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2000 DIGILAW 251 (JK)

Kashmir Carbon v. State Of J. &K.

2000-11-10

A.K.GOEL, T.S.DOABIA

body2000
JUDGMENT 1. This appeal is directed against the judgment passed by learned Single Judge in OWP 40/99 whereby a writ petition filed by the appellant was dismissed on 1.3.2000. Facts regarding which there is no controversy in this case need to be noted are that an industrial unit under the name and style of the appellant was established by its proprietor. Loan for establishing the same was admittedly obtained from the J&K Financial Corporation. It is further not in dispute that the loanee. Industrial Unit did not adhere to the repayment scheduled in terms of the loan documents subject to which loan in question was obtained. 2. A sum of Rs. 21, 38,180.86 paisa was due and outstanding as on 15.3.97 inclusive of interest upto this date. Out of this amount, a sum of Rs. 5.49, 342.86 paisa was the principal component. Rest was interest at the agreed rates and rests and other moneys. 3. After having waited for quite some time and after having enabled the appellant to repay the loan in question and after being satisfied that the amount is not likely to be retrieved, action under Section 29 of the State Financial Corporations Act was proposed to be taken. Thus notice under Section 29 of the State Financial Corporations Act. 1951 was issued calling upon the appellant to repay the loan in question. This notice is dated 31.5.1997. When the amount remained unpaid, action under section 29(2) of the State Financial Corporations Act was initiated by the Financial Corporation. 4. What appears in the meantime is that Financial Corporation had initiated some schemes for one time settlement. Loanees like appellant could avail the same provided they adhered to such schemes. Amongst other things, party was required to pay 20% of the principal outstanding under such scheme which was known as Rehabilitation-cum-Settlement Scheme, floated by the Corporation. This was valid upto 3.8.93 and was extended upto 31.12.98. With a view to avail the benefit of this scheme, appellant was required to tender 20% of the principal amount as also to complete certain other formalities. It appears that the appellant was well aware regarding the scheme. The appellant was further aware about the auction fixed by the Corporation. Vide its communication dated 20.8.98, a prayer was made to stop the auction proceedings. How this communication of the appellant was replied, needs to be referred to. It appears that the appellant was well aware regarding the scheme. The appellant was further aware about the auction fixed by the Corporation. Vide its communication dated 20.8.98, a prayer was made to stop the auction proceedings. How this communication of the appellant was replied, needs to be referred to. It was in the following terms: - "Whereas you were finally advised vide letter No. 1930-31 dated 31.5.1997 to liquidate the dues of the Corporation but you did not take any positive step in clearing the dues. Whereas when the Corporation did not receive positive response from you. there remained no alternative to the Corporation but to put the unit to auction after publishing auction notice in two local daily newspapers. Whereas in response to the publication of auction notice, the Corporation has received highest bid of Rs. 5.18 lakhs which the Default Review Committee of the Corporation has also approved. Now vide your letter dated 20.8.1998 you have requested to stop auction proceedings, which the Corporation cannot with-hold provided you deposit the amount equivalent to the bid amount in one lump-sum instalment or deposit an amount of Rs.1,09,969/-being 20% of the principal outstanding under the Rehabilitation-cum-Settle-ment Scheme of the Corporation which is valid upto 30.9.98. You are also advised to contact us personally on or before 21st September, 1998 enabling us to known failing which the Corporation shall be constrained to transfer the unit alongwith its assets to the highest bidder entirely on your risk and costs." 5. Thus, it, is obvious that the appellant was put to notice by the Corporation to come forth with the money and fulfill other requirements so as to avail the benefit of the said scheme. Admittedly, nothing was done. Thus, in the aforesaid background, admitted defaults on the part of the appellant in the repayment of loan amount, interest and other moneys, the Corporation in exercise of its powers under Section 29 of the Act (supra) auctioned the unit and delivered its possession to respondent No. 6 who was the highest bidder. 6. In the writ petition filed by the appellant, this action of the Corporation was challenged and the said writ petition has been dismissed. Sh. 6. In the writ petition filed by the appellant, this action of the Corporation was challenged and the said writ petition has been dismissed. Sh. Bhat learned counsel appearing for the appellant submitted that Relief and Rehabilitation Scheme was in force till 31st of December, 1998, therefore, the unit of his client could not have been either sold or delivered to the highest bidder, respondent No. 6. This action was bad in law. According to him his client was not aware as to what was the outstanding amount, of which 20% was payable to the Corporation. In these circumstances, he urged for allowing this appeal and as a consequence of it to declare the sale in favour of respondent No. 6 bad in law. 7. Today at the time of the hearing of the appeal, Sh. Bhat was asked as to what was the amount outstanding according to his client which was due and payable. He was not in a position to state anything except for harping that possession could not be delivers upto 31.12.98. In response to the communication of the appellant, corporation had specifically informed the details of the outstanding amount payable by the appellant as extracted hereinabove. Even Sh. Bhat was not in a position to controvert the contents of the aforesaid communication. When again questioned as to when the loan was raised and how much has been repaid by the appellant again the answer was the same that the unit could not be auctioned as has been done in the present case. With a view to ascertain the facts urged in the appeal as well as appreciate the submissions of Mr. Bhat, writ record was summoned. From the perusal of the documents on the writ file it is clear that despite having been put to notice, except for dilly-dallying, no bonafide effort appears to have been made by the appellant to avail the scheme referred to hereinabove. In case, appellant was serious in either repayment and or availing the benefits of the scheme in question in a bonafide manner, it would have not awaited till the unit was sold, possession delivered, then coming to this court, instead it would have approached the court without any loss of time. In case, appellant was serious in either repayment and or availing the benefits of the scheme in question in a bonafide manner, it would have not awaited till the unit was sold, possession delivered, then coming to this court, instead it would have approached the court without any loss of time. Its bonafide would have been further established if whatever was due according to them had been deposited alongwith the writ petition while filing the writ petition to demonstrate that the appellant is genuinely prosecuting the litigation. 8. In this behalf, we may observe that financial assistance is provided by the Financial Institutions like J&K Financial Corporation to entrepreneurs like appellant for industrial growth of the State. This is meant for improving industrial health of the State generating direct/indirect employment in the area as also revenues to the State Government. In case money is not repaid and is allowed to be blocked as in the present case, it cannot be re-cycled by the Corporation. Thus it is unable to carry out the purpose for which it is established under law. So far relief and rehabilitation schemes floated by the Corporation is concerned, it was made to help the genuine enterpreneurs who were facing difficulty and genuinely wanted to rejuvenate its unit. There is nothing on the record of the writ petition or this appeal brought by the appellant to suggest that the appellant was ever genuinely interested in that behalf. 9. No other point was urged. 10. In view of the aforesaid discussion, there is no merit in this appeal which is accordingly dismissed at the admission stage.