The main legal principle established in the judgment is that the classification of individuals under a scheme must have a rational nexus with the object sought to be achieved and must not result in unjustified discrimination.

1. Heard counsel for the parties.

2. All these cases raise common issue and have been decided by learned Single Judge by a common order 12-2-2007. We propose to do the same.

2A. Shorn of all elaborations, the key issue raised in these appeals is about the classification made in the scheme framed by the appellant Corporation established under the State Financial Corporation Act, 1951 (hereinafter referred to as the Act) for the State of Bihar. The scheme is known as BSFC OTS (One Time Settlement) SCHEME. The scheme is meant for inviting willing applicants who are debtors defaulters of the Corporation for one time settlement under the terms and conditions of the Scheme. For the purpose of scheme the original promoters of the Unit in default have been classified in two categories (i) those defaulter promoters against whom no action under Section 29 of the Act has been taken by the Corporation for taking over the management or possession or both of industrial concerns with a right to transfer by way of lease or sale and realize the property pledged, mortgaged, hypothecated or assigned to the Financial Corporation as well those industrial concerns against which action has been taken under Section 29 of the Act, but no attempt for transfer of such assets of the industrial unit has been made by the Corporation are classified as one Class and (ii) those industrial unit against whom action under Section 29 of the Act has been taken and an abortive attempt has been made to transfer the assets of such unit, in the control and management of the Corporation, as distinct class for more onerous treatment.

3. As per the Scheme originally framed the former class of promoters were only entertained under the scheme for One Time Settlement but the latter was totally kept out. However, the scheme was modified and the latter class was also entertained in the scheme but on condition that in addition to amount payable by defaulter promoter under terms and condition of the OTS Scheme, the latter class of defaulter promoters also pay the retention money as per the aborted attempt to transfer these properties to those buyers who had come at the auction but failed to purchase such assets, and no transfer of assets took place.

4. Initially the proviso as originally inserted in Clause (1) was challenged. But during the pendency of the writ application the original provision was amended as explained about. We shall presently notice the texture of the scheme excluding the second category of promoters from entering the OTS Scheme.

5. The contention of the respondents petitioners had been that this classification of the promoters in two classes is without any reason and such classification having no rational nexus with the object sought to be achieved for introducing one time settlement scheme (OTS), is violative of Article 14 of the Constitution.

6. The learned Single Judge has accepted the contention of the petitioners respondents and has quashed the relevant provision of the scheme requiring defaulting promoters, where attempt to transfer their assets by the Corporation, have failed are required to pay the. retention money in addition to money payable under the settlement scheme.

7. Before us, there is no dispute that all the petitioners respondents have either deposited the settlement amount required to be paid under the scheme in full or have made the initial deposit for inviting consideration of their OTS application but due to aforesaid controversy the balance amount remained outstanding. Some of them, it is stated, have also paid retention money.

8. The object of the one time scheme is stated to be to reduce the old Non Performing Assets (NPA) accounts of the Corporation and enhance recovery from them. The Board has approved one time settlement scheme for settlement with the loanee concerns. Thus the object of scheme is to reduce Non Performing Assets accounts by making recoveries from existed debtors whether promoters or transferee of assets,