- (1.) K. C. Bhargava, J. On 13-3-96 we have delivered the operative portion of the judgment for reasons to be recorded later on. Now we propose to give reasons for orders. The petitioner has prayed for commanding the opp. parties to disburse the additional term loan and working capi tal loan, which has been cancelled by letter dated 31-5-95 contained in Annexure-1.
(2.) THE facts stated in brief are that a term loan was granted to the petitioner in the year 1990. THEreafter the petitioner applied for additional term loan on 20-12-1991, which was registered after a lapse of six months i. e. on 16-6-1992. Dilatory tac tics of the U. P. F. C. officials thereafter con tinued and the petitioner was being harassed. THE petitioner had to make 15 representations to the U. P. F. C. requesting them to sanction the additional term loan expeditiously. One of such letters is con tained in Annexure-2, which is dated 26-8-1992. THEreafter when nothing was done by the UPFC, the petitioner had to write to 'udyog Bandhu' on 13-10-1992, which is an organization created by the State Government to settle the grievances of the industrialists under the Chairmanship of the Chief Minister. A photostat copy of the complaint made to Udyog Bandhu is Annexure-3. Even inspite of these efforts nothing was done by the U. P. F. C. and in the meantime the interest, over dues etc. were mounted. THEreafter the petitioner had to approach his Excellency, the Governor of U. P. by letter dated 13-8-93. He also wrote a letter to the Chief Secretary, Govern ment of Uttar Pradesh on 28-8-93 and a letter to the Chairman, Udyog Bandhu on 7-9-93. Photostat copies of these letters are contained in Annexure Nos. 4,5 and 6 to the writ petition. THE application was accepted by the U. P. F. C. on 8-2-1994 i. e. after about 2, 1/2 years under the 'single window Scheme'. A photostat copy of the letter sanctioning additional term loan and working capital loan is contained in Annexure-7 and photostat copy of the loan agreement is contained in Annexure-8 to the writ petition. After these loans were sanctioned the petitioner placed order for purchase of machinery with, M/s. Kolsite Machine Fabrics Ltd. , Bombay and for another machine orders were placed to M/s. Super Engineering Works, Kanpur. The opp. party No. 1 started causing hindrance and through letter dated 22- 10-94 asked the petitioner to change the supplier for pur pose of machines. Thereafter the petitioner suggested the name of M/s. Sharma Industrial Corporation through letter dated 5-12-94. The Regional Office of the UPFC kept mum for about four months and then permitted the change of supplier to M/s. Sharma Industrial Cor poration, Delhi. The UPFC imposed a condition to the effect that the petitioner would provide an additional security/col lateral security to cover the over dues to the satisfaction of the Regional Manager, UPFC vide letter contained in Annexure-11. The petitioner requested the opp. par ties to remove the condition of providing additional security/collateral security while granting permission to change the supplier for purchase of machine. It was brought to the notice of the opp. Parties that the petitioner firm was almost ready for production and only machines were to be procured to start production, which could not be done on account of the delay caused by the opp. parties, but these re quests went unheeded. Thereafter the opp. parties cancelled the additional term loan and working capital loan on 31-5-95 in an arbitrary, unfair and unreasonable man ner ignoring the events which took place in the last three years. The petitioner tried to persuade the UPFC for reviving the cancelled term loan and working capital loan, but to no effect. When the additional term loan and working capital loan was cancelled, the opposite parties had already disbursed about 80% of the loan. This unilateral act of cancelling the working capital loan despite taking collateral security and third party guarantee in respect of a project which is almost ready for production is, therefore, unfair, unreasonable, arbitrary and illegal. Acting on the promise of the UPFC to provide funds, the petitioner firm proceeded with their object and in the process suffered further liabilities to im plement and execute the same. The prin ciple of promissory estoppel is fully ap plicable and the UPFC is estopped from backing out of its obligation arising from its own commitments.
(3.) THE petitioner had invested 100% of his share of margin money as per the stipulations of letter No. 2068 dated 8-2-94, which is Annexure-8 to the petition. THE petitioner had invested about 4. 60 lacs from his own resources, Rs. 1. 33 lacs was raised as unsecured loan from relations and friends and Rs. 2. 27 lacs as the in tegrated margin of the District Industry Centre, Sultanpur. In this way, the total investment made by the petitioner comes to Rs. 8. 20 lacs. This much investment was made before the first disbursement of the additional term loan was made. In the counter-affidavit filed on behalf of the opposite party No. 1, it is alleged that the sanction of additional term loan was cancelled only when it has been observed that the petitioner is un able to comply with the terms and condi tions of the sanction letter dated 7/8-2-94 and several reminders were sent to the petitioner for clearing the outstanding dues as per the revised repayment schedule. It is admitted that 80% of the sanctioned additional term loan was dis bursed to the petitioner firm only after satisfying the integrity and soundness of the plant and machine supplier. The balance 20% additional term loan, which was sanctioned for the purposes of sup porting machineries, could not be released only because of the plant supplier proposed by the petitioner viz. , M/s Super Engineering Works, Kanpur, was not found upto the mark and was also held to be doubtful. It is further alleged that apart from the heavy over dues, for which he was advised to provide sufficient collateral security to prove his bona fide, he failed to provide the same and as such it was not possible to release the remaining addi tional term loan to the petitioner. The decision to cancel the undisbursed amount, was taken by the corporation after looking into the facts of the case and the over dues which has mounted in the meantime. The petitioner firm's financial resources are very poor since sanction of original term loan of Rs. 3. 30 lacs, but just to encourage him he was provided finan cial assistance by the corporation. It is also alleged that the petitioner exercised undue influence to get the loan sanctioned by the corporation and ultimately suc ceeded in his aim. The registration of the petitioner's case was made on 23-2-1993 when the petitioner's application was received and not in the year 1992. The loan was sanctioned to the petitioner without any delay. It is wrong to say that additional term loan of the petitioner was finalised by the respondent at the initiation of 'udyog Bandhu'. The petitioner was not in a posi tion to run the unit from his own resources and as such it was deemed proper to pro vide loan under the 'single Window Scheme'. On account of the petitioner's own mala fide intention he could not avail the same within the stipulated period. It is further alleged that disbursement for one machine which was purchased from M/s. Kolsite Bombay, was released within no time because it was a reputed supplier. The balance amount was not released be cause on enquiry it was found that the supplier chosen by the petitioner is not a reputed one having no proper work-shop and the petitioner was advised to procure machinery from reputed supplier. After a long gap, the petitioner submitted quota tions from one M/s. Sharma Industrial Corporation which was approved by the respondent and the matter was not delayed at the end of the respondent. The condition of additional security/collateral security was imposed because of the in ability of the petitioner to clear the dues of the respondent-corporation. The decision for cancelling the additional term loan was taken only due to the lapse on the part of the petitioner himself. The petitioner firstly introduced a fake supplier and later on did not clear the over dues after the facility of reschedulement was allowed to him. It cannot be said that the additional term loan was cancelled unilaterally and in an arbitrary, unfair and unreasonable manner. The main machinery was financed by the corporation and the petitioner had full opportunity to avail the loan for working capital from any of the banker, because it was not possible to revive the cancelled loan when heavy over-dues were lying against the petitioner and the petitioner also failed to clear the over-dues of the corporation as per the revised repayment schedule. The petitioner also failed to avail the same within the time provided. As per the agreement the revised repayment schedule was res cheduled and the petitioner firm had to start repayment w. e. f. 15-5-94. Till 15-11-95 four instalments have fallen due and not a single penny was forthcoming from the side of the petitioner and in terms of the agreement it was agreed between the parties that it would be lawful for the cor poration to suspend or cancel further ad vance loan to be paid if the borrower breaches any term and condition of the agreement. Thus, the respondent can celled 20% of the additional term loan and the working capital loan on the basis of these facts. It shows that the petitioner-firm was sick and could not start project within a period of four years.;