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2015 Supreme(Mad) 483
HIGH COURT OF JUDICATURE AT MADRAS
SATISH K. AGNIHOTRI & M. VENUGOPAL, JJ.
M/s. Unicare Pharma Ltd. - Appellant
Versus
The Chairman & Managing Director, Syndicate Bank, Corporate Office, Gandhi Nagar & Others - Respondents
W.P. No. 29608 of 2014 & M.P. No. 1 of 2014
Decided On : 23-01-2015
For the Petitioner:S. Anuradha Balaji, Advocate.
For the Respondents:A.R. Prakash, Advocate.
The main legal point established in the judgment is the non-maintainability of the writ petition due to the pendency of the O.A. filed by the Respondent bank, emphasizing the need for the Petitioner to pursue settlement of the due amount in the pending O.A.
Headnote:
SARFAESI Act - Rehabilitation and Restructuring - 13(2), 13(4) - The court discussed the provisions of the SARFAESI Act, particularly sections 13(2) and 13(4), and their application in the context of the Petitioner's request for rehabilitation and restructuring of credit limits. The court highlighted the non-application of mind by the Second Respondent in rejecting the restructuring proposal and the potential impact on the Petitioner's business and employees.
Fact of the Case:
The Petitioner, a company in the dairy farming sector, sought rehabilitation and restructuring of credit facilities from the Respondents. The Respondents, a bank, had initiated SARFAESI proceedings against the Petitioner, leading to the filing of a writ petition by the Petitioner.
Finding of the Court:
The court found that the writ petition filed by the Petitioner was not maintainable in law due to the pendency of an Original Application (O.A.) filed by the Respondent bank before the Debts Recovery Tribunal. The court dismissed the writ petition, directing the Petitioner to make a request in the pending O.A. for settling the due amount.
Issues: The main issue was the maintainability of the writ petition filed by the Petitioner in light of the pending O.A. filed by the Respondent bank.
Ratio Decidendi: The court's decision was based on the pendency of the O.A. filed by the Respondent bank, which rendered the writ petition not maintainable. The court directed the Petitioner to pursue the settlement of the due amount in the pending O.A.
Final Decision: The writ petition was dismissed, and the parties were left to bear their own costs. The court directed the Debts Recovery Tribunal to consider the Petitioner's request for settling the due amount in the pending O.A. and to dispose of the Original Application in accordance with law.
M. Venugopal, J.
1. The Petitioner has filed the instant Writ Petition before this Court in calling for the records of the Second Respondent in the impugned communication dated 30.10.2014 and to quash the same. Further, it has sought for passing of a consequential order in directing the Respondents to consider its restructuring proposal dated 19.09.2014, granting restructuring and rehabilitation of the credit facilities enjoyed by it and forbearing the Respondents from in any manner proceeding against the securities under the provisions of the SARFAESI Act pending consideration of such restructuring and rehabilitation package as contained in its request.
2. The long and germane facts of the Writ Petition:-
a) According to the Petitioner/Company, it was promoted by the first generation entrepreneurs with the main object of establishing a state of art facility for Milk Processing/Sasening Unit (Agri-priority sector) at Devadanapatti Panchayat, Theni District. The Company has been authorised capital of Rs.2 Crores and the same is fully paid up. Although, the Petitioner/Company is a limited Company, it is held closely only with 10 share holders. As a matter of fact, the Petitioner/Company commenced its business and as on date, extended to a turnover of Rs.22.5 Crores with unit at Devadanapatti, Theni for dairy farming. There are 120 families and people in large numbers are directly or indirectly depend on the business of the Petitioner/Company.
b) It is the case of the Petitioner/Company that it started its business with a turnover of Rs.15 lakhs and today, it has a turnover of Rs.21,49,00,000/- (say Rs.21.5 Crores). In fact, the Petitioner/Company has a potential to achieve a turnover of Rs.100 crores. The Petitioner/Company is carrying on its business since 1990 and was originally banking with Vijaya Bank, Saidapet Branch, enjoying a credit limit of Rs. 84 lakhs. In June 2009, the Petitioner/Company approached the Respondents/Corporate Finance Branch, Alwarpet, for a Letter of Credit (LC) limit for the purpose of import of butter from Australia. It has deposited a sum of Rs.1.3 Crores with the said bank to enable them to issue a letter of credit for the said import of butter from Australia. The Petitioner/Company had such source of funds at their disposal. Subsequently, the Petitioner/Company closed the credit of limit being enjoyed with Vijaya Bank out of their own accrued funds. With a growth of potential being established, the Respondents came forward to sanction a credit of letter of Rs.1.3 Crores to the Petitioner on 08.09.2009. Indeed, the said limit was availed by the Petitioner by executing necessary documents and creation of security and the facility was primarily utilised to carry on the business in Kunrathur unit near Chennai. During the Financial Year 2009-2010, the Petitioner/Company achieved a turnover of Rs.9.80 crores from their business of Ghee export, Protein Powder and Milk trading. With the said turnover and a prospective proposal, the Petitioner approached the Respondents in September 2010 seeking for a Working Capital limit of Rs.2 Crores being 20% of their turnover. The then existing limits is also due for renewal and the Petitioner has been pursuing the Respondents for renewal of the limits. However, the Respondents have not come forward to sanction the limits. During the year 2010-2011, the Petitioner achieved an increased turnover of Rs.11.10 Crores which made them eligible for Rs.2.2 crores for Working Capital limit to sustain their business. Still the Respondents did not even considered their annual renewal with increased limit to the Petitioner.
c) The Petitioner proposed an establishment of a new unit at Theni, primarily for milk processing and other allied activities in production of Ghee, Butter and Protein powder. The project report of the new unit was prepared with an outlay of Rs.6 Crores to be utilized only for construction, purchase of machinery etc. The Petitioner approached the Responden
