Point of Law: when the decision making process of the Bank is found to be not irregular or illegal or arbitrary in any form this Court is unable to exercise the discretion.

ORDER :

1. By way of this petition under Article 226 of the Constitution of India, the petitioner has prayed for the following reliefs :-

“7(a) quash and set the impugned letter and subsequent email at Annexure-A to this petition to the extent of restricting the petitioner’s withdrawals from its CC account resulting in stoppage of operations and direct the respondent Banks to allow usage of the CC limits forthwith ; and /or

(b) as an interim arrangement for a maximum period of 3 months, direct the Respondent Banks to accept the petitioner’s offer to surrender 10% of export collection made by the Company which would immediately reduce the CC limits till the strategic investor steps in; and/or ;

(c) pending the admission, hearing and final disposal of this petition, to stay implementation and operating of the impugned letter and email at Annexure-A to this petition;

(d) any other and further relief deemed just and proper be granted in the interest of justice;

(e) to provide for the costs of this petition.”

2. It is the case of the petitioner that the petitioner is an unlisted public Company incorporated under the provisions of the Companies Act, 1956 and is engaged in the production of sebacic acid which is manufacture from castor oil with a plant with an installed capacity of 10,000 MTPA with by-products such as 2-Octonal, Glycerine, Fatty Acids and Sodium Sulphate. The plant of the petitioner is the largest in the country and is ranked among the top ten in the world. Sebacic acid is a niche product and there is only one another company operating in India which has an installed capacity of 8,000 MTPA and rest all companies producing sebacic acid are based in China. The whole world depends only on India and China for manufacturing this product.

2.1. It is the case of the petitioner that primary raw material required for the production of the sebacic acid is castor oil and India produces 80-85% of the world’s castor oil of which Gujarat produces 70% and supplies to the rest of the world including China and castor oil is classified as a commodity and is purchased on a spot basis without any credit. The petitioner has asserted that certain other materials such as caustic soda, sulphuric acid and catalysts are also required as a part of the process for the production of sebacic acid and the demand for sebacic acid across the world is 1,00,000 MTPA of which 50% is consumed in China and balance is supplied to the world. The petitioner caters to the markets in North America, EU and Japan and has a marquee clientele base which regularly buys the product from the petitioner. Once the clients start using this product, it is difficult to change their manufacturing process and hence it is critical source of raw material even for them as well.

2.2. The petitioner has further asserted in the petition on oath that with the capacity outlay of Rs.65.20 crores, of which respondent no. 1 – State Bank of India (Rs.37 crores) and respondent no.2 i.e. Central Bank of India (6.20 crores) extended term loans totalling to Rs.43.20 during the year 2010-11. In addition to this the respondent – Banks have also granted cash credit facilities to the tune of Rs.28 crores and due to project delays, the debt was restructured in the year 2013 and the term loans were rescheduled and the total term loan debts outstanding as on May, 2013 of Rs.42.88 crores were to be repaid on March, 2019. It is imperative to point out even at this stage restructuring stage TEV report conducted on the behest of the respondents clearly showed that the petitioner’s company unit was technically feasible and economically viable and which is also case till date. After analyzing to this consortium approval letter dated 10.05.2013 came to be issued restructuring the petitioner’s debt.

2.3. During the passage of this period, the working capital facilities (CC Limits) have also been reduced from the earlier Rs.28 crores and currently stand as below :

Bank Sanctioned Limit (in crs.) O/s as on 19/4/21 (