NARESH SPINERS LIMITED Vs. STATE BANK OF INDIA

JUDGEMENT

(1.) CHALLENGE in this petition and connected petition is directed against the sale proclamation dated 22.11.2006 issued by respondent No. 2 contained in Annexure -8 to the writ petition.

(2.) THE petitioners, M/s. Naresh Spinners Limited, a company registered under the Companies Act and engaged in the business of manufacturing of cotton yarn was initially established with the appellation Amausi Textiles Mills Ltd. and subsequently, it was christened as M/s. Naresh Spinners Ltd. For its effective working, the company opened a cash credit limit account for Rs. 50 lac under an agreement with the State Bank of India Main Branch Lucknow, which was subsequently enhanced, to 75 lacs and thereafter to Rs. 95 lac with interest at the rate of 17% per annum. The company it would appear ran into rough weather and outstanding in the account overshot the said limit. Subsequently, the said limit was further enhanced. Again outstanding against the company overshot the limit. With repeated failure to liquidate the liability, it would appear, the Bank served the notice. It is in this perspective that present litigation erupted.

(3.) LEARNED Counsel for the petitioners has urged that due to various odd situations, the company was compelled to close manufacturing work in 1993 and all the machineries were sold off in auction proceedings initiated for recovery of certain dues towards payment of liabilities accruing against the company. To begin with, a suit was instituted by the Bank for recovery of certain amount against the petitioners, which suit subsequently stood transferred to the Debt Recovery Tribunal (D.R.T.) where it culminated in being decreed on 23.1.2002. During the execution proceedings, the parties agreed to One Time Settlement (O.T.S.) in 2003 as contained in the letter dated 28.11.2003. The Bank nodded in acceptance the proposal as contained in the letter dated 28.11.2003 vide letter dated 29.3.2004 of the Bank subject of course to the condition of its approval by the D.R.T., Lucknow. It would transpire from the record that Debt Recovery Tribunal by the order dated 2.9.2005 gave approbation to one time full and final settlement for repayment of Rs. 1.28 crores. The petitioners, in observance of the conditions of One Time Settlement, deposited Rs. 40.98 lakhs by 19.6.2006, which was accepted by the Bank.