c-.s^.vsQ^ IN THE HIGH COURT OF JUDICATURE AT BILASPUR W.P. N0 —^.^y.ll—OF 2004 <^\'rf,--;^\^' ^ " ^ '<^^ ^<s?'..i ^".^';^:;;^ /^^^ II *. /"" "\ ' ?'-T-T ?- - '•. r^-:%^ ?- \\ A.I." ^. -I' ?' —-,.^-T"^' ^ 717'^"^° ''''' ,-^ ../••"^•/' M/s. Bhilai Cement Company (Pvt.) Ltd. (A private limited company duly registered and incorporated under the provisions of Companies Act 1956). Having its registered office at 62-63. Industrial Growth Center Borai, Post Office Rasmada, District Durg (Chattisgarh), through its Director Shri S. N. Agrawal, S/o. Late Shri K.M. Agrawal aged 42 years, R/o. Ganjpara, Durg. (Chhatisgarh State) VERSUS RESPONDENTS: 1. Chairman - cum - Managing Director, Bank of Baroda having its Head Office at Mandvi, Baroda. 2. Branch Manager, Bank of Baroda, Civic Center, Bhilai, District Durg (Chhattisgarh). ifc^W PETITION UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA l-3 s ¥ HI6H COURT OF 'JU&ICATURE AT BILASPUR (CHHATTIS&ARH) ^^^ifl^ ";^T'< '•'' ~-fc M/s Bhilai Cement Company (Pvt.^ Ltd. -Versus- Chairman-cum-AAanaging Director d another- POSTFORORDER ON 12TH^yfi,2005 ~S8f-^ L.C. Bhadoo Judge 11-8-2005 -^itiB HIGH COURT OF JUDICATURE AT BILASPUR ICHHATTIS6ARH) i-fri+i AA/s Bhilai Cement Company (Pvt.) Ltd. -Versus- Chair'man-cum-McnaQing Director & another Present: Shri Manindra Shrivastavo, Senior Advocate with Miss Sharmila Singhai and Shri Amrito E5as Advocates: Shri Yashwant Tiwari with Shri Amiycksnt Tiwari, Advocates; For the petitioner. For the respondsnts. >th (Passed on 12Tn Auqust,_2QOS 1. The petitioner has preferred this writ petition under Article 226/227 of the Constitution of India "sith a prayer to issue a writ in tiie na+L;rs of mcindamus commandin9 respondents No.l and 2 to settte the bank account of the petitioner iike extending necessary rehabiiitation/ exemption/concession as per the guidelines is.sued by the RBI fro'ri time to tirne, further to restrain the respondents from proceeding with recovery pr'oceedings till the niatter is finaily settled as per ths guidelines issued by the RBI, and any other suitable reiief deemed fit in the facts and circumstances of the case. 2. At the outset, 5hri Manindra Shri'/astava, !earned Senior Counsel for the petitioner, submitted that he is pressing this vvrit petition oniy tc. the extent that respondents No.l and 2 be directed to consider ths case of the petitioner company for rehabilitation after examining the potentia! viability of the petitioner company and thsreafter to act according to rehabilitation package. Page2 of 10 Srief facts, as set out in the petition, necessary for the disposai cf this writ petition are that the petitioner cdT.pany was incorporated with the object of estabiishing a mini cement plant at Borai Industr-iai Growth Centre, Durg and in furtherance of its aims and objscts the petitioner company availed loans and financial assistance frcm the M. P. 5tate Industrial Development Corporation as a!so working capita] !imit3 from respondent No.2 for the businesses of its mini csmert manufacturing plant. bue to the then adverse business conditiona, ever changing economic policies, inadequate supply of essentiai resources iike raw material, power suppiy etc. and further due -to inadequate and delayed financial assistance, the mirsi cement plo.nt coutd not be fuliy set up which led to under-utilization of pbnts cnd machiner'ies, as a result of the aforesaid facts, the petitioner company could not perform well right from the inception and uitimately bsca.me a 'Sick 551 Industria! unit' due to er'osion in its peak network to the extent of 250% of the net worth as a resuit of ever growing accumuiated cash losses. The respondent bank sanctioned the working capita! financia! assistance for a sum of Rs.45 lakhs w.e.f. 3-12-98. However, the sanie did not reiease the sanctioned credit faciiities in time. rcthsr wo.s busy in appropriating the debts in liquidating the other accounts of the group in an crbitrary wanner. The respondent bank in comp!ete i9norance of the Reserve Bank of India guidelines was not only indulged in charging excessive interest then that of the agreed rates but was further busy in charging the Penal interest and capitalizing 1-he same against tiie banking practice and the directions of R.B.I. issued in this regard. On account of this the petitiorier co'Tipcny becomes a Sick Industrial Unit. Consequently, the rnat-rer wo.s referred to the District Level 5'ck Industria! Unit Rehabilitation Committee (for short '&.L.R.C.) for- suggesting the means ond mecsures for rehabiiitation of the petitioner company. The n'atter 1 'lt. PageS of 10 wa.s considered by the &.L.R.C. in its meeting dated 28-4-99 wherein the representative of respondents No.l and 2 was aiso present. In the said meeting after due examinction of the then preyailing Reser'/s iank of India circulars, guidelines as also the parameters issued by 1+ie directorate of industries from time to time, +he Comrnittee recommended for declaring the petitioner a sick industria! unit. ). The next meetina of the committ-ee was he!d on 14-6-99 wherein it was directed that the tota! loss suffered by the petitioner compcny be computed and thereafter the matter be placed before the committee for further consideration. In the said meeting an objection was taken by the representative of the respondent Bank that there has been reduction in the loss of the petitioner sompany and, therefore, it cannot be declared as a sick industriai unit. bespite successive directions of the District Level Indusl-rial Committee for considering the aspect of sickness of the petitioner company as aisc for suggesting the means for reviyal of the petitioner company and further to join the rehabiiitation package, the respondant Bank not only failed to observe the directions given +o it from time to time by the chairman of the committee, but further failed to expiain as •i's how the respondent was justified in not admitting the petitioner -init as a Sick SSI unit. Ultimately, respondent started to keep abstainlriG from the meetings conducted by the D.L.R.C.. 6. Other financial instil-ution namely MPSI&C not only agreed foi' declaring the petitionei" company a sick industrial unit but furthe" agreed for grant of concessions/exemptions as per the guideiines; issued by the Reserve Bank of India from time to time. Fino.liy, af-e!' taking into consideration alt the aspects inciuding the "hen prevalen" circulars, guidelines issued by the Reserve Bank of India, the b.L.R.C. was pleased to declare the petitioner company as a sick industrial unit in its meetino held on 30-12-99. The decision to the said effect was communicated to the petitioner vide memo dated 13/14-1-2000. i hs -u; Page4 of 10 petitioner conveyed in writing to respondent No.2 the decision take;i by the District Level Rehabilitation Committee deciaring the petitioner a sick industrial unit vide letter dated 22-1-2000 witi'i a request to extend necessary concessions as per the guideiines issued by the Reserve Bank of India. The petitioner company also submit'i'ed a detailed project report cum revival/rehabilitation proposa! for reviyal of the petitioner compcmy vide Annexure-P/7. The soid projact report was prepared on the basis of sxemption/concession extendad by the Reserve Bank of India to sick industrla! units. Howsver, respondentsmaintained total silence in -rhis regard and contrary to the axpectations of the RBI guidelines no remedial action was taken by the respondents. 7. The petitioner represented to the respondent No.2 for se'rtiement of its account after considering rehabilitation and granting concession a;3 per the guidelines issued by the Reserye Bank of India on 1-5-2002, but request of the petitioner fai!ed to evoke any response fs'oiri respondents No.l and 2. Respondents No.l and 2 w/ere not taking cny action for rehabilitation of the petitioner company as per this guidelines issued by the Reserve Bank of India. Kespondents No.l ancl 2 failed to confer the benefits iiable to be extended to tne pel-itioner company in terms of the guidelines of Reserve Bcmk of India. S. Return has been filed on behalf of respondents in which it has been mentioned that in view of Sections 17 and 18 of the Recovery Deb--s Due to Banks etc. Act, 1993 (for short the Act') the writ petition is not mainto.inable, as exciusive jurisdiction has been given to the Debts Recovery Tribunai in respect of subject meitter of the petition and that could be dealt with under Section 17 of the Act. Earlier the writ petition filed by the petitioner against the respondents before the High Court of AAadhya Pradesh was dismissed as withdrawn by that Court. Hence, this petition is without jurisdiction and not maintainable on the principle of res Judica+a. The petitioner had Page5 of 10 already taken all the grounds before the bebts Recovery Tribunat, M.P., therefore, the writ petition is not maintainable. I-!- has been mentioned that contents of paras 5.3 to 5.17 of the petition are denied. The petitioner is a bad debtor and has no intention to repcy the loans and debts due a9ainst the petitioner. The petitioner has not come with the clean hands before this Court. Rs.61.17 lakhs was due to respondsnt Bank for recovery' against the petitioner as on 19-11-2001 and against their other 3 credit accounts namely M/s 6opal Traders, Rs. 14.34 lakhs as on 29-9-2000, M/s S. N. Agrawiil & Company, Rs. 17.02 iakhs as on 30-6-2000, M/s 5. N. Agrawal, Rs.2.06 iakhs as on 30-6-2000, total Rs.94.59 lakhs with interest payable onwards from the above date was due to the Bank. The proceeding for recovery of the debts is pending before the D.R.T., AA.P.. The petitioner and al! its above sister concern have not deposited any amounts towcrds the credit (loan/debt), principa! amount or interest outstanding dus on loan credit. The petitioner is bargaining to the respondents by de'ic.y cuid defeating the o'ebts due against the petitioner, therefore, the writ petition be dismissed. 9. As argued by Shri Manindra Shrivastava, learned Senior CounseE for the petitioner in this petition that only the question for consideration before this Court is that as to whether in the facts and circumstances respondents haye failed to act, proceed and consider the RBI guidelines for sanctjon of the rehabilitation packcge and also to find out the potential viability of the petltioner company in order to bring back ths petitioner unit to a healthy track. In this connection, it is admitted position thct the District Leysi Rehabilitation Committee constituted by the State fiovernment considering the above aspect in its meetings held on 28-4-99, 1-5-99 and 14-6-99, declared the petitioner company as sick unit on 30-12- 99, and certificate to that effect was issued by the District Level Rehabilitation Committee on 13/14-1-2000. But, the questiori is 16[ Pageo of 10 whether the petitioner company was able to submit worth consideration a rehabilitation package in order to r'ehabi'itate the petitioner company and so that the respondent bank to examine the potential viabiiity of the petitioner company, in my opinion, merely by declaring the petitioner company as sick unit !pso facto does not amount to approval of the potentia! viability of the petitioner co.npany so as to implement the rehabiiitation committee. There is nothing on record which shows that the District Leyel Rehabilitation Committee after examining any rehabilitation packo.ge submitted by the petitioner company, reached to the conclusion based on the rehabilitation package that there is potential yiabiiit'/ of t'ne petitioner company to reach on a healthy track and there is eyery possibility that if the rehabilitatron package is accepted and financia! assistance is sanctioned to the petitioner company, then the petitioner company wiii be able to "ehabilitate itseif and start production and commercial activities so as to ecrn benefits in the business. It is evident from the ietter dated 1-5-99 issued by ths Senera! Manoger and Principa! Secr-etcry, District Level Rehabilitation Committee right from the year 1993-94 to 1998 that loss of ths petitioner company was increasing and it was reached to the stage of Rs.76.60 lakhs whereas paid up capital was up to Rs.60 ickhs only. lO.The rehabilitation scheme is jntroduced with a purpose th&t unit becomes yiab!e and starts generating revenue in order to iiquidate the outstanding toans, also that the employees working in the unit are o.ble to get their job, public money so far invested In tha unit can be utilized and the loans which were advanced to the unit are repaid. But, if we look into the whoie petition and the papers, the petitioner company was never able to show that how the company wiii be able to start the production to a profitable extent if any financial assistance and concession are granted to the petitioner company. As per the figures given by respondents in the return that 1'he petitioner is a bc'. !-.—! ;M '^^.'\ Page7 of 10 debtor, not only the petitioner company, but the petitloner's othe.r sister concerns were also in debt and there were ourstanding ioars against them of more than Rs.94 lakhs which were not being repaid to the respondents. As fo.r cs R.B.I. 9uidelines are concerned, even in R.B.I. guidelines it has been mentioned that a unit may be regarded o.s potentialiy yiable if it would be in a position, after implementing a relief package spread over a period not exceeding five years from the commencemerit of the package from banks, financiai insti-rutions, <5oyt. {Centra!/State} and other concerned agencies, as may be necessari/, 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 [past] debts should not exceed seven years from the date of implementation of the package. Based on the norms specified above, it will be for the banks/financia! institu't'ions to decide whether a sick 551 unit is potentially viable or not. Viabilit^/ of a unit identified as sick, should be decided quickiy and made known to the unit and others concerned at the eariiest. The rehabilit'ation package should be fully implemented witiiin six months from the date the unit is declared as 'potentialiy viabie'/'viable'. While identifying ar;d implementing the rehabilitation package, banks/financial institutions are advised to do 'hoiding operation' for a period of six monl+is. This will ailow small-scale units to draw funds from the cash credit account at teast to the extent of their deposit of sale proceeds during the period of such 'holding operation. iut, as has been mentioned above, the petitioner has not been able to show any such rehabilitation plan which requires consideration by respondents for grant of rehabilitation package. Even concessions were already granted by the MPSI&C and one time settlement was granted to the petitioner company due to continuous loss for few years. Facts of the co.se show that since beginning the petitioner /~\ PageS of 10 Company never earned any profit, it started running into losses. Not only the petitioner Company but also its sister concerns were not repaying ioans in lakhs of rupees to the respondents which Is e'/ident from the return filed by the respc'ndents. It is aia'o commoi". knowledge that on account of growth of the heavy industries in the field of productiors of cement, mini cement plants couid not make c. mark and success in the field of production of the cement. During the course of arguments, question was put to lesrned counsel for the petitioner whether he is in a position to give a list of ar.y mini cement plant functioning with a profit, he was not able to point out c,ny cement plant. The industry of mini cement piant hos never been successful. Therefore, in view of the above, I am of the considered opinion that the petitioner has not been able to make c'ut a prima facie case that the petitioner company is entitled for consideration by respondents for the rehabilitation package. However, it is made clear that these observations have been made while considerinq tha-:' whether the petitioner has been able to rnake out o, case for direction to the respondents to consider the rehabiiitation package in order to give financial assistance to the petitioner compoaiy so as to put it on o. healthy track and to start production and business activities. It \s also made ciear that the observations made hereinaboye wili not disentitle the petitioner company from seeking concessions GS a sick industry as per R.B.I. guidelines while considerin9 outstanding arr.ount against the petitioner by the D.R.T.. 12.Now, corning to the question whether on account of wil+idrawlng ths wri-t- petition filed before the High Court of AAadhyc Prcdesh at Jabalpur and without seeking liber-ty to file the petition afresh, ths petitioner has disentitled himself from filing this writ petltion. During the course of.arguments, tearned counsei for the petitioner admitted that a writ petition with similar relief was filed by the petitioner compdny before the Hi9h Court of AAadhya Pradesh c.-t Page9 of 10 Jabalpur- and the same was withdrawn. Even the sgid order has not been placed on record. But, during the course of arguments, learned counsel for the petitioner submitted the said order of the Madhye Pradesh Hi9h Court for perusal of the Court. Perusal of the said order reveals that in the said order it was specifically mentioned that the petitioner is withdrawing the writ petitlon with liberty to roi^e the points before the D.R.T. Learned counsel for the petitioner argued that if the D.R.T. is not considering anything, in that ccse the petitioner is not debarred from filing this writ petition. It is al.so admitted position that so far D.R.T. has not given any decision and the matter is still pending. Looking to the aboye facts, I am of the opinion that when the petitioner preferred to withdraw the writ petition filed on the same facts regarding same issue before the High Court of Madhya Prodesh at Jabalpur with !ibert)' to moye to &.R.T. oiid accordingly, he had moyed the &.R.T., therefore, the petitioner is not entitled to file this writ petition again, particularly, without any decision and order of the Tribunal is not being questioned in this writ petition. For thls view I am supported by the judgment of the Hon'b!e Apex Court in the matter of Sarguja Transport' Servlee reported in AIR 1987 S )ex Court held that; in which the Hon oie "Whiie the withdrawal of a writ petitiors filed in High Court without permission to fi'e a 'fresh writ petition may not bar other remedies like a suit or a petition under Ar-ticie 32 of the Constitution since such withdrawal does not amount to res judicata, the remedy under Article 226 of the Constitution should be deemed to have been abandoned by the petitioner in respect of the cause of action relied on in the writ petition. PagelO of 10 K IS.The Hon'ble Apex Court in the matter of Union of India and another Versus 5. B. Vohra and others reported in(2004) 2 Suprsme Coyrl' Cases 150 held that: "The High Court should not ordinarily issue a writ of or in the nature of mandamus and ought to refer the matter back to the Centrai/State 6oyernment with suitable directions pointing out the irrelevant factors which are required to be exciuded in taking the decision and the reieyant factors which are required to be considered therefor. The statutory duties shou!d be allowed to be performed by the statutory authorities at the first instance." 14.In the light of above observations of the Hon'ble Apex Court, if we look into R.B.I. guidelines, in the R.B.I. guidelines also discretion as well as caution has been given to the banks and finaicial institutions to decide whether a sick 551 unit is potentially viable or not and in the return respondents haye mentioned tiiat the petitioner is a bad debtor and has no intention to repay the loans and debts due against the petitioner. l5.For the foregoing discussion, I am of the considered view that the petitioner has not been able to make out a ccse for issuance of a v<rit in the nature of mandomus and directions, as prayed for. The writ petition is, therefore, liable to be dismissed and the same is dismissed. There shall be no orders as to costs. -—_^,-, L.C. Bhadoo Judge 12-8-2005