V. GOPALA GOWDA, C.J.
1. The Petitioner M/s. Premier Sheet which is loanee of the Orissa State Financial Corporation (hereinafter called in short ‘OSFC’) has filed this writ petition seeking for issuance of a writ of certiorari to quash the notice dated 2-1-2010 and further sought for a mandamus directing to the Corporation to settle its account pursuant to the application dated 19-11-2007 under Annexure-3 in the spirit of the OTS Scheme and a writ of prohibition restraining the opposite parties from taking any coercive action against the Petitioner’s unit under the provisions of the Act urging various facts and legal contention.
2. Necessary brief facts are stated for the purpose of appreciating the rival legal contention urged on behalf of the parties.
The petitioner has its registered office at D-2/7, Mancheswar Industrial Estate, Bhubaneswar in the district of Khurda. The petitioner-Industry was initially involved in manufacture of poly-propylene and low density polythene sheets, bags with printing arrangements. The said unit of the petitioner was set up in the joint finance of State Bank of India and OSFC out of which the Bank agreed to finance the working capital and the OSFC greed to sanction the money for the installation of plant and machineries. Accordingly, the OSFC sanctioned Rs. 2.44 lakhs towards the term loan and soft loan for the plant and machineries. Thereafter, the petitioner had also applied to the bank for necessary working capital of Rs. 2,00,000/-. However, the bank sanctioned only Rs. 80,000/-. The petitioner-unit could not run properly due to inadequate working capital. Therefore, the petitioner was constrained to approach the OSFC and the bank to sanction the required money for rehabilitation of the unit. Considering the financial condition of the petitioner, the OSFC has sanctioned Rs.9.96 lakhs by way of additional terms loan of Rs.7.80 lakhs, soft loan of Rs. 0.50 lakhs, margin money of Rs. 0.50 lakhs and Government soft loan of Rs.1.16 lakhs. The State Bank of India, Bhubneswar Industrial Estate Branch again greed to sanction Rs. 7.28 lakhs towards rehabilitation working capital in favour of the petitioner-unit, but disbursed only Rs. 3.26 lakhs. Therefore, it was difficult on the part of the petitioner to run the unit.
3. While the petitioner was going through severe financial crisis, on 28-12-1996 the OSFC issued a notice to the petitioner for recalling the loan liability and threatened to take over the possession by seizure. In order to save the unit from seizure, petitioner deposited Rs. 10,000/- by way of banker’s cheque drawn on State Bank of India. Utkal university Branch bearing No.765725 dated 18-1-1997 and requested to grant more time to improve the performance and payment. Since the Corporation insisted for seizure of the unit and to take over the possession of the unit, petitioner was constrained to file writ petition before this Court bearing OJC No. 1251 of 1997 challenging the arbitrary action of the opposite parties in sending the seizure notice under Section 29 of the State Financial Corporation Act. This Court after hearing the writ petition at the stage of admission was pleased to pass an interim order directing the opposite parties not to take any coercive action against the petitioner. Subsequently, the writ petition was dismissed due to non-prosecution and the petitioner was not aware of the order of dismissal. Taking advantage of the dismissal of the writ petition, the Corporation without any prior intimation to the petitioner seized the unit on 28-12-1998 and thereafter sent a letter for release of the assets on deposit of Rs. 7.25 lakhs. The petitioner had paid Rs. 1,00,000/- on 27-1-1999, Rs. 25,000/- on 23-3-1999 and Rs. 20,000/- on 31-3-1999 totaling Rs. 1,45,000/- for release of the unit. Thereafter, the Corporation released the unit in favour of the petitioner under Zimanama on 6-2-1999. While the matter stood thus, the Corporation again issued another letter dated 9-9-1999 to the petitioner to deposit the outstanding amount within fifteen days failing which appropriate action shall be taken under the provision of SFC Act. The petitioner on 8-10-1999 replied to the opposite parties describing the genuine and practical difficulties and requested to sanction rehabilitation package to improve the condition of the unit. While the unit of the petitioner was going through such financial condition, the super cyclone of 1999 was a severe blow to the petitioner and the unit suffered a huge loss. Thereafter, the petitioner applies for Cyclone assistance on 12-1-2000 for repairing the factory building and machineries and requested for an amount of Rs. 7.39 lakhs. On 19-7-2000, the petitioner met with an accident and became bed ridden for about one year. When the petitioner enquired about the sanction the cyclone loan, opposite parties verbally refused to sanction the cyclone loan on the ground that the unit is under Zimanama of the petitioner. Again on 20-9-2001, the petitioner received a notice from the opposite parties directing him to pay the outstanding amount of Rs. 34,43,344.22 within fifteen days from the date of issuance of the letter i.e. by 4-10-2001. The petitioner finding no other alternative, challenged said action of the opposite parties by filing OJC No.13120 of 2001 which is pending disposal. While the mater stood thus, the petitioner came to know that the Corporation has floated a Scheme for one time settlement of the loan amount dues on the borrowers. While the petitioner awaiting for a reply from the opposite parties for OTS, suddenly, on 23-1-2010 received a notice from the Branch Manager, OSFC, Bhubaneswar branch vide letter dated 2-1-2010 recalling the entire liability under Section 30 of the Act. In the OTS Scheme, there is a right of making application to get amount settled, therefore, issuance of the aforesaid notice is contrary to the scheme and it is arbitrary and unreasonable action on the part of the Corporation which is in violation of the Scheme as well as Arts, 14, 19(1)(g) and 21 of the Constitution of India. Therefore, the petitioner approached this Court seeking for the reliefs as prayed for in the writ petition.
4. The Corporation has filed a detailed counter-affidavit on behalf of opposite party Nos.1 to 3 being sworn in by Shri Nirmal Kumar Senapati, working as Manager (Law) in the Corporation traversing the petitioner’s averments opposing the prayer of the petitioner that the loan recall notice dated 2-1-2010 under Anneuxre-5 be quashed as there is no valid application as per the O.T.S. Scheme and Annexure-3 series cannot be considered as valid application as required. The OTS application was filed by the petitioner without the required processing fee and initial deposit. Therefore, there is no statutory obligation on the part of the Corporation to consider the application and settle the same.
5. It is further submitted that the Corporation is a Statutory Corporation established by the Government of Orissa under the State Financial Corporation Act, 1951 with an object to lend and advance financial assistance to Small and Medium Scale Industries. The loan so advanced by the Corporation to the loanee has to be recovered as per the terms and conditions of the loan agreement and it has a right to enforce the provisions of the State Financial Corporation Act by initiating recovery proceedings in exercise of Section 29 of the SFC Act. It is further stated that petitioner is a defaulter in repayment of the loan and installments are not being paid. Therefore, under the terms and conditions of the agreement, the Corporation has got a right to take possession of the industrial concern along with plant and machineries and the same shall be transferred by way of sale and realize the amount due to the bank out of the property mortgaged hypothecated and assigned to the Corporation under the provisions of SFC Act. It is stated that petitioner had availed a loan of Rs.11,62,250/- on different dates during 1981 to 1999 for setting up his industry at Mancheswar Industrial Estate, Bhubaneswar. It failed to repay the loan dues as per the contractual terms and conditions with the Corporation. The outstanding dues of the petitioner as on 30-6-2009 had reached Rs. 85.02 lakhs. The loan was recalled on 2-1-2010 as per Annexure-5 as it has defaulted in paying the dues of the Corporation. The petitioner had also failed to pay Rs.20,00,000/- as directed by this Court vide its interim order dated 14-9-2009 passed in OJC No.13120 of 2001. Therefore, it is contended that the petitioner is not entitled for the relief as prayed for in the writ petition since he did not comply with the interim order passed by the Court.
6. It is further stated that the OTS Scheme namely, MFD OTS-07 was introduced in May, 2009 and the Corporation had released several advertisements in the website of the Corporation. The last date for receipt of valid application under the OTS Scheme duly supported with required processing charge and initial deposit was 20-11-2009. The petitioner was advised by the Corporation about the deposit of Rs.3000/- as processing fee and Rs.1,07,000/- as initial deposit within 20-11-2009 along with the OTS application, otherwise the application will not be a valid application and there is no obligation on the part of the Corporation to consider the same. Undisputedly, the petitioner deposited Rs.2724/- and Rs.1,07,000/- towards the processing fee and initial deposit respectively on 12-12-2009 beyond the period which was stipulated. Therefore, there is no obligation on the part of the Corporation to consider the application and grant the benefit under the OTS Scheme. Hence, the question of issuance of a writ of mandamus does not arise and the petitioner’s application can be considered only under OTS Policy Scheme, 2011 which has come into force on 2-5-2011. The said application may be considered against the said Scheme as per the terms and conditions stipulated in Clause 6.2 as the claim statement formula will come in the said clause. Further reliance has been placed upon para-12 of the counter-affidavit wherein claim of the petitioner made in paragraphs 14 and 15 of the writ petition is traversed inter alia contending that the petitioner is a chronic defaulter which is evident from default position of the Principal and interest amount and in total a sum of Rs. 85,01,272/- was outstanding against the petitioner. The OTS proposal of the petitioner has been rejected by the Corporation due to malfeasance which was communicated to the petitioner on 12-12-2010. It is open for the petitioner to apply against the Settlement Policy, 2011 by submitting valid application in terms of the guidelines stipulated therein. The same will be considered against the said scheme. In fact, for non-compliance of the interim order passed by this Court on 4-10-2001 in Misc. Case No.7338 of 2002 arising out of OJC No.13120 of 2001 vacated the interim order passed on 4-10-2001. The above order of the Court has made it clear that the petitioner was a defaulter and it did not comply with the interim order of this Court, although chance was given to it for repayment. It is the duty of the Corporation to obey the direction of this Court for realization of the loan dues. The opposite parties-Corporation cannot discriminate other entrepreneurs by adopting a separate principle on OTS for the petitioner by agreeing with the demand of the petitioner. Accordingly, the stand taken by the petitioner and the allegations made against the Corporation in the writ petition is not based upon fact and the same is denied as false. According to the Corporation a on 31-12-2010, the total outstanding amount dues against the petitioner was Rs. 1,41,37,117.53. Such being the factual position, the petitioner is not entitled for any reliefs as prayed for in the writ petition. The petitioner has approached this Court by filing the writ petition without complying with the interim direction passed by this Court in depositing Rs.20,00,000/-. Therefore, the Corporation has prayed for dismissal of the writ petition with cost.
7. The petitioner has also filed a memo on 28-7-2011 enclosing the rein the total loan amount along with calculation of interest from the date of disbursement up to the cut-off dated 31-3-2003. According to the petitioner, payment made from 1981 to 2010 is Rs. 3,92,956/- by way of cash, cheque and demand drafts. The sanctioned amount of Rs.11,64,770/- vide different sanction order has been mentioned in the calculation sheet and disbursement amount made up to the date of OTS-07 scheme would be Rs.11,62,250/-. Total interest on the principal amount of Rs.11,62,250/- is Rs. 14,81,285.97. Total amount of outstanding due to the Corporation is Rs.26,43,505.97. Repayment made by the petitioner is Rs.3,92,956.60. So according to the petitioner the OTS amount as per OTS-2007 scheme is Rs.22,50,549.97. Since thirty one years have already elapsed, the WDV cost of the plant and machinery is almost zero. On 25-7-2011 learned counsel for both parties were directed to file memo of calculation according to OTS-2007. On 28-7-2011, learned counsel for the petitioner filed the memo of calculation as per OTS-2007. After filing of the memo by the learned counsel for the petitioner along with calculation sheet regarding the outstanding amount as per OTS-2007 Scheme, learned counsel appearing for the Corporation was directed on 28-7-2011 to file a memo of calculation according to the OTS-2007 Scheme of the Corporation on the basis of the principle laid down by the Apex Court in the Central bank of India v. Ravindra and Ors. reported in AIR 2001 SC 3095 to calculate the interest on the principal amount borrowed by the petitioner-loanee. Opposite party filed a memo on 28-7-2011 by producing five documents including the settlement amount under OTS-2007 scheme, statement of accounts up to 30-6-2011 and sanction order of the entire loans and rate of interest without complying with our direction dated 25-7-2011 and 28-7-2011. He has also filed an affidavit on 4-8-2011 stating therein that the claim of the petitioner can be examined under OTS-2011 Scheme. It is stated that the loan period which is more than 15 years and up to 20 years interest will be charged @ 7% per annum till the date of application. Since the petitioner availed loan of Rs.11,62,250/-, the petitioner is eligible to settle the account under OTS-2011 Scheme as per the guidelines enumerated in the said scheme. Further, learned counsel for the petitioner requested this Court and this Court on 14-9-2009 in OJC No.13120 of 2001 gave an interim direction to the petitioner to deposit Rs.20,00,000/- referred to supra.
8. With reference to the aforesaid factual and rival contentions, the following points would arise for our consideration:-
(I) whether the notice dated 2-1-2010 issued under Annexure-5 is liable to be quashed?
(II) Whether the petitioner is entitled under OTS-2007 Scheme or OTS-2011 Scheme?
(III) What order?
Point Nos. I and II
9. The impugned notice under Annexure-5 is liable to be quashed for the following reasons:-
It is no doubt true that the petitioner has availed term loan of Rs.11,62,250/- on different dates during 1981 to 1999 for setting up industry at Mancheswar Industrial Estate, Bhubaneswar. It has no doubt become a defaulter in paying the loan amount on installment basis as per the terms and conditions of the loan agreement. It had approached this Court by filing OJC No.13120 of 2001 seeking certain relief to quash the demand notice issued under Section 29 of the SFC’s Act. Earlier writ petition filed in the 1999 was dismissed for non-prosecution. In 2001, there was an interim order directing the petitioner to deposit Rs.20,00,000/- against the loan amount. At that time MFD-OTS-07 Scheme was in force. It is the case of the petitioner that it has submitted its application on 19-11-2009 before the last date for submitting such application i.e. 20-11-2009 for settlement of loan account under MFSD-OTS-07 Scheme which is an undisputed fact. It is an undisputed fact that the required process fee of Rs.3000/- and Rs.1,07,000/- towards initial deposit was not deposited at the time of submission of the OTS application. However, the fact remains that the application was pending for consideration which came to be rejected by the Corporation on 31-12-2010 during pendency of this writ petition. By that time, it had deposited a sum of Rs.1,07,000/- towards the initial deposit and Rs.2724/- towards the process fee by means of two demand drafts on 12-12-2009. In fact that amount was deposited by the petitioner after the last date of filing of the application. But the fact remains that on different dated i.e. from 19-6-1981 till, 9-2-2010, the petitioner had paid Rs.2,79,232.00 and up to 9-2-2010, it had deposited Rs.3,92,956.00. No doubt, the last date of submitting the application under OTS-2007 Scheme was 20-11-2009 and there is no doubt that there was a delay of three weeks from 20-11-2009 in submitting the application by the petitioner along with the process fee and initial deposit. The money deposited by the petitioner towards the process fee and initial deposit was received by the bank and was adjusted towards his loan account is an undisputed fact. The encashment of DDs must be construed as receipt of the deposit amount. Considering that the application filed within time on 19-11-2009 is a defective application, but by encashing the same the Corporation ha condoned the delay in depositing the initial deposit amount as required under the Scheme. The receipt of process fee and initial deposit is for considering the OTS-07 application. The same came to be rejected on 12-12-2010. This writ petition was filed on 1-2-2010 seeking relief to quash Annexure-5 and for issuance of a writ of mandamus directing the opposite party to settle the account of the petitioner which was kept pending up to 12-12-2010 pursuant to its OTS application dated 19-11-2009 and was rejected during the pendency of the writ petition on technical ground that the OTS-07 application was not submitted in time with the required processing fee of Rs.3000/-, although the aforesaid amount deposited by the petitioner with the Corporation through two DDs was encashed by it. The rejection of the application ten months after filing of the writ petition on the aforesaid ground with a view to deprive it the benefit of availing OTS-07 scheme, cannot be accepted by this Court as it is an afterthought on the part of the Corporation and its officers to deprive the petitioner his legitimate right accrued in his favour under the OTS-07 Scheme. It would have been a genuine reason on the part of the Corporation if the application had been rejected before receipt of the DDS. The Corporation did not do so. After receipt of DDs, the same were encashed and taken into account and after waiting for one year and hen the writ petition was pending before this Court, the application was rejected on the ground that the same was submitted after the last date fixed for making application. The aforesaid defence taken by the Corporation can be said to be an after thought and cannot be accepted. The scheme is a beneficial scheme both in the interest of the Corporation and the loanees who have borrowed money from the Corporation as medium and short term loans. Object of the scheme is to see that the principal amount due to it is recovered with some interest from the loanees so that the SFC can function for the purpose for which it has been established by the State Government for advancing loan to the small, medium scale entrepreneurs who can establish small scale industries by way of self employment and generate employment. Therefore, the rejection of the OTS-07 application made by the petitioner under Annexure-3 series on 12-12-2010 by the Corporation is liable to be quashed and accordingly quashed. Having quashed the same, the application filed by the petitioner under OTS-07 Scheme is revived. The same must be considered as per the terms and conditions enumerated under the said Scheme. According to the said Scheme and as per the calculation sheet submitted by the petitioner, the petitioner is liable to pay Rs.26,43,505.97. Out of total outstanding amount of Rs.26,43,505.97, the petitioner has already deposited Rs.3,92,956.00 including the initial deposit amount and application process fee. On the basis of the calculation sheet submitted by the learned Senior Counsel for the petitioner, learned counsel for the Corporation was directed to file a memo of calculation on the basis of the principle laid down by the Apex Court in the case of Central Bank of India v. Ravindra and Ors., reported in AIR 2001 SC 3095 with a view to ascertain what would be the amount due from the petitioner. Despite the said direction, learned counsel for the Corporation ha not furnished required information to this Court. On the other hand, learned counsel has produced an irrelevant statement and some documents which are not necessary for considering the case of the parties and pass just order in this case, and the learned counsel is not assisting this Court as to what would be amount due to the Corporation along with interest on the principal amount as per the law laid down by the Apex Court in the decision referred to supra. Therefore issuance of the impugned demand notice dated 2-1-2010 by the Corporation under Annexure-5 is arbitrary and unreasonable and the same is liable to be quashed and accordingly quashed.
10. We have already held that rejection of the application for one time settlement under OTS-2007 Scheme on technical ground is bad in law. Though the Corporation has accepted the DDs which were received by them belatedly on 12-12-2009 to wards process fee and initial deposit for considering the OTS-07 application submitted by the petitioner, since we have quashed the rejection order of the application for the reasons recorded by answering point No.1, we are of the view that having regard to the facts and circumstances of the case, the OTS-07 application filed by the petitioner be considered by the Corporation on the terms and conditions stipulated therein. As per the calculation sheet submitted by the learned Senior Counsel, the total outstanding amount due to be paid by the petitioner to the Corporation is Rs.26,43,505.97. So the demand raised by the Corporation is much more which is arbitrary and unreasonable. Therefore, we direct the Corporation to consider the OTS-07 application already filed by the petitioner and dispose of the same in accordance with law and also take into account the calculation sheet produced by the learned Senior Counsel for the petitioner. Till such determination, no coercive steps regarding seizure of the Unit and taking over possession of the Unit by the Corporation shall be taken.
11. For the reasons stated above, in order to consider the OTS-07 application filed by the petitioner under Annexure-3 series. We feel that it would be just and proper to direct the petitioner to deposit a sum of Rs.5,00,000/- with the Corporation which shall be adjusted towards the OTS amount that may be determined by the SFC. The aforesaid exercise shall be completed by the Corporation within a period of eight weeks from the date of receipt of certified copy of this order.
With the aforesaid observation and direction, the writ petition is disposed of.