In order to call a decision as a policy decision, it must be applicable to a wider section of people and not in relation to a single individual or a unit.

1. These two writ petitions are disposed of by a common order in view of the common issue involved in them.

W.P.No.17435 of 2008:

2. The petitioner is a company incorporated under the provisions of Companies Act, 1956 and is a small scale industry carrying on the business of milling and manufacturing of parboiled rice and is situated in Nellore District. It applied to the second respondent in June 1998 seeking financial assistance by way of term loan of Rs.50.25 lakhs for setting up of a 2T/HR capacity parboiled rice mill unit in their existing land and buildings situated at Survey Nos.63 to 66, Panchedu Village, B.R. Palem Mandal, Nellore District. The first respondent sanctioned a loan of Rs.50.25 lakhs on 08.08.1998 for the purpose of plant and machinery (Rs.44.10 lakhs), contingencies @ 10% (Rs.4.40 lakhs), erection (Rs.0.55 lakhs) and pre-operative expenses (Rs.1.20 lakhs). The tenure of the loan was five years and the amount has to be paid in 17 quarterly instalments commencing after one year from the date of disbursement of any part of the loan. The said term loan was secured by way of equitable mortgage of land and buildings and hypothecation of plant and machinery, vehicles, miscellaneous assets, existing and proposed in scheme and all future acquisitions of fixed assets in nature.

3. The petitioner company commenced its production in the month of February, 2001, but it became sick in the year 2002 and was unable to fulfill its obligation of repaying quarterly instalments and interest to the second respondent. Even though the petitioner made a request for rescheduling the loan, the petitioner company was seized on 05.03.2004. In those circumstances, the petitioner made several representations to the Government and the Commissioner for Industrial Promotion, Industries and Commerce Department. The Commissioner issued a letter on 18.05.2004 directing the first respondent to consider the application for rescheduling the loan of the petitioner. The petitioner again represented to the first respondent and the first respondent in response to the request of the petitioner, rescheduled the loan on 25.07.2007 directing the petitioner to pay the principal outstanding amount of Rs.47,95,995/- in 14 quarterly instalments, commencing from 23.03.2008 and the outstanding interest amount of Rs.65,68,212/- in 2 years in 22 monthly instalments at the rates prescribed therein, but the seizure of the unit was not lifted.

4. The petitioner submitted several representations to the various authorities for lifting seizure of the company and the first respondent invoked its powers under Section 29 of the State Financial Corporations Act, 1951 (for short, SFC Act) and published a notice inviting tenders for the sale of the petitioner’s unit on 14.03.2008. On 10.06.2008, the petitioner’s company was sold in favour of the third respondent under a registered sale deed bearing No.1654/2008. Challenging the same, the present writ petition was filed.

5. Respondents 1 and 2 filed a counter-affidavit stating that the term loan of Rs.50.25 lakhs was sanctioned in favour of the petitioner and the petitioner availed an amount of Rs.48.08 lakhs during 21.06.1999 to 31.01.2002 repayable in 14 instalments. The petitioner company failed to implement the project within the stipulated time and thereby caused inordinate delay. The petitioner also failed to make arrangements for obtaining working capital well in time by 31.10.2002. The petitioner company fell in arrears for an amount of Rs.37.34 lakhs and became a chronic defaulter. In those circumstances, the second respondent was constrained to initiate proceedings under Section 29 of the SFC Act for sale of hypothecated property and consequently a recall-cum-sale notice was issued on 02.12.2002 providing 15 days time for clearing the arrears of instalments. When the petitioner failed to comply with the said notice, the respondents 1 and 2 were constrained to seize the unit on 21.01.2003. After seizu