Siva Cotton Mills (INDIA) PVT. LTD. vs. The Principal Secretary

Facts

The petitioner, Siva Cotton Mills (India) Private Limited, had borrowed a term loan of Rs. 250 Lakhs from the respondent, State Industries Promotion Corporation of Tamil Nadu Limited (SIPCOT), in 1996. Due to financial difficulties, the company approached the Board for Industrial and Financial Reconstruction (BIFR). SIPCOT approved an One Time Settlement (OTS) Scheme on 10.12.2012, requiring the petitioner to pay Rs. 440.10 Lakhs. The petitioner contended that the interest charged was contrary to an earlier order (O.O.No.7 of 2005) and requested a revised calculation. SIPCOT rejected this request, leading to a previous writ petition (W.P.(MD)No.1429 of 2013). This Court, by order dated 29.10.2021, directed the petitioner to deposit Rs. 50 Lakhs and processing fees, with the balance to be paid within 60 days thereafter. The petitioner failed to comply and sought an extension. During this period, SIPCOT passed the impugned order dated 18.04.2022, cancelling the OTS offer dated 06.01.2022. The current writ petition challenges this cancellation.

Held

The Court noted that the petitioner had expressed difficulties in complying with the previous conditional order. Considering these difficulties and an undertaking provided by the petitioner, the Court directed the petitioner to pay Rs. 1,00,00,000/- within 15 days and the balance Rs. 1,28,07,000/- within one month thereafter. The Court also directed the respondent to ascertain if any incidental charges were due. If incidental charges were found, the respondent was to communicate this to the petitioner within three weeks and collect them. Upon collection of any incidental charges, the respondent was to hand over the original documents to the petitioner within four weeks. The Court disposed of the writ petition with these directions, effectively allowing the petitioner to proceed with the settlement under the revised payment schedule and resolving the issue of incidental charges.

Key Issues

1. Whether the respondent acted within its rights in cancelling the One Time Settlement (OTS) offer dated 06.01.2022, given the petitioner's inability to comply with the previous Court order dated 29.10.2021 within the stipulated timelines. Petitioner's arguments: The petitioner argued that they faced difficulties in complying with the previous order and sought an extension. They relied on the previous order of this Court which allowed for a conditional deposit and subsequent payment, implying a willingness to facilitate a settlement. They also sought to have incidental charges clarified and collected by the respondent. Respondent's arguments: The respondent, SIPCOT, cancelled the OTS offer due to the petitioner's failure to adhere to the payment schedule mandated by the Court's previous order. The respondent's action was based on the petitioner's default in fulfilling the conditions precedent for the OTS approval and settlement.