Laxminarayana Tile Works vs Karnataka State Financial Corporation and another

M.P. Chandrakantharaj Urs, J.—The petitioner, Laxminarayana Tile Works, is proprietary concern. This writ petition is presented by one of its partners seeking an order of this court directing the first respondent, the Karnataka State Financial Corporation, to consider the proposal of the petitioner and to treat the petitioner''s industry as sick unit with reference to the repayment of the loan extended by the respondent to the petitioner-firm.

That certain sums borrowed have remained unpaid together with interest thereon is not disputed. The apprehension of the petitioner is that the Karnataka State Financial Corporation is likely to take action u/s 29 of the State Financial Corporation is likely to take action u/s 29 of the State Financial Corporation Act, 1951 (hereinafter referred to as "the Act"). If the law empowers the respondent-financial Corporation to take action u/s 29 of the Act in respect of defaulting manufacturers-debtors this court cannot come to the aid of such defaulters unless it is demonstrable that the action taken or proposed to be taken is not permitted under the Act.

The plea this court is that the petitioner is in a position to repay the same if certain things are allowed to take place such as realisation of his outstanding bills from its customers as well as subsidy available to the petitioner as evidenced by annexure-J. They are matters which are within the exclusive power and jurisdiction of the financial Corporation to consider and accept or reject. This court cannot compel the financial corporation to accept the proposal of their debtors merely because the debtors come to this court.

In the course of normal business activity, liabilities are incurred by the petitioner-firm and the like, This court will not interfere to protect their interests unless some illegality is pointed out in the actions of the respondent- corporation. In this case, no illegality is pointed out and, therefore this court must reject the petition as ill-conceived.

However, this court must also observe that it has no power to give a direction to consider the petitioner''s unit as a sick unit. That power is not vested in the respondent-financial corporation. That power is vested in the state Government under separate enactment and the petitioner must move the state Government for such relief. If the State Government acts under the provisions of the sick Industries Undertakings Act, the financial corporation will be bound by the action taken by the Government.

In that view of the matter, this writ petition is rejected with the observation that any action taken by the respondent- corporation will be in accordance with law and not contrary thereto.