Recovery Of Public Money Cannot Wait Indefinitely To Suit The Convenience Of A Particular Borrower: Calcutta High Court
Agreeing with the argument of the Counsel appearing for 'West Bengal Financial Corporation' (a financial institution), the Calcutta High Court on Friday (22nd January) noted that recovery of public money cannot wait indefinitely to suit the convenience of a particular borrower. The Bench of Justice Sabyasachi Bhattacharyya was hearing the plea of the petitioner, Brahm (Alloys)...
Agreeing with the argument of the Counsel appearing for 'West Bengal Financial Corporation' (a financial institution), the Calcutta High Court on Friday (22nd January) noted that recovery of public money cannot wait indefinitely to suit the convenience of a particular borrower.
The Bench of Justice Sabyasachi Bhattacharyya was hearing the plea of the petitioner, Brahm (Alloys) Ltd. (borrower) who failed to repay the loan taken from the West Bengal Financial Corporation, a financial institution.
Matter before the Court
As the borrower [Brahm (Alloys) Ltd.] failed to repay the loan taken from the West Bengal Financial Corporation, a sale notice was issued on 30th January, 2018 to the borrower.
The petitioners filed a writ plea, which was dismissed on 12th February, 2018, however, when this order was challenged before a Division Bench, it disposed of the appeal by restructuring the schedule of repayment and granted a further opportunity to the petitioners to repay the debt, vide order dated 13th February, 2018 but the Borrower couldn't repay the loan.
Thereafter, a second sale notice was published on 25th June, 2018 and in connection with the second sale notice, the petitioners again preferred a writ petition, but did not move it. While the said writ petition was still pending, the financial institution issued a third sale notice.
Arguments put forth
The Counsel appearing for the petitioners submitted that they are already in touch with an Asset Reconstruction Company (ARC) regarding the loan being taken over by the said ARC.
The notice to this effect was communicated to the respondent no.1, however, it took a plea that there had been previous nonfulfillment by the petitioners of the liberty granted to the petitioners to repay the loan.
It was contended that there is no provision in the State Financial Corporation Act for transferring such loan to an ARC.
Lastly, it was submitted by the petitioners that they ought to be given some time to finalize the arrangements with the ARC for the purpose of repayment of the loan advanced by 'West Bengal Financial Corporation' (a financial institution).
On the other hand, the counsel appearing for the respondent authorities argued before the Court that even after three sale notices, they haven't been able to repay the loan and that they are in the habit of trying to stop the process of sale, whenever a sale notice is put up.
It was also argued that the conduct of the petitioners is evident from the fact that the second writ petition was never moved till date.
Importantly, it was submitted that the offer given by the ARC was conditional, leaving scope for further negotiation.
Hence, it was stated that the ARC's negotiations cannot form a relevant basis for staying the process of sale which has now been undertaken.
Court's observations
The Court noted that in the instant case, even the latest offer given by the concerned ARC, with whom the petitioners are negotiating, is patently conditional.
"As such, there is no final proposal, even at this stage, coming from the ARC at the behest of the petitioners for repayment of the loan", remarked the Court.
In such circumstances, the Court said, the respondent no.1 was fully justified in proceeding with the sale of the assets of the borrower, particularly in view of the previous conduct of the petitioners.
Importantly, the Court remarked,
"A fresh lease of life cannot now be granted to the petitioners, since such opportunity was previously given to them but the petitioners miserably failed to avail of the same. Recovery of public money cannot wait indefinitely."
Accordingly, the Writ Petition was dismissed on contest without any order as to costs. However, respondent no.1 was directed to give reasonable opportunity to the petitioners to meet the highest offer, after receiving adequate offers on the latest sale notice from prospective buyers.
"In the event the petitioners can give a concrete counter offer equal to or more than the highest offer, it will be open to the respondent no.1 to permit the petitioners to purchase back the property. However, on failure of the petitioners to do so, the respondents shall proceed with the sale in favour of the highest bidder", concluded the Court.
Case Title - Brahm (Alloys) Ltd. & Anr. -vs- West Bengal Financial Corporation & Ors. [W.P.A. 9084 of 2020 With CAN 1 of 2021]
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