured by the primary security of lands and buildings at B. Kothakota Village and Mandal, and hypothecation of plant and machinery besides collateral security by way of equitable mortgage of land admeasuring 4719 square yards in Survey No.92 of Mallampet Village, Qutbullapur Mandal; these properties were offered as security also for the loans extended to the sister concerns of the petitioners herein viz, M/s. Nandita Dairy Products Pvt. Ltd, Nitya Dairy Products Pvt. Ltd. and Kisan Food Products Pvt. Ltd; the collateral security offered by the petitioners is land admeasuring 4477 square yards in Survey No.91 of Mallampet Village, Qutbullapur Mandal, Ranga Reddy District, 1936 square yards in Survey No.92 of Mallampet Village and Mandal, Ranga Reddy District belonging to the 1st petitioner, and land admeasuring 4719 square yards in Survey No.92 of Mallampet Village, Qutbullapur Mandal, Ranga Reddy Distirct belonging to the 2nd petitioner i.e. a total extent of 11,133 square yards (approximately 2 acres); in Subhransu Sekhar Padhi25, the Supreme Court followed its earlier judgment in Karnataka State Financial Corporation v. N. Narasimhaiah to hold that the collateral security offered by parties, other than the defaulting borrower, cannot be proceeded against under Section 29 of the Act; in the present case the collateral security which has been put to sale, in the exercise of the powers conferred under Section 29 of the Act, belongs to the petitioners and not to third parties; and the APSFC is, therefore, entitled to proceed against the said property, under Section 29 of the Act, to realise its dues.
While the defaulting industrial concern can be proceeded against under Section 29 of the Act, the State Financial Corporation cannot proceed against the assets of a third party surety under Section 29(1), and its power to put the assets to sale under Section 29(1) is confined only to the assets of the industrial concern. For enforcing the liability of a third party surety, the procedure under Section 31, and not under Section 29, can alone be resorted to by the respondent-Corporation. In the case on hand, it is not in dispute that the collateral security, for the term loan extended to it, was furnished by the industrial concern (defaulting borrower) and not by any third party. The respondent- Corporation is therefore entitled, in law, to sell the assets offered by the petitioners-industrial concern as collateral security for repayment of the loan due by it to the respondent-Corporation. This contention, urged on behalf of the respondent-corporation, also necessitates rejection.