USHA ENTERPRISES Vs. KHADI AND VILLAGE INDUSTRIES

JUDGEMENT

(1.) The Writ Petition is filed for a writ of mandamus declaring the action of 1st respondent in issuing letter No. Bank Finance/Nodal 05. dated 26-4-2000 withdrawing the margin money kept in Fixed Deposit in the name of the petitioner with 3rd respondent-Bank and consequential letter dated 31-7-2000 of the 3rd respondent in this regard as arbitrary, illegal and against the principles of natural justice and consequently direct the respondents to credit the margin money to the loan account of the petitioner with the 3rd respondent and pass such other suitable orders.

(2.) The Proprietrix of the petitioner- Company had sworn to the affidavit filed in support of the Writ Petition. The facts, in brief, are as follows: The 1st respondent is a statutory body created by an Act of Parliament called the Khadi and Village Industries Commission Act, 1956, hereinafter referred to as "Act". The 1st respondent is charged with the responsibility of planning, promotion, organization and implementation of Schemes and Programmes for the development of Khadi and other Village Industries in rural areas in co-ordination with the other Agencies engaged in rural development and providing jobs to the unemployed in the villages. In exercise of the powers under Section 15 of the Act, the 1st respondent had introduced the Scheme called Margin Money Scheme applicable to these programmes in village industries. The Scheme provides 25% of the project cost for the projects upto Rs. 10 lakhs will be provided as margin money. The Bank will sanction 95% of the project cost and shall ensure 5% of the own contribution. It is stated that once the margin money is released in favour of the loanee it should be kept in Term Deposit for two years in the Bank which sanctioned the loan and the Fixed Deposit shall be kept in the name of beneficiary and the interest accrued on such deposit will be utilized to service partial interest burden on the loan disbursed to the beneficiary. The margin money will be one time assistance from the 1st respondent and the same shall be credited to the loan account of the beneficiary after expiry of the two years from the date of the first disbursement to the borrower. It is also provided in the Scheme that the Banks will ensure that each project fulfills the criteria of percapita fixed investment, own contribution, etc., and also will appraise project technically as well as economically and take their own credit decision on the basis of viability of each project. The Proprietrix of the petitioner-company, an unemployed woman entrepreneur intending to start leather footwear manufacturing unit under small scale industries in a village called Surampalli, Gannavaram Mandal, Krishna District registered its unit with the authorities and obtained certificate of registration from Commercial Taxes Department in Form-B and D in the month of July, 1997. It is further stated that having come to know of the above said Margin Money Scheme introduced by the 1st respondent, the petitioner submitted an application dated 29-1-1998 along with Project Report to the 2nd respondent who is the sole in-charge of the 1st respondent at the State level in Andhra Pradesh in order to process through, scrutinize and sponsor the loan application to the Bank for financial assistance under rural employment generation programme of the 1st respondent. After satisfying all the criteria laid down under the Margin Money Scheme and after necessary scrutinisation of the Project Report and the application made therefor, the 2nd respondent forwarded recommended the petitioner's case by letter dated 9-2-1998 for financial assistance under Margin Money Scheme of the 1st respondent by enclosing necessary circulars requesting the Bank to scrutinize and appraise the same. The said letter further states that the matter can be taken up with the 1st respondent for the realization of margin money after disbursing the first instalment of the Bank loan to the beneficiary. Thereafter, the 3rd respondent sanctioned the loan after thorough scrutiny of the Project under the Margin Money Scheme of the 3rd (sic. 1st) respondent on 6-6-1998 and the first instalment of the loan was disbursed on 13-6-1998. Subsequently on 10-7-1998 an amount of Rs. 2,97,000.00 was deposited in the Fixed Deposit No. VSU/FD.198/98 in the name of the petitioner in the 3rd respondent-Bank. For the last two years as contemplated by the Scheme, the interest accrued on the said Fixed Deposit is being credited to the loan account of the petitioner to service the partial interest burden. The period of two years contemplated by the Scheme had expired on 10-7-2000 and the said Fixed Deposit amount would have to be automatically credited to the loan account of the petitioner to discharge the loan as provided in the Scheme. On 19-7-2000, the petitioner requested the 3rd respondent through a letter even dated to credit the Fixed Deposit Amount. Thereafter, the 3rd respondent having kept quiet till 31-7-2000 served a letter on the petitioner on 1-8-2000 accompanied by the impugned letter purported to be dated 26-4-2000 of the 1st respondent addressed to the 3rd respondent stating that the Fixed Deposit amount cannot be credited to the loan account for the reasons mentioned in the enclosed letter of the 1st respondent and two other letters dated 28-2-2000 and 24-4-2000 were also enclosed to the letter dated 31-7-2000 of the 3rd respondent. It is further stated that; the proceedings had been taken behind the back of the writ petitioner and it was also stated that the 3rd respondent used to visit the petitioner's premises and make an enquiry with the petitioner about the functioning of the unit under the Scheme and he is obliged to send the regular reports to the other respondents and the staff of the 3rd respondent in fact inspected the unit several times after the installation of machinery and after the functioning of the unit had started. It is further stated that the petitioner also submitted a letter dated 14-2-2000 to the 3rd respondent narrating about the functioning of the unit and the petitioner does not know what had transpired between the respondents 1 and 3 in prompting to pass the impugned proceedings and it was also further stated that if there had been an opportunity the petitioner would have explained to the satisfaction of the respondents as to how the impugned proceedings cannot be issued in the case of the petitioner and the letters dated 28-2-2000 and 24-4-2000 of the 3rd respondent or 26-4-2000 of the 1st respondent were not at all brought to the notice of the petitioner and in the said circumstances, the present Writ Petition is filed raising several grounds which had been specified in detail in paragraph 7 (A) to (I) of the Affidavit filed in support of the Writ Petition.

(3.) Counter-affidavits were filed by respondents 1 and 2 and also by the 3rd respondent. In substance, the stand taken by respondents 1 and 2 in the counter-affidavit is that the impugned proceedings are valid and sustainable since the petitioner had obtained the margin money to the project not fulfilling the criteria of the Margin Money Scheme and that opportunity, had been given to the petitioner to put forth its views in this behalf. The 3rd respondent in the counter affidavit had also taken a stand that the release of margin money to the petitioner firm is purely an administrative decision of the 1st respondent basing on the application submitted by the petitioner firm and hence the 3rd respondent is in no way concerned with the sanction or otherwise of the margin money by the 1st respondent. In paragraphs 3 to 9 of the counter-affidavit filed by the 3rd respondent, several details relating to different proceedings had been explained.