M/S Pintoji Foods Pvt Ltd vs Punjab National Bank & Anr
2014 Latest Caselaw 4778 Del

$-7
*        IN THE HIGH COURT OF DELHI AT NEW DELHI

           +     LPA 467/2014 and CM No.11014/2014

%                       Date of decision : 24th September, 2014

       M/S PINTOJI FOODS PVT LTD            ..... Appellant
                      Through : Mr. K. Priyadarshi, Adv.

                          versus

       PUNJAB NATIONAL BANK & ANR          ... Respondents
                    Through : Mr. Sanjay Katyal and Mr.
                              S.S. Katyal, Advs. for R-1.

        CORAM:
        HON'BLE MS. JUSTICE GITA MITTAL
        HON'BLE MR. JUSTICE J.R. MIDHA

GITA MITTAL, J. (Oral)

1. The appellant before us had applied for financial assistance and facilities from the Punjab National Bank, respondent before us. Placing reliance on guidelines dated 1st November, 2012 issued by the Reserve Bank of India, the appellant had filed W.P.(C)No.2641/2013 complaining that the technical economic viability report of the appellant was not being examined by an appropriate authority. In that view of the matter, by an order dated 14th August, 2013 passed in W.P.(C)No.2641/2013, the learned Single Judge of this court has directed as follows:-

"Considering the guidelines dated 01.11.2012, issued by RBI, if any request is made by a Micro Small Enterprises for its rehabilitation and it is sought to

declare such unit as unviable on account of viability study conducted by the bank, such a declaration should have approval of next higher authority/present sanctioning authority for both micro and small units. Even before declaring a unit to be unviable, an opportunity is required to be given to the owner of the sick unit to presents his case before the next higher authority. The respondent No.1-Bank has not placed the request of the petitioner before the authority higher to the sanctioning authority, for decision in terms of the above-referred guidelines of the Reserve Bank of India. In fact, even the second Technical Economic Viability Report has not been supplied to the petitioner. In these circumstances, the writ petition is disposed of with a direction to respondent No. 1 to place the aforesaid report, along with all relevant documents before the next higher authority for appropriate decision. The said next higher authority shall give opportunity to the petitioner to present its case before him and then take an appropriate decision after considering inter alia the material produced by the petitioner in support of its case. The hearing shall be given to the petitioner within two weeks from today and an appropriate decision shall be taken within two weeks thereafter. ..."

2. The appellant assailed the views taken after a consideration afresh by the General Manager of the Punjab National Bank in the order dated 7th September, 2013. The relevant portion of this report (also extracted in the impugned order dated 20th January, 2014 of the learned Single Judge) reads thus:-

"16. In the detailed analysis, it has been observed that unit cannot survive only with trading activity,

residual life of machinery and technology is not adequate for significant time and finally financing such unit will be like financing new unit.

17. The conclusion given in the report is that neither the directors are competent nor they are having enough margin or funds to run the unit and so the unit is neither technically feasible nor economically viable.

18. An opportunity has already been given to the company before me on date-26.08.2013, to put-up their stand on the matter as bank had earlier also not found the unit technically feasible and economically viable. Sh. A.N. Jha, Director placed his view point before me requesting for rehabilitation of company.

19. The account became NPA on 30.06.2010 with total ledger outstanding of Rs.68.60 lakhs. Recovery application was filed by Bank before DRT on 24.05.2011 for Rs.73.56 lakhs.

20. I have considered all the facts before me and submissions of Borrower Company, I find that in the absence of margin/funds from the promoter, negative net worth due to continuous/accumulated losses, residual life of technology and machinery, diversion of funds reported in the previous dealings, bank cannot take any financial risk by inducing further funds in the venture where it is apparent that return of funds is highly doubtful because of inherent deficiencies on various parameters.

21. I do not find any new favourable fact in support the rehabilitation request of unit contrary to which were not already there when the account became bad and ultimate NPA forcing bank to initiate recovery action.

22. The Key financial parameters also do not support the hope of revival.

I am therefore of the final view that rehabilitation of M/s Pintojee Foods (P) Ltd is not feasible and possible."

(Emphasis supplied)

3. The appellant before us challenged this finding by way of W.P.(C)No.380/2014 which was disposed of by the impugned order dated 20th January, 2014. The order also records the presence of Mr. A.N. Jha, Director of appellant, who appeared in person. It is noteworthy that on the 20th of January 2014, Mr. A.N. Jha, had stated that he was willing to deposit margin money being an amount of Rs.3,50,000/- and had prayed for directions to the Punjab National Bank to invest more money in his project so that it could be revived. After examining the techno economic viability report and the order dated 7th September, 2013, the learned Single Judge had taken a view that it could not ask the Punjab National Bank to invest more public money in the appellant's project which was economically and technically not viable and had declined to interfere therein. This order was accepted by the appellant and it was submitted by Mr. A.N. Jha, Director of the appellant that the appellant may be given liberty to apply for a one time settlement which liberty was granted to him. The writ petition was consequently disposed of.

4. The appellant has assailed the order dated 20 th January, 2014 on the ground that by the impugned order, the learned Single Judge has in fact directed the closure of the business of the appellant even though the appellant is of the view that his project is technically and economically viable.

5. We are informed by Mr. Sanjay Katyal, learned counsel appearing for the respondents that the proposal of the appellant was examined three times by the respondents. Three techno economic viability reports have resulted which have come to the same conclusion that it is neither technically nor financially feasible to make further financial sacrifices to rehabilitate the petitioner.

6. We are unable to agree with the petitioner inasmuch as the respondents, who are technical as well as financial experts in the matter, have examined this matter thrice over and have taken a considered view which they have placed before the learned Single Judge and stands accepted by him. Mr. A.N. Jha, Director of the appellant who was present in court, also endorsed the view taken by the respondent, Bank which has been noted in the order dated 20th January, 2014.

7. It is submitted by learned counsel for the appellant that the matter with regard to the economic and technical viability of the appellant was not placed before the appropriate authority. Given the stand of Shri A.N. Jha, Director of the appellant company before the learned Single Judge on 20th August, 2014, we are of the view that even if this position was correct, the appellant abandoned such objection given the statement made by Mr. A.N. Jha for leave to submit the one time settlement instead of the rehabilitation/revivals proposal.

8. We may note that Mr. Sanjay Katyal, learned counsel appearing for the respondents staunchly disputes this position and submits that the techno economic viability of the project of the

appellant has been examined by the General Manager (Field) and the order dated 7th September, 2013 was passed in terms of the order dated 14th August, 2013 of the learned Single Judge of this court. It is submitted that the General Manager (Field) is higher in hierarchy to the AGM (Credit) who was the sanctioning authority of the financial facilities to the appellant.

9. We therefore, find no substance in the objections of the appellant. In any case, the learned Single Judge has rightly held that this court cannot direct the respondents to invest public money in a project which has been found to be economically and technically not viable.

10. The instant appeal is hopelessly misconceived and the appellant deserved to be burdened with heavy costs. We have, however, refrained from imposing costs. We find no merit in this appeal and application which are hereby dismissed.

GITA MITTAL, J

J.R. MIDHA, J SEPTEMBER 24, 2014 aj