ORDER:- This writ petition is filed for a writ of mandamus to set aside notice dated 26.9.2005 issued by respondent No.2, where under the respondents invoked the provisions of Section 29 of the State Financial Corporation Act, 1951 (for short, 'the 1951 Act') for recovery of Rs.35,79,228/from the petitioners.

2. Petitioner No.1 is a private limited company of which petitioner No.2, represented by two GP A Holders, namely, Salish Kumar Agarwal and Vimal Kumar Agarwal, is the Managing Director. The Andhra Pradesh Industrial Development Corporation Limited, respondent No.1 (for short, 'the Corporation') extended equity of Rs.2.75 lakhs and invested preference share capital of 0.75 lakhs in petitioner No.1 company It also sanctioned a term loan of Rs.3.50 lakhs. The amounts towards the equity and preference share capital were released during the years 1967-69 and a sum of Rs.3,30,733=59ps. towards term loan was released during the period from 19.4.1969 to 4.10.1971 (the respondents in the additional counter-affidavit stated that the averment in their counter-affidavit that the term loan was released in April, 1978 was a mistake). As per the terms governing the parties, the respondents are entitled to charge interest @ 9.5% per annum and in the event of default, they are entitled to charge interest @ 12% per annum.

3. It is the common case of the parties that the petitioners failed to make repayment of any part of the loan amount till the year 1992 and as on 31.8.1992 the total outstanding amount due to the respondent - Corporation was Rs.12.50 lakhs (approximately). In the year 1992 the petitioners came to the negotiating table with the respondents on which the latter extended One Time Settlement (OTS) Scheme to the petitioners and they accordingly arrived at an amount of Rs.6,16,867=60ps to be paid by the petitioners. The General Manager of the Corporation addressed letter dated 3.10.1992 to petitioner No.2, wherein it is informed that the total due of the loan was Rs.6,16,867=60ps and he was requested to pay immediately 50% of the said amount and the balance amount within three months thereafter. A perusal of the record reveals that the initial payment of Rs.3,08,433=80ps towards 50% of the OTS amount was made on 10.11.1992 and it is not in dispute that the petitioners failed to pay the balance 50% of the amount payable under the OTS scheme.

4. As the petitioners failed to clear the loan amount under the OTS Scheme, the Corporation addressed letter dated 23.1.2001 to the District Collector, Hyderabad, to initiate action for recovery of Rs.15,63,005=80ps found to be due as on 31.12.2001. The Tahsildar concerned issued demand notice dated 30.1.2003 to petitioner No.2 and on receipt of the said notice he addressed letter dated 29.1.2003, wherein he referred to his discussion held with the Tahsildar of the Corporation and stated that as far as he could remember, he never borrowed any amount from the Corporation at any time and that the matter being four decades old, he was unable to trace out any record and requested the Corporation to permit him to peruse the records and supply him copies of notice and the relevant documents. Later, in reply to the Corporation's letter dated 10.3.2004, petitioner No.2 addressed letter dated 5.8.2004 stating that he was enclosing demand draft for Rs.3,09,000/- representing the outstanding balance under the OTS Scheme. He made a request to revive the OTS package and close the term loan and other dues by treating the payment of said amount made in full and final settlement of the account of term loan and other dues to the Corporation. The demand draft for the said amount was enclosed, which was evidently encashed by the Corporation.

5. On 19.3.2005, a letter signed by one Mr. Amarnath was addressed to the Managing Director of the Corporation, wherein it is informed that petitioner No.2 was not keeping good health and that he asked him to represent on his behalf to consider his proposal for OTS at an early

Click Here to Read the rest of this document