IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM MONDAY, THE 11TH OCTOBER 2010 / 19TH ASWINA 1932 WP(C).No. 27632 of 2010(D) --------------------------------------- PETITIONER(S): ------------------------ M/S. A.M. BODY BUILDERS, REP. BY ITS PROPRIETOR-RAM MANOJ, PORUVAZHY.P.O. BHARANIKAVU, SASTHAMCOTTA, KOLLAM-690 520. BY ADV. SRI.K.V.SOHAN, SMT.SREEJA SOHAN.K., SRI.GEORGE JOSEPH PULIMOOTTIL, SRI.K.DILIP, SRI.ROVIN RODRIGUES. RESPONDENT(S): ------------------------- 1. THE REVENUE RECOVERY TAHSILDAR, TALUK OFFICE, KUNNATHUR, KOLLAM DISTRICT-690 540. 2. THE EMPLOYES PROVIDENT FUND ORGANISATION SUB REGIONAL OFFICE, ANNEXE, MANNANIYYA COMPLEX, ANDAMUKKAM-691 001. 3. THE INDIAN OVERSEAS BANK, KOLLAM BRANCH REP. BY ITS SENIOR MANAGER AND AUTHORISED OFFICER. PIN-691 001. 4. THE GENERAL MANAGER, DISTRICT INDUSTRIES CENTRE, ASHRAMAM, KOLLAM-691 002. R1 & R2 BY GOVT. PLEADER SRI.BIJOY CHANDRAN. R2 BY ADV. SRI.PIRAPPANCODE V.S.SUDHIR, SC, EPF ORGN. R3 BY ADV. SRI.P.B.SURESH KUMAR, SC, I.O. BANK. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 11/10/2010,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: rs C.K.ABDUL REHIM, J. ------------------------------------------- W.P.(C).No.27632 of 2010 ------------------------------------------- Dated this the 11th day of October, 2010 J U D G M E N T ---------------------- Writ petition is filed with the following prayers: a. Call for the records connected with the case; b. Declare that Ext.P17 sale proceedings initiated by the 3rd respondent without finalising the revival proceedings initiated at the instance of 4th respondent is an illegal and malafide act; c. Quash Ext.P17 sale proceedings without obtaining the permission of the 4th respondent while the 4th respondent was implementing the revival scheme under Ext.P16 Government Order; d. Issue a writ of mandamus or other appropriate writ or order directing the 4th respondent to process and pass orders on the revival scheme on the basis of Ext.P16 Government Order; e. Issue a writ of mandamus or other appropriate writ or order directing the respondent No.3 to stop the sale proceedings initiated as per Ext.P17 until the finalisation of the revival scheme; W.P.(C).27632/10-D -2- f. Issue a writ of mandamus or other appropriate writ or order directing the respondents 1 to 3 to allow the petitioner to repay the respective amount claimed under Ext.P1 to P3 giving the benefits under the revival scheme; and g. Pass such other orders, as this Hon'ble court may deem fit and proper in the circumstances of the case. It is the case of the petitioner that with respect to its industry a revival programme was pending consideration and approval, before the 4th respondent, under the scheme formulated by the Government (Ext.P16) for revival of sick industrial units. It is stated that the 4th respondent had convened meetings of all the financing institutions for consideration of the project proposal for revival and in one of such meetings held on 19.10.2009 it was promised on behalf of the 3rd respondent that the matter will be taken up with higher ups of the Bank. The 4th respondent made request to the Bank for their concurrence, for registration of the petitioner as a sick unit under Ext.P16 scheme. In the minutes of a meeting (Ext.P11) it is recorded that the Bank Manager had agreed to give a reply within a week positively. Thereafter various meetings were conducted on the subject and the 3rd W.P.(C).27632/10-D -3- respondent had raised objections stating that the projections reflected in the revival project is unrealistic and exaggerated. The petitioner submitted further reply answering the queries raised in this regard. It is the case of the petitioner that without considering such replies and without properly examining the feasibility of the revival project, the 3rd respondent Bank had now initiated steps under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) and Ext.P17 sale notice was published. The writ petition is filed aggrieved by the steps thus initiated. 2. Through an interim order issued, this court had restrained the sale of item Nos:1 to 4 properties in Ext.P17, which is the factory building, wherein it is alleged that more than 40 employees are working. It is submitted that no sale has been taken place pursuant to ExtP17. 3. Heard, Standing Counsel appearing for respondents 2 and 3 and the Government Pleader on behalf of the 4th respondent. 4. Standing Counsel for 3rd respondent submitted that pursuant to meeting convened by the 4th respondent, the matter was taken up for consideration by the competent authority of the W.P.(C).27632/10-D -4- Bank. After elaborate consideration regarding feasibility of the revival project, the Bank came to a conclusion that the same is not realistic and no revival of the petitioner's industry can be effected on the basis of the project proposal. It is noticed that huge amounts are due under the loan account which was availed long back. Further it was submitted that inspite of the liability outstanding, recovery steps initiated on different occasions were objected by the petitioner through various interventions. It is also contended that various other dues of the petitioner which are in the nature of crown debt is mounting up and thus valuation with respect to the secured asset is being reduced. Therefore the Bank could not wait any further for revival project to come through, for realising the amounts due. 5. In a statement filed on behalf of the 4th respondent it is mentioned that, as per letter of the Senior Manager of the 3rd respondent Bank dt: 12.12.2009, it was informed that the revival proposal submitted by the party is not viable and therefore they are unable to consider the proposal. It is further stated that in a meeting convened on 6.1.2010 the 3rd respondent had pointed out various defects such as, the units does not have enough capital, many points about the firm are not mentioned in the balance sheet, projection is unrealistic and exaggerated and also W.P.(C).27632/10-D -5- non-availability of adequate security, etc: It is mentioned that till date the 3rd respondent has not consented for registering the unit under SURP scheme. It is also mentioned that the petitioner had furnished all details and rectified the defects which are pointed out by the 3rd respondent, in the revival project. 6. It is noticed that the 3rd respondent Bank, being a financing institution which extended credit facility to the petitioner, could not be compelled to co-operate with the revival in any manner for re-structuring of the existing liability. A decision in this regard may depend on various relevant factors as far as the Bank is concerned, and it may depend on the policies of the Bank. Since there are huge arrears outstanding, it could not be contended that the proceedings now initiated under SARFAESI Act is without jurisdiction, or illegal. Therefore I am of the considered opinion that the challenge against the SARFAESI proceedings could not be entertained in this writ petition. 7. Having confronted with the above situation Sri.K.V.Sohan, learned counsel appearing for the petitioner conceded that the petitioner is limiting its as requested in No.(d) extracted above, and that he may be permitted to withdraw all W.P.(C).27632/10-D -6- other reliefs sought for, reserving liberty to challenge the same in appropriate proceedings if so advised. He points out clause 2 (iii) of Ext.P16 scheme wherein it is mentioned that if any financing agency is raising doubts about viability of the revival, the same can be referred to any competent professional agencies which is acceptable to the financing agency, for preparation of a revival project after consultation with the financing agency and such revival project can be finalised by such professional agency. 8. Based on the above clause contained in the revival scheme formulated by the Government, the petitioner is seeking a direction against 4th respondent to pursue such remedies for registration of the industry as a sick unit. It is for the 4th respondent to decide as to what should be the course of action to be adopted on the basis of the provisions in Ext.P16. Needless to say that the 4th respondent can pursue actions in terms of Ext.P16 with participation of the financing institutions. However, a time bound decision in this regard is highly solicited, considering the present situation as far as the petitioner's industry is concerned. Therefore, I am of the opinion that the writ petition can be disposed of directing the 4th respondent to finalise the matter at the earliest possible. In the result the writ petition is disposed of directing the 4th W.P.(C).27632/10-D -7- respondent to consider and to take appropriate actions on the basis of Ext.P5 application and Ext.P6 revival project, as early as possible. It is desirable on the part of the 4th respondent to take a decision in this regard if possible, within a period of 3 months. C.K.ABDUL REHIM, JUDGE. okb