Courts should exercise their jurisdiction in regard to disputes of non-payment of dues to banks and financial institutions on “well-settled principles and not on mere sympathy or compassion”, the Madras High Court has ruled.

Hearing a writ petition by Medtech Products Ltd, Chennai, challenging an order dated 14-9-2009 by the State Industries Promotion Corporation of Tamil Nadu (SIPCOT), a State Govt undertaking, proposing foreclosure notice of the company, Mr Justice K. Chandru cited a judgment of the Supreme Court in TN Industrial Investment Corporation Ltd vs Millenium Business Solutions P Ltd reported in 2004 (5) CTC 689 and observed that recovery of tens of thousands of crore rupees of loans by banks had been held up by court orders under Article 226 of the Constitution, which was really unwarranted.

However much sympathy a court might have for a party, a writ court must exercise its jurisdiction on well-settled principles and not on mere sympathy or compassion.

Dismissing the petition, the judge ordered exemplary cost on the petitioner for adopting “dilatory” tactics and the cost quantified was Rs 10,000 payable by the petitioner towards counsel fee.

The petitioner approached SIPCOT for a term loan of Rs 250 lakh to fund the project to produce condoms. The loan was sanctioned on August 27, 1997, and the petitioner executed necessary security documents agreeing to repay the same with interest in eight quarterly instalments commencing from November 1, 1998. The petitioner, however, failed to repay the dues. Hence, a show-cause notice dated June 28, 1999, was issued followed by foreclosure notice recalling the loan on February 2, 2000.

The petitioner contended that they had settled the loans of several companies and wanted a “fair settlement”. They had already repaid Rs 20 lakh. Considering the nature of industry, the respondent (SIPCOT) must think on keeping the petitioner’s industry alive in national public interest, petitioner submitted.

In the light of several judgments of the apex court, the judge held there was no case made out to entertain the current writ petition. Hence, the petition was dismissed.

Published on December 20, 2011