Gujarat High Court
M/S Shaniyal Dyeing And Printing Mills ... vs Gujarat Industrial Investment ... on 13 October, 2021
Author: J.B.Pardiwala
Bench: J.B.Pardiwala, Vaibhavi D. Nanavati
C/LPA/1707/2019 ORDER DATED: 13/10/2021
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/LETTERS PATENT APPEAL NO. 1707 of 2019
In R/SPECIAL CIVIL APPLICATION NO. 11919 of 2019
With
CIVIL APPLICATION (FOR STAY) NO. 1 of 2019
In R/LETTERS PATENT APPEAL NO. 1707 of 2019
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M/S SHANIYAL DYEING AND PRINTING MILLS LTD
Versus
GUJARAT INDUSTRIAL INVESTMENT CORPORATION LTD
=============================================
Appearance:
MR MASOOM K SHAH(6516) for the Appellant(s) No. 1,2,3,4
NEHA M SHAH(9218) for the Appellant(s) No. 1,2,3,4
MR RD DAVE(264) for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE J.B.PARDIWALA
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
Date : 13/10/2021
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA)
1. This appeal under Clause 15 of the Letters Patent is at the instance of unsuccessful writ applicants and is directed against the order passed by a learned Single Judge of this Court dated 23.07.2019 in the Special Civil Application No.11919 of 2019 by which the learned Single Judge rejected the writ application. The impugned order passed by the learned Single Judge reads thus:
"1. By preferring this petition under Article 226 of the Constitution of India, the petitioner has prayed for the following reliefs:
A) Be pleased to order the Respondent to decide the application/letter dated 05.06.2013 and 03.06.2016 of the Petitioners to settle their account through OTS Scheme of the Respondent.Page 1 of 7 Downloaded on : Sun Jan 16 23:51:03 IST 2022
C/LPA/1707/2019 ORDER DATED: 13/10/2021 B) Pending Admission, disposal and final hearing, be pleased to stay the Civil Suit No.223/1998 filed before the Hon'ble City Civil Court, Ahmedabad.
C) Costs of this Petition be awarded.
D) Such further and other relief, order or direction which may be just, fit, proper and equitable in the facts and circumstances of the petition.
2. The brief facts of the present case are that the petitioner availed loan from the respondent - Gujarat Industrial Investment Corporation Limited, in the year 1992.
3. The respondent sanctioned loan of Rs.16,60,000/- vide sanction letter dated 22.06.1992. On furnishing undertaking and requisite guarantee in favour of the respondentCorporation, amount of Rs.5,96,000/- was disbursed by the respondent. The said loan was disbursed for setting up a project for process house.
4. As the petitioner could not repay the installments, Civil Suit No.223 of 1998 was filed by the respondent in the City Civil Court, Ahmedabad for recovery of Rs.12,35,000/- towards outstanding principal and interest on the date of filing of the Suit.
5. It is the case of the petitioner that in the year 2000, machineries of the petitioner were stolen and police complaint was lodged with Sachin Police Station, Surat.
6. Thereafter, on 15.04.2013, the respondent wrote a letter to the petitioner stating that One Time Settlement scheme (hereinafter referred as 'OTS' for short) is available for clearance of outstanding dues of the petitioner.
7. The petitioner had also availed loan of Rs.44.33 lakhs from Gujarat State Financial Corporation (for short 'GSFC') for aforesaid project and the said loan was cleared by the petitioner on 17.09.2011. No Objection Certificate was issued by GSFC for the same.
8. It is the case of the petitioner that on 05.06.2013, the petitioner informed respondent in response to the letter dated 15.04.2013 that the petitioner was ready and willing to avail OTS and was eligible for 6% simple interest and it showed willingness to pay 10% on the final settlement amount calculated as per the OTS.
9. It appears that thereafter, the petitioner deposited sum of Rs.1,00,000/- by cheque on 27.09.2013 to show its willingness to settle the dues.
10. Thereafter, the respondent did not inform the petitioner about further payment and in meanwhile, another OTS of 2015 was introduced by the respondent.
11. Thereafter by letter dated 11.03.2016, the petitioner informed Manager (F & A) of the respondent in reference to personal visit dated 10.03.2016 for settlement of NPA loan account. In the said letter, it was mentioned by the petitioner that the petitioner was Page 2 of 7 Downloaded on : Sun Jan 16 23:51:03 IST 2022 C/LPA/1707/2019 ORDER DATED: 13/10/2021 ready to avail the benefits of prevailing OTS and requested the respondent to calculate 4% simple interest on the principal amount and deduct whatever amount paid by the petitioner. It was further stated that this would enable the petitioner to apply in OTS with 10% amount deposit. The petitioner again by letter dated 03.06.2016 requested respondent to give benefit of OTS.
12. Thereafter, by letter dated 09.09.2016, the respondent informed the petitioner that an action to consider the proposal of OTS was initiated and as a course of further action, approval of Managing Director was availed to get the valuation of mortgaged assets of petitioner by Government authorized valuer. The petitioner was therefore, requested to deposit sum of Rs.30,000/- to get the valuation of mortgaged assets of the petitioner company.
13. The petitioner thereafter by letter dated 14.09.2016 informed respondent that the petitioner company is not in a position to pay the sum of Rs.30,000/- for the valuation of the mortgaged assets as the petitioner has sold the hypothecated machineries to settle dues of GSFC, other banks and GEB, and therefore, the question of valuation does not arise.
14. By letter dated 19.12.2016, the petitioner informed the respondent to clarify the status of machineries hypothecated with the respondent and submitted that machineries of the company were stolen and as against that police complaint wasalso lodged in the year 2000. It was therefore, once again requested to accept the OTS proposal submitted by letters dated 03.06.2016 and 14.09.2016.
15. The petitioner thereafter by letter dated 20.03.2017 submitted certificate of Chartered Accountant wherein it is mentioned that valuation of the machineries as on 31.03.1997, was of Rs.57,34,152/-, however, as on the date of issuance of the certificate i.e. on 18.03.2017, valuation of the machineries was almost Nill.
16. The petitioner thereafter by letter dated 17.01.2018 requested the respondent to know about situation of OTS proposal at the earliest as the learned Judge, City Civil Court, was not giving long adjournment date.
17. By letter dated 01.06.2018, the petitioner again requested respondent to grant benefit of OTS policy as the business activities were affected and as no reply was received from the respondent and by letter dated 15.05.2019 petitioner again requested the respondent to consider the proposal of OTS. The petitioner also submitted proposal dated 18.07.2019 during pendency of this petition which is produced on record along with additional affidavit, which is taken on record.
18. Heard learned advocate Mr. Masoom K. Shah for the petitioner.
19. Learned advocate for the petitioner submitted that the petitioner is ready and willing to settle the outstanding dues of the respondent since 2013 as per OTS, however, the respondent is not giving any positive reply for settlement of the dues. He therefore, submitted that the respondent should be directed to consider the proposal of the petitioner under the OTS. He also relied upon the Page 3 of 7 Downloaded on : Sun Jan 16 23:51:03 IST 2022 C/LPA/1707/2019 ORDER DATED: 13/10/2021 order dated 07.03.2019 passed by this Court in Special Civil Application No.4761 of 2019, copy of which produced at Annexure - P/15 to this petition, and requested to pass similar order in the matter. Learned advocate for the petitioner also relied upon the decision of Hon'ble Apex Court in case of Sardar Associates and Others Vs. Punjab & Sind Bank and Others reported in (2009) 8 SCC 257 to contend that once there is one time settlement scheme, the respondent-Corporation is required to consider the same.
20. Having considered facts emerging from documents produced on record as well as submissions made by learned advocate for the petitioner, it is not in dispute that after availing loan of Rs.5,96,000/- from the respondent in the year 1992, the same is not paid till date. The respondent has also filed Civil Suit in the year 1998 for recovery of Rs.12,35,000/- which is still pending. It is also not in dispute that the respondent has invited petitioner to avail the benefits of OTS but the petitioner did not pursue the same inasmuch as it is evident from the letter dated 14.09.2016 at Annexure -P/9 that the petitioner has sold the machineries which were hypothecated with the respondent. It appears that contrary stand is taken by the petitioner as in the letter dated 14.09.2016 it is stated that machineries hypothecated with the respondent are sold whereas in the letter dated 19.12.2016 it is stated that machineries were stolen in 2000 and police complaint was filed. The petitioner has not revealed any further fact with regard to the situation of the machineries whether it was stolen or sold by the petitioner to pay the outstanding dues of GSFC and other Government dues.
21. Moreover, the benefit of OTS can be given to the petitioner provided that the petitioner is found eligible as per the OTS. The petitioner has not made any proposal pursuant to the OTS of 2015, which has been launched by the respondent, wherein eligibility criteria described in OTS Scheme 2015 at page 28/A reads as under:
ELIGIBILITY CRITERIA
1. The account of the company with GIIC should be NPA and classified as Doubtful Account; and
2. The company is either closed OR under possession with the Corporation/other lenders under Section 28 of the SFC Act, 1951 under the SARFAESI Act/with Official Liquidator/ DRT-Court Commissioner, OR
3. The company has incurred losses in last consecutive three years as appearing in Audited Profit & Loss Account and having negative net worth.
22. The petitioner has failed to produce on record as to in what manner eligibility criteria as stated above is met by the petitioner so as to direct the respondent to consider the proposal made by the petitioner in the year 2013. Even in the proposal which is made by the petitioner on 18.07.2019, produced along with additional affidavit, the petitioner has not stated as to how the petitioner is eligible for OTS 2015 of the respondent. It appears that the petitioner would like to settle the dues as per its own terms, irrespective of provisions made in the OTS of the respondent- Corporation.
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23. In view of the above facts, reliance placed on the order passed by this Court in Special Civil Application No.4761 of 2019 as well as decision of Hon'ble Apex Court in case of Sardar Associates and Others (Supra), are not of any help to the petitioner and no direction can be given to the respondent-Corporation to consider the OTS proposal of the petitioner. The petition is therefore devoid of any merit, the same is not entertained. Accordingly, the petition is summarily dismissed with no order as to costs."
2. On 29.09.2021, this Bench passed the following order:
"1. We have heard Mr. Masoom K. Shah, the learned counsel appearing for the appellants - original writ applicants and Mr. R. D. Dave, the learned counsel appearing for the respondent - Corporation.
2. The writ application came to be filed by the appellants herein seeking the following reliefs:
"A) Be pleased to order the respondent to decide the application / letter dated 05.06.2013 and 03.06.2016 of the petitioners to settle their account through OTS Scheme of the respondent.
B) Pending admission, disposal and final hearing, be pleased to stay the Civil Suit No.223/1998 filed before the Hon'ble City Civil Court, Ahmedabad.
C) Costs of this petition be awarded.
D) Such further and other relief, order or direction which may be just, fit, proper and equitable in the facts and circumstances of the petition."
3. It appears that the writ application came to be rejected vide order dated 23rd July 2019 in limine. Prima facie, it appears that the learned Single Judge is of the view that the benefit of the One Time Settlement Scheme could not have been availed by the writ applicants as they are not eligible for the same.
4. We would like to know from the Corporation as to what was the amount due and payable by the appellants herein on 23rd July 2019 i.e. the date on which the writ application came to be rejected. We would also like to know from the Corporation that if the One Time Settlement would have been offered to the writ applicants, then what would have been the amount due and payable by the appellants. In the last, we would like to know what is the amount due and payable as on date with interest and the status of the securities furnished by the appellants in favour of the Corporation. Mr. Dave shall also seek instructions whether there is any scheme as on date which the appellants may be in a position to avail to put an end to this litigation once and for all.
5. A responsible officer of the Corporation shall remain present on the next date of hearing to assist Mr. Dave on all the aforesaid questions.
6. Post this matter on 13th October 2021 on top of the Board."
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3. In response to the aforesaid order passed by this Bench, details have been furnished by the Corporation in the form of an affidavit which reads thus:
"AFFIDAVIT OF RESPONDENT GIIC I Manish Balvantrai Chaudhari, Age 50 years, Hindu, residing at Gandhinagar do hereby solemnly affirm and state as under:
1) I am working as I/c. Manager, (Zonal Office - Baroda) with Resp.
Gujarat Industrial Investment Corporation Limited ("GIIC" for short) at Gandhinagar Head Office. I am filing this Affidavit in compliance of order dated 29/09/2021, for limited purpose to place on record details and particulars as directed in Para.4 of the said order.
2) I state that following information and particulars are relevant.
Sr. Particulars on certain dates Outstanding Amount or OTS
No. Amount
1 Amount due and payable on 23rd July Rs.3,82,91,437/-
2019 (by updating statement of accounts) OUTSTANDING AMOUNT 2 OTS amount that would have been Rs.8.50 Lakh approx.
payable on 23rd July 2019. OTS Amount 3 1. Amount due and payable as on date Rs.5,63,23,827/-
i.e., 30/09/2021 (by updating statement of OUTSTANDING AMOUNT accounts).
2. Status of the securities given to the Machineries hypothecated to Corporation. GIIC, which were stolen as informed by promoters. A Police FIR lodged by a director of the company on 06-06-2000 4 (Any OTS) Scheme as on date which the Rs.9.42 Lakh approx.
appellants may avail to put an end to this OTS Amount litigation once and for all under OTS (copy of applicable scheme Scheme - 2018-I. enclosed)
3) I state that at present OTS Scheme 2018-I is applicable which is annexed hereto and marked as ANNEXURE - R/1 for ready reference.
4) I state that at present I am not dealing with contentions, averments and allegations made in LPA or in Memo of Petition. I reserve my right to file Affidavit dealing with merits of the matter if and when required.
Solemnly affirmed on 12th day of October, 2021 at Gandhinagar.
Sd/-
DEPONENT"
3.1 The affidavit is ordered to be taken on record.
4. Mr. Manish Chaudhari, the In-charge Manager , Zonal Page 6 of 7 Downloaded on : Sun Jan 16 23:51:03 IST 2022 C/LPA/1707/2019 ORDER DATED: 13/10/2021 Office of the Corporation is personally present in the Court with the necessary record. The appellants nos.2 and 3 respectively are also personally present in the Court.
5. This litigation can be put to an end today itself by asking the appellants to avail the One time settlement scheme in force today as pointed out by the Corporation by depositing an amount of Rs.9.42 lac towards full and final settlement.
6. We direct the appellants to deposit the amount of Rs.9.42 lac within a period of two weeks from today with the Corporation. Upon such amount being deposited within the stipulated period, the Corporation shall proceed further to record the settlement in accordance with the scheme and issue a No Due Certificate.
7. With the aforesaid, this appeal stands disposed of. The connected civil application would also not survive and the same is disposed of.
8. One copy of this order shall be furnished to Mr. R.D. Dave, the learned counsel appearing for the Corporation for its onward communication and one copy to Mr. Masoom Shah, the learned counsel appearing for the appellants.
9. If any formalities are to be completed at the end of the appellants like preferring an appropriate application addressed to the Corporation etc., the appellants shall do it at the earliest.
(J. B. PARDIWALA, J) (VAIBHAVI D. NANAVATI,J) NEHA Page 7 of 7 Downloaded on : Sun Jan 16 23:51:03 IST 2022