M.M. Kumar, J. - (1.) M/s Garg Steel (for brevity, 'the entrepreneur - petitioner') has approached this Court for issuance of directions to the Punjab Financial Corporation -respondent No. 1 (for brevity, 'the PFC') to release the entire loan amount sanctioned in its favour without any further delay. It has further been prayed that Small Industries Development Bank of India - respondent No. 3 (for brevity, 'the SIDBI') be directed to release the soft loan amount as per National Equity Fund Scheme (for brevity, 'the Scheme'), which has been duly sanctioned. The entrepreneur -petitioner has also prayed for awarding damages, interest and waiver of interest on the amount already released.
(2.) Brief facts of the case may be noticed. On 28.10.2002, the entrepreneur -petitioner applied for financial assistant of Rs. 30 lacs to the PFC. The application was accepted and the entrepreneur - petitioner was sanctioned loan in two parts. A term loan of Rs. 21,25,000/ - @ 15.5% interest p.a. was sanctioned as per the terms and conditions specified in the letter dated 28.10.2002 (P -1). Under the Scheme, the entrepreneur -petitioner was also sanctioned a soft loan of Rs. 7,50,000/ - @ 5% interest p.a. All the terms and conditions of the soft loan have been incorporated in the letter dated 28.10.2002 (P -2). On 18.11.2002, the entrepreneur -petitioner also executed a mortgage deed (P -4). The entrepreneur -petitioner availed term loan to the extent of Rs. 17,00,000/ - as is evident from the perusal of letter dated 7.4.2003, written by the entrepreneur -petitioner (P -7). There are numerous representations made by the entrepreneur -petitioner for the release of soft loan of Rs. 7,50,000/ -, which was to be released under the Scheme. It is appropriate to mention that the amount of Rs. 17,00,000/ - as term loan released to the entrepreneur - petitioner, was utilized in purchase of machinery and construction of building etc. Eventually, the entrepreneur -petitioner served a legal notice through its counsel on 9.4.2003 (P -10) wherein it is claimed that the entrepreneur -petitioner after utilizing Rs. 17,00,000/ -, which was sanctioned as term loan, has also spent a huge amount for setting up the unit by spending more than Rs. 25,50,000/ - for raising construction and purchase of machinery. On account of non -payment of soft loan of Rs. 7,50,000/ - and balance term loan, the work of the unit had come to a stand still. Therefore, request was made for release of the soft loan as well as term loan. There is some correspondence available on that issue between the entrepreneur - petitioner and the PFC. Having failed to obtain any relief, the entrepreneur -petitioner has approached this Court for issuance of directions as noticed in the preceding para.
(3.) In the reply, the PFC has admitted sanction of term loan of Rs. 21,25,000/ - and soft loan of Rs. 7,50,000/ - under the Scheme. It has been asserted that the amount of term loan was to be disbursed by the PFC from its own corpus subject to compliance of formalities mentioned in the sanction letter dated 28.10.2002 (P -1). But the soft loan was sanctioned by the PFC as an agent of the SIDBI with the condition that in case of non -availability of refinance from the SIDBI, the entrepreneur -petitioner was to undertake to pay normal interest on the amount of soft loan which was equal to the rate of interest charged on term loan. It was also claimed that out of the sanctioned term loan of Rs. 21,25,000/ -, the PFC had already disbursed Rs. 17,00,000/ -, which constitute 80% of the term loan and remaining 20% i.e. Rs. 4,25,000/ - were to be disbursed by the PFC after compliance of remaining formalities as per the details available in the mortgage deed, dated 18.11.2002 (P -4). The entrepreneur -petitioner was required to comply with the following conditions: Before seeking release last 20% of loan the company shall comply with the following: a) NOC from Pollution Control Board, Punjab b) Shall install factory main gate c) Power connection letter from PSEB to extent of 75KW d) Sanction letter of working capital limit of 603000/ - from bank e) Shall appoint experienced foreman. f) The sanction of soft loan under NEF Scheme is linked with refinance from SIDBI. In case of non -availability of refinance from SIDBI, the concern shall undertake to pay normal rate of interest as is being charged on amount of term loan.;