CWP No.22146 of 2010 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CWP No.22146 of 2010 Date of decision: 04.11.2011 M/s Vipan Cottons Pvt. Ltd. ….Petitioner Vs. State of Punjab and others ….Respondents CORAM: HON’BLE MR.JUSTICE HEMANT GUPTA HON’BLE MR.JUSTICE G.S.SANDHAWALIA Present: Mr.Anand Chhibbar, Advocate for the petitioner, Mr.A.P.S.Mann, Addl.A.G., Punjab, Mr.G.S.Gill, Advocate, for respondents No.2 & 3. HEMANT GUPTA J. (ORAL) The Petitioner availed loan from the Punjab Financial Corporation, Abohar, District Ferozepur, established under the State Financial Corporation Act, 1951 (for short, ‘The Act’). The petitioner took the loan in the year 1994 from the Corporation. It is the case of the Petitioner that the loan amount was being re-paid till the year 1998. But the Petitioner suffered heavy financial losses in the year 1999 and despite its best efforts; the company could not come out from the losses. In view of the defaults committed by the Petitioner, the physical possession of the assets of the company was taken over by the Corporation on 14.02.2000 in exercise of the powers conferred under Section 29 of the Act. It was on 10.01.2007, the assets of the Petitioner were put to sale and a sum of Rs.61,00,000/- realized from the sale of the CWP No.22146 of 2010 2 assets. At that time, the principal amount outstanding in the books of pay of the Financial Corporation was Rs.44,36,970/- and the interest amount of Rs.1,78,50,917.00. Both the amounts were shown separately in the accounts of the Corporation. After adjusting the principal amount of Rs.44,36,970/-, the balance amount was transferred to the interest account of the Petitioner on 22.02.2007. Thereafter, the outstanding interest liability was reflected as Rs.1,61,87,887/-. The grievance of the Petitioner is that the Corporation has come out with a One Time Settlement Scheme (Annexure P2 for short “The Scheme”) on 02.03.2009. As per the said Scheme, where the assets have been acquired and sold by the Corporation, the amount payable in terms of the Scheme is outstanding principal amount plus expenses plus 10% of the interest outstanding “as on the last date of sale”. It is the case of the Petitioner that on the date of sale, i.e., on 10.01.2007, the amount of interest reflected in the account of the Petitioner was Rs.1,78,50,917/-. Therefore, it is the 10% of the said amount of interest which is payable by the Petitioner, which the Petitioner is ready to pay. In reply, respondents have stated that in terms of the Scheme, the amount payable by the Petitioner would be Rs.17,30,203/- (as on 22.2.2007) plus expenses if any. The Petitioner was also required to make a payment of Rs.2,61,000/- being 15% as up-front money for the consideration of one time settlement proposal. The relevant clause from the Scheme Annexure R-2/4 reads as under:- “Loans where Outstanding principal plus Properties/assets expenses plust 10% of Acquired and sold interest outstanding as on by PFC the last date of sale. In no case, the OTS amount will be less than the outstanding principal plus expenses.” CWP No.22146 of 2010 3 We have heard learned counsel for the parties and find that the interpretation of the Scheme by the Corporation is not tenable. The property was put to sale on 10.01.2007. It is the said date which is relevant to determine the interest component of the Scheme. On the said date, the interest was Rs.1,78,50,917/-. In terms of the policy, 10% of the interest outstanding as on the last date of sale is required to be paid. Thus an amount of Rs.17,85,091.70 would be payable by the Petitioner. However, the Corporation adjusted Rs.16,63,030.00 in the interest account of the Petitioner on 22.2.2007. The said amount was in excess from the sale proceeds after adjusting the principal outstanding. Such amount has been transferred after sale, though the amount due on the date of sale is required to be taken into consideration. The amount of Rs.16,63,030/- in terms of the scheme has to be adjusted towards 10% of the total interest outstanding against the Petitioner. After adjusting the said amount towards interest, the balance amount payable by the Petitioner would be Rs.1,22,061/-. It is the said amount, which is to be deposited by the Petitioner under the policy framed by the Corporation. The strange interpretation adopted by the Corporation is an attempt to deny benefit of the scheme framed for settlement with the borrowers. The relevant date is date of sale, whereas the corporation has adjusted the sale proceeds on 22.2.2007 in the interest account i.e. after the date of sale. In view of the said fact, we allow the present writ petition and direct the respondent-Corporation to accept Rs.1,22,061/- in full and final adjustment of the amounts due from the Petitioner. The Petitioner is granted a month’s time to deposit the said amount. On such deposit, the CWP No.22146 of 2010 4 Corporation shall give no due certificate and release title deeds, if any, with the Corporation. (HEMANT GUPTA) JUDGE (G.S.SANDHAWALIA) JUDGE 04.11.2011 Sailesh/vimal