1995 (10) TMI 239 - SC - Indian Laws

Revival of Rohtas Industries Limited deemed unfeasible; winding-up proceedings to resume for asset sales & dues settlement.

Workmen of Rohtas Industries and Ors. Versus Rohtas Industries and Ors.

The Supreme Court concluded that the revival of Rohtas Industries Limited was not feasible despite extensive efforts. The Court directed the resumption of ... - Issues Involved:1. Closure and winding up of Rohtas Industries Limited.2. Revival and rehabilitation of the Company.3. Financial constraints and funding for revival.4. Offers for purchase and revival of the Company.5. Role of the State of Bihar and the Union of India.6. Role of the Board of Industrial and Financial Reconstruction (BIFR).7. Role of the Rehabilitation Commissioner.8. Security and maintenance of the Company's assets.9. Payment of dues to creditors and financial institutions.10. Employment and dues of the workmen.11. Sale of the Company's assets.12. Future course of action for winding up.Detailed Analysis:1. Closure and Winding Up of Rohtas Industries Limited:Rohtas Industries Limited, a large industrial undertaking, was closed on September 9, 1984, resulting in the unemployment of about 10,000 workmen. A petition for winding up was filed in the Patna High Court, and a Provisional Liquidator was appointed on May 22, 1986.2. Revival and Rehabilitation of the Company:The Supreme Court entertained a writ petition under Article 32 of the Constitution to revive the industry and rehabilitate the workmen. The Sick Industrial Companies (Special Provisions) Act, 1985 (the Act) came into force, and the Court directed the Central Government to refer the matter to the BIFR to frame a revival scheme.3. Financial Constraints and Funding for Revival:The State of Bihar and the Union of India were directed to provide funds for the revival. Initially, Rs. 30 crores were provided, but due to financial constraints, the units could not function profitably and had to be closed again. Further funds were sought but were not provided.4. Offers for Purchase and Revival of the Company:Several offers were received for the purchase of the units, but they were not considered viable. Notably, offers from Shri L.N. Dalmia and Speedcrafts Pvt. Ltd. were considered but were found insufficient to cover the liabilities and ensure long-term viability.5. Role of the State of Bihar and the Union of India:The State of Bihar and the Union of India were involved in providing financial assistance and concessions. The State of Bihar agreed to defer payment of dues and extend help to any intending purchaser. However, there were difficulties in granting certain concessions and leases.6. Role of the Board of Industrial and Financial Reconstruction (BIFR):The BIFR, along with Industrial Financial Corporation of India (IFCI) and Soni Industrial Revival Consultants (SIRCON), prepared reports on the viability of the Company. The BIFR concluded that the Company could only be revived with substantial financial support from the State Government and financial institutions.7. Role of the Rehabilitation Commissioner:The Rehabilitation Commissioner was appointed to take control of the Company's assets and attempt to revive the units. Despite efforts, the units could not be made profitable, and the Commissioner sought additional funds, which were not provided.8. Security and Maintenance of the Company's Assets:The Central Industrial Security Force was deployed for security, and measures were taken to reduce expenditure on security and electricity. The Rehabilitation Commissioner was directed to sell raw materials and finished products to cover some liabilities.9. Payment of Dues to Creditors and Financial Institutions:The Claims Committee assessed various claims, and objections were pending consideration. The BIFR highlighted the need for substantial sacrifices by financial institutions and banks to settle the Company's liabilities.10. Employment and Dues of the Workmen:The Court issued directions to reduce the number of employees and ensure payment of salaries up to September 1995. The employment of the entire workforce could not be ensured under the proposed revival schemes.11. Sale of the Company's Assets:The Court directed the sale of raw materials and finished products and considered offers for the purchase of the entire industrial undertaking as a running concern. However, the offers received were not sufficient to cover the liabilities.12. Future Course of Action for Winding Up:The Supreme Court concluded that the revival of the Company was not feasible and directed the resumption of the winding-up proceedings in the Patna High Court. The Rehabilitation Commissioner was instructed to complete the sale of assets, pay dues, and hand over possession to the Official Liquidator.Conclusion:The Supreme Court, after extensive efforts to revive Rohtas Industries Limited, concluded that revival was not feasible. The Court directed the resumption of winding-up proceedings and provided detailed instructions for the sale of assets, payment of dues, and handling of the Company's properties. The writ petitions were disposed of with no order as to costs.