According to sources, ICICI sent a recall notice in February 1998 to the company which had defaulted on the payment of Rs 2.37 crore. The loan, granted in 1991, turned into a non-performing asset (NPA) in 1996.

Industrial Finance Corporation of India and Central Bank of India were the other members of the consortium and the total exposure of banks and institutions to the company was Rs 5 crore.

The high court directed the company in March last year to deposit a royalty of Rs 10 lakh per month with the court. However, the promoters failed to pay the royalty and, subsequently, the court appointed a receiver who took possession of the company's assets. Later in July, the court directed the receiver to sell and dispose off the assets.

Rajalakshmi Mills went in for an appeal against the court order which directed the company to deposit Rs 1 crore on or before August 20, 1998, failing which the receiver will be at liberty to sell the assets without any further reference to the court. The company also moved the Supreme Court. However, the apex court dismissed the special-leave petition.

The company failed in making the Rs 1 crore deposit and, following which, in October 1998 the sale order was passed. “The valuation has already been done by the court-approved panel of valuers and a reserve price has been fixed. It will be put on the block over the next few weeks," legal sources said.

With this move, the future of the company's 300-and-odd workers has become uncertain as secured creditors' dues will be cleared first.