Indian Kanoon - Search engine for Indian Law

6. Pursuant thereto, Additional Director, Industry, vide letter dated 06.01.2001, communicated petitioners a decision of Divisional Level Committee informing that petitioner's claim for rehabilitation was already rejected in April, 2000 but this fact was concealed in the above writ petition. Further, One Time Settlement was sanctioned by UPFC in 1998 but that was not adhered to and complied with by M/s GOI. Only Rs.96,000/- was deposited by M/s GOI in April, 1997. The Committee therefore, proposed that, if petitioners deposit Rs.1.40 lakhs, towards earnest money within three weeks with UPFC, it may be allowed an year's time to pay rest amount, which was total Rs.14 lakhs. Petitioners did not comply with the said demand claiming that it was arbitrary. Petitioners filed appeal before State Level Standing Committee vide memo of appeal dated 02.02.2001 which remanded the matter to Regional Level Committee but it reiterates earlier order vide decision dated 27.03.2001. Again an appeal was filed by petitioners on 24.4.2001 before State Level Standing Committee. When the same was pending, UPFC advertised, in daily newspaper Amar Ujala dated 10.05.2001, petitioner's Unit for sale with a reserve price of Rs.5 lakhs. Petitioners were also informed vide letter dated 28.6.2001 sent by Regional Manager, UPFC that pursuant to High Court's judgment dated 05.7.2001, his representation was rejected. Petitioners protested against said decision vide letter dated 12.7.2001 but UPFC reiterated the above decision vide letter dated 11.7.2001. Petitioners then filed an application before State Level Standing Committee on 05.9.2001 requesting for stay of sale of Unit by UPFC. The Committee, vide letter dated 13.9.2001, requested UPFC to defer sale of Unit till a decision is taken by State Level Standing Committee. Petitioners, vide letter dated 15.9.2001 made similar request to UPFC. UPFC sent a letter dated 4.10.2001 to petitioners stating that Unit has been sold for Rs.5 lakhs in the proceedings under Section 29 of Act, 1951 and after adjusting aforesaid amount of Rs.5 lakhs, the balance amount, if petitioners are ready, may be allowed to clear in instalments and if petitioners are ready for One Time Settlement, it may apply alongwith earnest money by 25.10.2001.

7. However, UPFC executed sale deed on 25.9.2001 (Annexure 14 to writ petition) and informed petitioners that rest amount shall be recovered by issuing a recovery certificate under U.P Public Moneys (Recovery of Dues) Act, 1972 (hereinafter referred to as "Act, 1972"). Hence present writ petition has been filed seeking relief, as described above.

8. Respondent 3 i.e. UPFC has filed a counter affidavit sworn by N.K.Dixit, Deputy Senior Manager (Law) sworn on 10.12.2001 stating that Term Loan of Rs.1.72 lakhs and Rs.1.80 lakhs were sanctioned to Mr. Vinod Kumar Garg in 1991 for setting up an Industrial Unit for manufacturing Mustard Oil at Village Ladu Khera Kheragarh, Agra. Subsequently, Working Capital Term Loan of Rs.9 lakhs was sanctioned and disbursed in September, 1995. Therefore, a total loan of Rs.12.52 lakhs was disbursed to petitioners by UPFC. Petitioners committed default in repayment of instalments of principal sum as well as interest. Despite repeated request and reminders, it did not clear its outstanding dues. Consequently, a notice under Section 29 of Act, 1951 was issued on 13.6.1997. Physical possession of Unit was also taken over by UPFC. Electric connection was already disconnected on 25.11.1995 due to default in payment of electricity dues to U.P. State Electricity Board (hereinafter referred to as "UPSEB"). An undated proposal for rehabilitation submitted by petitioners were received in the office of UPFC on 07.3.2000 but it was not found viable hence rejected vide order dated 11.04.2000, which was communicated to petitioners. Then petitioners, vide letter dated 26.9.2000, informed about the steps taken before Regional Level Rehabilitation Committee. Additional Director (Industries) vide letter dated 6.1.2001 required petitioners to deposit Rs.1.40 lakhs within three weeks whereafter it would be given a year's time to make payment of balance One Time Settlement amount but even this direction was not complied with by petitioners. Consequently, UPFC proceeded for sale of Unit by publishing notice in daily newspaper 'Amar Ujala' on 10.5.2001, following guidelines laid down by Supreme Court in Mahesh Chandra vs. Regional Manager, U.P. Financial Corporation and others (1993) 2 SCC 279. Information was also given to petitioners vide letter dated 23.5.2001 sent by Regional Manager, UPFC. Here also petitioners did not respond. A registered letter was also sent to petitioners on 11.7.2001. Ultimately, auction was held and Unit of M/s GOI was sold by UPFC vide sale deed dated 03.09.2001 for a sum of Rs.5 lakhs. Thereafter, outstanding dues, after adjusting Rs.5 lakhs, were demanded from petitioners vide notice dated 04.10.2001. A similar notice was also given to Kailash Chandra Mittal, Guarantor to petitioner's loan.

Sl.

Cheque Date Amount 17.01.1996 Rs.34,000/-

15.07.1996 Rs.56,000/-

23.10.1996 Rs.44,000/-

10.12.1996 Rs.44,000/-

30.09.1996 Rs.56,000/-

29.10.1996 Rs.12,000/-

10.12.1996 Rs.16,000/-

31.03.1997 Rs.79,000/-

10. On 15.5.1997 there were overdues of Rs.2 lakhs in Working Capital Term Loan Account and Rs.2,40,183.92 in the main loan account. When UPFC was contemplating to issue notice under Section 29 of Act, 1951, it came to knowledge, through its Recovery Officer on 12.9.1996, that petitioners had abandoned the Unit. Consequently, for the safety of assets of Unit, UPFC recommended for posting of its Guard. Thereafter notice under Section 29 of Act, 1951 was issued and actual physical possession of assets was taken over on 13.6.1997. Information to this effect was also given at Police Chauki Ladukhera, Agra. Thereafter, several letters were issued to petitioners but the same remained unheeded. On 13.6.1997, when UPFC Officers visited the Unit, they did not find either petitioners, his family members or any other employees or representatives present at the Unit. This shows that information given by Recovery Officer that petitioners had abandoned the Unit was correct. Possession of Unit was taken almost after one and half years of disconnection of electric connection showing that Unit was not functional.

16. Annexure CA 9 to the counter affidavit sworn on 27.6.2003 filed by UPFC is a letter dated 17.12.1996 informing petitioners that cheque no.219562 drawn on Punjab National Bank, Belanganj, Agra on 30.11.1996 for Rs.60,000/- towards repayment of Term Loan was returned dishonored with the remark ''insufficient funds' and petitioners were required to pay the said amount but nothing proceeded. Thereafter, a notice dated 10.02.1997 issued by Senior Manager (Technical) UPFC, (Annexure 10 to the writ petition), further shows demand of outstanding dues from petitioners as also inviting to submit proposal, if any, for repayment as Unit's physical possession would be taken on 25.02.1997 but nothing has been placed on record to show that in response thereof petitioners made payment of dues to UPFC. On the contrary, UPFC has filed petitioner-2's letter dated 15.6.1997 addressed to Senior Superintendent of Police, Agra, (Annexure CA-11 to counter affidavit) complaining that on 08.6.1997 petitioner-2 and his family members had gone out of station locking his House and Mill but when he returned, Mill was looted and possession was taken by third party who also threatened him. Another letter of petitioners dated 21.6.1997 is Annexure 12 to counter affidavit whereby petitioner-2 has informed Regional Manager that auction proposed on 26.6.1997 shows entire Unit but only 259.2 sq.m. is liable to be auctioned and rest area has no concerned with UPFC. Here also we do not find any objection raised by petitioner-2 for auction proposed by UPFC.