Sujana Industries Ltd. vs Indian Renewable Development ...
2004 Latest Caselaw 244 Del

JUDGMENT

Manmohan Sarin, J.

1. Rule.

With the consent of the parties the writ petition is taken up for hearing and disposal.

2. Petitioner by this writ petition seeks a writ and direction to the respondent not to issue letters to nationalized banks or petitioner's bankers labelling the petitioner a willful defaulter. Petitioner also seeks quashing of the letter dated 20.1.2003, declaring petitioner to be a willful defaulter.

3. Notice in the petition was issued on 19.09.2003. Counter affidavit was filed on 20.10.2003. Respondent raised objection to the maintainability of the writ petition. The petition was directed to be listed for arguments on the question of maintainability. In the meanwhile, time was given to the petitioner to file rejoinder, if any. Rejoinder from the petitioner is not on record despite opportunities given. Learned counsel for the petitioner in any case has been given the liberty to raise any legal plea or submission that it wanted to urge.

4. Petitioner had approached the respondent for grant of loan for setting up its wind-power project. Respondent had sanctioned the loan amounting to Rs.590.40 lakhs for setting up of 2 MW wind firm project at Singanamalla Mandal of Ananthapur District in Andhra Pradesh. The amount of Rs.295.20 lakhs was disbursed to the petitioner-Company by way of loan on 30.3.1999. It is respondent's case that despite the loan of Rs.295.20 lakhs having been disbursed, petitioner defaulted in making re-payment. Not only this even the project has not been set up. Petitioner's requests for reschedulement of the project implementation dates were duly considered and granted. Project completion dates based on petitioner's assurances and request were extended from 31.3.1999 to 31.5.2000. Again time was sought to give commissioning plans on or before 4.10.2000. Further time was granted up to 31.3.2001. As petitioner failed to set up the project and was in default, loan was recalled vide notice dated 25.4.2001.

5. I have heard learned counsel for the petitioner in support of the petition. Learned counsel submits that petitioner had commenced work in all earnestness for setting up the wind-energy project on the steep hills at Singanamalla Mandal of Ananthapur District in Andhra Pradesh. In view of the peculiar nature of the project, the same could be set up only at specific locations. The present project was at a steep hill with a view to facilitate functioning of the wind mills. Learned counsel for the petitioner submits that it was necessary to lay out the roads. However, the present site happened to be within the control and dominance of the Peoples War Group naxalites, which caused obstruction in the making of the roads. He submits that it was on account of these factors, which were totally beyond the control of the petitioner, that the project was delayed. Forty acres of land were acquired and the site has been certified by the experts, as an ideal site for wind-energy project. Petitioner had got the survey done at considerable cost. The survey for laying down of roads was also got done. Petitioner also placed orders for purchase of equipment and wind-energy turbines. As noted earlier, there were obstructions to the laying of the roads and petitioner was subjected to the wrath of Peoples War Group naxalites. Once under the threat, it became almost impossible to implement the project. Delays and absence of progress in implementation of project resulted in attrition of the loan that was sanctioned.

6. Learned counsel for the petitioner further submits that the allegations of the respondent of deliberate non-payment despite being possessed with sufficient cash flow is factually wrong. It is also not a case where the respondents have diverted the funds for other projects. In these circumstances, learned counsel for the petitioner submits that when the completion of project could not be carried out on account of reasons beyond the control of the petitioner and considering the difficulties on account of the threat from groups of naxalites, the delay in making the repayment of the loan deserves to be condoned and reschedule be granted to the petitioner. Non-payment of loans has arisen out of factors beyond the control of the petitioner and the petitioner ought not to be declared a willful defaulter.

7. Learned counsel for the respondent has firstly submitted that the loan in question was disbursed as far back as 30.3.1999. Although a period of more than three years has elapsed and despite the disbursement of loans of Rs.295.20 lakhs, the project is nowhere in sight. Learned counsel for the respondent submits that no equipment has been received at the site. It is only claimed that orders have been placed. As per the petitioner's own admissions, the laying of roads at the site could not be completed on account of obstructions and objections by the PWG group of naxalite.

8. The net position which emerges is that even the infrastructure for the project has not been completed in terms of laying of roads, etc. As of now, there is no equipment at site despite, the claim of amount having been disbursed for purchase of plant and machinery. Respondent's Committee for identification of willful defaulters, has reviewed the petitioner's case in detail. It reached the conclusion that this was a case where funds have been diverted to purposes other than for which they were intended, inasmuch as the funds granted for purchase of plants and machinery are said to have been utilized, yet no plant and machineries have been received at site in pursuant to these alleged purchases.

9. Learned counsel however laid emphasis on the point that as per the amended definition of "willful defaulter" in terms of RBI Circular dated 30th May, 2002, revised criteria is set out as under :-

"A willful default would be deemed to have occurred if any of the following event is noted:-

(a) the unit has defaulted in meeting its payment/repayment obligations to the lender even when it has the capacity to honour the said obligations.

(b) The unit has defaulted in meeting its payment / repayment obligations to the lender and has not utilized the finance from the lender for the specific purposes for which finance was availed of but has diverted the funds for other purposes.

(c) The unit has defaulted in meeting its payment / repayment obligations to the lender and has siphoned off the funds so that the funds have not been utilized for the specific purpose for which finance was availed of, nor are the funds available with the unit in the form of other assets.

10. Learned counsel submits that petitioner's case fairly falls within the criteria laid down in sub-paras 'b' and 'c'. I find merit in this submission. Learned counsel for the petitioner assails the findings of the Committee as being a non-speaking one and without reasons being given. He submits that only conclusions have been given. In my view, considering the nature of the controversy between the parties, the admitted facts i.e. the receipt of loans, non-completion of infrastructure and laying of roads, non-receipt of any equipment at site, despite claim of orders having been placed for purchase of equipment, inferences as drawn by Committee were justified. There is admitted default as no payment in terms of reschedule as granted by the Committee has been made. Thus the case would fall within default being made in payment and discharge of meeting of other obligations. It also shows that the non availability of the equipment despite the disbursement of the amount for purchase of equipment is suggestive of non-utilization of the funds for the purpose for which they were given.

11. In these circumstances, the decision taken by the respondent of declaring the petitioner a "willful defaulter" can neither be termed as untenable nor can the view taken be termed as a non-plausible view. The decision making process is also not flawed by denial of any opportunity. Petitioner had been given several opportunities, loans had been rescheduled, project deadlines had been extended. In these circumstances, I do not find a case is made out for interference in the exercise of writ jurisdiction. Learned counsel for the respondent submits that in case the petitioner finds it feasible, he may be given the liberty to approach the respondent with a proposal for settlement. Learned counsel for the respondent states that any concrete proposal given, shall be considered on its merits, without prejudice to the rights of the parties and decision of this petition.

In view of the foregoing decision, the writ petition is dismissed.