The central legal point established is the importance of production status and outstanding dues in determining eligibility for the O.T.S. Scheme benefit.

Nagendra Rai, J.

1. The Bihar State Financial Corporation (hereinafter referred to as the Corporation) and its officers are appellants against the judgment dated 19.5.2000 passed by the learned Single Judge, by which he has quashed the order, dated 1.4.1995 issued by the Assistant General Manager (Z-VI) of the appellant-Corporation, rejecting the prayer of the respondent-Firm to give benefit of One Time Settlement Scheme (for short O.T.S. Scheme) dated 24.5.1995 issued by the appellant-Corporation as well as the notice asking the respondent-Firm to pay 25% of balance outstanding dues within one week, otherwise, assets of it would be sold. The learned Single Judge also directed the appellant to consider the case of O.T.S. on the basis of dues as it stood against the respondent-Firm on 1.4.1995, on which date the order of rejecting its claim under O.T.S. was passed.

2. The facts necessary for disposal of the present appeal are that one Arvind Kumar Sinha started a firm in the name and style of M/s. A.K. Films, situated in Boring Canal Road, Patna, in the year 1974 with a view to produce film and hire shooting equipments pertaining to Film Production in Patna. The said unit was an industrial unit and was also granted S.S.I. registration certificate. The respondent-Firm approached the appellant-Corporation for financial assistance and the latter accepted its proposal and approved the scheme for developing facilities for production/processing of motion pictures on hire to producers of films such as are exhibited through licensed Cinema Houses. The Corporation formulated a project of 5.42 lacs and sanctioned a term loan of Rupees 3.86 lacs on 17.10.1978 with stipulation that the remaining amount of Rupees 1.56 lacs or more was to be invested by the respondent-Film itself. The appellant-Corporation sanctioned the aforesaid amount under technical entrepreneur scheme without asking for any collateral security. Out of the said amount, a sum of Rs. 2.76 lacs was issued by cheque for establishing a letter of credit in favour of German Suppliers of Camera, lenses and tape-recorder on 30.10.1978 and the remaining amount of Rs. 1.10 lacs was released to the Custom authorities. Bombay, for payment of custom duty. The amount released for payment of custom duty was not sufficient to pay entire custom duty and the respondent-Firm approached for further loan with the appellant-Corporation and a loan of Rs. 1.14 lacs was further sanctioned subject to providing security by respondent No. 2 Lal Mani Devi, mother of aforesaid Arvind Kumar Sinha, by joining as a partner of the propriety-film and executing a mortgaged deed in favour of the respondent-Corporation by offering 13 Kathas of land as collateral security.

3. According to the respondent-Corporation, as the until was facing serious crisis and was virtually becoming sick and was suffering from various maladies, theManaging Partner of the respondent-Film, namely, Arvind Kumar Sinha approached one Ashok Kumar Singh, Proprietor of M/s. Swastik Films, Patna, and the latter agreed to purchase the imported equipments for a sum of Rs. 7.50 lacs and a memorandum to that effect was also signed between them. Said Arvind Kumar Sinha informed the appellant-Corporation that he has negotiated for sale of the firm with M/s. Swastik Films and he also gave an undertaking to pay balance due to the Corporation after adjusting the saleproceeds within a period of three years in 12 quarterly instalments. However, later on M/s Swastik Films backed out and the said agreement could not be finalised, thereafter, the respondent-Firm approached the Corporation for rehabilitation of the unit but the said prayer was also rejected as it was not permissible in law.

4. Thereafter, on 27.7.1993 the appellant-Corporation through a circular came out with a scheme to give relief to such units having not cleared of the dues. The said scheme was known as O.T.S. Scheme and its benefits were available to those units, whose outs