MURLIGANJ COLD STORAGE PVT LTD Vs. UCO BANK

JUDGEMENT

(1.) The petitioner-Company had sought funds from UCO Bank, Saharsa Branch for setting up a Cold Storage. Apart from other, it was also entitled to capital subsidy from Government of India which is paid through NABARD which amount, on final calculation, comes to Rs. 50 lacs out of which Rs. 25 lacs has already been received on 16-12-2008 and kept in a separate account of UCO Bank, and Rs. 25 lacs, pursuant to report of the Joint Monitoring Committee dated 22-3-2009, has been sanctioned. Thus, the total subsidy entitlement itself would be Rs. 50 lacs. There were initial hiccups in establishing the plant which was followed by devastating floods in the entire area which is known to all. That disrupted the entire setting up and working of the Cold Storage adversely affecting the financial viability of repayment. Now, for alleged default in payment of instalments, after October 2007 upto June 2008, petitioners have now been classified as NPA and steps for recovery of the entire loan is being taken under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). It is not in dispute that, thereafter, the petitioner has been paying and trying to liquidate the debts. Petitioners make a grievance that under the loan agreement, the Bank was required to insure not only building, plant and machinery but also the stocks. Though it deducted insurance premium, it did not get the stocks insured. The result is that, as a consequence of the devastating floods, all the stocks, which were worth over Rs. 2 crores, were destroyed and petitioners could get only compensation claim of about Rs. 10 lacs for the plant and machinery which also was appropriated by UCO Bank on about 31-3-2009. This created a serious problem for the petitioners because of which default occurred. Now for this default, the petitioners' unit is up for sale. It is also not in dispute that Rs. 25 lacs is already with the Bank in the subsidy reserve account. What this Court finds curious is that the Bank, stating that the accounts had become NPA towards the end of 2007 and, as such, petitioners could not be extended any facility including facility for reschedulement of the debt notwithstanding floods, the devastation which are all matters of record, the Bank insists on its pound of flesh. The most curious aspect of the matter is that Bank with officers of the NABARD inspected the premises of the petitioners on 22-3-2009 that is more than a year after they have allegedly classified petitioners as NPA. This Joint Monitoring Committee Report records clearly that everything is in order and the Cold Storage is functioning normally and the promoter is entitled to final disbursement of subsidy. It specifically notes that the Bank Account No. 12A/201 of the Company was regular with outstanding of Rs. 124.99 lacs. This report is not contradicted by the learned Counsel for UCO Bank. Learned Counsel for the petitioners says that these are contradictory stands taken by the Bank for taking action against the petitioners. They now say that in the end of 2007 itself, the account had become NPA and on the other hand, on 22-3-2009, they report that the account is regular and final subsidy be sanctioned for disbursement notwithstanding this, now they pounce upon the unit to sell the same.

(2.) In my view, these depict a very sorry state of affairs. Here is a unit which is struggling to get on its legs. It suffered the devastating floods. Bank failed to discharge its duty in insuring its stocks. Forgetting all these, Bank is now proceeding under SARFAESI Act. It refuses to enter into reschedulement which otherwise it would normally be entitled to on the ground that the account had become NPA and reschedulement cannot be done. On the own statement of the Bank, as recorded in the Joint Monitoring Committee Report dated 22-3-2009, the Bank itself admits that the account was not NPA. It was regular. This is now borne out by the accounts statement as contained in Annexure-10 wherein except for a short period, repayment has been resumed.

(3.) In that view of the matter, I hold that the petitioner is entitled to be considered for reschedulement and/or restructuring of the loan and the Bank cannot take the plea of the unit having become NPA. It could not do so. The action of the Bank is per se arbitrary. Instead of helping a unit stand, its actions are cut and dry giving an apparent feeling that they are more interested in finding an excuse for selling the unit rather than encouraging the industrialisation and recovery of the money.