A K KANDASWAMY Vs. STATE BANK OF INDIA

JUDGEMENT

(1.) THIS writ petition is directed against the resolution passed by the Executive Committee of the Central Board of State Bank of India, namely, the first respondent dated 02. 12. 2005 for sale to ARCIL the financial assets in so far as it relates to the petitioner M/s. Sri Ranga Industries and his family held company M/s. Llasar Flow Controls Pvt. Ltd. stated as Item Nos. 11 and 12 to the Annexure to the said resolution.

(2.) THE petitioner has availed a financial facility of about Rs. 64 lacs in the form of term loan, working capital finance and cash credit facility from the first respondent State Bank of India in the year 1982. The petitioner's closely associated company, namely, M/s. Llasar Flow Controls Pvt. Ltd. , has also availed financial facility of about Rs. 56 lacs from the first respondent State Bank of India in the year 1986. According to the petitioner, he has been repaying promptly the amount in respect of both the loans to the Bank upto 1989. However, due to certain practical difficulties, namely, the steep rise in the cost of raw materials, the petitioner was unable to continue the repayment. According to the petitioner, the liability as on 27/12/1990 of the petitioner company as per the books of the first respondent was Rs. 77. 80 lacs and his associated company was Rs. 72. 77 lacs. The first respondent Bank has instituted a Civil Suit bearing O. S. No. 72 of 1991 on the file of Sub-Court, Coimbatore on 3/2/1991. After the Debt Recovery Tribunal was constituted in Coimbatore City, the said suit was transferred to the Debt Recovery Tribunal and renumbered as T. A. No. 2038 of 2002 and the same is pending. The said application pending before the Debt Recovery Tribunal relates to the claim of the first respondent Bank against both the companies as stated above.

(3.) IT is the further case of the petitioner that the petitioner's group company, namely, Llasar was referred to BIFR and ultimately, the AIFR has recommended winding up of the said company and the assets have been sold by M/s. Tamil Nadu Industrial Investment Corporation Ltd. , in respect of the amount due to them. Therefore, according to the petitioner, the security, which has been given to the first respondent Bank by the said Llasar Flow Controls Private Limited as a second charge becomes inoperative by the action taken by TIIC. It is the further case of the petitioner, the petitioner has approached the first respondent Bank for one time settlement and based on the agreement, the petitioner has paid a sum of Rs. 2. 50 lakhs to the first respondent Bank on 15/3/2005. According to the petitioner, the first respondent Bank has accepted for Rs. 50 lakhs as repayment under one time settlement scheme. The petitioner to show his bonafide, has paid the sum of Rs. 2. 50 lakhs as part payment of the one time settlement. It is not in dispute that the first respondent has returned the said amount on 18/11/2005. The case of the petitioner is that even though the proposal of one time settlement was pending between the petitioner the first respondent Bank, the first respondent has passed the impugned resolution by which the rights of the first respondent Bank has been assigned to the second respondent, namely, The Asset Reconstruction company (India) Limited as per Section 5 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as 'sarfaesi Act' ).