M/s Ghai Agro Mills (P) Limited and another vs Punjab Financial Corporation and another

Alok Singh, J.—Petitioners have invoked writ jurisdiction of this Court challenging the action of the respondents taking over the unit of the petitioners u/s 29 of the State Financial Corporation Act. Brief facts of the present case inter alia are that petitioner No. 1 has taken a loan of Rs. 38.60 lacs from Punjab State Industrial Development Corporation Limited-respondent No. 2; petitioner has also availed a term loan of Rs. 30.00 lacs from Punjab Financial Corporation respondent No. 1; petitioner No. 1 has committed default in making payment of the loan amount along with interest, therefore, unit of the petitioner was taken over by respondent No. 1 u/s 29 of the State Financial Corporation Act on 16.6.1995. On 16.6.1995 Rs. 40,82,935/- were outstanding against the petitioner. On the request of the petitioners, respondent No. 1 has granted benefit of One-time Settlement Scheme (hereinafter referred as ''O.T.S.'') in a meeting held on 4.9.1995 and it was decided that petitioner No. 1 would pay entire principal outstanding amount along with simple interest at documented rate within one year in instalments; last instalment was to be paid on or before 4.9.1996; petitioners had to furnish fresh collateral security by submitting title deed of immovable property; however, petitioners could not honour first O.T.S. for one reason or another; as per petitioners, despite deposit of title deed for the fresh collateral security and payment of first instalment of 25% of the amount settled possession of the unit was not restored, while as per the respondents, petitioners failed to furnish fresh collateral security and failed to supply title deed and further failed to make payment as per schedule of O.T.S. However, it is not in dispute that during the pendency of the present writ petition, pursuant to interim order dated 1.5.2002 passed by this Court, a joint meeting of the parties was held on 10.5.2002; in the meeting it was decided that company would pay Rs. 48.20 lacs to respondent No. 1 against the outstanding amount of Rs. 97.43 lacs with further interest from 1.6.2002 and shall also pay Rs. 31.50 lacs to PSIDC-respondent No. 2 against the outstanding amount of Rs. 92.67 lacs with further interest from 1.6.2002. However, petitioner was successful in making payment to respondent No. 1, therefore, loan amount with respondent No. 1 was adjusted and respondent No. 1 had issued ''No Due Certificate'' to the petitioner. Since, petitioner has failed to repay the amount to respondent No. 2, as per the O.T.S., as decided in the meeting dated 10.5.2002, on the request of respondent No. 2, possession and control of the unit was handed over to respondent No. 2 by respondent No. 1 in accordance with the tripartite agreement.

Mr. A.K. Jain, learned counsel appearing for the petitioners, has vehemently argued that handing over possession of the unit by respondent No. 1 to respondent No. 2 is not legal and petitioners are entitled for possession of the unit since petitioners have cleared the loan amount of respondent No. 1. He has further argued that had possession of the unit been restored to the petitioners by respondent No. 1, petitioners would have paid entire amount to respondent No. 2 also. Mr. Jain further stated that if possession is restored to the petitioners and time is re-scheduled by this Court, entire payment shall be made.

Mr. G.S. Gill, learned counsel appearing for respondent No. 1, as well as Mr. B.S. Walia, learned counsel appearing for respondent No. 2, while referring to Annexure R-3 dated 20.5.1997, have vehemently argued that petitioners themselves have admitted that original sale deed could not be supplied to Mr. Piyush Kant Jain, Advocate, for the Corporation, since original sale deed was lost and petitioners have proposed to furnish fresh security being khewat No. 249 khatauni No. 303 khasra No. 32/26 measuring 998 sq. yds. in lieu of property bearing khasra No. 33/2. Mr. Walia has further argued that petitioners are habitual defaulters; at the first instance neither title deed was supplied nor any payment was made as per O.T.S. dated 4.9.1995 and thereafter once again despite of second O.T.S. dated 10.5.2002, pursuant to interim direction of this Court dated 1.5.2002, petitioners have not paid outstanding amount on one pretext or another, therefore, petitioners are not entitled for any equitable relief. Having given anxious consideration to the matter and having perused the entire record, we find that despite of concession of O.T.S., first on 4.9.1995, at the pre-litigation stage, and second on 10.5.2002, during the pendency of present petition, petitioner No. 1 has miserably failed to honour the settlement. Auction of the property was stayed by this Court vide interim order dated 7.6.2000. To explore the possibility of the amicable settlement keeping in mind rehabilitation of unit, this Court has issued interim order dated 1.5.2002 directing the parties to hold joint meeting to resolve the controversy. Pursuant to interim direction dated 1.5.2002, second O.T.S. was granted on 10.5.2002. Despite of second O.T.S. dated 10.5.2002, petitioner No. 1 could not repay the amount. Since, petitioner No. 1 could not honour two O.T.S., therefore, we are not inclined to grant third chance to petitioner No. 1. Petitioner No. 1 has lost every right for equitable relief by committing breach of two O.T.S. Petition is liable to be dismissed, hence is dismissed as such. It is needless to say that the interim order dated 7.6.2000 stands vacated.