HARI NARAYAN SINHA SON OF LATE MADAN SINGH Vs. STATE OF BIHAR THROUGH PRINCIPAL SECRETARY- CUM-INDUSTRIAL DEVELOPMENT COMMISSIONER, DEPARTMENT OF INDUSTRIES, GOVERNMENT OF BIHAR

JUDGEMENT

(1.) HEARD counsel for the parties.

(2.) AN order passed by the Specified Authority under Section 32G of the State Financial Corporation Act dated 28.9.2007, Annexure -8 to the writ application, is subject matter of challenge in the present writ application. By virtue of the order the Managing Director of the Bihar State Financial Corporation (hereinafter to be referred to as the BSFC) has rejected the objections raised on behalf of the petitioner in the exercise which was being carried out by the Specified Authority under Section 32G of the SFC Act. Some basic facts are noted based on the pleadings of the parties. Bihar State Credit and Investment Corporation (hereinafter to be referred to as the BICICO) and BSFC in consortium had provided term loan of Rs. 46 and 26 lacs respectively to one M/s Bala Paper Mills (P) Ltd. The unit was to manufacture craft paper. Against the loan amount a joint equitable mortgage and other required legal documents were executed by the Company in favour of the two financial institutions. The charges of these institutions ran pari passu over the mortgaged assets of the Company. As a collateral security the petitioner had also executed a guarantee bond in favour of the two institutions for the repayment of their loans on failure to do so by the principal debtor. The unit came to be set up in the year 1985 but ran into some difficulty resulting in its closure, compelling the two financial institutions to recall the loan. They also took possession of the unit on 26.8.1996. A proceeding under Section 29 of the SFC Act was initiated and a notice for sale was issued in the year 1996. Various sale offers were rejected on the ground that they were not commensurate with the value of the property starting at the level of about 70 lacs but somehow BICICO in its wisdom unilaterally sold the unit for Rs. 54 lacs to one M/s Patna Rolling Mills (P) Ltd. The entire assets of M/s Bala Paper Mills (P) Ltd. were handed over. It is stated that the BSFC was left in the lurch despite the so -called consortium loan financed by both the institutions.

(3.) M /s Bala Paper Mills (P) Ltd. assailed the action of the BICICO by filing a writ application. The Company failed before the learned Single Judge as well as before the Letters Patent Bench. The litigation thereafter traveled before the Hon 'ble Supreme Court. The Hon 'ble Supreme Court after hearing the parties gave an offer to the Company to redeem the property by paying Rs. 30. lacs within a time frame. That amount of Rs. 30 lacs could not be paid leading to dismissal of the S.L.P., which is borne out from Annexure -D to the counter affidavit filed on behalf of respondent no. 7 i.e. BICICO.