JUDGMENT
P.P. Naolekar, C.J.
1. On 7-10-1985 the Board of Directors of Assam Financial Corporation (AFC) had sanctioned a term loan of Rs. 30,00,000.00 to M/s Super Packaging Ltd., Jorhat for establishment of a medium scale unit at Jorhat, Assam for manufacturing of HDPE woven sacks to use for packaging items like food grain, fertilizers, cement etc. The commercial operation of the unit was started since 1989 with the installed capacity of 720 MT per annum. Though the unit started its commercial operation in March, 1989 it could not sustain its growth and the unit was closed w.e.f. 9-2-1994. The AFC started proceedings for recovery of its loan along with interest against the Company under the State Financial Corporation Act, 1951 (for short ‘the Act’). When the proceedings have been started under the Act, the appellant Company wrote a letter dated 23-2-1994 requesting the AFC for one time settlement of the dues of the Company. The Company again sent a letter on 23-12-1994 to the AFC for repayment of the outstanding dues with its proposal for one time settlement. The AFC did not agree with the one time settlement proposal made by the Company and the same was rejected. Later on, by letter dated 31-3-1995 the AFC offered to the Company for one time settlement in accordance with the policy decision taken by the AFC for settlement of outstanding dues of any party concerned. When the Company received the letter of the AFC making an offer for one time settlement under the terms and conditions mentioned therein, a counter proposal was made by the Company by letter dated 28-4-1995 to the AFC along with cheque of Rs. 10,00,000.00 requesting it to accept the one time settlement with slight modification in their proposal. The counter proposal made on 28-4-1995 proposed that -(i) the Company shall pay the AFC immediately 1/3rd of the principal dues, i.e., Rs. 10,00,000.00 vide cheque drawn on United Bank of India, (ii) the AFC may allow to pay the balance 2/3rd in two equal annual instalments commencing one year from the date of payment of the first instalment, (iii) once the commitment on payment of principal is kept, request was made for further remission of interest, (iv) the interest after waiver will be paid within six months of payment of the last instalment of principal and (v) the Company understands from the letter of the AFC that the AFC will freeze charging of interest w.e.f. 1-4-1995. The Company expects that from the inception only simple interest will be charged.
2. After the counter proposal was made, the AFC by letter dated 26-6-1995 issued by the Manager (Recovery) of the AFC, withdrew the one time settlement facility offered to the Company. On 1-9-1995 the memorandum was prepared by the Managing Director wherein the letter of the Company dated 28-4-1995 has been referred. The fact of payment of Rs. 10,00,000.00 towards the principal amount is also mentioned in the memorandum. The proceedings of the 268th Meeting of the Board of Directors of AFC held on 12th September, 1995 at 11.30 AM have been produced before us by the learned counsel appearing for the respondent Corporation.
The only point urged before us by the learned counsel for the appellant is that, when the Company has submitted a counter proposal which goes beyond the policy decision of one time settlement, taken by the AFC, under the policy decision itself, before rejecting or accepting the proposal made by the Company, it should be placed before the Board for decision and decision for rejection of any proposal made by the Company, which goes outside the policy decision, could not be taken by any official except the Board. From the documents submitted before us, particularly the minutes of the meeting of the Board of the AFC dated 12th September, 1995, we do not find that the Board has applied its mind to the proposals made by the company on 28-4-1995. Power to accept or reject the proposal, which goes beyond the policy decision, clearly falls within the domain of the Board and none else. The Board has to take a decision on the proposal which does not fall within the policy decision. If the Board finds that the proposal made by the company, although is outside the policy decision is in the interest of the AFC, the Board has the power to modify the policy decision and accede to the request made by the Company which results in arriving at one time settlement. In the present case, as the proposal dated 28-4-1995 has not been considered by the Board, as per its own policy decision wherein it is stated that any proposal beyond the purview of the package shall be put up before the Board for decision, we direct the Board of the AFC to consider the proposal made by the Company on 28-4-1995 and take a decision over it before proceeding further in the matter of recovery of the loan under the State Financial Corporation Act.
3. The appeal stands disposed of.
