Kamesh Bhargava Hospital and Research Centre (Pvt.) Ltd. (Silver v. Punjab State Industrial Development Corporation Limited, a

CORAM:HON'BLE MR. JUSTICE K. KANNAN

1. Whether Reporters of local papers may be allowed to see the judgment ? Yes

2. To be referred to the Reporters or not ? Yes 3. Whether the judgment should be reported in the Digest? Yes K. KANNAN J.(ORAL) -.-

The petitioner challenges the vires of One Time Settlement Policy for loans obtained from PSIDC/PAIC-2009. It is an admitted case that the petitioner has availed of the loan and actions have been taken for recovery of the amount by the creditor institution- PSIDCL before the Debt Recovery Tribunal. Earlier, the petitioner had approached this Court for intervention expressing his bona fides in settling the amounts due to the creditor-institution in C.W.P. No.5425 of 2009 by offering to pay Rs.25 lacs. Taking note of the petitioner's offer and his further undertaking to abide by the terms and conditions of the OTS Scheme that was floated by the C.W.P. No.6501 of 2010 -2- respondent, the Court had originally issued notice to the other side. During the pendency of the proceedings, this Court had granted to him liberty to apply for OTS but when the petitioner pointed out that he was aggrieved by Clause I of the notification in the OTS Scheme, he was granted liberty to challenge the terms of the Scheme. It appears that the petitioner's claim for settlement of the amount under OTS is rejected by citing Clause I setting out the eligibility criteria for the application of OTS. The relevant clause which is in challenge reads as follows: “I. Eligibility Criteria The collaborators/promoters of profit making companies as per Audited Balance Sheet as on 31.03.2008 shall not be eligible.”

The contention of the petitioner is that an OTS that makes a distinction between profit making companies and companies which are running under loss for obtaining the benefit and further stipulating a cut off period is arbitrary and violative of Article 14. According to him, all the debtors of financial institution form a single homogenous class and if the benefit of some concessions through a One Time Settlement should be available, the financial institution ought not to make any distinction between a debtor, who is making profit or a person who is incurring a loss. He would also urge that at a time when the original application had been filed before the Debt Recovery Tribunal, the respondent-institution itself had referred to the indebtedness of the petitioner-company and by the only fact that in the year 2008, the company had a turn of C.W.P. No.6501 of 2010 -3- events by a modicum of profits registered in the year 2007-08, the benefit of the OTS ought not to be denied.

In its fiscal policy, a decision to extend concession to certain classes of deserving persons would always be seen as reasonable. The deserving cases would again be instances of company which is sick or a company which has serious financial stringency. Formulation of a policy that excludes a profit making company is under such circumstances a perfect legitimate policy to arrange its finances. A classification of borrowers as falling within profit making companies and loss making ones has a nexus to an object namely of extending a benefit to deserving companies only. A profit making company is a company that has known to survive on its own efficiency. It is somewhere akin to a rule of reservation, which is made to provide for some benefits to certain underprivileged or socially disadvantaged classes of persons. Such reservation is always consistent with the rule of equity and social justice. An extension of OTS to loss making companies and to exclude profit making companies has a similar philosophy to expound C.W.P. No.6501 of 2010 -5- and be seen as compatible to rules of fairplay and justice. The challenge by the petitioner that the exclusion of profit making companies from the OTS Scheme as arbitrary is, in my view, without merit.

It is irrelevant that the company is not making enormous profits but it has only shown registered .01% profit as against the earlier years' revenues. If a line has to be drawn, it cannot be on a plus or minus issue of percentage of profits to determine the eligibility to the benefit of OTS. It is again a matter of policy, which if it is not shown to be unreasonable, cannot be susceptible to challenge in a writ petition. The petitioner may have other remedies to make his persuasive efforts to plead before a financial institution to give some concessions but it is beyond the competence of the Court to give such directives to the respondents to do what in its fiscal interest, it shall do.

The petitioner cannot have a remedy before this Court through this writ petition and it is accordingly dismissed. April 28, 2010 Pankaj* (K. KANNAN) JUDGE