- 1 - HC-KAR NC: 2026:KHC:34510 WP No. 17648 of 2022 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 8TH DAY OF JULY, 2026 BEFORE THE HON'BLE MR. JUSTICE M.G.S. KAMAL WRIT PETITION NO. 17648 OF 2022 (GM-RES) BETWEEN: 1. ARJAY EXTRUSIONS PVT LTD., A PRIVATE COMPANY INCORPORATED UNDER THE COMAPANIES ACT, 1956 REGISTERED OFFICE WAS AT NO 202, 37TH A CROSS, 8TH BLOCK JAYANAGAR, BENGALURU - 560 082 REP. BY ITS KNOWN SURVIVING PROMOTER SRI. M J ARUN. 2. SRI M J ARUN S/O LATE M R JAYADEVA AGED ABOUT 57 YEARS NO 28/A, 37TH A CROSS 8TH BLOCK, JAYANAGAR BENGALURU -560 082. …PETITIONERS (BY SRI. RAJESH MAHALE, SENIOR ADVOCATE FOR SRI. RAVI K.G., ADVOCATE) AND: 1. KARNATAKA STATE INDUSTRIAL AND INFRASTRUCTURE DEVELOPMENT CORPORATION LIMITED A FULLY OWNED GOVERNMENT OF KARNATAKA UNDERTAKING UNDER THE PROVISIONS OF THE COMPANIES ACT 1956 REIGSTERED OFFICE AT "KHANIJA BHAVAN" NO 49, 4TH FLOOR, EAST WING RACE COURSE ROAD Digitally signed by SUMA B N Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2026:KHC:34510 WP No. 17648 of 2022 BENGALURU - 560 001 REP. BY ITS MANAGING DIRECTOR. 2. THE BOARD OF DIRECTORS KARNATAKA STATE INDUSTRIAL AND INFRASTRUCTURE DEVELOPMENT CORPORATION LTD., "KHANIJA BAHVAN", NO 49 4TH FLOOR, EAST WING RACE COURSE ROAD BENGALURU - 560 001 REP. BY CHAIRMAN. 3. M/s.HINDCOMP PRIVATE LIMITED A PRIVATE LIMITED COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956 REGISTERED OFFICE AT #6A 6TH MAIN ROAD, 3RD PHASE PEENYA INDSUTRIAL AREA BENGALURU - 560 058 REP. BY AUTHORISED REPRESENTATIVE/ ASSISTANT GENERAL MANAGER. …RESPONDENTS (BY SRI. VIVEKANANDA T P., ADVOCATE FOR R1 AND R2; R3 SERVED AND UNREPRESENTED) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO CALL FOR RECORDS IN THE CASE FROM THE R1 CORPORATION; DECLARE THE SALE OF PRIMARY PROPERTIES OF THE PETITIONER COMPANY UNDER PROCEEDINGS DATED 31.08.2006 OF THE SUB-COMMITTEE (ANNEXURE-AH) AND THE SALE LETTER DATED 16.09.2006 ANNEXURE-AK ISSUED BY THE ASSISTANT GENERAL MANAGER (Z-II) TO M/s.HINDCOMP PVT. LTD. THE R3, ARE INVALID, ILLEGAL, VOID AB INITIO, NON-EST AND UNSUSTAINABLE AND DIRECT THE KARNATAKA STATE INDUSTRIAL AND INFRASTRUCTURE DEVELOPMENT CORPORATION LIMITED (R1) TO HAND OVER THE PRIMARY PROPERTIES OF THE PETITIONER COMPANY AS - 3 - HC-KAR NC: 2026:KHC:34510 WP No. 17648 of 2022 ENUMERATED IN THE MAHAZAR DATED 05.07.1996 (ANNEXURE-B) AND ETC. THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE M.G.S. KAMAL ORAL ORDER Petitioners who had availed the financial assistance from the respondent-corporation having run into default, had pursued the option of One Time Settlement as per the schemes which were introduced by the respondent-corporation from time to time. 2. The total outstanding of the petitioner company as on 31.03.2007 is as under: NORMAL METHOD SIMPLE INTEREST METHOD PRINCIPAL 59.25 58.90 INTEREST 1119.56 187.03 SUB TOTAL 1178.81 245.93 OTHER DEBITS NIL NIL TOTAL 1178.81 245.93 3. It appears considering the OTS policy prevalent for the years 2007-08 as against the aforesaid amount, applying guidelines and instructions, OTS sub-committee seems to have - 4 - HC-KAR NC: 2026:KHC:34510 WP No. 17648 of 2022 recommended settlement of total dues at Rs.63.15 lakhs. It appears while this OTS settlement proposal was under consideration, respondent-corporation auctioned the secured assets and recovered a sum of Rs.28.75 lakhs. 4. The OTS revalidation issue was taken up by the respondent-corporation and by communication dated 30.11.2013 at Annexure-AW, it was intimated that the respondent-corporation had agreed to consider the restoration of OTS amount of Rs.48.60 lakhs subject to conditions referred to therein. The said communication also indicate additional payment of sum of Rs.12.25 lakhs made by the petitioner. There appears to be some misunderstanding between the petitioner and the respondent-corporation with regard to the amount of OTS proposed and as understood by the petitioner. Petitioner seemed to have understood the amount of Rs.48.60 lakhs to be the OTS amount while the corporation stuck to the figures of Rs.63.15 lakhs. Therefore, petitioner insisted the sale proceeds received by way of auction in a sum of Rs.28.75 lakhs to be adjusted as against OTS amount of Rs.48.60 lakhs while the corporation had adjusted the said amount as against the - 5 - HC-KAR NC: 2026:KHC:34510 WP No. 17648 of 2022 OTS amount of Rs.63.15 lakhs. This anomaly continued resulting in filing of the present petition. 5. Learned Senior counsel for the petitioner submits that the said amount of Rs.48.60 lakhs is traceable to the valuation made by the respondent-corporation OTS Committee as far back as on 08.06.2007 wherein the value of the security was determined at Rs.41.54 lakhs. Therefore he insists within one year thereof the respondent-corporation could not have altered the value of the secured assets fixed it at Rs.63.15 lakhs (15.99) and could not have sold it for lesser price at Rs.28.75 lakhs. Therefore, he submits there is no justification in respondent-corporation insisting the OTS settlement having been agreed only at Rs.63.15 lakhs. He insists the respondent- corporation should consider OTS amount as indicated in its communications dated 12.07.2007, 27.08.2010 and 30.11.2013 which consistently reflected the OTS figure as Rs.48.60 lakhs. 6. Learned counsel appearing for the respondent- corporation on the other hand drawing attention of this Court to - 6 - HC-KAR NC: 2026:KHC:34510 WP No. 17648 of 2022 the extracts of the proceedings of the board meetings submits that substantial part of principal amount outstanding as well as the interest has been waived off. That petitioner cannot contend to be unaware of the actual outstanding amount prior to OTS sub-committee recommending the OTS amount at Rs.63.15 lakhs. He also refers to a communication extracts wherein the amount of Rs.48.60 lakhs was arrived at after adjusting a sum of Rs.28.75 lakhs which was received by the corporation as well as Rs.12.25 lakhs after adjustment of Rs.28.75 lakhs received from the sale proceeds against the OTS amount of Rs.63.15 lakhs. Any further payment or consideration by the petitioner can only be in respect of Rs.48.60 lakhs which does not include the sale proceeds of Rs.28.75 lakhs which has been adjusted by the respondent- corporation. He further submits that petitioner is still at liberty to approach the respondent-corporation under the OTS scheme 2019 which will be considered in accordance with law. 7. Heard and perused the records. - 7 - HC-KAR NC: 2026:KHC:34510 WP No. 17648 of 2022 8. The extracts of the proceedings of 469th Board Meeting held on 08.06.2007 produced by the respondent- corporation at Annexure-R8 read as under: "EXTRACT OF THE PROCEEDINGS OF THE 469TH BOARD MEETING HELD ON JUNE 08, 2007 ITEM NO.C-10 ARJAY EXTRUSIONS PVT., LTD - FOR OTS The Board considered the subject and observed that the company had been pursuing for an OTS for a long time. The Sub-committee recommendation during May 2006 was to pay Rs.63.15 lacs under OTS. The chief promoter did not convey his acceptance for the OTS amount and a decision was therefore taken to sell the primary assets. The highest offer received for the primary property was Rs.28.75 lacs (during August 2006) against the valuation of Rs.15.99 lacs (valuation done by TECSOK during April 2006). The Board took note of the following: a) Loss asset as on 31-01-2003. b) The company is not a willful defaulter. c) The usage of aluminium collapsible types has become obsolete. d) The company could not get the working capital sanction. e) The collateral property has been attached under Section 31 of SFCs Act. Decree yet to be obtained. Legal process would take considerable time to realize the dues. As per the OTS policy 2007-08, the amount payable under OTS should be equal to the net value of security of Rs.89.10 lacs (present market value) without any write off subject to a minimum yield of 8% on simple interest basis (Rs.153.44 lacs). Accordingly, the amount payable under OTS is Rs.153.44 lacs. As against the above, the chief promoter had been consistently offering to pay about Rs. 35 lacs towards OTS of dues. - 8 - HC-KAR NC: 2026:KHC:34510 WP No. 17648 of 2022 The Board further noted that sub-committee recommendation was to pay Rs.63.15 lacs under OTS based on the prevailing market price of properties assessed then. The primary assets were later sold for a consideration of Rs.28.75 lacs, thereby realizing a higher amount than the valuation of TECSOK of Rs.15.99 lacs. The sale receipts have been appropriated towards the dues of the company in accordance with the declared policy. The balance amount still realizable against the OTS amount recommended by the sub-committee therefore worked out to Rs.34.40 lacs and promoter had agreed to pay this amount in consideration for the release of the collateral property. The Board noted that if the benefit of realization of higher amount from the sale of primary assets than the valuation is not given to the company / promoters, then the balance amount payable against the OTS amount recommended by the sub- committee worked out to about Rs.47 lacs. This amount was also close to the value of the collateral property of Rs.48.60 lacs based on recently revised SR guidance value for land. The Board also noted that the OTS proposal of the company was pending for a long time. After deliberation, the Board approved the OTS of dues to the Corporation as follows: 1) The company shall pay Rs.48.60 lacs under OTS to KSIIDC (including the initial amount paid) 2) OTS amount as above shall be paid as follows: i) First 25% of the OTS amount within 30 days from the date of communication without interest (including the initial amount paid). ii) Balance 75% of the OTS amount within next three months without interest. 3) Write off of balance principal amount and waiver of interest dues. 4) The company shall pay other debits. 5) The company shall settle the dues to IDBI for the assistance availed under seed capital. Since there is write off of principal involved, the proposal may be got audited by Internal Auditors to ascertain whether norms stipulated for sanction and disbursements of loan/s were followed". - 9 - HC-KAR NC: 2026:KHC:34510 WP No. 17648 of 2022 9. The relevant portion of the OTS note on the actual outstanding amount as on 31.03.2007 at page 39 read as under: NORMAL METHOD SIMPLE INTEREST METHOD PRINCIPAL 59.25 58.90 INTEREST 1119.56 187.03 SUB TOTAL 1178.81 245.93 OTHER DEBITS NIL NIL TOTAL 1178.81 245.93 The promoter has offered to pay Rs.35.28 lacs and the yield will be 0.29%. This would involve sacrifices as follows: Principal Write off Rs. 23.97 lacs Interest Waiver under normal method Rs.1119.56 lacs Interest Waiver under SI basis Rs. 187.03 lacs 10. Perusal of the aforesaid figures and the proceedings detail indicate that the respondent-corporation has already given consideration to the request made by the petitioner and has apparently applied the OTS guidelines in giving concession in the nature of writing off the principal amount as well as the interest. It may be that Rs.63.15 lakhs which the subcommittee has recommended as understood by the petitioner as only a recommendation and not the final OTS amount and which according to the petitioner is Rs.48.60 lakhs. This apparent - 10 - HC-KAR NC: 2026:KHC:34510 WP No. 17648 of 2022 misunderstanding/anomaly stands clarified on perusal of the proceedings of the board meeting extracted herein above, wherein the OTS amount, valuation of the asset, realisation of the proceeds and adjustment thereof has been provided for. It is thereafter the balance amount of Rs.48.60 lakhs is stated to be payable by the petitioner in terms of revised OTS scheme. 11. Petitioners seem to have paid further sum of Rs.12.25 lakhs against sum of Rs.48.60 lakhs which the respondent-corporation has taken into consideration while revalidating the OTS in 2013 as seen in document at Annexure-AW and the petitioner has been called upon to pay the balance amount of Rs.36.35 lakhs along with interest for the delay period. 12. Under the circumstances this Court do not find any reason or irregularity on the part of the respondent- corporation. 13. At this juncture, it is submitted by learned Senior counsel for the petitioner that even the 2019 OTS scheme policy guidelines contemplate revalidation of the approved OTS - 11 - HC-KAR NC: 2026:KHC:34510 WP No. 17648 of 2022 under the previous OTS policies and if the respondent- corporation is directed to consider the same, the purpose of the petition would be served. Learned counsel for the respondent- corporation has submitted that the petitioner is at liberty to make an application for availing the benefit and same would be considered, if permissible under law. 14. Submissions placed on record. Petition disposed of reserving liberty to the petitioners to submit fresh OTS proposal within 30 days from the date of receipt of certified copy of this order. The respondent- corporation shall bear in mind the revalidation provision provided under the 2019 OTS scheme policy guidelines and convey its decision one way or the other in writing within an outer limit of 90 days from the date of submission of such OTS proposal by the petitioners. SD/- (M.G.S. KAMAL) JUDGE SBN List No.: 1 Sl No.: 31