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Our Legal Correspondent

CHENNAI, Oct. 4

SMALL-scale units in Tamil Nadu have in a writ petition sought a direction from the Madras High Court to waive their dues to banks "as has been done by them for big industrialists".

Citing the Reserve Bank of India's circular dated July 17, 2000 stipulating the guidelines for all banks to settle the non-performing assets (NPAs) uniformly to all industries, big or small, they have prayed for issue of an order of injunction to the respondents (Secretary, Ministry of Finance, Government of India, and the Governor, RBI) from collecting the dues from the SSIs pending disposal of the writ petition.

The First Bench, comprising the Chief Justice, Mr B. Subashan Reddy and Mr Justice K. Govindarajan, admitted the petition on Friday and ordered two weeks' notice to the respondents.

In his public interest litigation, the petitioner, Mr E. Gnanasambantham, President of the Logh Udyog Bharti, (which is claimed to be an all-India organisation to serve the SS sector), contended that the banks and financial institutions were discharging their duties arbitrarily, unfairly and unjustly, discriminating in favour of big industries and stifling the SS units.

As per the RBI's circular dated July 17, 2000, the petitioner said, the banks and FIs were told to settle the NPAs in respect of all categories of loanees, including the pending court cases (Debt Recovery Tribunals), as on March 31, 1997, barring wilful defaulters and fraudulent companies.

Thus, the banks and FIs were accorded decision-making powers so as to quicken the process of settlement of NPAs.

It was, however, noticed that "discriminative and arbitrary" treatment was given to different industries and individuals who borrowed from the banks and FIs.

This was violative of Articles 14, 38, 39 and 43 of the Constitution, according to the petitioner.

The petitioner said that the RBI circulars and other rules governing the waiving of dues by the banks and FIs were non-transparent and subjective, which was illegal and discriminatory and arbitrary exercise of power and authority.

It was gathered, according to the petitioner, loans taken by big industrialists were waived, but in respect of loans granted to the SSI units, the entrepreneurs were harassed; their outstandings were not being waived as per the RBI circular.

The petitioner prayed for a direction to the banks to publish the list of industrialists/businessmen whose NPAs had been waived.

The Court, he further prayed, should direct the respondents to waive the NPAs pertaining to small scale units as had been done in respect of the big industries.

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