Karnataka State Financial Corporation vs Appellate Authroity For Industrial And on 30 November, 2009

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Karnataka High Court

Karnataka State Financial Corporation vs Appellate Authroity For Industrial And on 30 November, 2009

Equivalent citations: AIR 2010 KARNATAKA 89, 2010 (2) AIR KANT HCR 128, 2010 CLC 845 (KAR), (2010) ILR (KANT) 621, (2011) 1 BANKCAS 203, (2010) 1 KCCR 341

Bench: H.G.Ramesh

W. P. NQ.110O0g_'200}7'

IN THE HXGI-I COURT OF KARNATAKA AT BANGALORE

 

DATED THIS THE 30"' DAY OF NOVEMBER 

BEFORE

THE I-ION'BLE MRJUSTICE  ' 

Writ Petition 1~1o.13.ooog2s;*)%o7 _;%,_g__4_;_.~_11<?sr;;;'.%1 

BETWEEN:

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AND:

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_ 133* 1118 MANA{}I'N(} 11111114-;(;:'1'<:)12 S'1'A'ﬁ§'E BANK 01? §\/§YS()RE I"C)S'T §'3(')X N(').S3727 K ISM P1120 ()W'1")A I\'()i\.Ii) W.P.IVo.11000;_'2007 1'315\.N(_3AI.,ORE ~« 560 009 I3'r' ITS M.ANAGE-R ..RESPONI)I:3NTS {BY SR1 K.NAGI%:E3I"1WARAI'}?3A. C.(j.'x.C. F'('j)I"{ RI 6%: R-2:

SR1 J(..)SI"IVA.E---LSAMUEE. OF ;"\/I/ sa.(.'.ARIx'\I-'I--'A C(..).. AI')\-"()C.?A'E'ES I*'(j)R R43:

SR1 VARAIJARAJR.l'Ij\VA.I..If)AR. AD\z"(T)(TfATE §*"(i)R R4.) 'm:s WI-2I'I' I'I~)'I'I'E'I(j)N 1s r«'11.,1::r:) UNDER AR'I"ICI,-E53. 2:27 01:" '1"}~1{«: ('f()NS'I'I'I'LE"I'l ON or? I§\3DI1\ I-'RAY1NG '__I-'O 'I'I~'i¥?3 ORDIf:R I)A'l'ED 5.e~3.:2o07 mssran BY R14::"sI><>:.\!:::,>._rs:mj*T'No.: " WDES A.NNL«:xURE--M. ANI.) "1':~1Ie: ORDER DA'{fE«;1:1 -- -.20 9';200e:s PASSEID BY RESP(}NI)E1N'I' No.2 WIDE) A;"<5NI£X1,JRE§I.. _ ' : mrs :>£:*1'1':'1 ON COMING ON }"(f)1Fi }-i:'!}:zxRIN1C;-- fji"r»-1.15 'I'PIE3 (;:(')L%R'.:"MAI:)I~:T1-~11; F<.>1.,1.,ow;?~sQ: _ = oRDEﬁv This writ pet.it:i0r1" 'by I{df(i'(1;f':g3c}j-..Staie Fiﬁanciaf COrporc1l.ion ['KSFC' I'01* sI1'1(11_ft}L.."_i§b~:.fb(ii-r?§f€:'tf3'd._ --ag;§ainst the orcier c§:;€t,.c3ci passed by the Appellate ' }';;;tIia;'ii.g--:;.r"- v__4]"oj' "Tndusslriczl & F'fnaI"zc:iai Rec7or'1:s'£"mc1iozi,w 1301111, 1'ejec*.1'.:'ng £he:: pt-3t:i1'.i0ner's """ M By the imp1.1gr1ed orcier, the /Xppe5_Z_la1I=e. Tﬂiti:'IViVo.:"iI.y has cor1fi1'm<:d. the order datieci _20.092006-.{AI1r1exu1'e»I,.) passed by the I3oa.rd _ji:1r Ifu;3L.;_s_f.1'£cii" and Financial Rec.ron5;{:'mcIion {'BIF'R' for ~_shr_)V1'1'.)'' : in (3213:? N0. 32 1 / 1998 cii1*e<.:t:i1'1g the azy W.P.No.11000g2007 pet.i{'%1<)1'1e1"~KSFC 1.0 issue.' a 'no du_c?s Cc?rI.'g'/"ic.rcz£"c' to 1'esp<:)11de1'1I. No.3 -- :1 Sick" Industrial Cc)n'1pa1'}y.

2. I }'2a\--*<r 1'1(-=;?z-11'd i.l'1(-2 1<re'1:'1'1cd C(.n,11'1sc} 21p;3(*z;11'i'i'1;;{_1"-.f§>.1' ~. the )21I'1'it3S and )e1'used the orders Tassed t)'s,?. {}1c::*»I3I1'"5R»VT' I I P - _ .

and 17110 Appeflaie Aut.hoI'iz'y w}1}'.-(:1i"21=.i§? "..p1'g).ci §[1'(€.c:riV A.I]I1(',XL11't?S~L 81 M 1-espemively.

3. The case of the pe?tit:i0fiL@.:{}lVKSFCV"is°thVai213;: had leased 21 Diesel Ge»;1cr1%e\.4.g_)1* KVA) which was purc:hasec1 ' .{(')r crrores to 1"esp01"1dVVe3n-1;._ANQ.3%'CE:>mp.§1:1y a-m1..~'in that connection. 1'esp<)11d:e11tf' 'N-:3,3~C'<:e1*x1;);i'n_y'" due to the p<=:1T.:'t:i()1'1e,1"« KSFC to "{"{,)I"1fL')'__Of~ RS.,.'i7 (:1'or<-vs; and it". had never «aE§I"€._'é%t}:. f'()/if a... 'or1eV"iime:2. seIf.£er'ner1I.' for RS210 lakhs and

--hc1V1éc?vjtE'2--e"dVi'1*£;{:tio11 issued to it as per the orders at A.n11c§éVure_s_s i;i.8aT': M to issue (:1 'no dues cert;/E(:ate" is not j;1st:i:ficrc:i._ The Assismm Gc.z'1c=:ra} M2a.:'1a1g(?1* (HP «Sz FS} of _'f.5'get.iti()z1e1'--KSFC has filed his affidavit dated 1.2009 in this Ccmrt stating that: the Board of the j'pei:itTio1'1e1" C<:u'p0z'a1_ior1 has not appmved any 'one time \ if .

Z"'}{\:%v:i// W.P.NO.1lOOOgj.$300,7 sc1i'le,>.n1.c-mi" In 1"<'s}.)(m(f(*1'11'_ N{).I3~('.',o111.p2111y._ '}"l1<--* <_tz.1.se of 1'es13<)n(.!cm: N0.3--CI-ompa.ny is t'"_1'121t. the KSFC has 1'(i'(.'(;'i\'t:'C.i R5210 I2-"aklls as a 'one.> zinu-3.) sci:!e'3.r2:z.é-;%1'4;i[7._ €0wa1'cis E116 8lTl(.)U111 due hf<'m'1 1:. It is s1'.at.cd.i}'1:1*i;».{fE=1g§ 2,1fm'es;1id I.i)i@sel C}e1'1c:1'at',<)r SCI: xv;-1s_1g:1ter sc3id"'i':<3:'_2!. if}*;ii_"d party for RS210 1z;1l<:hs with the: ;'e11})p1"(5xr;,11'~ _ <":)f' VV i;I's«s:? °V.A pet.1t_.1<:)11cI>KSFC.

4. Leameci Co1.1r1seI (mt }h(?...t.h:"cu1.1gl1 the <::<.)rrespondence "'a;2,§'1c1 them-t not_hi11g on 1'c%g()rfi ..to V' gifel-ﬁE.i(>11(*rvKSFC had cx;_i1'css}.yV(::'<::;'1sCi11'0.::{ "f7<.,1_1_' aiiy 'one lirne se1.1'l.c:.>r"ne?1'1I"

to 1'cs}:)('):71{1<?1*1t 'Nd; I3~C€§'21'1pa1'1y'. I--f0\.v(.'ve1". 1<;%a1.:.'::'1ed (:<_>t.111se;?l'V?:;1p1;)cziri'1}g for 1"@sp<>11(.1c?m". N().3«C<')m}')a1'1y s1].A1'(.>11g.iy A("(.)1.'1iI'tt'...1'j}dC'.d 1112.11. oven 2?-1ss1,.1miI'1g mat the pé::if'ic);%1eVi"~K_SF(§{"}'xa<:1 rmt, c<'ms<:m':<3cl for any 'one time

-S(3{l,ZC?Itf?€?I'E""f.A', "Iii vimv of H10 lc-'gs-11 f1'Cti(.m cr<:2T1_t_&?d Lmder '$3.-*(3£i(..:1_1 19(2) <..)f1.hc Sick' Iru:.iu.sZ'riaE (.Jor'I'1p(.z:'1i.e:s (Spcciaf

--.f.'1'--"':"AAci--.v§,v'z'».'s*i'A(A)11.*i»'} Act 1985 ('ti'1<:? SICA Ac'ff:" for short)' it. shaﬂ "<}V;)c. (i<-i?v1'11c:c.i 111211;' the 1:3cIi1:i<';1'1c1' ha'=1.<.! <'(.>nsc'.1*1l'_(=d for the my (53 W. P. No. I 1 0005200?

'one? i.im<? se;>II5.(;>r'ne?:1I" p1'()}:')(.)s(=?d in the-* clrcg/'Ii rc..>l1al)ili1.'c1{_ior2 scillerm-?. as it did 1101: Object to it. Ht". sLab1nit'.1ec1 t.}'1_:;i{.. clr'cy'l 8('.'f'1crn(? W A1111ex1,11'(:=-R1. timed V' (%i1'(:111aIc=:(.1 to all the (?()1'}Cf31'11(:?d i.I1('.h'.'1'Ci~ii1§:{ 1.--_he ptﬁ'iLi()im_r; KSFC for tzheir consem. as cont<:r1'1'p}a'i;ed zlalititiéi'=Sc(?tfi§n. "

19(2) of z"l'2e.> SICA Act. ancl t.l1c~.__hSFC3 v.(i~i_'(",IV}r.1A(\)1l"».: (_:)x§;3--_Vi"cVi't'E'i. SE0 the }'Jr()-1305-:;a} of 'one: t'iz?'1§' sc?§l1I'i(-13:--rll(f-?rzl3'"n1'_k)r Ré_§.'i:?AI{'1Vl;:,I.<}1s and a(2<to1'dir1g1y the s(:li(:_i1'1<-3 _$:é;1:f1'€t"iQ_11ec1 as per A.m1cx1.1.:'(:r-R2 V

5. Before: 2<r:.f:<é--1'.f1;i:1jjgVj,¥ of the SICA Act". it is 1't3}L'=rV211'1f.__ to >jt'£':;;.t;=j'.f"vf()l'1(jxvia'1g z'e2;1s()1'1i11g of the Appellate l7i'«.',ll'l.f1(}I'fl;l:jI.

. . . . . ' - _ ' , . n .V:' :4 A Ely} V.'Tf'l€?~!T€?C§]'fC'f'. BIFR vz'a'.e? its ()r'd.er dared 3 the DRSfor consent Q1" all The DRS envisacgeci lite setilenlenz of of KFC l.lI'ld6?I" an 078 of RS210 A " 'l'i"1.e ol,y'e<.'n'or'1s to (he DRS u.:(3re l"'._vv'ttoi'1.sider"c3(l in the f'1ecu'ir1g held on 12.12.2005 and prior to the said hearing KSFC wide its leaner dated 7.12.2005 clclc:lr'e.<:5;c2cl Io z:'lz.e OA W.P./Vo.11000g2007 affirmeci that KFC.' Board at its I'nt?eIiI'1.g held on 20.9.2005 had agreeeal in prir1c:fpl.e to 1."'I'C£I'L'S_'f4'(:?[fV'~_ '._ thcz leascrsd assez"for a sum Q/' rs.2IO . A4 t.l'2t?re was no objec:tior'z to I.he I)R§:":3 "

circtdaied. the same was scartcrzioaed bgj"if'a:<: ' BIFR aide its order dated 12.1V':2.2oo:éi'. U} A reuie?tu hectrirtg u.'.=«as t.'($IAtvz.*'c:-",'II€C1 arr)? for 20. 9.2006 and IIV5ie..u izs'zI,ti't'-eat: T S':t'at't}ts report'/'ram all Q(),v'¢;('V';'L"}.;V_"'r1(,'C».i'A. "'KS%C' .vS3,{.bf?"tfl.lvéd"HIS status report on ~.t__h.(1I', the asset had I3;5--.£?V2_'1 t'rai'2sj}'t{fg*étiz_aad Itlzzat the due praCed.a.r_¢ :':i:lti'1g€ _ a§:z,jat.vuf1lavas under

way. £:'jI C;,'jv:.:t..tf)missiiaiis of {.116 OA, I3IFR'Ab'$;. artist" 'at're(:1.ed that the 's(1rt:c:tiar1ed.v be l7'H[9l€%'l'I'I(3l'tl.£3C1 and the 'a%:1lt'gati.a;-1s"" be discthargeci by [3a.v-.1k§'.s/ 'II.°z's i'.r'1 this (.ror'zI,c,?xi that KFC was 't'ifl:"€%(,f'1€3Ct"'~. to issaﬁa No Due Cert_£/i'Cat'e? SiT1C€' it ' that a pag,:rnent: Q/' Rs2IO lacs H ~. had Vbéiifrx i*g?(;9ei.veci..

ft'). I*'fa:'7'1 ("he for'eqo1'r"zc; it is en-ider'1t that the .A _KFC=!-tad at no stage obfecrted to the sett.lernent"

V' dues under an OTS and had repeatedly ;c:org_firn'zed that" time Zeastzd asset had been. t'r'(u1s/'erred as per understarzditlg and that a My '-«J W. P. /Vc.11000;2007 s1..mz Qf"Rs.21O lacs had I30:-=?1z r'cc'c;>iu(e(i__/}'om the re?.<;pc3r'z(1cI1l (*0mp(m_zj. Ii:'cw1'.n._c; c1cc.'cpz<;>.a' q[]1'rn"1c(1 as above, if is now nor: open appellarlii to decline to iss'1Lc (1 No Ofr. discllargc? <JcI'z'§f1'('aIe. In mica' vQf"i.'.:I'{.(.§"Cg]}i§I'C'§§ic1'i.f-jfiivvi _/'acts we,>__/"i.r'1c1 1''! M11. there is ni;-3' i1"gj'I:'!'f'2iI'g}._ft:

clircctfon zssued to KFC' £"fi'c._ tirderfcii .20. 09.2005 passed by 131;?2*2,:;i;. ...... .5. 1. J: ; .i . . {Um cleﬂ i'z:1¢i n 1.:15;3!§.c?d} ' .. c

6. To exa11'1in.c as {Q v_V{v%1et.hE:cj' "f.'Eave>:"t'--..I,V--xxizis deemed cronscmt in Iawg" it 3*?' '1fc1.éV21i?;t'f Vito _41*c._fci'r'io"séL.1b--scc'1ions {1} 82' {2} of Sc:c,1:i<::IiiV;»'&:V1.9:Acrtf w}11'<th read as foiiowsr ''19. ii giuirlg _f'z'.r1an.cial c15s£st'(xI'1i'fc?__¥[I'}-"M/Iiicrch U16'. sc>f'1e=,>n'1{3 relates 1.0 i(ih'[e:i-5.-£:;i'aIice. remedial and other 1V'F7ilCL7...$vuIT(f$Viiilzilh re.>spe(>1 10 any sick irzdus'Ir1'aI ._ '{.39;:i'1g:»'cii-c;«g,.I_f ':'t'ﬁe scheme may provide for ﬁ_na§:ci.aI assistance by way Q/' Ioarzs, ad.z}cqj&7es or guaramccs or rclic)'l9 or co:'1c:cs.9ic>I1s or sacriﬁces from {he C;'er'z1'ruI iC}c'iuer'rzrr'1er'1l, (1 Slalzc C}ouemmenI._. (lily :sc!'"zeduZed bank or ofhcr bank, a public ﬁnancial institution or Stale level in.s;iitiuIicr1 § 38 3; E R. if / X W. P. /'Vo.l.7.0OOg20O7 or cm,I,l ir1st_z'_tu:1.ion or other amhoriizy (snug C}0z,2ernrnen£". bank, inslitulion or oiher aulhoriiy required by a scrlzernc 1'0 provi.de']br such '/'i.nar1.('z'.al. a..~.;sis{(1r'1<'c being i1ereqf1"er 1'n7.

this seclion rejerred {'0 as the pmson I'6'C]I,.I_?.I7Qd V by the scheme to provide jincmciai assi.s'i:f;1:i1c:e);:

to {he sick industrial c7or71par'1y._; ._ x V' {2} Euery S('.'f'I£'fT1E.' r'e_fer':'ecI to i'.*;z&. s,'§:r')~v':9¢'€;r':iO'2"2ii!'I Z shail be c:L'rc.uiaI.ed to eve'r§;__pcerSk3.r:1'ﬂeqtxireciéi the scheme io proL=ide.]ir1'¢ii*1.eiai asSi5t'(ii"ze-e his consent withiri cg 19c'Ii{h()'CI"'.:n]j':.§Vi§<=I'y da_{.;S';_f}'O%71 the date of such "'C.'[i"'«.f,'.'L1hfl_{"iE'%j t;1.;*:il'hir'1 such further period, as '7?€1$li"""I3'e;?- '"_"'t'.3'cJE:1rci. and if no corisent such period or further! perViehc'i',.:' be deemed that cerasentéhhhas b'eeh' given.

. . . . . .".'.'.".";';".'.' ................................... .. "

(Em phasjsis supplied} _ As (i&:L11ci._"be. from Sec:t:i<)n 19(2) of the SICA Act". it. ;«;pe.;>; 10 €'1'1_c-. p<;=.1ifi01'1er~KSF{Z not. to give iiss ('".(.)l1S€I'H. _&e~__\v"If1e?11"A1'he draft: scheme \V£EiS <':ircu}afed to if for its 2

--10~ W.P.NO.11000g2007 ALL('h()rz'E;_.; in ('ii1'c'?(11ing;§ the ;;)('31.iti<):'1c:r to issue 21 'no ::i;:1e-.s' <.rct'I'§]'i'(.:aze' to 1*eSp0nd€>nt No.3~C3ompz2my. 'I'l'1ef peIiti<m iS devoid of merit. and ac:'('<')1'(ii:'1g_{ly c§iSn)iss'euciM. .* V' 1 I . . _.' V' "

Pet_1t1(im chs1n1ssed. * '_ 2 -3 Sh}/~A1a

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