Gap Paper Board Industries Pvt Ltd vs ORISSA STATE FINANCIAL CORPORATION

M /s. Gap Paper Board Industries Pvt. Ltd., the complainant in this Original Petition against Orissa State Financial Corporation (for Short called O.S.F.C.) and Industrial Promotion & Investment Corporation Ltd. (for short called IPICOL), Orissa, alleges deficient and inadequate rendering of financial assistance hired by the complainant for consideration and seeks a direction to the opposite parties to sanction fully viable project, not to charge interest till the entire loan on the revival project is sanctioned and released, disburse the lo& : to the complainant to complete the project and also to pay damages of Rs. 115 crores.

THE assets of M/s. G.K. Straw Board Industries Pvt. Ltd. at Manamunda, Phulbani were seized on O.S.F.C. under Section 29 of the State Financial Corporation Act, 1951 in the year 1987 (10.12.87), with a right to sell/lease for realisation of its dues. These were ready for sale/ lease and disposal on ''As is where is basis'' with negotiation to pay back the amount outstanding after deposit of the down payment. The said unit alongwith other units was advertised for sale, but there was no response for the said unit. The Managing Director of O.F.S.C. was also authorised to negotiate with the available parties for sale of unit. One Mrs. Amrit Pal wife of Gr. Capt. Gajender Pal approached opposite party No. 1 and upon negotiation agreed to purchase the said industrial unit of M/s. G.K. Straw Board Industries (P) Ltd. The terms are contained in tine acceptance letter dated 31st March, 1988 (Annexure -A to the complaint) reading as follows : ''Sub : - Sale of indl. assets of G.K. Straw Board Industries (P) Ltd., Manamunda, Phulbani taken over u/Section 29 of the SFCs Act, 1951. Ref : - Your offer, dated 30.3.88 Dear Madam, After careful consideration, the Corporation has agreed in principle to sell the indl. assets of the above named unit like land, building, plant and machinery etc. to you on as -is -where -is basis subject to following terms and conditions : 1. Total Sale Value - Rs. 22,00,000/ - (Rs. twenty -two lakhs) only. 2. Down Payment - Rs. 2,000,000/ - (Rs. two lakhs) only to be paid in two instalments i.e. Rs. 1.00 lakh (Rs. one lakh) only immediately and rest within a month thereof on which interest will be charged till its payment. 3. Interest on the balance amount will be charged at the existing rate as was applied against loan to M/s. G.K. Straw Board Industries (P) Ltd. 4. Corporation will consider sanctioning additional loan as may be required for completion and implementation of the project on usual terms and conditions. 5. The balance amount will be repaid as per Repayment Schedule, to be decided and drawn -up jointly after sanction of addl. loan in your favour for both the loan. 6. Besides mortgage and hypothecation of the indl. assets to be sold, you and your husband will give personal guarantee to the Corporation as to repayment of loan and payment of interest. As the immediate payment of Rs. 1,00,000/ - has already been made by you, you are requested to execute necessary documents in compliance to above immediately.''

Mrs. Amrit Pal executed on 31st March, 1988 the requisite documents in compliance with the terms of sale contained in the above quoted letter and the immovable and movable assets of the said unit were released in her favour on as is where is basis, as per the letter Annexure Bl to the complaint. The proceedings of the handing over the assets were duly recorded on 31.3.88 and are Annexure Al to the complaint. O.S.F.C, in the letter dated 13.5.88 Annexure B informed Mrs. Amrit Pal that during the period of the previous management a sum of Rs.

12 LAKHS was released by IPICOL in favour of M/s. Adya and Co. Engineering Pvt. Ltd., Calcutta as advance for supply of some machinery for the unit costing around Rs. 16.50 LAKHS required in connection with manufacturing of grey boards and that these machineries are now lying with the above supplier for delivery. These are the bare facts on which there is no dispute. 4. In the meanwhile a Company was floated in the name and style of Pankaj Straw Board Industries Pvt. Ltd. as per the provisional letter of allotment by Registrar of Companies, Orissa, with Gr. Captain G. Pal, Mrs. Amrit Pal as Directors. However, subsequently the name of the Company was changed due to an objection of Registrar of Companies to M/s. Gap Paper Board Industries Pvt. Ltd., the complainant herein.

SINCE we are not inclined to go into the merits of the complaint, we are briefly noticing the allegations made in the complaint. It is alleged in the complaint that after the acceptance of the said offer regarding the purchase of said unit it came to lime light that the first opposite party had concealed material facts. The opposite parties guided by their sole desperate expediency to save their neck from the CBI and other Investigating Agencies, who were investigating serious irregulari ties of the opposite parties which caused losses of around Rs. 14 -15 lakhs to the State of Orissa and ruined the lives of previous promoters, deliberately handed over the same partly completed industrial project to the complainant for completion and implementation as a revival package at their full capital costs of Rs. 22 lakhs by giving patently false assurance and commitment and resorting to massive concealments, misrepresentations and false -allurements, fully knowing that the project was a non -starter and had become thoroughly non -viable and was banned for financing by the IDBI and out of assets of Rs. 22 lakhs, assets worth Rs. 13 lakhs had been completely written off and the main plant and machinery had become thoroughly redundant and incapable of any viable use. The complainant has raised inter alia : (i) that opposite parties had deliberately for ulterior purpose/reasons best known to them, had concealed that the existing incomplete project of G.K. Straw Board for manufacture of 5 M.T. per day straw board costing Rs. 34.60 lakhs had already been considered to be financially non -viable project and had been superseded and was revised in 1986 at the cost Rs. 86 lakhs for production of 5 M.T., grey board per day instead of straw board,

(ii) that even grey board project had already been declared non -viable for business and implementation by IDBI,

(iii) that the complainant was cheated at the hands of opposite parties as even the grey board project was banned by IDBI on 31.3.84, four years before the date when the complainant was duped into buying the banned project in March, 1988,

(iv) that on account of allurement given and misrepresentations made by opposite parties that they would give enough proper financial assistance and concession to complete the project in its entirety and completion of project of duplex board would be more profitable, the complainant was persuaded to agree and the complainant did submit a proposal for implementing the project of duplex board which was sanctioned for implementing at a cost worked out to Rs. 129.59 lakhs,

(v) that the complete project profile for duplex board unit was submitted by the complainant for sanction but opposite parties took eight long months to finally sanction the project profile of the complainant.

(vi) that the opposite party No. 1 defaulted and failed to register the assets agreed to be sold to the complainant and until the assets were registered no loan could be disbursed to the complainant despite the fact that it was lying sanctioned since March, 1989 and thus the complainant was not allowed to work,

(vii) that the opposite parties were guilty of concealment of various facts, including the fact that an advance of Rs. 4.12 lakhs was given to M/s. Adya and Co. Engineering Pvt. Ltd. for manufacture of machine worth Rs. 16.50 lakhs and that the complainant was compelled by opposite parties to place an order on them,

(viii) that M/s. Adya and Co. Engineering Pvt. Ltd. refused to supply machinery in time agreed between them while taking advantage of the default on the part of the opposite parties as the penalty clause and clauses regarding confirmed prices became inoperative because of the inaction of the opposite parties,

(ix) that there was escalation and M/s. Adya and Co. Engineering Pvt. Ltd. started demanding escalation to the extent of 35% and so the complainant has been made to suffer for no fault of it,

(x) that at the time of selling the unit opposite party No. 1 had assured that the project would be allowed to be completed and implemented but the opposite party No. 1 did not inform the complainant that the construction which had already been done at spot had already been rendered useless and the complainant had to reconstruct,

(xi) that the complainant was compelled to submit a revised proposal for 7 metric tones per day for revised cost of Rs. 220 lakhs which proposal is perfectly in order as per opposite parties but opposite parties have not taken any steps for sanction and disbursement of the complete loan,

(xii) that the amount sanctioned for the said scheme firstly to the extent of Rs. 129 lakhs and then Rs. 147 lakhs and Rs. 28 lakhs is yet to be released which is being illegally withheld causing loss to the complainant,

(xiii) that the opposite parties have acted most high -handedly and have been victimising the complainant for all the faults, shortcomings and misrepresentation on their part.

The complainant prayed that : ''(a) The respondents be directed to sanction the fully viable project in favour of the petitioner,

(b) The respondents be further directed not to charge interest from the petitioner till the entire loan on the revised project is sanctioned and released as the delay has occurred only on account of the respondents as shown by the petitioner by the documents produced on record.

(c) The respondents be directed to disburse further loan to the petitioner so as to facilitate the petitioner to implement and complete the project.

(d) The respondents be further directed to pay to the petitioner damages to the tune of Rs. 1.15 crore with interest suffered by them due to their misrepresentations made to them by the respondents.''

The Industrial Promotion and Investment Corporation of Orissa Ltd., the second opposite party is a Government Company within the meaning of Companies Act, 1956 and is a wholly owned State Government of Orissa Undertaking with the object, inter alia, of accelerating industrial growth in the State by providing financial assistance to small and medium scale industries. The opposite parties in their written version/ counter affidavit have set out chronological sequence of events which according to them conclusively demonstrate the total bona fide of the opposite parties and would further go to show that leave alone the issue of deficiency in service, the opposite parties have gone out of their way in aiding and assisting the complainant in ways more than one and from stage to stage. It is asserted that the complainant is the author of his own predicament and the present situation has arisen primarily due to want of financial liquidity of the complainant, the chief promoter and Managing Director whereof is admittedly an ex Air Force Officer. Further it is submitted that the sequence of events narrated would show that the Management of the complainant has been fickle minded and instead of singularly approaching the project and carrying on with it till its completion have attempted to proceed with the project in an arbitrary manner contrary to/without appropriate technical advice, more particularly that of their consultants and also attempted to change the scope of the project from time to time by way of enhancement of the capacity. It is pleaded that having invited its present predicament, the complainant is now trying to turn around and blame the financial institutions by way of the present petition for its own latches and unprofessional handling of the project.

HAVING given our utmost thought to the respective contentions of the parties as set out in their pleadings, we are of the opinion that this is not a suitable case for adjudication by this Commission in the time bound proceedings under Consumer Protection Act, 1986 as it involves determination of complicated questions of disputed facts which can be decided only after an elaborate trial involving taking of extensive oral evidence as well as scrutiny of voluminous documents. In M/s. Special Machines v. Punjab National Bank & Anr. I (1991) CPJ 78 (NC), decided on 22nd December, 1989 this Commission held : ''The procedure for disposal of complaints under the Act has been laid down in Section 13 of the Act, the provisions of which are made applicable to proceedings before the National Commission by Rule 14(2) of the Consumer Protection Rules, 1987. Subsections (2) and (3) of Section 13 of the Act show beyond doubt that the statute does not contemplate the determination of complicated issues of fact involving taking of elaborate oral evidence and adducing of voluminous documentary evidence and a detailed scrutiny and assessment of such evidence. It is no doubt true that the Forums constituted under that Act are vested with the power to examine witnesses on oath and to order discovery and production of documents. But such power is to be exercised in cases where the issues involved are simple such as the defective quality of any goods purchased or any shortcoming or inadequacy in the quality, nature and manner of performance of the service which the respondent has contracted to -perform for consideration. Even in such cases, if it appear to the concerned Forum under the Act that the issues raised cannot be determined without taking elaborate oral and documentary evidence it is Open to it to decline to exercise jurisdiction and refer the party to his ordinary remedy byway of suit.''

We therefore, decline to go into the merits of the complaint and refer the complainant to its ordinary remedies by way of suit or other remedies. We make no order as to costs.