TaxTMI 
TaxTMI 
2002 (2) TMI 1221
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.... submitted by Cemtech and thus BIFR directed the company to submit an alternative revival plan to the Operating Agency. The workers were also directed to submit rehabilitation proposal with the help of Tata Consultants within two months indicating the means of finance. No proposal was received by the Board within the time indicated. By the same order of the BIFR dated 28-12-1993, the State Bank of India, Allahabad Bank and IDBI were directed under section 21 of the Sick Industrial Companies (Special Provisions) Act 1985, to prepare a complete inventory of all assets and liabilities and lists of registers/records/documents of shareholders and creditors and to get valuation done and to report the matter to the Board. Since no proposal were received the Operating Agency issued an advertisement for change in management on 6/8-3-1995. Four offers were received in response to the advertisement. The Operating Agency was required to examine the relative merits of the proposals. The State Government was also required to indicate their view regarding their equity of Rs. 68 lacs, and loans of Rs. 50 crores to UPSCCL in the event of privatization. Out of the four proposals, Gujarat Ambuja Ceme....
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....ity of rehabilitation formed a prima facie opinion that the company was not likely to make its net worth positive within a reasonable time, while meeting all its financial obligations, and was not likely to become viable in future, and that it was thus just equitable, and in public interest that it should be wound up under section 20(1) of the Act. A show-cause notice was issued on 18-11-1996. 2. On 6-2-1997 the Board found that H.B. Group had withdrawn their proposal and obtained refund of the amount. It gave a further opportunity to the company, State Government and Workers to submit a comprehensive twice. A revival proposal was submitted on 26-3-1997 for closure of two production lines, modernization/expansion of existing facilities. OTS of the dues of financial institution and banks, VRS as well as various concessions from the State Government including of induction of fresh funds for OTS, waiver of interest and conversion of their loans into equity. Operating Agency reported that the corporation will require interest free funds of order of about Rs. 250 crores for two years of implementation of scheme and that the State Government has not communicated their commitment to indu....
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....ounsel Sri Shiv Nath Singh for winding up of the company and to appoint Official Liquidator as liquidator of the company along with affidavit of Padam Singh, Managing Director of U.P.C.C.I. Churk, Mirzapur. 4. Cement Workers Union (CITU) an 13 other trade unions filed a Writ Petition No. 15134 of 1998 challenging the order dated 19-2-1998 passed by AAIFR and the order dated 2-7-1997 passed by the BIFR. They filed an affidavit (A-12) in this company application to keep the proceedings in abeyance till the disposal of the Writ Petition. The State Government filed a reply to the aforesaid application filed by the Cement Workers Union in the form of Affidavit of Sri K.L. Meena, Special Secretary, Government of U.P. Industrial Development Department, Lucknow, for rejection the application to keep the winding up proceeding in abeyance on the ground that UPSCCL is incurring losses. In detailed objection in the form of affidavit he gave reasons for losses suffered by the company. In para 9 it was stated that UPSCCL has on its rolls, including casual muster roll 5300 workers and that the major reason for the sickness of the Sick Company were financial, productive, technical, raw material, ....
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....lmia Nagar in District Rohtas Bihar reported in 1986 (86) Company Cases, Page 1, in which the Apex Court entertained the writ petition during the pendency of the winding up before the Patna High Court and experimented with adopting various alternative schemes for rehabilitation of that industry with the help of the BIFR and after keeping the winding up proceeding in abeyance for years together, concluded that inspite of the best efforts the object to revive the company does not appear feasible and held that in these circumstances, the future course of action and while bringing end to the proceedings directed, the winding up proceedings before Patna High Court be resumed. Sri Meena concluded that in view of the facts and circumstances enumerated by him and in view of Rohtas Industries experiment, the Court may order winding up of UPSCCL rather than entertaining similar rehabilitation scheme, as were submitted before the Board and were not found viable by the Board. 5. In his aforesaid affidavit Sri K.L. Meena also submitted that since 1992 the State Government has directed sales tax deferment to the sick company for a period of 5 years with a benefit of approximately 50 crores as f....
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....ions that in case the assets of company are sold, the workers will be given first priority in payment. The operative portion of the order is quoted as below : "In the last, the learned counsel for the petitioner submitted that the workmen had been working in the sick unit. They are entitled to Wages till the winding up order is passed. This submission was also raised before the Board and it noted the submission in the meetings held on 26-9-1996 and observed as follows : In case the State Government decide to wind up the corporation they should do so and pay all the dues of the labour. The present Government has different policy regarding sick P.S.Us as compared to the previous Government and the workers are hopeful that a favourable view will be taken in this case. There is no reason why the workers be not paid their salary. In view of the above discussion the writ petition is dismissed against the recommendation of the Board dated 6-2-1997, and the order of the appellate authority dated 19-2-1998. The Writ Petition, in so far as the direction in the nature of mandamus commanding respondent No. 4 to make payment of all dues to the workmen for the period till today, is allowed. I....
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....ant claims to be secured creditor. A secured creditor is entitled to preference for realization of its amount under section 529A of the Companies Act, 1956. The secured creditor cannot claim that the properties which have been hypothecated should be exempted from winding up. The winding up order is not to be passed in relation to a particular property. It consists of the whole assets of the company. The applicant has a right to submit its claim before the official liquidator. The application is accordingly dismissed." 10. Application (A-16) filed by employees (thirty seven in number) of the company (in liquidation) was also disposed of with the observation that these applicants can claim such relief for appropriate proceedings before the appropriate authority. Applications A-21 and A-22 filed by Balaji Trading Company was disposed of on 13-4-2000 by giving permission to the applicant to continue the arbitration case before the arbitrator Mr. Justice G.B. Singh (retired) in proceedings in O.S. No. 281 of 1999. 11. At this stage, the subject application No. 47788 of 2001 (A-31) was filed on 17-5-2001 by the State Government with a prayer to direct official liquidator for taking app....
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....d interest, however, finally only one company namely Grasim Industries Ltd. came forward and submitted an offer on 30-4-2001 which was otherwise also valid as per tender notice. The bid submitted by Grasim Industries Ltd. was in two parts, which was opened by the concerned committee constituted for the purpose. The note of the committee has been annexed as Annexure A-6, which shows that the committee consisted of following officials: 1.Commissioner Industrial Development-Chairman 2.Secretary, Small Industries Development-Member 3.Secretary, Finance Department-Member 4.Secretary, Heavy Industries-Member 5.Managing Director, UPSIDC-Member The committee opened single tender on the stated reasons that the unit has closed production, its machinery is diminishing, five thousands and more employees are facing uncertainty and that such a big production capacity is suffering loss, and further that after two advertisements only one tender has been received. 13. The tender is in two parts namely qualifying offer of first part of Rs. 195 crores, towards settlement of dues of Banks and Financial Institutions and with employees, and part II of the said bid contains a proposal of Rs. 35 cr....
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....g workers retrenchment benefits to all the workers and the one time settlement dues for financial institutions and B. The amount expected for this is Rupees One Hundred Ninety Five Crores. This would be qualifying offer part of the bid would be an offer and above the qualifying offer. IInd part of the bid of only such bidders be opened who have tendered unconditional acceptance of first part (qualifying bid). The Highest Bidder of Part II would be awarded the tender immediately Reliefs and Concessions Government of Uttar Pradesh would be ready to : 1.Write off all past Government loans with interest of the company. 2.Write off all Electricity/Trade Tax/Royalty dues. 3.Offer Trade Tax exemption to the unit for Ten years. 4.Offer waiver of royalty dues for Ten years. 5.Renew the Lime stone leases in favour of the company. 6.Power load of the new plant would be sanctioned and required power supply ensured. 7.Electricity Duty Exemption would be granted on any captive power generation facility set up by the promoter for this plant. Properties on Offer Include the lime stone lease at Ninga & Kajrahat having over hundred million tonnes of lime stone deposits adjacent to the fa....
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....hare capital is held by the Government of U.P. through the Governor of U.P. or his nominees. It has the largest installed capacity for manufacturing of cement. The four units of the company are situated at Churk, (wet process) commissioned in 1954 and 1962, installed capacity (i) Clinker 4.56 Lac MT and (ii) Cement 4.80 Lac MT; (2) Dalla (wet process) commissioned in 1971-72 installed capacity (i) Clinker 3.80 Lac MT and (ii) Cement 4.00 Lac MT; (3) Dalla (Clinker Unit) (Dry process) commissioned in 1983-84 installed capacity 8 Lac MT; and (4) Chunar (Grinding Unit) commissioned in 1983-84 with installed capa-city of Cement 16.80 (Lac MT). In the Liabilities statement as on 8-12-1999 is shown as share capital of 68.28 crores and total of 879.98 crores towards loans and current liabilities. The break-up of these loans and current liabilities is given as below : (i)Long term loan from FIs/Banks: (a)Principal-54.20 (b)Interest-235.42 (ii)Working Capital Loans-4.65 (iii)Loans from State Government-165.80 (iv)Current Liabilities : (a)Salaries and wages etc.-106.64 (b)Electricity Dues-110.70 (c)Outstanding Sales Tax-67.10 (d)Royalty on Lime Stone-20.10 (e)Suppliers payment etc....
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....idence/representation from the Governor of U.P. that all dues payable to U.P. Government shall be waived, Sales-tax exemption on sale without any ceiling of amount will be available to the bidder for a period of 10 years from the date of handing over possession and royalty tax exemption on limestone will be available to the bidder for a period of 10 years in case any land has been acquired the permission of State Government under section 44A of the Land Acquisition Act, 1984 for sale of transfer of the property in favour of the bidder and no additional/further payment shall be required to be made or if the land has been required by private purchase by UPSCCL to arrive and clear and marketable title free from encumbrances to the land and its weight to transfer the same without requiring any permission/approval or sanction of any statutory or other regulatory agency and that all taxes including land revenue shall be paid by UPSCCL. The bidder further required evidence of all these payable to the bank and financial institutions, all guarantees, warranties and indemnities of the suppliers of machinery is continued to the value to the bidder, evidence that electricity company, water wor....
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....s Act, 1956, conferring exclusive jurisdiction in respect of the adjudication of the claim and execution of the final order on the Tribunal and the Recovery Officer in respect of the debts payable to the bank, and that there can be no interference of the Company Court in respect of payment due to bank payable before Debt Recovery Tribunal. It is lastly alleged that the application of Government of U.P. and Corporation is mala fide and is not maintainable. 19. Arguments were heard on 25-5-2001. The matter was thereafter directed to be heard after vacations. On 25-7-2001 the Court called for report of the official liquidator with regard to handing over of the possession of the plant and machinery and other assets after preparing inventory. Directions were given that the official liquidator and his staff will be provided security for taking over the possession of the property of the company. The Chief Standing Counsel stated that he is in a position to hand over inventories to the official liquidator. 20. On 6-8-2001, the Court was informed that the financial institution which had finances the company (in liq.) held a joint meeting on 2-8-2001 to consider the proposal of the Governm....
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....is matter on 10-9-2001, 20-9-2001, 22-9-2001, 3-10-2001, 29-10-2001, 30-10-2001 and 5-11-2001. In between the official liquidator submitted his report Nos. 113, 114 and 115 of 2001 with regards to various matters, including application of State Government to consider the offer made by Grasim Industries Ltd. (report No. 114 of 2001), report No. 114 of 2001, was filed in compliance of direction of the Court to find out the views of State Government on possibility of sale of assets by advertising for exploring higher offer made to the official liquidator and report No. 115 of 2001, for giving direction to the District Magistrate, Principal of College, schools, hospitals, employees, workers and officials to deposit the rent of the building occupied by them giving authority to District Magistrate to realize the rent. 21. In pursuance of the orders passed by this Court on 20-9-2001, the official liquidator submitted his report No. 129 of 2001 in which the report to the Court that in response to his letter dated 9-1-2001, sent to the State Government, he has been furnished a reply by the Secretary, Industrial Development Department of Government of U.P. by Fax Message dated 30-10-2001. I....
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....eed to accept compromise proposal. The application was not supported by affidavit of any officer of the bank and it was submitted that the matter is under consideration with the Board of Director of State Bank of India. Adjournments were sought to file an affidavit supported by approval of the Board of Directors of the Bank. The Court directed that the copy of application filed by State Government shall be circulated to the official liquidator and other financial institutions and Allahabad Bank inviting their comments. The learned chief standing counsel was directed to produce the entire record pertaining to invitation of offer and acceptance of offer by the committee constituted by the State Government for perusal of the Court. On 4-12-2001 an affidavit of Sri Hemant Bansal, Chief Manager of State Bank of India, Ghosia, District Sant Ravidas Nagar was filed confirming the contents of application filed on 29-11-2001 and stating that the condition of settlement of the matter with the Bank are subject to the approval by the Board of State Bank of India and it will take about two weeks time for the Bank to consider the matter. The counsel appearing for the State Government informed th....
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....e limited period. It found that at present all units are exempted from trade tax on purchase of raw material, and thus the benefit of exemption on finished product is not justified as it will also come in the way of application of VAT system. Industrial Development Commissioner opposed the exemption of arrears of trade tax and full exemption of 10 years on the ground firstly that in the Chief Ministers meeting it was decided that no such benefit will be given to any industry and if such benefit is extended the Central Government may stop giving assistance to such State Government. Secondly, there is no justification to give 10 years exemption from trade tax and from registration fees as there may not be difficulty in selling unit without giving such exemption. Thirdly he stated that exemption may discourage efficiency of sale of cement in the State and that the amount of profit to the promoter which shall not be estimated. He said that this profit can be somewhere between Rs. 300 to Rs. 3000 crores. According to him information regarding the maximum production of cement has not been given by the Industrial Development Department. According to trade tax and Registration Department t....
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....nt to put mineral assets of the State to their utilization, and for early payment of the dues of the workers which may take a long time without putting any liability or responsibility on the State Government. 26. U.P. Power Corporation submitted its note informing that there is a liability of 110.70 crores to be paid by the company (in liq.) to U.P. Power Corporation. If the unit is rehabilitated by privatization, it will put development of the capacity of cement production and since the rate schedule for this industry is higher than other category of consumer, it agreed in the interest of future realizations, with the proposal to exempt the electricity dues of 110.70 crores, while putting forward to the difficult, to the effect that the financial condition of the power corporation is unsatisfactory and thus it will not be possible to give such exemption, and offered the only option that the dues to be paid by the U.P. Power Corporation to the State Government be reduced to the extent of the dues of the UPSCCL. The Electricity Department, in fact tried to off set their liability to the State Government by reducing the amount of dues to be paid by UPSCCL. It was pointed out that un....
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....and by excluding 254 acres land building and factory at Churk and 564 acres at Gurma valued at about 30 crores. Further reliefs and concessions offered were ten years exemption from trade tax, supply of electricity for 3 years on fix electricity tariff exemption on electricity duty on captive power generation and peaceful possession of unit to the new promoters. 30. Section 466 of the Companies Act, which is quoted as below : "Section 466. Power of Court to Stay winding up.-(1) The Court may at any time after making a winding up order, on the application either of the Official Liquidator or of any creditor or contributory, and on proof to the satisfaction of the Court that all proceedings in relation to the winding up ought to be stayed, make an order staying the proceedings either altogether or for a limited time, on such terms and conditions as the Court thinks fit. (2) On any application under this section, the Court may, before making an order, require the Official Liquidator to furnish to the Court a report with respect to any facts or matters which are in his opinion relevant to the application. (3) A copy of every order made under this section shall forthwith be forwarde....
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....ion may be dismissed with cost. The State Bank of India has filed application (A-44) dated 12-7-2001 with the same prayer to dismiss application filed by the State Government of sale of assets of the company (in liq.) to Grasim Industries Ltd. on the ground that the applicant being a secured creditor has first charged over all the assets of the company (in liq.) and that the sale proceeds receive therefrom are liable to be adjusted towards the dues of the State Bank of India. It is submitted in the application that the State Bank of India along with the Industrial Development Bank of India, Industrial Finance Corporation of India, Industrial Credit and Investment Corporation of India Ltd., Life Insurance Corporation of India Ltd. and Allahabad Bank granted a term of Rs. 4700 lacs in a consortium of the company (in liq.). Share of each member of the consortium has been detailed as below : (i)IDBIRs.230 lacs (ii)IFCIRs.300 lacs (iii)ICICIRs.400 lacs (iv)LICRs.700 lacs (v)State Bank of IndiaRs.500 lacs (vi)Allahabad Bank Rs.500 lacs TotalRs.4700 lacs 34. A joint mortgage was created as security towards the aforesaid term loan in respect of the fixed assets of the company (in l....
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....ties towards the working capital a second charge over all the immovable properties mortgaged in favour of the State Bank of India and other members of consortium under term loan was also created. After the company (in liq.) was unable to pay its dues and BIFR recommended for winding up of the company and the company was recommended for winding up the State Bank of India filed an application for Rs. 62,68,50,394.53 with pendente lite and future interest at the rate of 17.75 per cent p.a. with quarterly rests before the Debt Recovery Tribunal at Jabalpur which was registered as O.A. No. 249 of 1999 and was transferred and is pending before the Debt Recovery Tribunal at Allahabad. It is alleged that the total dues of State Bank of India as on 30-6-2001 comes to Rs. 69.48 crores approximately. The State Bank of India has stated that before inviting the offers for sale the State Bank did not consult with the Bank. Both Allahabad Bank and State Bank of India have submitted that the provisions of Recovery of Debts Due to the Banks and Financial Institutions Act, 1993, override the provisions of the Companies Act, 1956. Sections 17 and 25 of the Act confer exclusive jurisdiction in respect....
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.... submitted that the Act of 1993 gives jurisdiction to decide for recovery of their debts and that the Tribunal cannot pass any winding up order or take proceedings to liquidate the company, and thus winding up proceedings and any exclusion can only be proceeded with in accordance with the Companies Act, 1958. The Recovery Officer under 1993 Act may apply to the Court in whose custody (including Company Court) the money belonging to defendants for payment in accordance with Act of 1993 is available and thus proceedings for sale of assets, under the Companies Act are not barred by the aforesaid Special Acts. Both Sri V.K.S. Chaudhary appearing for the Allahabad Bank and Sri Ashok Mehta, Chief Standing Counsel appearing for the State Government, have both relied upon Allahabad Bank's case (supra) in support of their contention. In the said case the dispute was between two nationalized banks. Allahabad Bank had obtained a money decree against M.S. Shoes (East) Co. Ltd. from the Debts Recovery Tribunal and Canara Bank's claim as a secured creditor was pending before same Tribunal and against the same company. The Company Judge acts exercising of power under sections 442 and 537 of the ....
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....urisdiction on the Tribunal and the Recovery Officer in respect of debts payable to bank and financial institutions and there can be no interference by the Company Court under section 442 read with section 537 or under section 446 of the Companies Act, 1956. In respect of the monies realized under the RDB Act, the question of priorities among the banks and financial institutions and other creditors can be decided only by the Tribunal under Act of 1993, in accordance with section 19(19) read with section 529A of the Companies Act and in no other manner. The provisions of the RDB Act, 1993 are to the said extent inconsistent with the provisions of the Companies Act, 1956, and the latter Act has to yield to the provisions of the former. This position holds goods during the pendency of the winding up petition against the debtor Company and also after a winding up order is passed. No leave of the Company Court is necessary for initiating or continuing the proceeding under the Act of 1993. 36. The Supreme Court considered the distribution of money to be done by the Tribunal and whether the provisions of section 73, C.P.C. and section 529(1) and (2) and section 530 court also apply apart....
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.... liquidator to appear before him and upon his failure moved before the Tribunal on which an order was passed by the Tribunal directing the Advocate Commissioner to take inventory of the company assets and in case of non-cooperation by the official liquidator to take assistance of the police to break open the locks. The official liquidator filed an application on which the company referred the matter to a Division Bench. It was held in this case by Andhra Pradesh High Court in Pannar Paterson Limited v. State Bank of Hyderabad [2001] 106 Comp. Cas. 338 that by reason of section 456, a legal fiction is created by the deeming provision contained in section 456, and the assets of the company are under custody of the Court from the date of the order of the winding up of the company. The Debt Recovery Tribunal may have exclusive jurisdiction for adjudication and execution but it is another thing to say that such jurisdiction has to be exercised in a particular manner. Although the Tribunal has jurisdiction to be exercised having regard to the provisions laid down therein, the Tribunal is subject to the supervisory jurisdiction of the Court. The jurisdiction of the Tribunal for adjudicat....
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....of the company under section 457(1)(c), with approval of Court. There is no statutory bar or restriction applicable to the official liquidator under the provisions of the Recovery of Debts due to the Bank and Financial Institutions Act, 1993 with regard to exercise of powers by liquidator over the property of the company which are under the custody of the company Court under section 456. It is submitted on behalf of the Allahabad Bank, that the Companies Act, 1956 has not been mentioned in sub-section (2) of section 34 and thus the Act of 1993 shall have overriding effect over the provisions of the Companies Act, 1956. This submission has been accepted in Allahabad Bank v. Canara Bank, only to the extent that for the purposes of adjudication and recovery by the Tribunal. In such cases, the provisions of the Companies Act, 1956 shall be applicable only to the extent of sections 529, 529A and 530. The Act of 1993 is a Special Act as against the Companies Act, 1956, only so far as the adjudication and execution of such decree is concerned. It does not over ride the provisions of the Companies Act, 1956 for all other purposes. The claims of Allahabad Bank and State Bank of India have ....
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....eme viable. Sri K.L. Meena, Special Secretary, Industrial Development Department, Government of U.P. categorically stated in para 76 of the affidavit filed in 1998 that the State Government had communicated to the Board about decision of not being in a position to invest huge amount of thousands crores of rupees, proposed by the Operating Agency and that the decision of the State Government has never been reversed. 40. The State Government was also aware that the company has been wound up and that all its assets are deemed to be in possession of the Court. All the departments of the State Government opposed the sale and for providing exemptions or creating any further liabilities. The opinion given by the legal department was also not in favour of sale of the assets, but to file an application under section 466 of the Companies Act for rehabilitation. The proposal to the cabinet was based on a consideration that the official liquidator is unable to dissolve companies in liquidation for decades, and it takes more than twenty years to sell the assets of the company during which the workers suffered irreparable hardship. This consideration had no basis whatsoever. The State Governmen....
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....ly one valid proposal was received from Grasim Industries Ltd. It was considered by High Powered Committee. Part 1 of the bid of Rs. 195 crores covers the secured creditors and workmen, Rs. 11 crores was offered as Part II of the bid, and upon negotiation has also agreed to pay Rs. 35 crores towards VRS of the employees of the company (in liq.). The Advocate General agrees that the exercise should have been made by the official liquidator, who has been appointed as the liquidator of the company, after seeking approval from the High Court, but the State Government in right earnest, in public interest made advertisement and have received an offer which complies with the requirements of the Committee for sale, with intentions to avoid further delay for sale of the assets of the company (in liq.). 43. I have already disposed of the objections of Allahabad Bank, State Bank of India to the application of the State Government in the preceding part of this order. Two more objections have been received first by Bharatpur Nutritional Products Limited (formerly known as Dalmia Industries Ltd.) vide application No. 79609 of 2001. It is submitted in February, 1991, on account of recurring loss....
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....ctor, the installed capacity of cement plants is Rs. 2.57 million tones, and that the cost of setting up new plant of the said installed capacity, is around Rs. 1300 crores, i.e., at the rate of Rs. Five thousand per metric tone, what is needed in the present old plant is only some repairs and modernization costing rupees two hundred crores. On making deductions on account of such repairs and modernization of the worth of the present plant is about Rs. 11000 crores. The entire share capital of the company (in Liq.) is about 70 crores. Apart from the plants, lime stone lease at Ninga and Kajrahat having over 100 millions tones limestone deposits adjacent to the factory site. The apart, all he properties of the corporation have also been included in the offer. The actual worth of the plants can also be gauged from the fact that (1) company (in Liq.) has larges installed capacity (2) strategic advantages of corporation included proximity to limestone deposits at Kajrahat, Ghurma, Rohtas and that markets lie on the forwarded direction via Chunar (3) mining lease have limestone deposits of over 100 million tones. (4) The units are located in the region which is a major market is eastern....
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....ng an offer. 46. The workmen appearing through Sri Saumitra Singh have filed application to the effect that the offer of Grasim Industries Ltd. be considered favourably to avoid any delay in the matter of sale of the assets. The application filed on behalf of the CITU and 15 others supported by affidavit of Harendra Kumar Pandey have brought on record the number of unions, number of workers/employees per unit the period for which they have not been paid, wages structure, pay in the revised pay-scale, actual number of workmen from the date till which they employed with the corporation and the loan agreement with IDBI and State Bank of India. There are about 37 workers unions in the corporation. Out of these unions sixteen were petitioners in writ petition No. 15134 of 1998. There were about 5143 employees on roll in the company (in liq.) till 13-7-1998, and details giving number of employees grade-wise and designation-wise has been annexed to the supplementary affidavit. Apart from the aforesaid there are about 350 employees who have not been paid their retirement benefits after their retirement prior to 13-7-1998. The total number of employees to whom the dues are payable are appr....
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....e company be sold as early as possible. It is also in public interest to sell the assets so as to save the increasing financial burden on the non-productive assets and further to save and utilize the natural resources. In the present case the company has been wound up and the order of the winding up of the company has been wound up and the order of the winding up of the company has been upheld upto the Supreme Court. The State Government and all concerned have admitted that there is no possibility of its commercial revival, without reliefs and concessions by the State Government. The BIFR made all attempts to persuade the State to revive but the State Government was not ready to accept any further liability. 49. Rules 172 to 274 of the Companies (Court) Rules, 1959, made by Supreme Court of India, in constitution with High Courts, under section 643(1) and (2) of Companies Act, 1956 provide for sale by official liquidator in exercise of his power under section 457(1)(c) of the Act. Rule 272 and Rule 273 is quoted as below : "272. Sale to be subject to sanction and to confirmation by Court.-Unless the Court otherwise orders, no property belonging to company which is being wound-up ....
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....ate Government, namely, Finance Trade Tax, U.P. Power Corporation etc. advised the state Government not to sell the properties as going concern by offering any reliefs and concessions. (c)It was objected to by the Trade Tax Department and Finance Department that conference of the Chief Ministers had agreed not to offer any tax concession to any entrepreneurs being causing financial burden and in case of any breach, the Central Government may stop giving financial aid to the State Government. (d)The Law Department clearly advised that such an action can only be taken under section 466 of the Companies Act by applying for say of winding up by adopting process of rehabilitation, and not through sale of assets as going concern. (2) The first part of the bid of Rs. 195 Crores was based on the consideration namely that is workman's dues have been finalized up to date of winding up order and that the financial institutions and the Bank have entered into one time settlement by accepting only the principal amount towards their outstanding dues. The Court finds that workers dues were not calculated and that the official liquidator has reported that these figures are still being processed.....
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....bt Recovery Tribunal and keeping all its securities fully effective. The last condition, i.e., condition No. 8 is most important in which the State Bank of India stated as follows : "8. That the above conditions are subject to the final approval of the Board of the applicant Bank, i.e., State Bank of India." 52. The Court required the application to be supported by affidavit of a responsible Officer of the Bank and granted time for approval of the aforesaid proposal by the Board of the Bank Sri Kush Saxena. Advocate, filed an affidavit of Harendra Bansal, Chief Manager of the State Bank of India, Ghosia Branch, Ghosia, District - Sant Ravi Das Nagar, dated 4-12-2001, reiterating the contents of the application mentioned as above. Till the last date i.e., 3-1-2002 when the orders were reserved, the State Bank of India was unable to bring on record approval of the Board of Directors. The Allahabad Bank was most reluctant to give any commitment and after repeated orders to make its stand clear, an application was filed by Allahabad Bank through its counsel Sri P.N. Tirpathi stating that the State Bank of U.P. is guarantor of the dues of Allahabad Bank and in case the amount realized....
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....ate Government in which it was stated that in joint meeting held on 2-8-2001, the Financial Institutions have agreed to accept Rs. 241 crores offered by Grasim Industries Ltd. To be distributed as follows : (i)VRS of the workmenRs.35 crores (ii)Workers duesRs.135 crores (iii)Financial Institutions/Bank (principal amount)Rs.60 crores (iv)Towards the dues of the Financial Institutions/ Banks proportionate basis)Rs.11 crores Further it is stated in this letter that the working capital limit sanctioned by the S.B.I. are secured by first charge on the assets of the company and it is not secured by first charge and mortgage on all movable and immovable properties of the company, and as such they cannot have claim on the balance claim sale proceeds. The term loan of Rs. 5 crores by SBI is secured by first charge and mortgage on the immovable properties of the company. In view of the above, the claim of the S.B.I. and Allahabad Bank on the balance sale proceeds as well as excess sale proceeds is illogical and untenable. It is stated in the letter that the State Bank of India is misleading the Court and is trying to gain out of same. In view of the above it is observed in the letter t....
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....s the duty of the Court which is trustee of the property to look for the highest amount to be received out of the sale of the assets, both in public interest as well as in the interest of the creditors, workmen and the shareholders. The Court is thus not satisfied by the process adopted for the sale of the assets by the State Government. (7) Inspite of repeated queries, the State Government was not able to explain as to why Grasim Industries Ltd. has not made offer directly to the official liquidator and was trying to remain in the shadow of the State Government in making the offer. (8) The State Government was not willing to offer the reliefs and concessions to any other party. Initially when the Court directed the official liquidator to seek response of the State Government in offering the same concession to any higher offered, the reply given by Sri Pradeep Shukla, Secretary State Government to the Official Liquidator dated 30-10-2001 amounted to refusal. Para 2 of the reply is quoted as below : "2. The Government of U.P. does not support the move for retendering through the Official Liquidator due to the following reasons : (1)It will only unnecessarily delay the revival of....
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.... those offered to M/s. Grasim Industries. However, it is submitted that the following concerns of the State Government may kindly be also kept in view while taking a decision in this regard:- (i )The process of restarting the Unit may not get unduly delayed. (ii)There is no guarantee for a higher bid and meanwhile we may loose the offer already received. (iii)Besides, the bid amount, the resources competence, experience and the commitment of the bidder to run the unit also has to be kept in view. (7) That, however, in case it is decided to retender then the present offer of M/s. Grasim Industries should remain valid and the amount offered by them should be kept as the minimum reserved price. Moreover in case any higher bid is received in all fairness. Grasim Industries may be given the first option to purchase the property at that price. (8) That beside the State Government the consent of the Financial Institutions and Banks to extend similar accommodation the new purchaser is also necessary." 55. For the aforesaid reasons the application of the State Government for considering sale to Grasim Industries Ltd. as only offerer, in pursuance of invitation for sale does not find f....
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....d by State Government in its proposals to cabinet at Rs. 30 crores. The offerer shall be required to deposit earnest money of Rs. 10 crores by Bank Drafts in favour of official liquidator, U.P. at Allahabad. This amount shall be forfeited if the party whose offer/bid is finally accepted, makes default in payment on the terms and conditions of sale, or such negotiated conditions of sale or completing the offered formalities within the due date. If, however, the sale is completed and the conditions are complied with within specified time the earnest money shall be adjusted towards the final sale price without carrying any interest. It will be open to Grasim Industries Ltd. to make an offer to the official liquidator U.P. at Allahabad by depositing the earnest money as above. 5. If the bid is finally accepted by the Court, twenty-five percent of the sale consideration excluding the earnest money shall be paid within a period of 30 days, from the date of intimation regarding the final acceptance of the bid on the notified address of the bidder by registered post (AD) and balance in instalments to be negotiated with the Committee and accepted by Court, which shall not exceed beyond one....