NARMATHAA TEXTILES LTD Vs. UNION BANK OF INDIA

JUDGEMENT

(1.) THIS Writ Petition challenges the order passed by the Management Committee of Union Bank of India rejecting the request made by the petitioner to condone the delay in complying with the conditions of one time settlement and to extend the time for payment, as per the recovery policy of the Bank and in the light of the guidelines framed by the Reserve Bank of India. Background facts :-

(2.) M/s.A.D.Jeyaveerapandia Nadar & Brothers and their sister concern M/s.A.R.J. Textiles Pvt. Ltd., took over a sick unit from Small Industries Corporation of Tamil Nadu. The sick unit was engaged in processing of fabrics. The Company was renamed as M/s.Narmada Textiles Processing Mill Private Ltd. Since the promoters were known to the Bank and in view of their long standing banking relationship since the year 1982, the Bank sanctioned term loan and working capital loan to the new concern towards its expansion cum modernization. Subsequently, during the year 1999, the existing Companies promoted by A.D.Jeyaveerapandia Nadar & Brothers, A.R.J. Textiles Pvt. Ltd. and Narmatha Textiles Processing Mills Pvt. Ltd., were all merged under a single group and was named as M/s.Narmada Textiles Ltd. The Bank renewed the existing credit facilities periodically.

(3.) SUBSEQUENTLY, the petitioner was able to arrange a buyer to purchase the Kodambakkam property for a sum of Rs.15 crores. Accordingly, a sum of Rs.1275 lakhs was appropriated towards the dues. Since the petitioner experienced difficulties in paying the balance amount, representation was given to the Bank seeking extension. Accordingly, time was extended till 31 December 2009 subject to payment of interest and penalty of Rs.5 crores. Though the petitioner made certain payments, they were not in a position to wipe out the entire arrears. This made the bank to withdraw the one time settlement.