M/S. JAYASAKTHI LEATHERS PVT. LTD., REPRESENTED BY ITS MANAGING DIRECTOR M.P. ADIMOOLAM Vs. PONDICHERRY INDUSTRIAL PROMOTION DEVELOPMENT AND INVESTMENT CORPORATION LTD.

JUDGEMENT

(1.) THIS writ petition has been filed by M/s. Jayasakthi Leathers Private Limited under Article 226 of the Constitution of India, seeking to quash the impugned letter dated 3.4.2013 issued by the Chief General Manager of Pondicherry Industrial Promotion Development and Investment Corporation Limited and direct the respondent to extend the OTS for another one year to enable the petitioner to settle the dues to the respondent under the OTS scheme. Learned counsel for the petitioner submitted that the petitioner Company submitted an application dated 28.9.95 requesting the respondent -Corporation to provide financial assistance for setting up of a SSI unit at R.S. No. 2, Kurumbapet, Villianur Commune, Puducherry for manufacturing leather shoe uppers. Accepting the said request, the respondent -Corporation also sanctioned a term loan of Rs. 26,25,000/ - on 20.12.95 and intimated the same on 11.1.96 and also subsequently issued a corrigendum on 3.5.96 relating to the same. As per the terms, the petitioner should repay the term loan amount along with interest at the rate of 18.5% per annum and if it commits any default, it was made clear that the petitioner should pay additional interest at the rate of 4% per annum for the period of default. That apart, the petitioner also made an application on 11.3.99 with a request to provide working capital loan of Rs. 3,50,000/ -. Accordingly, by passing a sanction order dated 18.3.99, the Corporation also sanctioned the working capital loan of Rs. 3,50,000/ - on 18.3.99 subject to the terms and conditions prescribed thereof. As per the terms and conditions, the petitioner should repay the working capital loan amount along with interest at the rate of 15% per annum and if it commits any default, it was made clear that the petitioner should pay additional interest at the rate of 4% per annum for the period of default. Moreover, as per condition No. 42 of the sanction order, the petitioner also executed a hypothecation deed on 10.5.99 and its Directors viz., Mrs. G. Vasantha Leela, W/o Mr. P. Gopalan and Mr. P. Gopalan had executed equitable mortgage by way of deposit of title deeds, mortgaging their plots bearing Nos. 15, 16, 17 & 18 at R.S. No. 2, Kurumbapet, Puducherry as collateral security for the loan on the same day.

(2.) ADDING further, it was also stated that as per the terms and conditions of the sanction order and corrigendum, the petitioner had also executed a deed of mortgage on 6.5.96 mortgaging its plots bearing Nos. 19, 20, 21, 22, 23 & 24 comprised in R.S. No. 2 corresponding to Cad. No. 3 at Kurumbapet Revenue village, Puducherry measuring 6000 sq. ft., as security for due repayment of the term loan amount. As per the first sanction order, having executed the hypothecation deed and the equitable mortgage deed on 6.5.96 as security, after the expiry of the moratorium period of 1 = years from the date of first disbursement, the petitioner had to repay the above term loan amount in 32 quarterly instalments, namely, the first 4 instalments at Rs. 18,750/ - each, the next 4 instalments at Rs. 50,000/ - each, the next 4 instalments at Rs. 87,500/ - each and the last 20 instalments at Rs. 1,00,000/ - each. Therefore, on this basis, it was further submitted that the petitioner had availed the entire term loan amount of Rs. 26,25,000/ - on various dates from 18.6.96 to 22.8.97 and again the respondent -Corporation had provided the working capital loan of Rs. 3,50,000/ - on 18.3.99. After the expiry of the moratorium period of 3 months from the date of first disbursement, the petitioner had to repay the working capital loan in 16 quarterly instalments, namely, the first 14 instalments at Rs. 22,500/ - each and the last two instalments at Rs. 17,500/ - each and the petitioner availed the entire working capital loan amount of Rs. 3,50,000/ - on various dates from 17.5.99 to 22.6.99.

(3.) ADDING further, the learned counsel for the petitioner submitted that although the respondent agreed and redelivered the assets to the petitioner on 15.7.2004, after taking over the assets, the petitioner company paid the arrears and instalments as much as possible. But, after some time, again the petitioner was unable to make the repayments, resultantly, once again the respondent Corporation took over the possession of the petitioners company on 28.2.2007. Thereafter, the petitioner company again approached the respondent with a further assurance to repay the entire amount without default and the respondent also redelivered the possession of the unit. Once again the respondent Corporation formulated another scheme for repayment. As per the said scheme, the petitioner had to repay only a sum of Rs. 36,36,154/ - against the outstanding loan amount of Rs. 72,34,321/ - and Rs. 6,60,827/ - against the loan amount of Rs. 9,71,216/ - as on 31.3.2007. Unfortunately the petitioner again was unable to comply with the said scheme. Further, when the petitioner approached the respondent Corporation to consider extending one more opportunity explaining the difficulties faced by the petitioner at the time of taking over the sick unit, the respondent once again extended the scheme as per their letter dated 19.9.2007 by intimating the petitioner to repay 30% of the amount on or before 31.10.2007. But again the petitioner was unable to avail the same, for the reason that there was no purchaser to buy the property at the market rate. In view of that, the respondent Corporation had issued the letter dated 11.7.2007 calling upon the petitioner to avail the scheme on payment of Rs. 72,34,321/ - against the outstanding amount of Rs. 2,14,08,479/ - and the 30% amount which worked to Rs. 7,31,000/ - was to be paid as upfront amount on or before 31.3.2007 to become eligible under the scheme and the balance amount should be paid and the loan settled on or before 31.12.2007. Although the respondent Corporation extended the said scheme upto 30.6.2009, the learned counsel for the petitioner again submitted that the petitioner company was unable to repay the entire amount, as the petitioner company was not doing its business comfortably.