LAMBDA ELCOT LIMITED, REPRESENTED BY ITS MANAGING DIRECTOR, MR. K.V.B. PRASAD, THIRUVANMIYUR, CHENNAI Vs. STATE INDUSTRIES PROMOTION CORPORATION OF TAMIL NADU LIMITED (SIPCOT), EGMORE, CHENNAI

JUDGEMENT

(1.) Since the petitioner in these writ petitions is the same and the relief claimed is also similar, they are being disposed of by the following common order.

(2.) Aggrieved by the proceedings of the respondent dated 27 -07 -98, in and by which the respondent decided to proceed under Sec. 29 of the State Financial Corporations Act to take possession of the mortgaged assets of the company, the petitioner -Lambda ELCOT Limited has filed Writ Petition No. 12427 of 98 to quash the said order and for further direction to the respondent to consider the repayment schedule in terms of the revival package as contained in the respondent's Memorandum/Note for the Board Meeting held on 25 -02 -98 and to consider and hold a joint meeting of the respondent, the petitioner company and ELCOT as requested by the petitioner in its letter dated 10 -04 -98 and confirmed by ELCOT's letter 25 -06 -98 to find an amicable solution. The very same petitioner in W.P. No. 960 of 2001 challenges similar proceedings of the respondent initiated on 9 -01 -2001.

(3.) The case of the petitioner is briefly stated hereunder: - The petitioner company approached the respondent -State Industries Promotion Corporation of Tamil Nadu Limited (SIPCOT) for a term loan to finance the purchase of the fixed assets. After considering the petitioner company's project report, the respondent granted a term loan assistance of Rs.85,00,000/ - on 24 -2 -93. The loan was to be repaid in 20 quarterly instalments after an initial moratorium of two years from the date of first drawal of the loan. The repayment was to be completed on or before 1 -12 -2000. The petitioner company commenced production in December, 1995. Though the petitioner company was sanctioned Rs.85,00,000/ - of term loan, it voluntarily availed of only Rs.46,19,000/ - due to curtailing of its manufacturing activity by limiting itself to the manufacture of only 3 types of electronic equipment due to the changed market condition. The petitioner company was eligible for a subsidy under the term loan sanctioned. After negotiation, the subsidy was disbursed after a considerable delay by the respondent and the same was adjusted by the respondent against the arrears due by the petitioner company. The petitioner company also prayed for a joint meeting of the respondent with the petitioner company and ELCOT who was a 50 per cent equity holder in the petitioner company. At the meeting, the petitioner company was asked to submit a feasibility report which was forwarded to the respondent by a letter of recommendation dated 5 -12 -97 from the Chairman and Managing Director of ELCOT, to consider the feasibility report favourably. Despite the above, the respondent issued a foreclosure and recall order dated 23 -03 -98 foreclosing the loan and calling upon the petitioner company to repay the entire term loan of Rs.46,19,000/ - and interest of Rs.17,13,626/ - within 15 days of the receipt of the above said notice. They also issued a notice informing that they had decided to proceed further under Sec. 29 of the State Financial Corporations Act, 1951 to take possession of the mortgaged assets of the company, against which the petitioner filed W.P. No. 12427/98. The petitioner had paid Rs.26,41,920/ - after filing the earlier writ petition and in all paid totally Rs.42,37,308/. Regarding interest amount dues, it is a subject matter of discussion between the petitioner and the respondent in respect of concessions and waivers. The respondent is not justified in issuing the impugned proceedings.