1999 (7) TMI 589 - HC - Companies Law

Court sets aside directions for mill operation, parties to propose to BIFR for consideration.

The appeals court set aside the directions issued by the learned Single Judge for running the mill and directed all parties to submit their proposals to ... Reference to Board Issues Involved:1. Questioning the order dated 20-11-1997 passed by the Board for Industrial and Financial Reconstruction (BIFR).2. Direction upon the Officer-in-charge, Maheshtala Police Station to render necessary protection to the writ petitioner for opening and operating the mill.3. Direction upon the Additional Labour Commissioner, Calcutta to frame a reasonable time for settlement between the petitioner-company and workers.4. Application by workers' union to vacate the interim order, appoint a Special Officer, and allow normal operation of the mill.5. Application by certain shareholders for impleading them as party respondents.6. Applications by Ceekay International (Pvt.) Ltd. and Gold Crust Jute & Fibres Ltd. for intervening in the matter.7. Directions issued by the learned Single Judge for running the mill by a Special Officer.Issue-Wise Detailed Analysis:1. Questioning the order dated 20-11-1997 passed by the BIFR:The appellant-company filed a writ petition challenging the BIFR order dated 20-11-1997. The BIFR had directed the promoters to enter into fresh MOUs and long-term agreements with workers, failing which the BIFR would consider changing the management. The company's appeal to the AAIFR granted them time until 31-10-1997 to comply, but no compliance was reported. The BIFR extended the deadline to 15-11-1997 and directed an advertisement for management change if compliance was not met. The learned Single Judge vacated the interim stay on the BIFR order, and the appeals court upheld this decision, emphasizing the BIFR's statutory role in such matters.2. Direction upon the Officer-in-charge, Maheshtala Police Station:The appellant-company sought protection from the police to open and operate the mill. This issue was part of the broader context of the company's inability to run the mill and the workers' livelihood being at stake. The court did not provide specific directions on this matter in the final judgment.3. Direction upon the Additional Labour Commissioner, Calcutta:The appellant-company requested the Labour Commissioner to frame a reasonable time for settlement between the company and workers. This issue was also part of the broader context of the company's operational challenges and the workers' interests. The court did not provide specific directions on this matter in the final judgment.4. Application by workers' union:The workers' union sought to vacate the interim order, appoint a Special Officer, and allow the normal operation of the mill. The learned Single Judge observed that the current management failed to run the mill or submit an acceptable revival scheme, affecting 4300 workers. The court directed Delta International Ltd. to be impleaded and appointed a Special Officer to take possession of the mill, make an inventory, and oversee its operation with a Committee of Management comprising representatives from various stakeholders.5. Application by certain shareholders:Certain shareholders, claiming to hold about 40% of the paid-up capital, sought to be impleaded as party respondents. The learned Single Judge dismissed their application, stating they had no locus standi. The appeals court did not address this issue further as it was not central to the appeals.6. Applications by Ceekay International (Pvt.) Ltd. and Gold Crust Jute & Fibres Ltd.:These companies sought to intervene in the matter. The learned Single Judge dismissed their applications, deeming them neither necessary nor proper parties. The appeals court did not address this issue further as it was not central to the appeals.7. Directions issued by the learned Single Judge for running the mill:The learned Single Judge directed the appointment of a Special Officer to take possession of the mill, make an inventory, and oversee its operation with a Committee of Management. The appeals court found that such directions were beyond the jurisdiction of the writ court and should be handled by the BIFR, which is the statutory authority with expertise in such matters. The court emphasized that the BIFR should consider all proposals for the revival of the company and pass appropriate orders.Conclusion:The appeals court set aside the directions issued by the learned Single Judge for running the mill and directed all parties, including the workers and Delta International Ltd., to submit their proposals to the BIFR for consideration. The court emphasized that the BIFR should expedite the matter and pass appropriate orders in accordance with the law. The writ petition and all related applications were disposed of accordingly, with no order as to costs.