ARYODAYA SPINNING AND WEAVING CO. LTD. Vs. STATE

JUDGEMENT

(1.) BY Company Application No. 160 of 1984, Aryodaya Spinning and Weaving Co. Ltd., which runs a composite textile mill in this city has sought direction under section 536(2) of the Companies Act, 1956, to the effect that utilisation of the further borrowings/new borrowing financial facilities to be given by the State Bank of India ('SBI', for short) and other banks/financial institutions for running the aforesaid mill be declared to be authorised, valid and binding on the company and the petitioning creditors under section 536(2) of the Act. By Company Application No. 236 of 1984, prayer A -1 is sought to be inserted in Company Application No. 180 of 1984 whereby certain charges created by the mill company pending the main winding -up petition in favour of SBI, financing banker, as listed in the said prayer are sought to be validated under the very same provision.

(2.) IN order to appreciate the circumstances under which the present company applications are filed, it will be necessary to have a look at certain relevant facts.

(3.) THE SBI which is the financing bank so far as the applicant company is concerned and with which all the movable and immovable properties of the mill company stood hypothecated and mortgaged, by its letter dated July 10, 1984, intimated to the company that the IDBI had offered certain conditions stated therein by its letter dated June 25, 1984. The bank also informed that the company had also accepted the letter of intent and was taking steps to obtain various reliefs from the State Government or other concerned organisations. The bank also accepted in principle the package recommended by the working group set up by the Union Government and was agreeable to make available to the company various facilities on the terms mentioned in the said letter. The bank was prepared to grant a rehabilitation loan of Rs. 118 lakhs to the company for the following purposes :