State Of U.P vs Hindustan Unilevers & Ors

The Supreme Court upheld the Delhi High Court's order directing the U.P. Government to pay Rs.15,00,000/- along with interest at 14.9% per annum to the first respondent, as the State had guaranteed repayment of the debenture bonds issued by the U.P. Cooperative Spinning Mills Federation Ltd. The Court emphasized that the State's guarantee included interest payments, and the financial difficulties of the Federation could not absolve the State of its obligations. The Court modified the interest rate to 14.9% for five years, thereafter reducing it to 9.5% per annum, and granted three months for payment.