S.R. Nayak, J.
1. All these writ appeals filed by the financial institutions and the banks are directed against the same judgment of the learned single Judge dated 12-8-1999 made in W.P. No. 26061 of 1992. WA. No. 1689 of 1999 is filed by the Industrial Development Bank of India, Mumbai (IDBI), the 2nd respondent; W.A. No. 1620 of 1999 by State Bank of India, Hyderabad Main Branch, Hyderabad, the 8th respondent; W.A. No. 1532 of 1999 by Industrial Finance Corporation of India Limited (IFCI), the 4th respondent; W.A. No. 1658 of 1999 by the Central Bank of India, Mumbai, the 7th respondent; W.A. No. 1637 of 1999 by Industrial Credit and Investment Corporation of India Limited, Mumbai, (ICICI), the 3rd respondent and W.A. No. 1699 of 1999 by State Bank of India, Gunfoundry, Hyderabad, the 6th respondent in the writ petition.
2. The writ petition was filed by Sri Krishna Oil Complex Limited, Hyderabad, the respondent herein. The background facts leading to the filing of the writ petition be noted briefly as under: The petitioner is a company registered under the Companies Act, 1956 and was incorporated on January 1, 1975. It is said, the main objects of the company, inter-alia, are to manufacture, crush, refine and prepare in the State of A. P., all products based on castor such as Medicinal Castor Oil, Refined Castor Oil, Commercial Castor Oil, B.S.S. grade, Dehydrated Castor Oil, Dehydrated Fatty Acid, Hydrogenated Castor Oil, Hydrogenated Castor Oil Fatty acid, Dimer Acids, Polyamides, Sebasic acid, blown castor oil, alkyd resins, epoxy esters, Sulphonated Castor Oil, Paint additives, based on castor oil, polyamides based on castor oil, brake fluids, greases, castor cake for fertilizers, glycerine, lubricants, Nylon-11. In pursuance of these objects, the petitioner-company was granted a Letter of Intent(Lol) by the Government of India to undertake production of refined castor oil 7000 M.T., dehydrated castor oil 5000 M.T., and Hydrogenated Castor Oil 13000 M.T., which was later converted into industrial licence CIL 173 (80) dated 19.7.1980 with a condition that the company should export 100% of the annual production of hydrogenated castor oil for 5 years which may be extended for a further period of 5 years at the option of the Government of India. The petitioner was started as a 100% Export Obligation Unit (EOU) having a collaboration and marketing tie up with M/s. Trade McNair of USA which supplied the technical know-how and also undertook to lift the entire stocks of the refined castor oil, dehydrated castor oil and hydrogenated castor oil that would be produced in the petitioner's proposed unit. The Government of India also granted its approval for the petitioner's collaboration with M/s. Trade McNair of USA vide its letter of the Ministry of Industries and Civil Supplies in Ref. No. FC.-II/I42 (70) 419 (75) dated 24.8.1976. Consequent upon the collaboration agreement and the approval of the Government of India, the petitioner-company undertook the research of feasibility and viability of raw-material for locating the castor oil unit. After studying various aspects, the petitioner finally decided to locate the unit at Vemphad Village of Nalgonda District, where there was abundance of excellent quality of castor seeds. The petitioner thereafter prepared an estimation cost of the project and the same was pegged at Rs. 682 lakhs. After preparation of the estimation of the cost of the project, the petitioner started negotiating with various financial institutions and banks for the purpose of obtaining the term loans for erecting and running the proposed plant. On negotiations, the IDBI sanctioned a term loan of 206 lakhs which included central subsidy of Rs. 15 lakhs to the petitioner under the loan agreement dated 28.10.1980 entered into between thepetitioner and the IDBI. Similarly, IFCI, the 3rd respondent agreed to provide Rs. 100 lakhs; the ICICI, the 4th respondent a sum of Rs. 100 lakhs. These loans advanced by respondents 2 to 4 will be hereinafter referred to as 'First Loans'. Further, the financial institutions agreed to sanction 'Bridge Loans' of Rs. 75 lakhs against the under-writing commitment of the petitioner-company against its proposed public issue, under the respective bridge loan agreements entered into between the petitioner and the respondent-financial institutions. Under these 'bridge loan agreements', the IDBI agreed to provide Rs. 37.51 lakhs, IFCI Rs. 18.75 lakhs and ICICI Rs. 18.75 lakhs, thus totalling to Rs. 75 lakhs. Out of the above committed sum, IDBI released the full share of Rs. 37.51 lakhs, IFCI released Rs. 13.26 lakhs and ICICI Rs. 12.95 lakhs totalling to Rs. 63.71 lakhs and adjusted the balance of Rs. 11.29 lakhs towards interest liability of the company. Equipped with these proposals, the promoters of the company started investing funds for purchase of lands, placing orders for machinery and construction of buildings etc., Further, respondents 2 to 4 sanctioned additional term loans aggregating to Rs. 105 lakhs under the common loan agreement dated 3.9.1994 entered into between the petitioner and respondents 2 to 4, hereinafter referred to as 'Second Loans'. In terms of the 'first loan' agreements and the 'second loan' agreement, the financial institutions have the right to withhold disbursement or cancel the loans if the petitioner commits default in compliance of the terms and conditions of the first loan agreements and/or 'second loan' agreements. Further, the financial institutions are also entitled to recover the dues payable by the petitioner out of the disbursements to be made by the respective financial institutions to the petitioner. According to the financial institutions, the interest on the loans during the construction of the project is included in the project cost and since the petitioner failed to pay the interest dues, they wereadjusted in the disbursements. Since the petitioner has committed default in compliance of the terms and conditions of the 'first loan' agreements and the 'second loan' agreement, the unavailed part of the loans were cancelled by the financial institutions by issuing recall notices. Under these circumstances, the petitioner company was referred to Board for Industrial and Financial Reconstruction (BIFR) under Section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short, the Act). At its first hearing held on 25.1.1989, it declared the petitioner to be a sick company within the meaning of Section 3(1)(o) of the Act. Later, at the hearing held on March 22, 1991, the 2nd respondent was appointed as the Operating Agency (OA) under Section 17(3) of the Act and asked to examine the possibility of revival/rehabilitation of the petitioner-company. However, all the attempts to revive/rehabilitate the petitioner-company failed. Keeping in view the non-viability of the unit and the inability of the promoters to bring in necessary funds, and since there was no response to the advertisement for change of Management, the BIFR issued a show-cause notice for winding up of the petitioner-company on 1.8.1994. At the BIFR hearing on 8.2.1995, the promoters of the company pleaded that they had identified an NRI who would infuse funds and join as a co-promoter to revive the petitioner-company. The BIFR decided to give the promoters last opportunity and were directed to bring in the funds to the tune of Rs. 3 crores to be deposited in a 'no lien account' with the State Bank of India within three weeks. At the request of the promoters, the period was extended upto 10-4-1995. However, inspite of such an extension of time, the promoters did not comply with the same. Consequently, the BIFR on 1-5-1995 recorded its final opinion that the petitioner should be wound up and forwarded the same to this Court for further action. In paragraphs 13 and 14 of the order dated 1.5.1995, the BIFR held--
'At the request of the company made vide letter dated 2-3-1995 seeking time of 2 months for depositing an amount of Rs. 3 crores in 'No lien account' with State Bank of India the Bench granted time upto 10-4-1995 for the purpose which was communicated to the company by the Bench Officer vide telex message dated 14-3-1995 with confirmatory copy to the company as well as to the SBI and Operating Agency. Despite granting extension of time the existing promoters of the company did not deposit Rs. 3 crores in no-lien account and sought further time of 3 months for the purpose. We are now fully convinced that the existing promoters are more interested in dragging the proceedings than in revival of the company. The case has dragged on for six years and the company in the meantime has lost viability. In view of the foregoing facts and circumstances of the case it has now been conclusively established that :-
(a) the existing promoters of the company are not capable of bringing necessary funds for the revival of the company of their own or in association with any other co-promoter nor have been able to submit any concrete viable revival proposal;
(b) In view of the huge debt burden of the company and amounting dues of the banks and financial institutions no other party has come forward for revival of the company;
(c) Revival of the company through a workers' co-operative is not feasible in this case.
Accordingly we have come to conclusion that it is just and equitable that the company be wound up. We, therefore, direct that our opinion that the company be wound up be communicated to the Hon'ble High Court of Judicature at Hyderabad. A copy of this order besides a copy of all the earlier proceedings of the case be forwarded to the Hon'ble High Court for further necessary action. The IDBI would provide adequate security for the assets of the company until appointment of a Receiver by the Hon'ble High Court.'
In pursuance of the reference made by the BIFR, the Company Court has registered the reference as RCC. No. 6 of 1998 and it is stated that further proceedings are not taken in the RCC by the Company Court because of the pendency of these writ appeals. The petitioner-company, being aggrieved by the order of BIFR dated 1-5-1995, preferred appeal to the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) and the AAIFR also dismissed the appeal by its order dated 30-9-1996. The petitioner-company did not prefer any writ petition either against the order of BIFR or AAIFR and they are allowed to become final.
3. When the matter stood thus, the petitioner-company instituted the present writ petition in the month of October, 1997 under Article 226 of the Constitution impleading the Union of India as the 1st respondent and the financial institutions as respondents 2 to 7. The prayer in the writ petition reads:
'For the reasons stated in the accompanying affidavit, it is prayed that this Hon'ble Court may be pleased to issue a writ or order or direction, more particularly one in the nature of writ of mandamus directing the respondents to rehabilitate the petitioner company's castor seed unit at Vemphad Village of Nalgonda District by providing suitable financial assistance for the revival and rehabilitation of M/s. Sree Krishna Oil Complex Limited, the petitioner company's Castor seed unit at Vemphad Village, Nalgonda District, and pass such other order or orders as this Hon'ble Court may deem fit and proper in the circumstances of the case.'
The writ petition was filed complaining that the respondent-financial institutions committed default in the disbursement of the sanctioned principal amounts of term loans and on account of their default, the petitioner-company could not even complete construction of the plant and thereby failedto commence production of value added products HCO and DCO and dispite the fact that the promoters of the company brought this lapse on the part of the financial institutions to the notice of the higher authorities in the administrative echelon of the financial institutions, they did not come forward to disburse the loan amounts, and on the other hand, they prevented erection of the petitioner company and the company was informed that the balance of the principal amounts to be disbursed would be treated as adjusted towards interest and that action of the financial institutions is patently illegal and not in public interest. In the writ affidavit, it is contended by the petitioner-company that if the financial institutions had disbursed the loans sanctioned in the first instance as per the schedule of disbursement, the petitioner-company would have successfully commissioned the castor seed unit and could have commenced production as per the plan which would have led to the unit taking care of itself financially, and since the financial institutions committed default in disbursement of the amounts on time, the project ended up with cost escalation and cost over run of Rs. 133 lakhs. It was also contended that even before the BIFR there were two reports submitted by the IDBI, which after an elaborate research and survey, showed that the petitioner-company castor seed unit at Vemphad village was a viable unit which could be rehabilitated. It was also contended that the survey conducted by Tata Economic Consultanacy Services, an independent agency drafted by IDBI on the recommendation of the BIFR in the year 1992 also showed that the petitioner-company is a viable unit which must be rehabilitated. The IDBI though initially proposed a scheme before the BIFR wherein it promised to bring an amount of Rs. 2.5 crores for complete rehabilitation of the caster seed unit and though the said scheme was agreed by all the financial institutions and also the commercial banks, respondents5 to 7, which were to provide for working capital, when the same went up for confirmation, the IDBI backed out in a totally 'irresponsible manner.' So alleging and claiming that the petitioner's unit still is a viable unit, the petitioner sought the relief in the writ petition already noticed above.
4. The writ petition was opposed by the respondent-financial institutions by filing counter-affidavits. In the counter-affidavit field by IDBI, the 2nd respondent, it was contended-
'The operations of the petitioner were not satisfactory since inception. It could hardly achieve 10% capacity utilization thereby incurring huge losses. The problem was further compounded by the petitioner's inability to tie up adequate working capital. The petitioner has been lying closed since July 1990. The commercial production commenced in May 1984 after a time lag of two years and the cost over run of Rs. 133 lakhs (original project cost was Rs. 682 lakhs). This time and cost over run was caused, inter alia due to lack of proper project planning and implementation delay in induction of promoter's contribution on matching basis, non release of sanctioned power of APSEB and promoters' inability to mobilize resources to meet over run. The petitioner, therefore, could not repay the dues of the respondents. There was, thus, gradual erosion of the net worth of the petitioner and subsequently the petitioner was referred to BIFR under Section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). At its first hearing held on January 25, 1989 BIFR declared the petitioner to be a sick industrial company within the meaning of Section 3(1)(o) of SICA. Later at the hearing held on March 22, 1991, the 2nd respondent was appointed as the Operating Agency (OA) under Section 17(3) of SICA and was asked to examine the possibility of revival/ rehabilitation of the petitioner. However, all the attempts to revive/rehabilitate the petitioner failed.'
'Keeping in view the absence of any viable proposal, inability of promoters to bring in necessary funds and no response to the advertisement for change of management, the BIFR issued a show-cause notice for winding up the petitioner on August 1, 1994. At the BIFR hearing held on February 8, 1995, the promoters of the petitioner pleaded that they had identified an NRI who would infuse funds and joint as co-promoter to revive the petitioner. BIFR decided to give the promoters last opportunity and were directed to bring in funds to the tune of Rs. 3 crores to be deposited in a 'No lien account' with the State Bank of India within three weeks. At the request of the promoters the period was extended upto April 10, 1995. However, inspite of such an extention of time, the promoters did not comply with the same. Consequently, the BIFR on 1-5-1995 recorded its final opinion that the petitioner should be wound up and forwarded the same to the Hon'ble A.P. High Court for further action.'
'The 2nd respondent in November, 1983 sanctioned to the petitioner, at the request of the petitioner, the Bridge Loan of Rs. 37.50 lakhs, against the proposed public issue of shares to the extent of Rs. 75 lakhs. The petitioner delayed launching of the public issue due to non-compliance on several counts viz., delay in bringing promoters contribution in full, inability of promoters to tie-up finances for meeting over-run and cash losses etc. The petitioner subsequently had to shelve the public issue in view of its poor working results. The petitioner was apprehensive to get the public support. It is further reiterated that shelving of the public issue was the sole decision of the petitioner and the respondent No. 2 has in no way advised or impressed upon the petitioner to shelve its plans for going in for a public issue as alleged by the petitioner.'
'It is further stated that this respondent and other institutions have timely disbursed the loans as per the respective loan agreements and in accordance with law. In fact at the request of the petitioner, the last date for drawal of the said First Loan andBridge Loan were extended. As regards the alleged shortfall in disbursement it is submitted that the project cost, as originally envisaged, included interest during implementation of Rs. 35 lakhs and contingencies of Rs. 30.35 lakhs, aggregating Rs. 65.35 lakhs, besides providing for other pre-operative expenses of over Rs. 60 lakhs. Capital issue expenses were also not included due to shelving of public issue. Accordingly, the First Loan was disbursed to the extent of Rs. 1,63,62,577.77 lakhs after making adjustments towards interest of Rs. 27,37,421.89 lakhs during implementation as per the normal institutional practice and in accordance with the terms and conditions of the First Loan Agreement, which was accepted by the petitioner. The Bridge Loan was fully disbursed. There is thus no shortfall in disbursement as alleged.'
'It is not true that the project suffered cost and time over-run because of non disbursement of the loans to the full extent and in time. In fact the said cost and time over-run occurred mainly due to the failure of the promoters to bring in their contributions in time in terms of the first Loan Agreement, the Bridge Loan Agreement and the Second Loan Agreement, and delay in implementation of the project. Adjustment of interest was made against the disbursement as per the normal practice, in accordance with the terms and conditions of the respective Loan Agreements and as per the request of the petitioner.'
'It is stated that the petitioner failed to timely implement the project and obtain promoter's contribution. Even though the castor seed unit had good viability prospects with availability of fine quality raw material and a ready export demand, the petitioner failed to commence production of value added product viz., Hydrogenated Castor oil (HOC) and Dehydrogenated Caster Oil (DCO). The phase II project could not be completed not due to non-disbursal of the loan from the respondent No. 2 and other respondents but mainly due to lack of proper project planning and implementation, non release of sanctioned power by APSEB and the promoter's inability to mobilizeresources. The operation of the petitioner were not satisfactory since inception. It could hardly achieve 10% capacity utilization thereby incurring huge losses. The main reason for the dismal performance was the inability of the petitioner to obtain need based working capital due to which it could not establish itself as a dependable supplier of castor oil.'
'The averment that this respondent had proposed a scheme before BIFR where it had promised to bring in Rs. 2.5 crores for rehabilitation, in untrue and false. BIFR on January 15, 1989 approved the scheme which envisaged induction of promoter's contribution of Rs. 187 lakhs to finance the revial scheme. Due to failure of the promoters to infuse necessary funds, the scheme fell through.'
'At the hearing held on January 25, 1989, BIFR approved scheme in terms of the proposal agreed to by respondent No. 2 to 4/ banks in 1988, wherein the respondents Nos.2 to 4 had agreed to grant to the petitioner additional rupee term loan of Rs. 70 lakhs and certain reliefs/concessions. The scheme sanctioned by BIFR fell through mainly because the promoter did not bring in the stipulated amount.'
5. Before the learned single Judge, it was contended by the petitioner that respondents 2 to 7 did not act fairly and they acted irresponsibly in not providing the necessary financial assistance for its rehabilitation and that the financial institutions backed out from their promises and, therefore, their action is hit by the doctrine of promissory estoppel. On behalf of the financial institutions, it was contended that the present situation of the petitioner-company was brought about by its own follies and bad planning and implementation and there was no breach of any terms and conditions of the agreements on the part of respondents 2 to 7 and in that view of the matter, there was no scope to apply the doctrine of promissory estoppel. It was also contended that the petitioner-company having approached the BIFR andAAIFR in 1989-90 and since the BIFR as well as the AAIFR being the competent sole functionaries under the Act have declined to rehabilitate the petitioner-industry and on the other hand recommended winding up of the company to this Court, it is not permissible for the petitioner-company to approach this Court under Article 226 of the Constitution independently seeking for the same relief which it sought before the BIFR and AAIFR, and that too, without assailing the validity of the orders of BIFR and AAIFR and, therefore, the writ petition filed by the petitioner is not maintainable.
6. Having regard to these contentions, the learned single Judge framed the following points for consideration:
(i) Whether there was failure on the part of respondents 2 to 4 in disbursing the principal amount in the first instance and additional term loans subsequently and on the part of respondents 5 to 7 consortium of banks in providing working capital assistance and if so whether it has resulted in breach of promissory estoppel?
(ii) What is the effect of two reports submitted by IDBI before the BIFR showing, that the petitioner-Company is a viable unit and what is the effect of survey by an independent agency i.e., Tata Economic Consultancy Services; and
(iii) To what relief?
7. The learned single Judge opining that when the petitioner company was still in the making and even before it took a shape, the financial institutions started cutting into its funds by not disbursing the agreed amounts and thereby respondents 2 to 7 financial institutions committed default in disbursement of the loan amounts and,therefore, the doctrine of promissory estoppel is applicable, by his order dated 20-9-1999 allowed the writ petition, the operative portion of which reads -
'In the result, the writ petition is allowed and respondent Nos. 2 to 7 are directed to provide necessary financial assistance for the revival and rehabilitation of the petitioner company's caster seed unit without any loss of time. Time for compliance is three months. There will be no order as to costs.'
Hence these writ appeals by the aggrieved respondents/financial institutions.
8. We have heard Sri S.R. Ashok for Mr. V.S. Raju, Mr. V.V. Krishnamurthy, Mr. M. Narendar Reddy, Mr. Deepak Bhattacharjee, Mr. R. Vijayanandan Reddy for Mr. P. V. Markandeyulu, learned Counsel for the appellants and Sri K. Pratap Reddy, leaned senior Counsel appearing for Mr. P. Vijaya Bhaskar Reddy, learned Counsel for the respondent-company.
9. On behalf of the appellants, the learned Counsel would contend that since the respondent-company has allowed the orders of the BIFR and AAIFR to become final, the writ petition filed by it for substantially the same relief under Article 226 of the Constitution is ex-facie not maintainable and the learned single Judge ought to have dismissed the writ petition in limine. The learned Counsel would further contend that the learned single Judge, in directing the appellants to provide necessary financial assistance for the revival and rehabilitation of the company has exceeded jurisdiction and power conferred on this Court under Article 226 of the Constitution was the learned Judge ought not to have straightaway directed the financial institutions and the banks to provide financial assistance for the revival and rehabilitation of the company without considering the techno-economic viability and possibility of the revival of the unit.The learned Counsel would further contend that by straightaway directing the appellants to provide financial assistance to the company, the learned Judge has usurped the power and discretion vested in the banks and financial institutions. The learned Counsel would also contend that the learned Judge totally erred in law in applying the doctrine of promissory estoppel and that the learned Judge ought to have seen that the respondent-company has not established the necessary conditions precedent to apply the doctrine of promissory estoppel. The leaned Counsel would also contend that the learned Judge is not justified in opining that the financial institutions and banks did not disburse the loan amounts in time and, therefore, it landed in financial crunch. Alternatively, the learned Counsel would contend that even assuming that the financial institutions and the banks committed default in disbursement of the loan amounts in time, even then, such a plea could be urged before the Company Court and the respondent-company cannot be permitted to circumvent the statutory orders passed by the BIFR and AAIFR under the Act in an indirect way invoking the power of this Court under Article 226 of the Constitution. Lastly, the learned Counsel for the appellants would contend that even assuming that the banks and the financial institutions committed omissions and commissions in the matter of disbursement of agreed loan amount in breach of the agreements entered into between them, as alleged by the respondent-company, such omissions and commissions on the part of the banks and financial institutions, would at the most, amount to a breach of an ordinary civil contract, in respect of which no relief can be sought in a writ petition by invoking the extraordinary jurisdiction of this Court under Article 226 of the Constitution and the only remedy available to the respondent-company is to work out its remedies in a competent jurisdictional civil Court.
10. On the other hand, Sri K. Pratap Reddy, learned senior Counsel for the respondent-company would contend that the materials placed before the Court would go to show that the financial institutions and the banks committed serious default in disbursement of the agreed loan amounts and on account of their default, the company could not erect its plant in time and consequently landed in financial doldrums and crunch and it could not take off as expected. The learned Counsel would contend that the financial institutions and the banks are statutory authorities/ instrumentalities of the State and, therefore, their serious lapses in the matter of disbursing the agreed loan amounts in time to the respondent-company could be reviewed by this Court under Article 226 of the Constitution on merits and on the touchstone of Article 14 of the Constitution and this Court can grant appropriate relief to the respondent-company regardless of the orders of the BIFR and the AAIFR. The learned senior Counsel would also maintain that merely because the orders passed by the BIFR and AAIFR are not specifically assailed in the present writ petition or any other writ petition, that fact itself would not come in the way of this Court exercising its powers under Article 226 of the Constitution of India. Answering the contention of the learned Counsel for the appellants that the writ petition is not maintainable because the orders of the BIFR and AAIFR and allowed to become final and they are not assailed, the learned Senior Counsel would maintain that neither the BIFR nor the AAIFR have any power under the Act to compel the banks and the financial institutions to provide funds to revival and rehabilitate the respondent-company and such an effective order could be passed by this Court only under Article 226 of the Constitution. The learned senior Counsel would maintain that the refusal of the banks and the financial institutions to disburse the loan amounts intime and thereby forcing the respondent-company to become sick is totally arbitrary, unreasonable and violative of Article 14 of the Constitution.
11. We are of the considered opinion that there is a deliberate attempt on the part of the respondent-company to circumvent the orders made by the statutory authorities i.e., BIFR and AAIFR and RCC 26 of 1998 pending before the Company Court in filing the writ petition. As noticed above, the relief sought in the writ petition and the relief sought before the statutory authorities constituted under the Act are substantially similar. It is trite to state that except the Act, there is no other law, which provides for revival or rehabilitation of industries which have become sick. In other words, but for the mechanism provided under the Act, the revival and rehabilitation of sick industries would not arise and that no Court and direct the banks and the financial institutions to revive or rehabilitate such sick industries by providing financial assistance. Sickness in industries is a universal phenomenon. Sickness in industries is of very vast magnitude both in terms of the quantum of the funds blocked and the number of units. The Government realizing the sickness in industries as the primary cause in arresting the financial growth and development of the country and recognizing its ill-effects, felt it necessary to rehabilitate the sick or potentially sick units by enacting a law. By enacting such law, the Government wanted to achieve three main objectives, viz., (i) to revive and rehabilitate the sick or potentially sick industries; (ii) to realize the dues of the banks and the financial institutions; and (iii) to sustain employment opportunities. This thought on the part of the Government resulted in the enactment of the Act in the year 1985. As stated by the Supreme Court in Navanit R. Kamini v. R.R. Kamini, 1989 (66) Company Cases 132, the Act has been enacted with the end in view to (i) affordmaximum protection of employment; (ii) optimize the use of the funds, etc,; (iii) salvage the production assets; (iv) realize the amounts due to the banks; and (v) to replace the existing time consuming and inadequate machinery by efficient machinery for expeditious determination by a body of experts like BIFR and AAIFR. In other words, the Act has been enacted to safeguard the economy of the Nation and to protect visible sick industries. Thus, the Act exclusively provides for mechanisms and forums aimed at reviving and rehabilitating the sick industries. The preamble of the Act reads:
'An Act to make, in the public interest, special provision with a view to securing the timely detection of sick and potentially sick companies owning industrial undertakings, the speedy determination by a Board of experts of the preventive, ameliorative, remedial and other measures which need to be taken with respect to such companies and the expeditious enforcement of the measures so determined and for matters connected therewith or incidental thereto.'
The Statement of objects and reasons, laid while tabling the Bill in Parliament, among other things, says that (i) the Bill is designed to make special provisions, in public interest, with a view to securing the timely detection of sick and potentially sick companies owning industrial undertakings; (ii) the speedy determination by Board of experts of the preventive, ameliorative, remedial and other measures which need to be taken with respect to such companies; (iii) the expeditious enforcement of the measures, so determined and for matters connected therewith or incidental thereto.
12. To translate the objectives of the Act, Section 4 provides for establishment of BIFR. The Board shall consist of a Chairman and Members to be appointed by the Central Government. The Chairman and other Members of the Board shall be persons who are or have been qualified tobe High Court Judges or persons of ability, integrity and standing who have special knowledge of, and professional experience of not less than fifteen years in science, technology, economics, banking industry, law, labour matters, industrial finance, industrial management, industrial reconstruction, administration, investment, accountancy, marketing or any other matter, the special knowledge of, or professional experience in which, would be in the opinion of the Central Government useful to the Board. Thus the BIFR to be constituted under Section 4 of the Act is an eminent expert body consisting of Chairman and Members who are well versed in all relevant sciences and knowledge which are necessary to revive or rehabilitate sick industries. Under Section 5 of the Act, the AAIFR has to be constituted consisting of a Chairman and Members, not exceeding 3, to be appointed by Government of India, for hearing appeals against the orders of the BIFR under the Act. Here again, Sub-section (2) of Section 5 of the Act requires that the Chairman to be appointed should be a person who is or has been a Judge of the Supreme Court or who is or has been a Judge of a High Court for not less than 5 years. Further, even a Member of AAIFR, according to Sub-section (3) of Section 5 of the act, should be a person who is or has been a Judge of a High Court or who is or has been an officer not below the rank of a Secretary to the Government of India, or who is or has been a Member of BIFR for not less than three years. Thus, even the AAIFR is undoubtedly an expert body created by the Act to take care of the societal and industrial interests of the State as well as the interests of the owners of the sick industries. Section 18 of the Act enumerates the schemes to be prepared by the Operating Agency (OA) to revive and rehabilitate the sick industries. Among other things, it provides for framing a scheme by the OA providing for the financial reconstruction of sick companies and such incidental,consequential or supplemental measures as may be necessary or expedient in connection with or for the purpose of providing for the financial reconstruction of sick companies.
13. In the light of the above historical background that led to the enactment of the Act and the salient features of the Act, it is appropriate to first decide whether the respondent-company is entitled in law to file a writ petition under Article 226 of the Constitution seeking substantially the similar relief which it sought before the statutory authorities i.e., the BIFR and the AAIFR without questioning the validity and legality of the orders passed by the said statutory authorities and that too when the RCC 26 of 1998 referred to by the BIFR for winding up of the Company is pending before the Company Court.
14. Before proceeding to deal with the specific question, it needs to be emphasized that the respondent-company became sick as far back as in 1987 and it was referred to BIFR in the year 1989. Even assuming that the banks and the financial institutions, as alleged by the respondent-company, did not perform their obligations under the agreements in the matter of disbursement of the sanctioned loans in time during the years anterior to 1987 or at the most upto 1989, that question cannot be gone into by this Court under Article 226 of the Constitution, if not for any reason, atleast for the reason that such a claim of the company relating to the period prior to 1987 is hopelessly barred by laches. In addition, it also needs to be comphasized that even assuming that the financial institutions and the banks committed omissions and commissions in the matter of disbursement of different loans i.e., first loans, bridge loans, second loans in breach of the terms of the agreement, the respondent-company is not entitled to make any grievance in that regard in a proceeding under Article 226 of theConstitution and the only appropriate remedy for it is to workout its legal remedies by approaching jurisdictional civil Court. The brach alleged by the respondent-company against the financial institutions is with regard to a purely civil contract not supported by any statute. This point need not be dilated further because, quite understandably, Sri K. Pratap Reddy, learned senior Counsel appearing for the respondent-company would not rest his argument in support of the company only on the basis of the alleged omissions and commissions of the banks and financial institutions stated to have been committed by them before the matter was referred to BIFR in the year 1989. The emphasis of the arguments of the learned senior Counsel is that the banks and financial institutions though came forward to extend the necessary financial support to revive and rehabilitate the respondent-company in the course of the proceedings before the BIFR, they did not stand by their promise and they backed out defeating the sincere efforts made by the promoters of the company to revive and rehabilitate it. When it was pointed out to the learned senior Counsel that if that is the fact, it should have been urged before the BIFR and the AAIFR and the company should have taken steps to enforce the promises made by the banks and financial institutions before the BIFR, the learned senior Counsel would maintain that under the Act, the BIFR is not armed with the power to enforce the promises made by the banks and the financial institutions and those premises can be enforced by this Court only under Article 226 of the Constitution or by approaching the competent civil Court, and that is why the respondent-company had to file the writ petition seeking the relief to rehabilitate the petitioner's sick unit despite the fact that the relief of rehabilitation sought before the statutory authorities was negatived by those authorities and the matter has been referred to the Company Court for winding up of thecompany. The above submission of the learned senior Counsel is not well founded and does not merit our acceptance. A careful reading of the provisions of Sub-sections (3), (3A), (3B) of Section 19 of the Act make it very clear that the scheme framed by the BIFR becomes binding on all concerned under Sub-section (3); a duty is cast on the financial institutions and the banks designated under Sub-section (3A) to release the financial assistance to the sick industrial company in fulfilment of the requirements in that regard. Even assuming that there was a breach on the part of the financial institutions and the banks in releasing the financial assistance, as mandated under Sub-section (3B) of Section 19 of the Act, even then, that could not be a justifiable circumstance for the respondent-company to file a writ petition under Article 226 of the Constitution to indirectly circumvent the orders of the statutory authorities. If the allegation of the respondent-company that there is a breach of promise or commitment on the part of the financial institutions and banks and they did not release the financial assistance as provided under Sub-section (3B) of the Act, is true, certainly, that point can be urged before the Company Court in the pending winding up proceeding and it is not that the Company Court is bound by the recommendation of the BIFR or AAIFR, and if the Company Court finds that BIFR has recommended winding up of the company without properly exploring the possibilities of reviving and rehabilitation of the company, it may refuse to wind up the company. Therefore, it is always open for the respondent-company to advance its grievances against the proceedings taken before the BIFR and AAIFR before the Company Judge in the pending RCC 26 of 1998.
15. This Court under Article 226 of the Constitution cannot assume the role of an appellate authority over the judgmentsof BIFR and AAIFR and again explore the possibilities of reviving or rehabilitating the respondent-company as an expert supreme body. As pointed out supra, the revival or rehabilitation of a stick industry can be worked out only under the provisions of the Act and not otherwise. The learned senior Counsel appearing for the respondent-Company was not in a position to refer to any law on the basis of which the respondent-company can seek a mandamus to the banks and financial institutions to extend financial support to revive and rehabilitates its industry de hors the provisions of the Act. The learned Counsel was also not in position to trace any legal obligation on the part of the financial institutions and the banks to extend financial support to the respondent-company to revive and rehabilitate its industry with reference to any of the provisions of the Constitution or any statute or common law. The resultant position is that rehabilitation of a sick industry could be worked out only under the provisions of the Act and not otherwise. If that is so, the respondent-company having allowed the orders passed by the BIFR and AAIFR to become final, cannot invoke the jurisdiction of this Court under Article 226 of the Constitution for the same relief as if the orders and reference made by them to this Court for winding up of the Company have no legal consequence and they can be ignored at the pleasure of the company. If the orders made by the said statutory authorities are invalid or illegal for any reason, the only course open to the respondent-company is to assail the validity of the same under Article 226 of the Constitution and seek appropriate legal remedies, but it cannot independently seek a remedy of revival/ rehabilitation of the industry by filing a writ petition under Article 226 without assailing the validity and legality of the orders passed by the BIFR and AAIFR. The power of this Court under Article 226 cannot be used for circumventing thestatutory orders made by BTFR and AAIFR under the Act. In that view of the matter we find force in the contention of the learned Counsel for the appellant-financial institutions and the banks that the learned single Judge is not justified in entertaining the writ petition and he ought to have dismissed the writ petition in limine.
16. In the writ petition, what actually the respondent-company has sought is the enforcement of the alleged obligations arising out of the contract entered into between the respondent-company and the financial institutions and the banks. It is well settled by the judgments of the Supreme Court in Kulchinder v. Hardayal, : (1976)IILLJ204SC , Bihar Co-operative Societies v. Sipahi, : [1978]1SCR375 , United Commercial Bank v. Bank of India, : [1981]3SCR300 , Achutan v. State of Kerala, AIR 1957 SC 490, Divisional Forest Officer v. Biswanth Tea Company, : [1981]3SCR662 , Umakant v. State of Bihar, : (1972)IILLJ580SC , Lekhraj v. Shah, : [1966]1SCR120 , that mandamus will not issue to enforce a private contract and the remedy, if any, is in private law e.g., a suit for damages or specific performance. From the same decisions of the Supreme Court, it is also well settled that the State, instrumentalities of the State, and statutory authorities can enter into a contract with a person just as any other person can, and die contract, as such, does not change its legal character merely because the other party to the contract is the State. Thus, mandamus will not issue to compel a public servant to carry out his obligation arising out of a contract of re-appointment of a manager of evacuee property as held by the Supreme Court in Lekhraj v. Shah (supra) or to enforce a right claimed in terms of a contract by a non-statutory body as held in Banchhanidhi v. State of Orissa, AIR 1975 SC 843, and Vidya Ram v. Jai Narain College, : (1972)ILLJ442SC , or to get rid of contractual obligations arising out of a publicauction where the petitioner bade voluntarily, accepting its terms and conditions as held in Har Shankar v. Deputy Excise Commissioner, : [1975]3SCR254 . In order to enforce contractual obligation by way of writ petition under Article 226, it should be shown that the breach of contract involves the breach of a statutory obligation or where the order complained of was made by a statutory authority in exercise of his statutory power, or in performance of a public duty. In Bareilly D.A. v. Ajai, : [1989]1SCR743 , the Supreme Court held that after a contract has been validly entered into, the rights of the parties shall be determined only by the terms of the contract, even though one of the parties is a statutory authority and that in the absence of any statutory obligation, it would be a case of breach of contract, pure and simple, for which the remedy is a suit for damages and not a petition under Article 226. In the instant case, the agreements entered into between the respondent company and the financial institutions and the banks to advance loans to the project of the respondent company are ordinary civil contracts and not statutory contracts. Further, these contracts do not involve public law elements. Therefore, no writ will lie to enforce contractual obligations arising out of the alleged commissions and omissions of the financial institutions and the banks in the matter of disbursement of Term Loans. Recall of loan agreements or the alleged default on the part of the financial institutions and the banks to disburse the committed loan amounts in terms of the schedule of disbursement of loans, at the most, if proved, can be treated as breach of ordinary civil contract and the remedy in such situation could be sought only before the competent civil Court and no writ will He to enforce or to get rid of contractual obligations. In FCI v. Jagannath, : [1993]2SCR497 , the Supreme Court held that the termination of a non-statutory private contract, in respect of which there is no question of obligationto act fairly or deserving natural justice cannot be questioned in a writ petition under Article 226. The Apex Court quite often held and reiterated that writ petition is not the appropriate remedy for impeaching contractual obligations and the writ does not lie to enforce contractual rights if it is no statutory contract. The judgments of the Supreme Court in State of Punjab v. Balvir Singh, AIR 1977 SC 1717, Har Sankar v. Deputy Excise and Customs Commissioner, : [1975]3SCR254 , Shyamlal v. State of Punjab, : AIR1976SC2045 , Chet Singh v. State of Punjab, AIR 1977 SC 1496, Bareilly Development Authority v. Ajay Pal Singh, : [1989]1SCR743 , are the authorities in that regard, to cite a few.
17. In Central Bank of India v. Rooplal Bansal, : (1999)9SCC254 , dealing with a dispute between a Nationalised Bank and a part standing as a guarantor for loan advanced to third party arising out of a pure commercial transaction, the Apex Court held that the High Court would not entertain the writ petition and go into the merits of the case when the transaction between the parties was a purely a commercial one and when it involves resolution of disputed questions of fact and that the proper remedy in such a case is a civil suit. It is true that State action in contractual matters also is subject to judicial review, if public element is present in such matters.
18. In the instant case, as pointed out supra, the agreement entered into between the parties are ordinary civil contracts without involving operation of any statute or public element. Therefore, even assuming that the banks and the financial institutions have committed omissions and commissions in the matter of disbursement of the agreed loan amount in breach of the agreements entered into between them, as alleged by the respondent company in its writ affidavit, such omissions and commissions on the part of the banks andthe financial institutions would, at the most, amount to a breach of an ordinary civil contract, in respect of which no relief can be granted in a writ petition by invoking the extraordinary jurisdiction of this Court under Article 226 of the Constitution and the respondent company has to workout its remedies in a competent civil Court by way of a suit for damages and/or for specific performance.
19. Further, there are serious factual controversies between the parties. According to the respondent-company, the financial institutions and the banks have committed defaults in the matter of disbursement of the agreed loan amounts in time, whereas according to the financial institutions and the banks, the company's unit has become sick due to its own follies, such as mismanagement, bad planning, breaches of terms and conditions of loans and the failure of the promoters to bring in committed and agreed amounts etc. In the writ affidavit, it is stated by the respondent-company that although the company's unit had excellant viability prospects with abundance of fine quality raw material and a ready export demand, due to the failure of the principal financial institutions, the company's unit could not even reach the statge of completion of erection of the plant and thereby failed to commence production of value added products HCO and DCO and on account of this failure, the unit has become sick. It is also alleged that the financial institutions and the banks resorted to dubious method of not disbursing the principal amounts, but instead started showing them as adjusted towards pending interest. It is also claimed that had the principal amounts been disbursed on time, there would not have been any pendency of interest as the company's unit would have successfully commenced production in time and made profits which in the long run would have wiped out the dues to the financial institutions and the banks. It isalso alleged by the company in the writ affidavit that even before the BIFR, the financial institutions backed out from their commitments to revive and rehabilitate the respondent-company. All these material allegations and averments in the writ affidavit are squarely denied by the financial institutions in their counter-affidavits as false and incorrect. On the other hand, according to the financial institutions and the banks, the operation of the company's unit were not satisfactory from the beginning; it could hardly achieve 10% capacity utilization thereby incurring huge losses; the problem of the company was aggravated on account of its inability, to tie-up adequate working capital; and the company's unit became a sick industry due to inordinate delay in completion of the project by two years and the cost over run of Rs. 133 lakhs caused insipient sickness. It is also contended by the financial institutions that the delay was mainly due to lack of project planning and implementation, non-release of sanctioned power by APSEB, promoters' inability to mobilize the required resources, non-compliance of sanctions of assistance etc., adverting to the allegation of the respondent-company that the financial institutions have arbitrarily adjusted interest against disbursement, it is contended by the financial institutions that this factual plea is false; in fact, it was in accordance with the wishes of the respondent-company, as requested vide its letters dated 16th day of December, 1983 and 19th day of December, 1984, Exs. (i) and (j), produced with the counter of the 2nd respondent to adjust overdues payable by the respondent company out of the disbursement. Relating to the allegations levelled against the financial institutions that they have backed out from their promises before the BIFR, it is stated that the schemes sanctioned by the BIFR fell through mainly because the promoters of the company did not bring in the stipulated amount of promoters contributions after approval of the rehabilitation package. It is also allegedthat the personal guarantees of the promoter? were also not furnished to the financial institutions and the banks by way of additional security and the company continued to operate its unit at low capacity utilization and, therefore, the scheme could not be implemented. Ultimately, it is claimed by the financial institutions and the banks that there was no default on their part in sanctioning/disbursement of the loan amounts and on the other hand at every stage, the promoters of the company committed serious default and they have utterly failed to bring in the stipulated amounts, and since they have failed in their obligation, they cannot blame the financial institutions by contending that they did not stand by their commitments. It needs to be emphasized that enforcement of commitments made by the financial institutions and the banks before the BIFR depended upon the performance of the obligations undertaken by the promoters of the company and since they have admittedly failed to perform their obligations, the financial institutions and the banks performing their part of the obligations would not arise. The law does not require that though the promoters of the company have failed to perform their commitment in formulating and implementing the scheme before the BIFR, the financial institutions and the banks should perform their commitments in terms of extended financial support.
20. Further, it needs to be emphasized that the viability of the company as per the reports of the Operating Agency and/or that of the Tata Economic Consultancy Services, was conditional upon the company and its promoters, in turn, performing and complying, in the first instance their obligations of bringing forth funds of about Rs. 3 crores by way of a deposit in a 'no lien account' and also in bringing about a change in the management, each of which the promoters, inspite of several extensions of time sought for and grantedbefore the BIFR and AAIFR failed to comply. Even the BIFR, in its order-dated 1-5-1995, in paragraphs 13 and 14 extracted above, has squarely blamed the promoters of the company for the failure of the revival and rehabilitation of the company. Farther, in paragraph 3 of the order, the BIFR dealing with the progress made in the implementation of the agreed package as well as the physical and financial position of the company at the hearing on 22-3-1991 has stated that the agreed package as taken on record under Section 17(2) of the Act could not be implemented mainly for the reasons of managerial deficiencies and that on account of those deficiencies, the performance of the company had deteriorated and the cash losses mounted up. A reading of the order of BIFR and AAIFR also show that the promoters are given fair number of opportunities to revive and rehabilitate the sick industry. But, the attempts went in vain because of the failure of the promoters themselves in bringing in the stipulated funds. Thus, it can be seen that from the material - pleadings of the parties noticed above and also the findings recorded by BIFR and AAIFR, certain serious factual controversies do arise for decision. These factual controversies are disputed question of fact.
21. As is well known, one of the grounds against the exercise of discretionary power vested in the High Court under Article 226 of the Constitution is where disputed facts have to be investigated. The reason is that when such dispute exists between the parties, the right claimed by the petitioner is not capable^ of being established in the summary proceedings under Article 226 of the Constitution, because, it requires a detailed examination of the evidence as may be had in a suit. The primary object of Article 226 is the enforcement of an established right and not the establishment of a right or title. A petition under Article 226 of the Constitutioncannot be converted into a suit to resolve the factual controversies. The same principle has been extended even to mixed questions of fact and law by Courts. After perusing the pleadings of the parties, it is not possible for us to conclusively record findings on the factual pleas urged by the parties. It requires investigation of disputed facts by permitting the parties to lead evidence and it also involves appreciation of evidence that may be so led by the parties. This Court cannot be converted into a trial Court in exercising its power under Article 226 of the Constitution, particularly when the parry approaching this Court under Article 226 can work out his/its remedy by approaching a competent and jurisdictional civil Court. The disputed questions that arise for decision in the instant case cannot be resolved on the basis of the pleadings and the documents produced by the parties, and in fact it requires further investigation into the disputed facts.
22. In general, a disputed question of fact is not investigated in a proceeding under Article 226 of the Constitution, particularly where an alternative efficacious remedy is available and where no effective and conclusive decision cannot be taken on the basis of the pleadings and the documents filed in the writ petition. This position is well settled by the judgments in Union of India v. Ghaus Mohammad, : 1961CriLJ703 , Bokarao and Ramgur Limited v. State of Bihar, : AIR1963SC516 , Moti Das, Mohant v. Sahi, S.P., : AIR1959SC942 ; Principal, Industrial Training Institute, Gahazipur v. Abhay Kumar Srivastava, 1995 Supp. (4) SCC 617, U.P, State Mineral Development Corporation v. K.C.P. Sinha, : (1997)IILLJ692SC , State of M.P. v. M.V. Vyavsaya, : AIR1997SC993 , State Bank of India v. State Bank of India Canteen Employees' Union, : (1998)5SCC74 , Ram Badan Rai v. Union of India, : AIR1999SC166 , Chairman, Grid Corporation of OrissaLimited v. Sukamani Das, : (1999)7SCC298 , Indian Overseas Bank v. IOB Staff Canteen Workers Union, : (2000)ILLJ1618SC , Factory Manager, CIMMCO Wagon Factory v. Virendra Kumar Sharma, ( : (2000)IILLJ775SC , and Jai Singh v. Union of India, : [1977]2SCR137 , to cite a few. Further, in Union of India v. Verma T.R., : (1958)IILLJ259SC , and Burmah Construction Company v. State of Orissa, : AIR1962SC1320 , the Supreme Court held that claims arising out of breach of contract or tort where it becomes necessary to investigate into the disputed questions cannot be entertained under Article 226 of the Constitution. In Maheswar Prasad Srivastava v. Suresh Singh, AIR 1976 SC 1766, the Apex Court held that the determination made by an expert body, in the absence of mala fides, cannot be interfered by exercising the power under Article 226 of the Constitution. Since the factual pleas put forth by the parties to the writ petition do involve investigation of disputed facts and recording findings on pure questions of fact, it is appropriate that this Court should have declined to entertain the writ petition.
23. In our considered opinion, even if the facts of this case as pleaded by the respondent-company are taken to be true, it would not attract the doctrine of promissory estoppel. It is true that by virtue of the judgments of the Apex Court in Union of India v. Godfrey, : [1986]158ITR574(SC) , Century Spinning v. Ulhasnagar Municipality, : [1970]3SCR854 , and Motilal v. State of U.P., : [1979]118ITR326(SC) , and several other cases to follow, the equitable doctrine of promissory estoppel is applicable against the Government, instrumentalities of the State and the statutory authorities at the instance of a private individual, even though there has been no contract according to the requirements of Article 299 of the Constitution.
24. The doctrine of promissory estoppel or equitable estoppel is well established in the administrative law of our country. The doctrine represents a principle evolved by equity to avoid injustice. The basis of the doctrine is that where any party has by his word or conduct made to the other party an unequivocal promise or representation by word or conduct, which is intended to create legal relations or effect a legal relationship to arise in the future, knowing as well as intending that the representation, assurance or the promise would be acted upon by the other party to whom it has been made and has in fact been so acted upon by the other party, the promise, assurance or representation should be binding on the party making it and that party should not be permitted to go back upon it, if it would be inequitable to allow him to do so, having regard to the dealings, which have taken place or are intended to take place between the parties. As noticed above the doctrine of promissory estoppel is applicable against the Government, instrumentalities of the State, statutory authorities also, particularly where it is necessary to prevent fraud or manifest injustice. The doctrine, however, cannot be pressed into aid to compel the Government or the public authority to carryout a representation or promise which is contrary to law or which was outside the authority or power of the officer of the Government or of the public authority to make. To invoke the doctrine of promissory estoppel, clear, sound and positive foundation must be laid in the petition itself by the party invoking the doctrine. Bald expression, without any supporting material, to the effect that the doctrine is attracted because the party invoking the doctrine has altered its opposition relying on the assurance of the Government or public authority would not be sufficient to press into aid the doctrine. As opined in Kasinka Trading v. Union of India, : 1994ECR637(SC) , the doctrine of promissory estoppel cannot be invoked inthe abstract and the Courts are bound to consider all aspects including the results sought to be achieved and the public good at large, because while considering the applicability of the doctrine Courts have to do equity and the fundamental principles of equity must forever be present in the mind of the Court, while considering the applicability of the doctrine. The doctrine must yield when the equity so demands and if it can be shown having regard to the facts and circumstances of the case that it would be inequitable to hold the Government or the public authority to its promise, assurance or representation.
25. Unless the above noticed conditions coexist, application of the doctrine of promissory estoppel to grant the relief on that ground to an individual would not arise. In the instant case, in the first place, necessary facts giving rise to the doctrine of promissory estoppel are not pleaded. It is neither pleaded nor established that on account of the promises made by the financial institutions and the banks under the loan agreements or in the revival proceedings taken before the BIFR and AAIFR, the respondent-company altered its position to its prejudice. Although the learned single Judge recorded the finding that when the respondent-company was still in the making and even before it took a shape, the financial institutions started cutting into their funds, this finding, in our considered opinion, with respect, may not be correct, as could be seen from the orders of BIFR or AAIFR as well as the materials placed by the financial institutions and the banks before this Court. Similarly, the action of the financial institutions and the banks in recalling the loan agreements consequent upon the breach of the terms and conditions thereof by the company cannot be termed as the one against the public interest. It is trite, public interest requires that the public money lent to private persons and bodies should not be blockedfor years and the institutions entrusted with the management of such public monies should take appropriate timely measures to recover such monies in order to safeguard the interest of the State. Of course, such public authorities cannot act like Shylock and they are charged with dual duties of safeguarding the public funds and sustaining the desired growth and economy of the Nation and also to do their best by providing all possible but legal measures and supports, financial or otherwise to revive and rehabilitate sick industries if the same could be done without sacrificing public interest In other words, these financial institutions and the banks as well as the statutory authorities like the BIFR and the AAIFR have to be guided by these twin objectives in their operations and functioning. They have to strike a healthy and enduring balance between the competing claims of individual industrialist and the public and institutional interest. In the instant case, it cannot be said that the action of the financial institutions and the banks in recalling the loan agreements and stopping disbursement of funds consequent upon the breaches committed by the company and their failure to perform their part of the undertaking given to the BIFR consequent to the failure of the promoters of the company to bring in the stipulated amounts, is irrational or arbitrary so as to attract the wrath of Article 14 of the Constitution.
26. The learned single Judge by the order under appeal has straightaway directed the financial institutions and the banks to provide necessary financial assistance to the company for revival and rehabilitation of the company's castor oil unit within 3 months. The contention of the appellants is that in issuing such direction to the financial institutions and the banks, the High Court exceeded its jurisdiction under Article 226 of the Constitution and usurped the power and discretion vested in them. The Apex Court in larger number ofpronouncements have defined the limitations of and circumscribed the powers of the High Courts under Article 226 of the Constitution to interfere with the decisions of the financial institutions and the banks in the matter of transactions/dealings and their rights and obligations arising out of the State Financial Corporation Act or even otherwise. It is trite to state that the financial institutions and the banks who advance the loans to industries will have a right to choose between more than one course of action upon which there is room for reasonable belief to hold differing opinions as to which course is to be preferred, in the event of the industries committing default in the matter of repayment of loan amounts as per the schedule of payments. In the field of judicial review of the actions of the financial institutions and the banks, the High Court cannot act as an appellate authority and substitute its judgment for the judgment of the financial institutions and the banks. The High Court, no doubt, can interfere with the actions of the financial institutions and banks only when it finds the complained action of the financial institutions and the banks is so unfair or unreasonable that no reasonable person would have taken that action. The doctrine of non-arbitrariness, reasonableness and fairness in action evolved as postulates of Article 14 rights are not supposed to convert writ Courts into appellate authorities over statutory and administrative authorities like the financial institutions and the banks. The constraints undoubtedly are self-imposed limitations on the part of the constitutional Courts to strike a balance between the competing claims of individuals and the State power and to subserve social interests without arresting or impairing the freedoms of the citizens and the persons and at the same time without undermining the efficacy and credibility of the administration. We do not think this Court is justified in straightaway issuing a direction of the nature issued by the learned Judge in hisorder in the premises of the binding authorities of the Supreme Court.
27. In U.P. Financial Corporation v. Gem Cap (Ind) Private Limited, (1939) 2 SCC 299, the Apex Court held that in a matter between the Corporations and its debtor under the State Financial Corporation Act, a writ Court has no say except in two situations; (i) where there is a statutory violation on the part of the Corporation; or (ii) where the Corporation acts unfairly and unreasonably violating Article 14 postulates. In U.P, Financial Corporation and others v. Naini Oxygen and Acetylene Gas Limited and others, : (1995)2SCC754 , a term loan of Rs. 30 lakhs had been sanctioned by the appellate-Corporation in favour of the respondent-Company in 1975. However, the Company made persistent defaults in repayment of the loan instalments with the result that the recovery certificate had to be issued against it under Section 3 of the U.P. Public Moneys (Recovery of Dues) Act. The then Management mismanaged the company and a company petition had to be filed on grave charges of manipulation of accounts, reallotment of forfeited shares etc. The non-discharge of the liabilities of the company was on account of the said fraudulent practices of the Management. By 30-5-1986, the dues of the company mounted to Rs. 90,31,102-13 with the result that on 13-6-1986, the Corporation had to take over its industrial establishment under Section 29 of the Act. The IRBI submitted its report at the intance of the Supreme Court on 29-1-1988, which stated that the industrial unit could be made only marginally viable provided another Rs. one crore were invested in it and the loan instalments were rescheduled. Between 1981, when the industrial establishment was closed down, and 1988 when the IRBI report was submitted, the machinery of the establishment was lying idle and become almost rusty with the result that by 1988, the value of the machineryhad gone down considerably, while its liabilities had gone up still further. In the circumstances, the Corporation did not accept the report of the IRBI taking the view that the revival of the Unit even after giving all concessions and reliefs as per the package deal with problematic and the Corporation will stand to lose whatever little it could retrieve towards its dues. Allowing appeal against the Allahabad High Court's order to restore the possession of the establishment of the Company to restore the position of the establishment of the company, the Apex Court held that that was not a matter where the High Court should have stepped in and substituted its judgment for the judgment of the Corporation which should be deemed to know its interests between whatever the sympathies the Court had for the prosperity of the company. The Supreme Court also observed that in matters commercial, the Court should not risk their judgments for the judgments of the bodies to whom that task is assigned. The Apex Court held-
' ....the Corporation is an independent autonomous statutory body having its own constitution and rules to abide by, and functions and obligations to discharge. As such, in the discharge of its functions, it is free to act according to its own light. The views it forms and the decisions it takes are on the basis of the information in its possession and the advice it receives and according to its own perspective and calculation. Unless its action is mala fide, even a wrong decision taken by it is not open to challenge. It is not for the Courts or a third party to substitute its decision, however, more prudent, commercial or business like it may be, for the decision of the Corporation. Hence, whatever the wisdom (or the lack of it) of the conduct of the Corporation, the same cannot be assailed for making the Corporation liable.'
28. In U.P. Financial Corporation v. Gem Cap (India) Private Limited, AIR 1973 SC 1435, dealing with the powers and dutiesof the State Financial Corporations and the fairness they are required to practice, the Supreme Court held-
'It is true that the appellant Corporation is an instrumentality of the State created under the State Financial Corporation Act, 1951. The said Act was made by the Parliament with a view to promote industrialization of the States by encouraging small and medium industries by giving financial assistance in the shape of loans and advances, repayable within a period not exceeding 20 years from the date of loan. We agree that the corporation is not like an ordinary money-lender or a Bank which lends money. It is a lender with a purpose - the purpose being promoting the small and medium industries. At the same time, it is necessary to keep certain basic facts in view. The relationship between the Corporation and the borrower is that of creditor and debtor. The corporation is not supposed to give loans once and go out of business. It has also to recover them so that it can give fresh loans to others. The Corporation no doubt has to act within the four corners of the Act and in furtherance of the object underlying the Act. But this factor cannot be carried to the extent of obligating the Corporation to revive and resurrect every sick industry irrespective of the cost involved. Promoting industrialization at the cost of public funds does not serve the public interest; it merely amounts to transferring public money to private account. The fairness required of the Corporation cannot be carried to the extent of disabling it from recovering what is due to it. While not insisting upon the borrower to honour the commitment undertaken by him, the Corporation alone cannot be shackled hand and foot in the name of fairness. Fairness is not a one way street, more particularly in matters like the present one.'
29. Above all, as quite often said and reiterated by the constitutional Courts that the judicial review is concerned with reviewing not the merits of the decision in support of which the application for Judicial review is made, but the decision-making process itself and it is different froman appeal. When hearing an appeal, the Court is also concerned with the merits of the decision under appeal apart from procedural irregularities. Undoubtedly, under Article 226 of the Constitution, the High Court can set right the decision-making process, but it would not substitute its own opinion for that of experts like BIFR or AAIFR. In Tata Cellular v. Union of India, (1994) 6 SCC 651, dealing with a tender matter, the Apex Court held that it is not the function of the Court to act as a superboard or with the zeal of a pedantic school master substituting its judgment for that of the administrator. This statement of the Apex Court speaks volumes about the self-imposed restraints imposed by the constitutional Courts on their own powers of judicial review.
30. In the premise of the above noticed limitations of the power of judicial review under Article 226 of the Constitution, with great respect, we are not inclined to fall in line with the opinion recorded by the learned single Judge or the direction issued by his Lordship. Looking from any angle, and after required reflection over the whole gamut of the matter, we are unable to sustain the order of the learned single Judge impugned in these writ appeals.
31. In the result and for the foregoing reasons, the appeals are allowed and the orders of the learned single Judge dated 12-8-1999 in WP No. 26061 of 1992 is set aside and the writ petition filed by the respondent-company is dismissed with no order as to costs.