- (1.) The Punjab State Industrial Development Corporation (for short, PSIDC) which had funded M/s Prime Industries Limited through a system of equity participation informed the Company on 03.12.2010 in response to a letter from the Company dated 28.05.2009 seeking for application of 'one time settlement' (for short, OTS) policy of remission in the outstanding loans on the ground that the Company was not eligible to apply for remission under the policy. It is this communication dated 03.12.2010 which is in challenge.
(2.) The eligibility consideration for OTS is set out through the policy declared by the Department of Industries and Commerce, Government of Punjab, through a notification, dated 10.12.2009. Clause 1 of the said notification which sets out the eligibility criterion reads as under:- "1. Clause 1-Eligibility Criteria is amended as under:- The collaborators/promoters of profit making companies as per Audited Balance Sheet as on 31st March, 2008 shall not be eligible. A profit making company is one which is earning profits over different years and having Reserves & Surpluses appropriated from the Profit & Loss a/c as per audited Balance Sheet as on 31.3.2008."
(3.) The crucial test was, therefore, that if it was earning profits over different years and having reserves and surpluses appropriated from the profit and loss account, it would not be eligible. The rejection of the petitioner's case was on the ground that the petitioner's Company was profit making company and hence, ineligible. The endeavour for suing through the petitioner who had incorporated M/s Prime Industries Limited on 19.10.1992 for the purpose of setting up Vanaspati Unit in the border district of Ferozepur was to point out that it was not a profit making Company. The petitioner would point out to the balance-sheet as on 31.03.2008 being the relevant date as specified in the eligibility criterion for M/s Prime Industries Limited and would show that an amount of Rs. 1,65,53,929.13 was the loss which was entered in the balance-sheet and the manner of how the amount was reckoned was brought along with annexures containing the profit and loss account for the year ending 31st March, 2008. The reserve and surplus as brought out through annexures contained the following entries:- JUDGEMENT_276_LAWS(P&H)10_2014_1.html The capital reserve, according to the counsel for the petitioner, included the capital subsidy and the profit & loss carried forward showed 'nil' entry. It was a matter of fact that a factory had been closed, having run under loss and even the power supply was disconnected on 28.11.2006. It was brought out through record that the Unit had been closed on 15.10.2006 itself. As per the requirements of the Companies Act under Section 211(3C), the accounts had to conform to AS (Accounting Standard) 28 as regards the manner of assessment of impairment loss. It was claimed by the petitioner that in the manner of drawing up of accounts, the impairment loss had not been recognized and since the Company had sold part of plant and machinery, the going concern status was effected. PSIDC appears to have entrusted the matter to M/s Goel Satish & Co. Chartered Accountants to examine the eligibility of the Company as per the OTS policy for equity 2009 and they reported that the Company had suffered a net loss after deducting of tax at '5.16 crores during the financial year ending with 31.03.2008. The Chartered Accountant reported that the Company was a 'loss making Company' because of debit balance of reserve and surplus in the profit & loss account. The audited balance-sheet as on 31.03.2008 showed an impairment loss of '5.66 crores as per AS28 issued by the Institute of Chartered Accountant. They certified that the Company was a loss making Company based on the audited and balance-sheet and the amount due as per the OTS policy was Rs. 2,27,07,663/-. The PSIDC was reported to have also received Rs. 2,59,97,532/-.;