Delhi District Court
Ms. Poonam (Prop.) vs The National Small Industries Corp.Ltd on 3 February, 2007
1
IN THE COURT OF MS. SHALINDER KAUR : ADJ : DELHI.
SUIT NO. 193/06
IN THE MATTER OF :-
MS. POONAM (PROP.)
M/S DEL RIO IMPEX CORPORATION
THROUGH HER AUTHORISED SIGNATORY
DR. S.N. SINGH
Y-12, FIRST FLOOR
OKHLA INDUSTRIAL AREA
PHASE -II, NEW DELHI - 110 020. .....PETITIONER.
VERSUS
THE NATIONAL SMALL INDUSTRIES CORP.LTD.
THROUGH CHAIRMAN
REGISTERED OFFICE AT:
NSIC BHAWAN
OKHLA INDUSTRIAL ESTATE
NEW DELHI - 110 020.
BRANCH OFFICE AT:
NSIC - TSC, OKHLA INSDUSTRIAL ESTATE
NEW DELHI - 110 020. .....RESPONDENT.
2
PETITION UNDER SECTION 9 OF THE
ARBITRATION AND CONCIALIATION ACT 1996,
READ WITH SECTION 151 CPC.
*******************
JUDGMENT :-
1. The petitioner has filed the petition under Section 9 of the Arbitration and Conciliation Act 1996 read with 151 CPC through Special Power of Attorney Dr. S.N. Singh.
2. It is averred that the petitioner is a proprietor of M/s Del Rio Impex Corporation which used to carry on business of leather shoes manufacturing from the premises at Y -12, Ist Floor, Okhla Industrial Area, Phase - II, New Delhi -20, a place hired on rent at the rate of Rs. 33,000/- per month. The respondent is stated to be an government company responsible for promoting, aiding and fostering the growth of Small Scale Industries in India.
3. It is averred that the petitioner being lured by the special incentives of the Composite Term Loan Scheme for promoting lady entrepreneurs, floated by the respondent , approached the respondent Company for obtaining loan to set up a tiny shoes manufacturing Unit in Delhi. The respondent company agreed to provide the financial assistance to the petitioner in terms of loan. Consequently, two agreements were entered into viz. Composite Term Loan 3 Agreement (Machinery and Equipments) and Composite Term Loan Agreement (Working Capital).
4. It is averred that in pursuant to the said agreement, the actual amount of Rs. 11,78,481/- was disbursed by the respondent towards Composite Term Loan (Plant and Machinery), which included interest up to the disbursement period and a sum of Rs. 7,55,274/- was disbursed towards Composite Term Loan (Working Capital) including the amount of interest up to disbursement period by the Corporation to the petitioner. The money under both the agreements was to be paid in 20 quarterly advance installments amounting Rs. 86,900/- for Composite Term Loan (Plant and Machinery) and Rs. 55,693/- for Composite Term Loan (Working Capital). The first installments was payable under both the agreements, on the 1st day of September, 2003 and each of the subsequent installment was payable on the 1st day of each succeeding quarter until the entire loan was repaid.
5. It is averred that Dr. S.N. Singh and Ms. Poonam Singh stood personal guarantee for the repayment of the loan amount vide Guarantee Agreement dated 21.11.2002 and 29.11.2002 respectively. The petitioner paid altogether eight installments towards repayment of the loan amount as per agreement without default till middle of year 2005. In view of the clause 18 of the agreement, the petitioner requested the respondent for premature settlement vide her letter 4 dated 02.06.2005 duly received by the respondent. She found it difficult to continue with the business due to heavy burden of rate of interest @ 14.5% per annum alongwith large outstanding in the market and to her marriage as it did not suit the temperament of the family of her in laws. Further, she sought permission from the respondent to clear all the dues of NSIC Limited in one go. Under those circumstances it was very difficult for the petitioner to run the said business and she had a ready buyer, who was wiling to give good price for the entire plant and machinery. The said request letter was duly received by the respondent on the same date.
6. It is further averred that the respondent is duty bound to allow the request of the petitioner for premature settlement, being the Government Enterprises, which has been established primarily to assist the small entrepreneurs. The respondent instead of allowing her request for premature settlement vide her letter dated 02.06.2005, preferred to sit idle over the same. No reply to the same has come to the petitioner so far.
7. It is averred that the petitioner has stopped the business and resultantly, the Firm is closed and is not doing any business. However, the liability towards the rent of the premises and the interest on the loan amount is accruing because of the failure on the part of respondent of not adhering to the provision of the duly signed agreement. As the liabilities towards the business were increasing on 5 the petitioner, she met the officials of the respondent several times through her Authorized Representative for premature settlement but of no use. The respondent showed no inclination towards premature settlement and allowed the liabilities to be increased on the head of the petitioner.
8. It is averred that the petitioner subsequently wrote various letters to the respondent. The respondent, instead of allowing the petitioner to deposit the amount as per her letter dated 11.10.2006 after selling of the machineries, asked her to make a payment of Rs. 8,74,881/- as on 30.09.2006, prohibiting her to sale the said machinery. The respondent vide its letter dated 09.10.2006, delivered to the petitioner on 23.10.2006 asked the petitioner to enhance the offer from Rs. 7,51,000/- as offered by her in June, 2006. Petitioner accordingly made a fresh offer vide letter dated 03.11.2006 enhancing the offer toward full and final settlement from Rs. 7,51,000/- to 8,50,000/- subject to allowing her to sell the plant and machinery. The respondent again chose to sit ideal over her fresh offer towards full and final settlement.
9. Thus, the petitioner filed the petition. She has prayed for interim directions to the respondent to allow the petitioner to sell the Plant and Machineries and to deposit the sale proceedings in the court. It has also been prayed that the respondent be directed to allow the petitioner to inspect the file pertaining to the petitioner.
610. On behalf of the respondent it was contended that the petition under Section 9 of the Arbitration Act is not maintainable. It has been filed only with a view to evade the recovery proceedings to be initiated against the petitioner by the respondent to recover their legitimate dues amounting to Rs. 18,29,645/- as on 31.12.2006. It was contended that the machinery has been hypothecated with the respondent thus, the petitioner cannot ask for the sale of the same till all the dues are cleared by the petitioner.
11. It is further contended that the petitioner is not even allowing the respondent to inspect the premises wherein the hypothecated machinery is lying. The respondent has admitted the execution of the loan agreement and disbursement of the loan amount. It was contended that the petitioner did not honor the terms of the agreement. Out of the 20 post dated cheques issued by the petitioner towards installments the third cheque was returned unpaid by the Bankers for the reasons "Account Closed".
12. It was contended on behalf of the petitioner that the said installment was paid in cash to the respondent. It was further contended on behalf of the respondent that the petitioner had been sleeping over her payments for an year and had sent the letter dated 14.07.2006 requesting the respondent to waive of all the interest and to take an amount of Rs. 7,51,000/-. The respondent through the 7 letter dated 09.10.2006 duly informed the petitioner that the proposal of the petitioner does not confirm to the settlement norms for premature settlement of the amount and rejected the proposal for full and final settlement at 7,51,000/-. It requested the petitioner to enhance the offer so that the same can be placed before the competent authority for consideration. The petitioner instead of making any efforts to arrive at any settlement sent another baseless representation dated 11.10.2006 which was replied back by the respondent vide letter dated 13.10.2006 reiterated the terms and conditions as mentioned in the earlier letter dated 09.10.2006.
13. It was contended that the petitioner was called upon to pay the outstanding dues of Rs. 8,74,881/- as on 30.09.2006 and the petitioner was made aware that in case she disposed of the machine without approval then she will be liable for criminal action. Thereafter, she sent two baseless proposals which were rejected by the respondent. In support of these contentions the following judgments have been cited on behalf of the respondent.
(i) Smt. Baby Arya Vs. Delhi Vidyut Board - AIR 2002 Delhi 50.
(ii) Olex Focas Ply Ltd. & Anr. Vs. Skoda Export Co. Ltd & Anr. -- AIR 2000 161.
(iii) D.K. Gupta & Anr. Vs. Oriental Bank of Commerce -
127 (2006) Delhi Law Times 488 (DB).
814. Section IX rule (ii) (a) of the Arbitration and Conciliation Act , 1996 lays down that, "a party for an interim measure of protection in respect of any of the following matters, namely :- the preservation, interim custody or sale of any goods which are the subject- matter of the arbitration agreement."
15. Clause 18 of the Arbitration agreement arrived between the parties is as under:-
"In case the Borrower wants to make premature payment of the loan amount or any part thereof, the Borrower shall give to the Corporation prior notice in writing at least 30 days of its intention to repay in advance the dues of the Corporation, which shall be at the absolute discretion of the Corporation to either accept or reject any such request f the Borrower. In case the corporation decides to accept the said request the Corporation shall be entitled to charge such premium from the Borrower for premature repayment as decided by the Corporation, whose decision in the matter shall be final."
16. In D.K. Gupta & Anr. Vs. Oriental Bank of Commerce (Supra) the Hon'ble Delhi High Court has held that, "When a person has taken a loan he has to repay the same in accordance with the loan schedule as per the agreement between the parties. Rescheduling of the loan is in the sole discretion of the bank or the financial institution which granted the loan and the Court cannot compel, it to 9 reschedule the loan. The matter regarding loan from financial corporations/ banks is purely contractual and a party has to abide by the agreement which he has entered into." It has further held that, "The petitioners have not been able to show that there is any statute or rule having the force of law which casts a duty on the respondent bank to accept the offer made by the petitioners to settle the dues. In fact, the matter is purely contractual."
17. In the letter dated 02.06.2005 the petitioner has requested the respondent to consider her case for one time settlement on compassionate grounds. She has further requested to charge simple interest on the loan granted to her and to permit her to clear all the dues in one go. In the letter dated 11.10.2006 it has been requested to allow the petitioner to dispose of the machinery and to make payments to the respondent as the petitioner did not have any alternative source of fund. Vide letter dated 09.10.2006 the respondent had rejected the proposal of petitioner for premature full and final settlement for Rs. 7,51,000/-. It had requested the petitioner to enhance the offer so that the matter could be placed before the competent authority. Whereas in the letter dated 13.10.2006 the respondent had asked the petitioner to clear the outstanding dues of Rs. 8,74,881/- as on 30.09.2006 immediately to avoid any unpleasant action. However, vide letter dated 03.11.2006 the petitioner has requested to allow her to deposit the amount of Rs. 8,50,000/- to the respondent towards full and final settlement of her claim.
1018. In the petition, the petitioner has made a limited prayer for sale of the Plant and Machinery and for depositing the sale proceedings in the court. It has also been stated that the petitioner is contemplating to invoke the Arbitration Clause and to refer the dispute before Arbitrator. As the dispute regarding the settlement of claim has arisen between the parties and the petitioner has shown an interest to invoke the Arbitration Clause. Thus, the petition under Section 9 of the Arbitration and Conciliation Act is maintainable.
19. The judgments cited on behalf of the respondent are distinguishable from the facts of the present case. In Smt. Baby Arya Vs. Delhi Vidyut Board (Supra) the relief under Section 9 of the Arbitration and Conciliation Act was not granted as the petitioner was seeking relief on account of fraudulent assertion. It has been held by the Hon'ble High Court that, "Does not come within ambit of dispute arising from breach or non- compliance of terms of agreement."
20. The judgment Olex Focas Ply Ltd. & Anr. Vs. Skoda Export Co. Ltd & Anr. (Supra) is distinguishable from the facts of the present case.
21. The judgment D.K. Gupta & Anr. Vs. Oriental Bank of Commerce (Supra) is also distinguishable from the facts from the 11 present case.
22. Petitioner had filed a writ petition seeking direction against the respondent to permit the petitioner to settle the account under one time settlement scheme issued Reserve Bank of India. However, in the present petition no such prayer has been made by the petitioner rather she has prayed for sale of the Plant and Machinery and to deposit the sale proceeds in the Court. She has not made prayer for the settlement of her premature claims.
23. An objection has been taken on behalf of the respondent that the said Plant and Machinery has been hypothecated in order to secure the loan amount disbursed to the petitioner. Thus, the same cannot be directed to be sold. However the sale proceeds after sale of the plant and machinery shall be kept by the respondent till the dispute is finally resolved between the parties.
24. Accordingly, the respondent is granted an opportunity to sell the Plant and Machinery by it at the price quoted by the respondent and to keep the sale proceeds till disposal of Arbitration proceedings. Otherwise, the respondent shall be at liberty to sale the Plant and Machinery hypothecated with the respondent and the sale proceeds shall be deposited with respondent. The sale of the Machinery shall be carried out within a month. The petitioner shall furnish the valuation for sale of the Machinery to the respondent 12 within a week and shall also invoke the Arbitration Clause within 15 days. The petition is accordingly disposed of. No order as to costs. File be consigned to record room.
ANNOUNCED IN THE OPEN COURT TODAY ON 03.02.2007.
(SHALINDER KAUR) ADDL. DISTT. & SESSIONS JUDGE, DELHI.
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03.02.2007
At 4.55 pm.
Present :- None.
Vide judgment announced of even date on separate sheets, the petition is disposed of. No order as to costs. File be consigned to record room.
ADJ:DELHI.
03.02.2007.