JUDGMENT
Aftab Alam, J.
1. Several orders were earlier passed in this case and on the basis of the directions given in those orders the petitioner has paid substantial amounts to the Bihar State Credit and Investment Corporation Limited (hereinafter to be referred as ‘BICICO’) towards liquidation of its dues. So far, the petitioner has paid amounts totalling to Rs. 39 lacs. It, thus, appears that the petitioner is not insincere in its intent to clear off the dues of BICICO.
2. The petitioner is making settlement of its dues under the One Time Settlement Policy of the year 2004 of BICICO. It is insisted on its behalf that it is covered by the definitions of both a ‘litigated unit’ and a ‘sick unit’ under the policy. Needless to say that under the policy settlement of dues by a ‘litigated unit’ or a ‘sick unit’ is made on payment of a considerably lower amount than in the case of a unit in the general category. According to the petitioner, if it is acknowledged as a ‘sick unit’ or a ‘litigated unit’, the total amount payable by it for a complete liquidation of its dues would be Rs. 51,78,0007- or Rs. 52,46,350/- respectively out of which it has already paid Rs. 39 lacs. On the other hand if the petitioner unit is taken as a unit in the general category, it would be obliged to pay Rs. 71,97,998/-(out of which Rs. 39 lacs are paid) for a complete liquidation of the due. Here it may be made clear that, these figures are as stated by the petitioner; these are not confirmed or verified by BICICO.
3. Having regard to the petitioner’s claim that it qualified both as a ‘sick unit’ and a ‘litigated unit’ it was asked by an earlier order passed in this case on 30.11.2004 to file a representation raising its claim before the Managing Director, BICICO who in turn was directed to examine the petitioner’s representation and to pass an order on its claim. In pursuance of the Court’s direction the petitioner filed a detailed representation, dated 1.12.2004 (brought on record as Annexure 11 to the supplementary affidavit). The Managing Director, considered the petitioner’s representation and rejected its claim both as a ‘sick unit’ and a ‘litigated unit’ by order, dated 6.12.2004. The petitioner brought on record that order as Annexure 12 to the supplementary affidavit seeking the Court’s permission to challenge it as bad and illegal both on facts and in law. Thus, the only question that remains to be decided in this case is whether the petitioner unit would fall under the categories of ‘litigated unit’ and/or ‘sick unit’.
4. A sick unit is defined under the policy in Clause (ii)(e) as follows
“(e) Cases registered with BIFR/Apex Body (State Level Committee for SSI Units).–This policy of OTS shall only be applicable to such companies which are registered with BIFR/Apex Body. (State Level Committee for SSI Units) upto 31.12.2002.”
5. In November, 2004 the date originally stated in the definition, as quoted above, was extended to 30.9.2004.
6. Admittedly, the petitioner has not been registered as a sick unit so far though it made the application for being so registered on 24.10.2004 (that is to say, beyond the cut-off date for registration).
7. On behalf of the petitioner it is stated that though in fact the unit had become sick due to stoppage of supply of coal under the linkage scheme in July-August, 2002 itself, it could make an application for being registered as a sick unit with a scheme of rehabilitation only after there arose the possibility of resumption of the supply of coal on the basis of the Court’s order and it was in those circumstances that some delay was caused in making the application for registration of the unit as a sick unit.
8. Mr. Navneeti Pd. Singh stated that though the application was made on 24.10.2004, it was not taken up for consideration because the meeting of the concerned body takes place only twice a year. He further submitted that the petitioner’s application for being registered as a sick unit was likely to be taken up in the next meeting and it was expected to be registered as a sick unit.
9. In my view the explanation given for non-registration of the unit so far as a sick unit is not quite relevant. The undeniable position is that it was not registered as a sick unit till 30.9.2004, the cut off date given in the policy and that to my mind settles the issue. I am, therefore, clear that the petitioner unit is not covered by the definition of sick unit under the policy and it cannot claim the benefits available to a sick unit.
10. Coming now to the petitioner’s claim to be treated as litigated unit, Clause 2(c) of the policy defines liquidated/litigated units as follows :
“(C) Definition of Liquidated/Litigated Units.–Liquidated units shall be such whose liquidation has been ordered under the Companies law by the competent Court of law on or before 30,9.2004. Litigated and lost cases shall be only such cases where a final decree/judgment has been passed against BICICO by the trial Court or the Court of appeal due to legal lacunas in scrutiny documents. The cut off date is 30.9.2004.”
11. In this regard the admitted facts are that on 31.3.2002 BICICO made requisition for a certificate for recovery of its dues from the petitioner unit under the provisions of the Public Demands Recovery Act. In pursuance of the requisition a certificate was issued on 29.4.2002 giving rise to Case No. BICICO/144/2002 before the Certificate Officer, BICICO . In response to the notice issued under Section 7, the petitioner filed its objections under Section 9 of the Act on 29.5.2002. At the same time it challenged the proceeding’s of the certificate case in a writ petition being C.W.J.C. No. 6721 of 2002 filed in the High Court in June, 2002. In that case the High Court passed an interim order on 17.7.2002 restraining the respondents from taking any coercive measures against the petitioner. On 26.12.2002 the Certificate Officer rejected the objections filed on behalf of the petitioner even while the writ petition was pending before this Court.
12. In the writ petition the proceedings of the certificate case were challenged primarily on two grounds, (i) that in the absence of a clause in the loan documents that it would be open to BICICO to recover its dues under the P.D.R. Act, the proceeding was bad and without jurisdiction as the loan advanced by BICICO was not covered by the definition of public demands and (ii) that in any event it was quite illegal, unreasonable, unfair and unjust to hold the certificate proceedings before an officer of the BICICO itself by appointing him as the Certificate Officer under the P.D.R. Act. The writ petition filed by the petitioner along with a number of analogous cases was allowed by judgment, dated 14.1.2003 on the second ground itself. The Court though noticed the other grounds on which the petitioner assailed the certificate proceedings, it did not go into that question because the writ petition was deemed fit to be allowed on the second ground. –
13. Against the judgment and order passed by the learned Single Judge on 14.1.2003 BICICO filed a batch of Letter Patent Appeals (L.P.A No. 99 of 2003 being filed against the judgment in the petitioner’s writ petition). The appeal bench by an interim order passed in March, 2003 stayed the operation of the judgment and order passed by the Single Judge on 14.1.2003.
14. The matter, however, did not stop at that stage. It appears that even after , the rejection of its objections filed under Section 9 of the Act by the Certificate Officer, the petitioner moved the Board of BICICO agitating before them that the institution of the certificate case was wholly unreasonable and arbitrary since there was no clause in the loan documents that BICICO would recover its dues from the loanee under the provisions of the P.D.R. Act. It further seems that the petitioner’s representation was accepted by BICICO and on 24.3.2003 an application was made on its behalf for withdrawal/cancellation of the proceedings. Thus, on a petition made by the certificate holder, the Certificate Officer cancelled the proceedings under Section 53 of the Act by order, dated 10.4.2003.
15. It may be noted here that shortly thereafter by judgment and order, dated 1.5.2003 passed by me in Sunil Kumar Mehrotra v. State of Bihar and Ors., 2003 (3) PLJR 757 this Court confirmed the legal position that in the absence of a clause in the loan documents for recovery of the dues under the provisions of the P.D.R. Act, a certificate proceeding was quite illegal and without jurisdiction.
16. In the aforesaid facts and circumstances, I fail to see how the petitioner unit can be denied a place in the category of litigated units. The Managing Director, BICICO in his order passed on the petitioner’s representation rejected the petitioner’s claim observing as follows :
“The petitioner unit’s claim that they be treated under litigated category is untenable because BICICO withdrew the case from the Certificate Officer’s, Court only on the ground that under the existing agreement between promoters and BICICO, BICICO cannot recover the dues under the P.D.R. Act. This does not mean that BICICO does not have right to recover the loan at all……….”
17. I am unable to appreciate the reason assigned by the Managing Director. He seems to take the position that a unit cannot be held to be a litigated unit unless all the modes of recovery are closed to BICICO. From that point of view no unit may ever qualify as litigated unit because even if all the modes of recovery through the process of Courts fail, BICICO may still exercise the power conferred by, Section 29 of the Financial Corporation Act and recover its dues by putting the defaulting unit to auction sale.
18. To my mind the definition plainly means the abortion or abatement of any one of the legal proceedings due to legal lacunae in the security documents and this is precisely what has happened in this case. The expression “lost cases” in the opening words of the definition do not mean a unit lost for ever but it means a lost proceeding. If all modes for recovery were closed to the BICICO, it is very unlikely that the concerned defaulting unit would still come to it for paying its dues under the one time settlement scheme.
19. It is noted above that BICICO got a certificate issued on the basis of which a case proceedings under the P.D.R. Act was instituted against the petitioner unit for recovery of its dues. In that proceeding eventually on an application made by BICICO, the certificate holder, the certificate was cancelled under Section 53 of the Act for lacunae in the loan documents.
20. A certificate has long been held to be an ex-part decree made against the certificate debtor. As early as 1938 a three Judge Special Bench of this Court in Bindeshwari Prasad v. Shiva Dutt Singh, Vol. XIX PLT (1938) 328 observed as follows :
“The Certificate Act has a procedure of its own according to which as soon as a certificate is signed by the Certificate Officer it becomes a decree and then may follow certain enquires as a result of which the decree may either be cancelled, varied or may be proceeded with. The decree may be varied or cancelled under Section 10 on objection by the certificate-debtor or under Section 11 it may, subject to law of limitation, be amended at any time by the addition, omission or substitution of the name of any certificate-holder or certificate-debtor or by the alteration of the amount claimed therein.”
21. In Lachmikant, Deo v. Rameshwar Choudhary, AIR 1948 Pat 104, a learned Single Judge of the Court made the following observation :
“Reading the form of the certificate as a whole, it no doubt takes the place of a decree for recovery of dues from the certificate debtor.
22. In Murari Singh v. State, AIR 1978 Pat 289, a Division Bench of the Court made the following observation :
“A certificate is an ex parte decree as it is filed behind the back of the certificate debtor, and the certificate debtor’s right to impugned the validity and correctness of the demand is reserved to a stage to come after service of notice under Section 7.”
23. The definition of litigated unit envisages passing of a final decree/ judgment against BICICO. This would also include the setting aside of a decree. The cancellation of the certificate is analogous to the setting aside of a decree which is clearly covered by the definition:
24. I, therefore, have no manner of doubt that the case of the petitioner squarely falls within the definition of ‘litigated unit’. The petitioner is accordingly held to be a ‘litigated unit’ and BICICO is directed to make settlement of its dues with the petitioner treating it to be a ‘litigated unit’. BICICO is directed to give to the petitioner, within fifteen days from today the account indicating the final figures on payment of which its dues with BICICO will be completely liquidated, taking it as a ‘litigated unit’. The petitioner is directed to make payment of the entire dues by July 15, 2005 as stated on its behalf by Mr. Navneeti Pd. Singh, Senior Advocate regardless of the last date fixed in the Policy.
25. In the result this writ petition is allowed but with no order as to costs.