JUDGMENT
[ENTITY] J.
1. By this petition filed under [SECTION] of the [ACT], the petitioners are seeking a writ of mandamus directing the [ENTITY], respondent No. 1, to take petitioner No. 1 company into the nursing/rehabilitation programme for viable sick units in accordance with the guide,lines and directions contained in the circular dated November 5, 1985, issued by the [ENTITY]. To appreciate the claim of the petitioners, it is necessary to set out the relevant facts which led to the filing of the present petition.
2. Petitioner No.1 is a public limited company and carries on the business of manufacturing dyes, dye intermediates and auxiliaries at its two plants situated at Ambarnath and Tarapore. Petitioner No. 2 is the managing director of the company. Respondent No.1, [ENTITY], respondent No. 7, [ENTITY], and respondent No. 8, [ENTITY], are nationalised banks and had advanced large amounts to the petitioner-company from time to time. Petitioner No. 1 company was incorporated in the year 1960 and enjoyed credit facilities from its inception from the [ENTITY]. Petitioner No. 1 company has employed about 500 workmen. The production capacity at Ambarnath is 720 tonne per annum and that at Tarapore is 300 tonne per annum and the products manufactured by the petitioners are principally used in. the textile industry. Between April, 1980, and June, 1980, the company suspended its work and in the year 1980-81 the company suffered considerable losses. The labourers went on strike for a period of eight months in the year 1981-82 and ultimately on March 5, 1983, the company was declared sick unit. From the year 1980 onwards, the company has been continuously incurring losses. The sickness of the company has been attributed by the petitioners mainly to the textile strike, in Bombay, labour strike in the company, competition from small scale units enjoying special excise reliefs and also lack of supply of adequate working capital in time. On October 13 1983, petitioner No. 1 company was declared a relief undertaking under the [ACT], by the Government of Maharashtra.
3. Petitioner No. 1 company had a cash credit account in addition to the working capital term loan account with the [ENTITY] and availed of the facilities to the extent to Rs. 4 crores. The company, after being declared a sick unit, approached the [ENTITY] for more financial assistance and the bank noticed that the company had continuously incurred losses from the year 1980- 81 onwards and that the irregularities in the account had increased. As on June 30, 1983, the total excess withdrawals and the interest thereon came to about Rs. 250 lakhs. The [ENTITY], therefore, thought it wise to secure a viability report about the petitioner No. 1-company from one Gami Consultants on July 22, 1983. Gami Consultants made a preliminary report on September 20, 1983, and in pursuance of that report, the petitioner-company submitted an application to the bank under the credit authorised scheme for additional funds of Rs. 265 lakhs. The bank decided to regularise the irregularity in respect of an amount of Rs. 250 lakhs by converting the same into a working capital term loan in addition to the existing working capital term loan of Rs. 30 lakhs. Between March 22, 1984, and August, 1984, the [ENTITY] entered into correspondence with the [ENTITY] seeking approval for enhancement of working capital. The [ENTITY] initially sanctioned an amount which was less that the amount sought by [ENTITY], but after follow up, ultimately, the [ENTITY] gave the authorisation in January, 1985, for working capital of Rs. 307 lakhs and working capital term loan of Rs. 360 lakhs. The [ENTITY] gave authorisation on condition that no further irregularity is committed in the account either by debit of interest or by allowing excess withdrawals. The [ENTITY] gave the authorisation only for a period of one year. In January, 1985, Gami Consultants made their final report about the viability of petitioner No. 1-company and the report was favourable to petitioner No. 1-company. In July, 1985, the general manager of the [ENTITY] advised the financial expert, [ENTITY], who is an officer of the bank, to study the report and make a note. Shri [ENTITY] forwarded his note on August 3, 1985, pointing out that the report made by Gami consultants was too optimistic and that it is unlikely that the company could be rescued by pouring of more funds by the banks and financial institutions. On August 26, 1985, the Maharashtra State Financial Corporation which had advanced Rs. 12.71 lakhs to petitioner No. 1 company served a notice for recovery of the balance.
4. On November 5, 1985, the [ENTITY] issued a circular to all scheduled commercial banks prescribing parameters for provision of reliefs/concessions by banks under rehabilitation packages evolved for sick units considered potentially viable. The circular, inter alia, recites that in the absence of guidelines regarding the concept of viability as well as the extent of reliefs/concessions which could be extended by the banks, much time is lost in arriving at a mutually acceptable package and the package is drawn up on an ad hoc basis resulting in disparities between one case and another and inequitable sharing of sacrifices amongst the concerned agencies. Some uniformity in the matter of concessions extended within a broad framework was felt essential. The circular also sounds a warning that the availability of large concessions from banks and term lending institutions has often tempted borrowers to demand excessive concessions with practically no contribution on their part in the rehabilitation measures. The circular then sets out that viability on a commercial basis should be the main criterion for undertaking the rehabilitation of sick unit. Viability is defined as under :
"A unit may be regarded as viable if it would be in a position, after implementing a relief package spread over a period not exceeding seven years from the commencement of the package from banks, financial institutions, Government (Central/State) agencies, shareholders, labour, suppliers of goods and services and other creditors, as may be necessary, to continue to service its repayment obligations as agreed upon including those forming part of the package, without the help of the concessions after the aforesaid period. The repayment period for restructured debts should not exceed ten years from the date of implementation of the package."
5. The circular also sets out that the details of the package evolved should be reported to the [ENTITY] where the units enjoy working capital of Rs. 1 crore and above from the banking system. It further prescribes that in the case of borrowers coming under the purview of the credit authorisation scheme, enhancements in the credit limits sanctioned by banks should be referred to the [ENTITY] for prior authorisation. The [ENTITY] is also required to be associated in the joint meetings convened for finalising the packages. The circular makes it clear that it should be ensured that the burden of reliefs and concessions is not borne by the banks and term lending institutions alone but is shared in an equitable manner by the various agencies interested in the revival of the units.
6. In pursuance of the guidelines by the [ENTITY], n December 26, 1985, [ENTITY] advised petitioner NO. 1- company to submit fresh proposals to establish that the company is a viable unit in accordance with the guidelines. On December 30, 1985, petitioner No. 1-company furnished the requisite details and, thereafter, on January 22, 1986, a joint meeting of the officers of the bank, the financial institutions and the [ENTITY] was held. The summary of the decisions reached in the meeting were as under :
(a) Respondent No. 3, Industrial Reconstruction Bank of India, will undertake a details viability study and it case the report is favourable, they may consider granting of loan to provide margin money for the additional working capital of Rs. 150 lakhs by the [ENTITY], provided the promoters contribute at least 20% thereof.
(b) A consortium consisting of three nationalised banks and the State Industrial and Investment Corporation of Maharashtra Limited and Maharashtra State Financial Corporation agreed to consider the following package to the company, subject to approval of higher authorities of respective banks/financial institutions :
(i) The [ENTITY] will assess the working capital requirements of the company on receipt of complete data from the company ;
(ii) Interest on cash credit and loans will be funded from April 1, 1980, to June 30, 1986, which will bear interest at 10% per annum ;
(iii) Irregular portion in the cash credit account with the [ENTITY] will be funded which will bear interest at 13.5% per annum ; and
(iv) Banks and financial institutions will reschedule repayment of loans and funded interest which shall be repaid within a period of seven years with one year moratorium.
7. In pursuance of the tentative decision reached in this meeting, [ENTITY] advised the company of February 25, 1986, to furnish details about the working of the company. On April 17, 1986, the [ENTITY] informed the Government of Maharashtra to continue to treat petitioner No. 1-company as a relief undertaking as the bank was considering nursing the unit. In the meanwhile, the [ENTITY] examined the viability report forwarded by Gami Consultants and the note prepared by Shri [ENTITY]. Thereafter, the general manager prepared his own note on May 2, 1986, and felt that petitioner No. 1-company was not a viable unit and that it would not be advisable to nurse such unit as it would not be able to repay the loan within the framework of the guidelines laid down by the [ENTITY]. The note prepared by the general manage was approved by the managing director and the chairman and the decision was subsequently confirmed by the board of directors in the meeting dated May 8, 1986. The board decided to recall the advances made to the company and, accordingly, on May 16, 1986, and the petition was admitted oN May 21, 1986, and certain interim orders were passed. Thereafter, on June 16, 1986, the [ENTITY] instituted a suit in this court against the petitioner No. 1-company for recovery of an amount of Rs. 868.25 lakhs inclusive of interest calculated up to May 31, 1986.
8. Shri [ENTITY], learned counsel appearing on behalf of the petitioners, submitted that the circulars issued by the [ENTITY] have statutory sanction and as such nationalised banks are bound to observe and implement the same. It was contended that the circular was issued by the [ENTITY] and the norms laid down therein are the best evidence of what is in public interest. Shri [ENTITY] urges that under the circular the grant of advantage or refusal by the nationalised bank must satisfy the test of reasonableness and must be in the public interest. It was urged that the declaration of petitioner No. 1-company as a relief undertaking by the Government of Maharashtra is to ensure continuous working of the unit and the [ENTITY] cannot refuse to nurse or rehabilitate the unit as it would defeat the object to be secured under the [ACT]. Finally, it was urged by learned counsel that the doctrine of promissory estoppel is attracted in the present case as by the tentative decisions taken in the joint meeting held by the officers of the banks and the financial institutions on January 22, 1986, the company was promised that it would be nursed and brought back to health and on such promises, the petitioners had acted and changed their position. Shri [ENTITY], learned counsel appearing on behalf of the workers, supported the claim made by Shri [ENTITY] and pointed out the from January, 1984, onwards, there is no labour problem in the unit and the bank should give ample finances to enable the workers to retain their jobs. The relief was seriously resisted on behalf on [ENTITY] and other financial institutions. Shri [ENTITY], learned counsel appearing on behalf of the [ENTITY], submitted that the petition is an abuse of the writ jurisdiction and the writ court should not enter into the question whether the decision taken by the financial institutions that petitioner No. 1-company is not a viable unit is correct or otherwise. Shri [ENTITY] urged that the court should be slow in disturbing the judgment reached by the financial experts of nationalised banks apart from the fact that the decision in the present case is entirely just and proper. Shri [ENTITY] pointed out that what was decided in the meeting of January 22, 1986, was a tentative proposal subject to approval of higher authorities and the higher authorities of the [ENTITY], the [ENTITY] and [ENTITY] have unanimously turned down the proposal, realising the petitioner No. 1 - company is not a viable unit. Learned counsel also pointed out that [ENTITY], respondent No. 3, has no even undertaken the exercise of ascertaining the viability of petitioner No. 1 - company.
9. Before examining the claim made by the petitioners about the viability of petitioner N. 1 - company and implementation of the circular issued by the [ENTITY], it would be advantageous to bear in mind the limits of jurisdiction to be exercised in a writ petition under [SECTION] of the [ACT]. It hardly requires to be stated that it is not possible for the court to determine the question whether a particular unit is viable or otherwise, because determination of such question would require examination of various facets including the financial implications and courts are not in a position and are not equipped to undertake such a detailed exercise . It is undoubtedly true that the [ENTITY] being a nationalised bank is guided by the circular issued by the [ENTITY] and in case it is established that the [ENTITY] had declined to nurse or rehabilitate the petitioner No. 1 - company on arbitrary and unreasonable grounds, then the court can certainly come to the help of the petitioners. It is necessary for the court to leave some discretion in favour of the financial institutions to determine whether a unit is viable or otherwise and the court should extremely slow in forcing financial institutions to advance public funds to a private party on an assumption that the unit would be viable. The discretion exercised by financial institutions is not to be interfered with unless it is made with oblique motives or for extraneous purposes or upon extraneous considerations. This principal is well- settled and reference can be usefully made to the observations in paragraph 17 of the judgment in the case of [PRECEDENT], . In a later decision of the Supreme Court, [PRECEDENT] , the Chief Justice, [ENTITY], while examining the claim for grant of licence for manufacturing and sale of liquor in the State of Madhya Pradesh, observed in paragraph 34 that grant of licences would essentially be a matter of economic policy where the court would hesitate to intervene and strike down what has been done unless it appears to be plainly arbitrary, irrational, or mala fide. After referring to the decision in Bearer Bonds' case, i.e., [PRECEDENT], the learned Chief Justice observed that what was said in that case in regard to legislation relating to economic matters must apply equally in regard to executive action in the field of economic activities. It was further observed as under :
"We must not forget that in complex economic matters, every decision is necessarily empiric and it is based on experimentation or what one may call the 'trial and error method' and therefore. its validity cannot be tested on any rigid 'a priori' considerations or on the application of any straitjacket formula. The court must, while adjudging the constitutional validity of an executive decision relating to economic matters, grant a certain measure of freedom or 'play in the joints' to the executive The Government in entitled to make pragmatic adjustments which may be called for by particular circumstances. The court cannot strike down a policy decision taken by the State Government merely because it feels that another policy decision would have been fairer or wiser or more scientific or logical. The court can interfere only if the policy decision is patently arbitrary, discriminatory or mala fide."
10. Keeping in mind the warning sounded by the Supreme Court while exercising writ jurisdiction in cases involving financial implications, it is necessary to examine the submissions urged by Shri [ENTITY] that the decision taken by the [ENTITY] is arbitrary or unreasonable.
11. It was contended on behalf of the petitioners that the [ENTITY] had felt that the company is a viable unit and to seek confirmation of their opinion sought a report from Gami Consultants. The report given by Gami Consultants, both preliminary and final, supports the contention of the petitioners that the company is a viable unit provided the financial institutions undertake to nurse the same by making advances. It was contended that there was no occasion for the [ENTITY] to turn down the favourable report made by Gami Consultants and, more so, when , in accordance with the report, the bank had entered into correspondence with Bank of India suggesting sanction for enhancement of working capital. Shri [ENTITY] submitted that the managing director and the Chairman made an adverse remark on the basis of extraneous considerations against the company and that, therefore, the same should be ignored and the [ENTITY] should be directed to nurse petitioner No. 1 - company unit and make advances as per the decisions taken in the meeting dated January 22, 1986. It is not possible to accept the submission of the learned counsel. The preliminary report of Gami Consultants was submitted in September, 1983, while final report was submitted in January, 1985. The preliminary report merely prescribes a viability plan under which the company was to increase its contribution of fixed costs per tonne of the product from the existing level of around Rs. 0.40 lakhs/tonne to say Rs.0.70 lakhs/tonne for Ambarnath plant. It is not in dispute that after receipt of the preliminary report, the [ENTITY] entered into correspondence with the [ENTITY] seeking approval under the credit authorisation scheme, for increase of working capital limits to Rs. 357 lakhs, working capital term loan of Rs. 250 lakhs, reduction in margin and changing interest at 15% on the working capital term loan. A letter in this connection was addressed to the [ENTITY] on March 22, 1984, and a subsequent letter dated April 19, 1984, recites that the bank was guided by the report of Gami Consultants for assessing the working capital of the company. After long correspondence, approval was received from the [ENTITY] on January 12, 1985, for raising the working capital limit to Rs. 307 lakhs and enhanced the working capital term loan to Rs. 360 lakhs for a period of one year. It is also accepted by Shri [ENTITY] that after the preliminary report of Gami Consultants, the [ENTITY] advanced a sum of Rs. 166 lakhs to petitioner No. 1-company, though according to Shri [ENTITY], the amount paid was Rs. 203 lakhs. It is, therefore, clear that the [ENTITY], on receipt of the preliminary report was prepared to nurse or rehabilitate the company so that it may become a viable unit. Now, the final report was submitted in January, 1985, and the recommendation was that sufficient cash funds should be made available to the company to increase its production and sale to 50 tonnes per month and that, thereafter, the company should continuously increase the production every month. Gami Consultants also suggested that interest should be levied at the rate of 13.5% for the term loans as well as working capital finance and no interest should be charged on the funded interest. On receipt of the final report, the general manager of the [ENTITY] advised Shri [ENTITY], the Technical Finance Officer, to prepare a note. Shri [ENTITY] prepared a note pointing out that the target set out in the report of Gami consultants was too optimistic. Shri [ENTITY] found that the overheads of the company are on the higher side as compared to the level of operations mainly because of higher incidental cost. Shri [ENTITY] felt that it is difficult to say whether the company would be successful in marketing 50 tonnes of dyes on an average of Rs. 77,500 contribution per tonne in the light of what is achieved in the previous year and in the absence of exact data about demand for such products.
12. On January 22, 1986, a meeting of the officers of the financial institutions and the banks was held to consider whether it would be possible to nurse the company to health under the rehabilitation programme. The representatives of the banks and the institutions noted that the company could not achieve a level of production of 50 tonnes per month and continued to incur losses consistently. The [ENTITY] was inclined to consider the grant of additional working capital of Rs. 130 lakhs but insisted on margin money and the [ENTITY] was willing to consider granting the loan to provide a margin for additional working capital provided the promoters contribute at least 20% and a viability study is undertaken to ensure that the unit is viable. Certain other decisions which are referred to hereinabove were reached, but it was made very clear that the package would be considered subject to the approval of the higher authorities. Now, what transpired within a short time, thereafter, is an eye- opener. On February 15, 1986, the chief manager of the [ENTITY] informed the [ENTITY] that the [ENTITY] is not in favour of granting concessions to petitioner No. 1-company as the entire amount due for payment has not been refunded inspite of grant of sufficient time to the company. The chief manager of the [ENTITY] also addressed a letter dated February 24, 1986, informing the [ENTITY] that the corporation Bank has decided to recall the advance and to take further steps for recovery of the dues. It is, therefore, obvious that the two nationalised banks had realised that the package tentatively agreed in the joint meeting cannot be gone through. It is also interesting to note that the [ENTITY] which had to undertake a detailed viability study before granting the loan for providing margin money, did not undertake the exercise at any stage and after the [ENTITY] filed a suit in this court for recovery of Rs. 8 crores, decided to remove petitioner No. 1-company from their list. It is , therefore, obvious that what was tentatively agreed, subject to confirmation by the higher authorities, in the joint meeting never went through, and possibly because the banks and the financial institutions realised that petitioner No. 1- company is in a hopeless financial situation and cannot be nursed back to health. Shri [ENTITY] submitted that the [ENTITY] and the [ENTITY] have subsequently advanced some amounts to petitioner No. 1-company and that indicates that these two banks have not given up the package tentatively agreed upon. This submission has no merit because on behalf of the [ENTITY] a return sworn on June 23, 1986, by Shri [ENTITY], the chief manager and principal officer, is filed with a specific averment that the [ENTITY] was and is not in favour of rehabilitating the company having regard to past experience. The deponent debt burden disproportionate to the company's level of operations, it was felt that the company could not be made financially viable, even if the company was given additional finance. The [ENTITY] has not filed any return and, therefore, it is difficult to assume that the [ENTITY] has accepted the package and, more so, in view of the specific letter written by the [ENTITY] to the [ENTITY]. It is, therefore, clear that the three banks and the financial institutions have clearly come to the conclusion that petitioner No. 1-company is not a viable undertaking and no worthwhile purpose would be served by pouring public money into such a sinking ship. In my judgment, no fault can be found with such a conclusion.
13. Shri [ENTITY], in this connection, urged that the doctrine of promissory estoppel is attracted in the present case because, in pursuance of the decision taken in the joint meeting, petitioner No. 1-company has acquired certain rights. It is impossible to accede to this submission. In the first instance, the tentative decisions taken in the meeting of the representatives of the financial institutions and the bank can, by no stretch of imagination, be treated as promises. The tentative decisions recorded in the minutes were subject to confirmation by the higher authorities and as mentioned hereinabove, the higher authorities turned down the proposal. In my judgment the financial institutions had never given any promise to the company and much less have the petitioners changed their operations in view of such promises. The claim of the petitioners that a writ of mandamus should be issued in view of the operation of the doctrine of promissory estoppel deserves to be turned down.
14. Shri [ENTITY] submitted that the decision taken by the [ENTITY] for recovering the advances and not nursing or rehabilitating petitioner No. 1-company was arbitrary and unreasonable. Before examining this plea, it is required to be stated that it is not the claim of the petitioners that any officer of the Bank has acted mala fide or with a bias to deprive the company of additional funds. In the absence of any plea about mala fides or bias, the contention of Shri [ENTITY] is that the note prepared by the managing director and the chairman of the [ENTITY] indicates that extraneous considerations were taken into account while refusing to nurse petitioner No. 1- company. Before referring to the remarks of the managing director and the chairman, it is necessary to reiterate the steps taken by the [ENTITY] after receipt of the final report by Gami Consultants. The final report was received in January, 1985, and on July 16, 1985, the general manager advised [ENTITY], financial expert, to study the report and prepare a note. On August 3, 1985, Shri [ENTITY] prepared a report and his conclusion was that, looking to the past performance and various constraints, it cannot be said that petitioner No. 1-company will be able to achieve results as projected. Shri [ENTITY] further stated that the company has been facing problems of marketability, labour trouble, shortage of funds and has been continuously incurring losses for the last several years. It was further observed that if the unit is to be nursed, a large sacrifice by way of write-off of interest and reliefs and concessions and additional working capital funds will be required. On receipt of this report, the chairman and the managing director made the following note :
"The question of making any attempt towards rehabilitation of this unit under the present management does not arise and unless the promoters bring in large funds towards equity capital or subordinated interest for a loan, we cannot entertain any rescue package. The advance should be recalled and we shall try to find out some one interested in stepping into the management with a suitable financial stake."
15. In pursuance of this note, the board of directors, in their meeting dated May 8, 1986, decided to inform the petitioners of the inability of the bank to nurse the unit and its decision to take steps to recall advances. Shri [ENTITY] strenuously submitted that the managing director and the chairman seem to be obsessed with the fact that while the present management is in charge, the bank should not entertain the package but if the management changes, then it may be possible. Learned counsel submitted that in none of the reports, there was any complaint about any mismanagement by the office-bearers of the company and, therefore, the chairman seems to have proceeded on an extraneous consideration to turn down the request for nursing the unit. It is not possible to accept the submission of learned counsel. After receipt of the final report of Gami Consultants, Shri [ENTITY] prepared a note. Thereafter, a detailed study report was prepared and forwarded to the central office and that report as well as Shri [ENTITY]'s note clearly indicate that the potentiality of petitioner No. 1-company was very doubtful and the company was not a viable unit in terms of the guidelines laid down by the [ENTITY]. All these reports were there before the chairman and it is not even alleged that the chairman has any bias against the company. In these circumstances, it must be presumed that the chairman was satisfied with the reports and the note prepared by Shri [ENTITY] and in addition found that the rescue package cannot be gone through unless the present management brings large funds. In my judgment, the note does not reflect any prejudice against the present management but only the desire of the chairman that the present management should bring in more funds on their own and should not merely depend on the advances from the [ENTITY]. The latter part of the note about finding someone interested in stepping into the management was only with a view to secure repayment of large amounts advanced by the [ENTITY]. In my judgment, the note prepared by the chairman must be read in its proper context and then it would be clear that the note cannot be considered as projecting a reflection by the chairman against the company. The chairman, in my judgment, was acting in the best interest of the bank and it would be futile to conclude from this note that the [ENTITY] has acted arbitrarily or unreasonably in refusing to take the company under the plan of rehabilitation.
16. It is necessary, in this connection, to mention what transpired after the filing of the petition. When the petition was last heard on November 27, 1986, after some arguments, I felt that the determination of the issue involved in the petition would result in serious financial implications for the [ENTITY]. The principal question to be determined is about the viability of the company and I felt that the [ENTITY], respondent No. 2, should assess the viability of petitioner No. 1-company in accordance with the circular dated November 5, 1985, and inform the court the conclusions reached. Shri [ENTITY], learned counsel appearing on behalf of the [ENTITY], thereupon stated that the Reserve Bank has no machinery to assess the viability and normally such a question is referred by the reserve Bank to the Industrial Development Bank of India (IDBI). Shri [ENTITY] assured that the question would be referred to the IDBI and after receipt of the report, the [ENTITY] will convey the opinion about the viability of petitioner No. 1-company to this court. Both the petitioners and the [ENTITY] stated that the material in support of their respective claims would be handed over to the [ENTITY]. Accordingly, I passed the order dated November 27, 1986, and adjourned the hearing of the petition. The IDBI, accordingly undertook the exercise to ascertain the viability of petitioner No. 1-company and after examining the material produced by the petitioners forwarded their report dated December 5, 1986, to the [ENTITY] and the report is entirely adverse to the petitioners. The conclusion is that it would require 36 years for repayment of the loans and the company's operations would not be viable with the normal reliefs as per the [ENTITY] guidelines. A copy of the report was produced by Shri [ENTITY] and is taken on record and marked "X". Shri [ENTITY] stated that the [ENTITY] concerns entirely with the conclusions reached by the IDBI. In view of the report made by the IDBI and in view of the stand taken by the [ENTITY], it is absolutely clear that petitioner No. 1-company is not a viable unit and that the reliefs sought by the petitioners cannot be granted. I must make it clear that it was on my recommendation that the [ENTITY] requested the IDBI to make the report and I made the suggestion to ensure that the decision taken by the [ENTITY] was reasonable and proper on the facts and circumstances of the case. The report made by the IDBI indicates that the company has incurred huge cash losses during the years 1983-86 and a comparative study statement of the balance-sheets and profit and loss accounts for the years 1983-86 is annexed as annexure I to the report and the summery is as follows :
1983 1984 1985 1986 (Rs. in lakhs) (A) (i) Share capital 88 88 88 88 (ii) Reserves and surplus 20 19 19 19 (iii) Accumulated loss 278 437 547 698 (iv) Net worth (170) (330) (440) (591) (v) Current assets 331 306 526 530 (vi) Current liabilities 179 188 234 184 (vii) Bank borrowings 324 411 673 832 (B) (i) Sales (in tonnes) 324 286 488 483 (ii) Sales value 394 334 577 581 (iii) Gross profit/loss (6) (27) 49 43 (iv) Depreciation 30 30 34 30 (v) Interest 77 102 140 173 (vi) Operating loss (113) (159) (125) (160) (vii) Cash loss (83) (129) (91) (130)"
17. Annexure III to Ex. "X" shows the outstanding term loans of financial institutions and banks and the amount due to the Maharashtra State Financial Corporation is Rs. 7.75 lakhs, State Industrial and Investment Corporation Rs. 137.67 lakhs, [ENTITY] Rs. 37.25 lakhs, [ENTITY] Rs. 31.75 lakhs and Saraswat Co-operative Bank Rs. 1.60 lakhs, thus making a total of Rs. 216.02 lakhs. The amount due to the [ENTITY] is Rs. 8.72 crores as per annexure III to Ex. "X". On perusal of the report made by the IDBI, there is hardly any doubt that petitioner No. 1-company is not a viable unit in terms of the guidelines issued by the [ENTITY].
18. After receipt of the report from the IDBI, the petitioners have filed an additional affidavit sworn on December 17, 1986, and it is claimed that the IDBI has overlooked that though the petitioners manufacture both dyes and chemicals, in its balance- sheet, the break-up of production and sales figures for dyes and chemicals are not given. It is claimed by the petitioners that the IDBI has arrived at a figure of Rs. 1.31 lakhs as being the average selling price per tonne, by simply dividing the sales value of Rs. 833 lakhs by the sales quantity of 483 tonnes and the future projections are based on this average sales price. The petitioners claim that the company has different production capacities for manufacture of three different kinds of dyes. The average selling price should have been worked out at Rs. 1.55 lakhs per tonne and if this correct computation is taken into account, then the report of the IDBI would have to be rejected. It is further claimed that on a correct computation, it would be established that petitioner No. 1-company could make substantial profits for the years 1987, 1988 1989 and would be able to wipe out the entire loan account. It is impossible to place any reliance on such affidavit for more than one reason. In the first instance, the issue in this petition is not about the accuracy of the report made by the IDBI. The said report was made on the suggestion made by me and the report was made after the petitioners were given ample opportunity to produce all the material in support of the claim. The report proceeds on the balance-sheets and the profit and loss accounts certified by the company and it is futile now to claim that the petitioners failed to point out the different nature of the productions and that has resulted in a mistake in determination of the average sale price. The claim made by the petitioners in this affidavit is obviously an afterthought and is nothing but a desperate attempt to come out of a hopeless situation. The petitioners approached this court by claiming that the [ENTITY] is recalling its advances arbitrarily and unreasonably and having failed in that attempt now desire to challenge the report of an independent body which has been approved by the [ENTITY]. It cannot be overlooked that the grievance in this petition is not about the validity or the accuracy of the report of the Industrial Development Bank of India and the report was sought only to ensure that what was done by the [ENTITY] was reasonable and just. It is not possible for this court to examine the future prospects of the company on the basis of what is averred by the petitioners and then direct the [ENTITY] to spend public funds on such a sick unit. In my judgment, no credence can be given to the claim made in this affidavit filed after the receipt of the report of the Industrial Development Bank of India. In my judgment, the conclusion is inescapable that petitioner No. 1-company is not a viable unit in accordance with the directions issued by the [ENTITY] and the decision taken by the [ENTITY] cannot be termed as arbitrary or unreasonable but, on the other hand, it is more just, fair and proper on the facts and circumstances of the case and the decision is entirely in the public interest.
19. It is now required briefly to refer to the submission urged by Shri [ENTITY], learned counsel, appearing on behalf of the workers of the company. The workers had appeared as interveners at the initial stage and the workers took out a chamber summons being [CASE NUMBER] for being joined as party- respondents. The chamber summons was adjourned to the hearing of this petition and I made the chamber summons absolute and directed the interveners-Chemiequip Employees' Association, a trade union, to be joined as party-respondent on the assurance of Shri [ENTITY] that the interveners would not insist on service of notice of the petition and would not file any more affidavits. Shri [ENTITY] submitted that the reliefs sought by the petitioners should be granted as the refusal would result in the company being wound up and would deprive 500 labourers of their bread, Shri [ENTITY] submitted that from January, 1985, there are no labour problems in the company and the labourers have assured the company of peace and production. In my judgment, these considerations are totally irrelevant for directing the financial institutions to pour more funds in a unit which is financially not viable. The funds to be advanced by the financial institutions are those which are deposited by the common man and such hard earned money should not be wasted on a unit which is not viable. Shri [ENTITY] also stated that the State Government has declared the company as a relief undertaking and the object of continuation of operation of the unit would be defeated if the funds are not made available by the [ENTITY]. It is impossible to appreciate any force in the submission. The mere fact that the unit has been declared as a relief undertaking and that too without consulting the [ENTITY] or other financial institutions cannot compel the financial institutions to advance more money to such a unit. In my judgment, the claim made by the labourers is without any merit.
20. Accordingly, the petition fails and the rule is discharged with costs.
21. Shri [ENTITY] applies for continuation of interim relief for a period of two weeks. Prayer granted.