TaxTMI 
TaxTMI 
2003 (9) TMI 566
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....their discretionary powers conferred under the provisions of the SIC Act blended with the duty cast on them under the SIC Act, is the short, but, vital issue that arises for my consideration in the above writ petition, testing the same in the teeth of judicial review conferred under Article 226 of the Constitution of India, to render complete justice in order to achieve the object of the above legislation. 2. The petitioner company is having the following divisions : (a)a textile division manufacturing and marketing cotton, silk and man-made fibre blended fabrics and woollen blended fabrics like cotswool and Angola having its mills, namely Buckingham and Carnatic Mills (B&C Mills) at Perambur (Chennai) and Banga lore; (b)an Engineering Division (manufacturing and marketing of C.I. Castings, Forgings, Sugar Mill Machinery and Equipment, Rice Mills, Granite Cutting Machinery, Electric Smelting Furnaces, Mini-Cement Plants and structural fabrication, ship repair works) at Meenambakkam, Chennai; (c)a Services Division (marketing of engineering and miscellaneous products) at Armenian Street, Chennai; Handloom, Power Loom and Woollen products and Hosiery at Armenian Street, C....
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....ve, ameliorative, remedial and other measures which need to be taken with respect to such companies; for expeditious enforcement of the measures so determined; and for matters connected therewith or incidental thereto. Therefore, it is clear that the SIC Act has been brought in the statute book in the public interest. 3.2 The preventive, ameliorative, remedial and other measures are required to be determined by the body of experts expeditiously or otherwise, the ill effects of the sickness in industrial companies such as, (i)loss of production; (ii)loss of employment; (iii)loss of revenue to the Central and State Governments; and (iv)locking of investable funds of the banks and financial institutions, are serious concerns not only to the company in question and to the Central and State Governments, but also to the society at large. It would, therefore, be imperative to revive such sick industrial companies as quickly as possible and salvage the productive assets and realise the amounts due to the banks and financial institutions, as otherwise the economy of the country itself would be eroded. 3.3 It is needless to point out that the industrialist must also have....
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....worth exceed the accumulated losses within a reasonable time and in that event the BIFR shall, by order in writing, give such time to the company as it may deem fit to make its networth exceed the accumulated losses. If the BIFR decides that it is not practicable for a sick industrial company to make its networth exceed the accumulated losses within a reasonable time and that it is necessary or expedient in the public interest to adopt all or any of the measures specified in section 18 in relation to the said company it may, by order in writing, direct any operating agency specified in the order to prepare, having regard to such guidelines as maybe specified in the order, a scheme providing for such measures in relation to such company. 4.2-4 Section 18 makes provision for preparation and sanction by the BIFR of a scheme with respect to a sick industrial company providing for any one or more of the measures, namely, (i)financial reconstruction of the sick industrial company; (ii)the proper management of the sick industrial company by change in, or take over of, management of the sick industrial company; (iii)the amalgamation of the sick industrial company with any other....
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....n 22, notwithstanding anything contained in the Compa- nies Act, 1956, or any other law or the memorandum and articles of association of the industrial company or any other instrument having effect under the said Act or other law, no proceedings for the winding up of the industrial company or execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof and no suit for the recovery of money or for the enforcement of any security against the industrial company or of any guarantee in respect of any loans or advance granted to the industrial company shall lie or be proceeded with further, except with the consent of the BIFR or, as the case may be, the Appellate Authority, namely the AAIFR. 4.2-9 Section 22A, which was introduced by Act 12 of 1994, provides that the BIFR may, if it is of opinion that any direction is necessary in the interest of the sick industrial company or creditors or shareholders or in the public interest, by order in writing direct the sick industrial company not to dispose of, except with the consent of the BIFR, any of its assets (a) during the period of preparation or consider....
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.... up. Therefore, it is clear that the winding up of the sick industrial company should be opted as a last resort where the operating agency reports that it is not viable to revive or rehabilitate the sick industrial company. There is no provision even under section 22-A of the SIC Act to impose a total ban on the power of a sick industrial company to dispose of a part of its assets and the only restriction is that the right of a sick industrial company to dispose of its assets is subject to the specific orders of the BIFR for the same under section 22-A of the SIC Act. In other words, making of a reference under section 15 of the SIC Act, by itself, does not ipso facto attract any restriction on the right of a sick industrial company to dispose of its assets. A specific order, contemplated by the BIFR under section 22-A for disposing the assets of the Sick Industrial Company, can be passed after considering the matter in accordance with the provisions of sections 16 and 17 of the SIC Act and framing a scheme under section 18 of the SIC Act. 4.7 A Division Bench of the Allahabad High Court in U.P. State Sugar Corpn. Karamchari Association v. U.P. State Sugar Corpn. Ltd. [Civil Mis....
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.... the 8 sugar mills which it was proposing to sell in view of the provisions contained in the Act. The judgment of the High Court cannot, there fore, be upheld and the appeal must be allowed." [Emphasis sup plied] (p. 1494) 4.9 The statutory authorities, namely the BIFR and AAIFR are, therefore, under an obligation to exercise the powers, much less their discretionary powers, blended with the duty cast on them, in order to achieve the objects of the SIC Act, namely : (i)to afford maximum protection of employment, (ii)to optimise the use of financial resources, (iii)to salvage the assets of production, (iv)to realise the amounts due to the banks, and (v)to replace the existing time-consuming and inadequate machinery by efficient machinery for expeditious determination by a body of experts to safeguard the economy of the country and protect viably sick units. 4.10 The SIC Act is, thus, intended to revive and rehabilitate sick industries before they can be wound up under the Companies Act, 1956, as held by the Apex Court in Real Value Appliances Ltd. v. Canara Bank [1998] 5 SCC 554. 4.11 Failure to keep a track of the above object of the legislation and the prin....
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.... 12-1-1996 of BIFR regarding de-registration of the petitioner Company. (vi)Pursuant to the order of this Court dated 25-2-1998 in W.P. No. 1198 of 1997, the petitioner Company submitted a fresh rehabilitation proposals to the BIFR which provided for :- (a )bifurcation of the assets and liabilities of the petitioner company between the original promoters and co-promoters; (b )Voluntary Retirement Scheme for the entire workforce both at Chennai and Bangalore units; (c )relocation of the manufacturing facilities and processing house from Chennai to Singaparumal Koil, near Kancheepuram, as well as Bangalore Silk Mills at a new location in Bangalore; and (d )investment in subsidiary, namely Binny Engineering Ltd. (BEL). Even though the said revised proposal was broadly accepted by the financial institutions and the State Bank of India, the same was not accepted by other consortium banks. (vii)Pending the above proceedings before the BIFR, the petitioner management and the workers entered into a settlement under section 12(3) of the Industrial Disputes Act on 28-3-1998, in the presence of the then Hon'ble the Chief Minister, which provided for Voluntary Retirement S....
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....larly the management will not interfere in the rights of the Union. 11. After implementation of the above settlement in full, all the cases will be withdrawn. Both the parties fully agree to the above settlement." (viii)Hence, a third revised rehabilitation proposal was submitted, which provided for reduction in cost of scheme. Even though the same was accepted in the joint discussion dated 15-3-1999 by all, the consortium banks did not agree to grant any concession in the interest rates. As a result, the said proposal was declared failed by the BIFR on 17-9-1999 and IDBI was reap pointed as Operating Agency under section 17(3) of the SIC Act. (ix)Thereafter, the petitioner company submitted another rehabilitation scheme on 19-11-1999 and again submitted another revised proposal on 13-12-1999 and thereafter, two more proposals one on 24-5-2000 and another on 29-5-2000 for scrutinization by the IDBI as per the guidelines enclosed by the BIFR with the proceedings dated 31-7-2000. A hearing was held to examine the above proposals, dated 19-11-1999, 13-12-1999, 24-5-2000, 29-5-2000, before the BIFR on 31-7-2000 and in the said meeting the Operating Agency (IDBI) represented....
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....ittee, including transferring such properties to 100% subsidiary of M/s. Binny Ltd. and M/s. Binny Karnataka Ltd.; (g)the transfer of properties to any subsidiary would be done with the prior approval of BIFR; (h)if any amount is realised through sale of immovable properties and sale of machinery within 90 days of sanction of the scheme, such amount would be deposited in a separate interest bearing 'No-lien account' with the Operating Agency; (i)the sale proceeds along with loans from the associate companies of the promoters and co-promoters were to be distributed by the operating agency for payment of the secured creditors, statutory liabilities and workers dues within 90 days from the date of sanction of the scheme; (j)in case the funds raised within 90 days by sale of assets and brought in by the promoters/co-promoters were not sufficient to pay all the secured creditors, statutory liabilities and workers dues, the amount lying in the 'No-Lien' account to the extent of proceeds from the sale of aforesaid assets would be distributed by the Operating Agency among first charge holders on pro rata basis; (k )if any amount is still left, it would be paid to the workers....
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....red creditors, statutory liabilities and workers dues within 90 days and as per the scheme. However, in case the funds raised within 90 days by sale of assets and brought in by the promoter/co-promoter were not sufficient to pay all the secured creditors, statutory liabilities and workers dues, the amount lying in the 'No-lien' account to the extent of sale proceeds of the aforesaid assets would be distributed by the Operating Agency among first charge holders on pro rata basis. After demerger, each company would meet its various commitments, as per the provisions of the rehabilitation scheme sanctioned by BIFR." (xv)Thereafter, the matter was adjourned for further hearing on 13-12-2001 and finally the scheme was sanctioned by order dated 13-12-2001 of the BIFR, but holding that the period of 90 days provided for in the scheme to make payment of the one time settlement to the financial institutions would commence from 13-12-2001 and would, therefore, expire on 12-3-2002. (xvi)It is, therefore, the scheme approved by the IDBI by the letter dated 5-10-2001, which provides for splitting of the petitioner company into two companies; for sale of properties of the petitioner compan....
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....rned occupant after collecting the key and taking possession of the quarters on behalf of the Management of the petitioner Company, if necessary with police assistance, and the said order had become final. (xx)Since the dues were not paid within 90 days from 28-12-2001, the financial institutions consortium banks and the Unit Trust of India, requested for the payment of interest in terms of the sanctioned scheme and therefore, a meeting was convened on 24-4-2002 calling on the promoters to implement the scheme without any modification. (xxi)A show-cause notice was issued to the petitioner company on 1-5-2002 for non-payment of dues of the financial institutions and banks as per the sanctioned scheme and a status report was called for from the Operating Agency (IDBI). (xxii)On receipt of the said show-cause notice, the Company submitted its reply to the BIFR, and the Operating Agency (IDBI), which was appointed as the monitoring agency as per the sanction order of the BIFR, also submitted a status report dated 25-6-2002. (xxiii)As per the direction of the Asset Sale Committee, the Company had advertised for the sale of 1260 grounds at Peram bur, Chennai, but did not rece....
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....f receipt of the order dated 1-7-2002, and disbanded the Asset Sale Committee with immediate effect and restrained the company from proceeding further in the matter in regard to sale/development of properties of the company. (xxvi)Pursuant to the option given to the petitioner in the order dated 1-7-2002, the petitioner company submitted a revised draft reha-bilitation scheme to the BIFR and the BIFR, in turn, directed the Operating Agency to examine the same. Accordingly, a joint meet-ing was convened on 10-10-2002. In the meeting held on 10-10-2002, the petitioner company also brought to the notice about the proposed sale of 1260 Grounds of land proposed to be transferred to BREAD, a subsidiary company at Rs. 79 Crores. In the said meeting the Promoters had agreed to deposit Rs. 20 Crores on or before 28-10-2002. But, since the petitioner could not deposit Rs. 20 Crores with the Operating Agency till 25-10-2002, as they only anticipated to effect the sale of properties to BREAD, a subsidiary company and proposed to take loans from other banks, the representatives of the financial institutions, consortium banks, debenture holders as well as the Ministry of Textile favoured wind....
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....ner company to discharge the dues of the secured creditors, viz., financial institutions and banks in one time settlement. (xxx)As per the directions of the BIFR dated 28-10-2002, the proposed offer of Sri Reddy and others was discussed at the joint meeting held on 9-1-2003, whereat all the secured creditors were agreeable for sale of the said property/land at the valuation/transfer price of Rs. 60 Crores, subject to the condition that the sale proceeds shall be deposited directly in No-Lien Account with the Operating Agency, IDBI, within thirty days from the date of approval of the BIFR. This proposal, acceptance and agreement among the petitioner company and the proposed purchaser through BREAD, a subsidiary company was also agreeable to the secured creditors, viz., financial institutions and banks, workers, and the Operating Agency, IDBI, strictly in accordance with the directions of the BIFR dated 28-10-2002. (xxxi)Accordingly, the petitioner company submitted a revised draft rehabilitation scheme on 14-2-2003, thereby agreeing to cancel the agreement entered into between the petitioner Company and the CREL, through BREAD, a subsidiary company to the petitioner company, a....
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....sing the Operating Agency (IDBI), State Bank of India (SBI), Indian Bank (lead bank) and the company for the proposed sale and the representative of the Operating Agency would be the Chairman of the Asset Sale Committee; (c )the Asset Sale Committee would fix a reserve price for the land and the same has to be approved by the BIFR; (d )a fresh advertisement would be issued for the sale of 1260 grounds of land at Perambur, Chennai and the Asset Sale Committee would meet within 15 days to finalise the detailed terms of sale; (e )If no bids are received in response to the advertisement or the bids received are not acceptable to the Asset Sale Committee, the company/promoters would be free to locate buyers and finalise the deal through mutual negotiation; (f )the advertisement should be issued within 15 days in view of the eagerness of the secured creditors; (g )on receipt of the offers, the Asset Sale Committee would analyse the bids; (h )the company would prepare a composite scheme including the rehabilitation of Binny Engineering Limited and submit the same to the Operating Agency (IDBI); and (i )the amount of Rs. 1.7 Crores would be paid to the workers out of R....
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....on Bank of India, T. Nagar Branch for a sum of Rs. 6,50,00,000 and Banker's cheque No. 100618 drawn on American Express Bank Limited dated 20-3-2003 for a sum of Rs. 39,96,164. 2. The parties acknowledge that the agreement dated 12-3-2002 entered between the parties shall hereby stand cancelled without any claim whatsoever by one party to the agreement against the other. 3. Both parties agree that this Memorandum of Compromise shall be placed before the BIFR/AAIFR at its next hearing to be held on 27-3-2003. In witness whereof the parties hereto have set their signatures unto this agreement on 20-3-2003." (xxxv) Aggrieved by the order dated 24-2-2003 of the BIFR, in the light of the memo of compromise entered into between the petitioner company and CREL on 20-3-2003, the petitioner company preferred an appeal to the AAIFR seeking to set aside the order of the BIFR dated 24-2-2003 and to approve the scheme dated 14-2-2002, expeditiously. However, the AAIFR, by order dated 9-5-2003 in Appeal No. 83 of 2003, confirmed the order of the BIFR dated 24-2-2003. (xxxvi) Hence, the above writ petition seeking a writ of Certiorarified Mandamus to call for the proceedings of the....
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....ng the rehabilitation of Binny Engineering Limited and submit the same to the Operating Agency (IDBI); and (i )the amount of Rs. 1.7 Crores would be paid to the workers out of Rs. 20 crores lying in the 'No Lien Account' with IDBI. 6.2 On an appeal preferred by the petitioner Company, the order of the BIFR dated 24-2-2003 was confirmed by an order dated 9-5-2003 of the AAIFR, holding that the petitioner company failed to bring the funds into the company for disbursement of the out standing dues to the secured creditors, viz., financial institutions and banks for a long time, even though they are prepared to sacrifice the interest considerably. While confirming the order of the BIFR dated 24-2-2003, the AAIFR, making a reference to the decision of the Supreme Court in Chairman and Managing Director, SIPCOT v. Contromix (P.) Ltd. JT 1995 (6) SC 283 as followed in Haryana Financial Corporation v. Jagadamba Oil Mills JT 2002 (1) SC 482, observed that for sale of the public property, adequate publicity should be given and the best price should be secured by public auction. The AAIFR also found that the sale of 1260 grounds for a sum of Rs. 60 crores is not reasonable, for want of ....
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....manufacturing activity. would be under BL. 7.2 As per the scheme, the contribution by the Promoters and the Co-promoters shall be made as follows : "Promoters Contribution The promoters have brought in Rs. 2,300 lakhs in the year 1998-1999 and Rs. 1,300 lakhs in March 2002 utilised towards part payment of workers' dues. A further sum of Rs. 800 lakhs is deposited in NLA account with IDBI on behalf of Ethurajan Group in November 2002. Out of this a sum of Rs. 250 lakhs has been paid in May 2003 towards 1st instalment of interest as per the direction of Hon'ble High Court of Madras. The balance funds in No Lien Account would be 'lien' marked on sanction of Scheme by High Court of Madras. The promoters are also bringing Rs. 755 lakhs to meet the balance interest payments to workers. Thus the total promoters contribution would work out to Rs. 5,155 lakhs towards the cost of the scheme. Of this it is proposed to convert a sum of Rs. 2,500 lakhs into redeemable preference share capital carrying dividend rate so as to give a yield not higher than that of SBI's Prime lending rate, after considering tax benefits, if any. This dividend would be payable only when the company start....
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....mount to be settled is Rs. 3,673 lakhs, and the same has to be arranged by the co-promoter, crystallised as follows : Name of the Bank Crystallised Amount as on 31-3-2001 Name of Institution/ Bank Crystallised amount as on 31-3-2001 Already paid Balance payable Funds to be arranged by promoters Funds to be arranged by co-promoters Indian Bank 2993 IDBI 949 223 726 Oriental Bank of Commerce 1802 IFCI 125 29 96 Bank of Baroda 789 ICICI 241 57 184 Federal Bank Ltd. 552 Debenture-Holders 73 17 56 SBI 2500 589 1911 Govt. of India 700 0 700 Total (A) Total (B) 4586 915 3673 Total Crystallised amount (A+B) = 10,724 Lakhs The aforesaid crystallised amount of Rs. 10024 Lakh (after adjusting Rs. 915 lakhs which has already been appropriated) would carry simple interest @ 6% p.a. from April 1, 2001 till 31st July, 2003 estimated at Rs. 1,357 Lakhs and such interest would be paid ....
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....ber 2001 as under : (Rs. Lakh) Total amount payable to workers 6775 Amount paid till October 21, 2001 2642 Balance amount payable as on October 31, 2001 which was provided for payment in the rehabilitation scheme sanctioned in October/December 2001 4133 Less : Amounts paid after 31, 2001 Released by OA as per BIFR order from Insurance Claim Paid by the company in March, 2002 from their own sources 958 1950 2908 Balance payable to workers/Staff Workers & Staff Dues 200 Management Staff dues 100 Arrears of Salary (Gross) 81 Dues of Co-op Society : Workers (762) & HO Staff 844 1225 In addition to the above, a sum of Rs. 207 lakhs as under is also payable towards arrears dues in respect of Bangalore Mills : (Rs. Lakh) PF Dues 150 Balance ESIC dues 10 Gratuity etc. to persons retired/resigned during 1996-2002 27 Arrears of salary etc. 15 Management Staff salary 5 Total 207 The workers' dues aggregating Rs. 1,4....
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....38 lakhs (inclusive of interest of Rs. 40 lakhs as stated above). Clause 7(d)( iii ) : Workmen occupying the company's quarters shall vacate all the quarters occupied by each one of them. With the handing over of clear vacant possession of each quarter, the company would simultaneously hand over the cheque in full settlement of each work man's dues as per the scheme. Apart from advising the workmen to vacate the quarter as per the manner detailed above, the Worker's Union will also cooperate with the management in all possible legal manner in taking vacant possession. Clause 7(d )( iv) : About 398 workmen who have applied under VRS pursuant to the settlement dated 28-3-1998 have not been relieved by the management and have been retained. Of these 398 workmen, 281 workmen have already retired. Such of the above workmen who have already retired/will retire shall claim only 50% of their last drawn wages (reckoning it as on 15-6-1996) from 28-3-1998 (the date of settlement) and their eligible gratuity till the date of their superannuation. They shall not claim any other benefit under the settlement dated 28-3-1998." Clause 3(B)(ii) provides for settlement of dues under t....
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.... be as prescribed in the advertisement dated 23-5-2003." 7.10 After settling the dues by way of one time settlement to the secured creditors, namely the Financial institutions and the consortium banks as well as the Workers, as provided under the scheme referred to above, there shall be a balance of Rs. 345 lakhs out of the source of funds covered under the scheme after discharging the liabilities as stated hereunder : (Rs. Lakhs) SOURCES Promoters Contribution already brought in 800 Interest already paid to workers 250 Funds available in Escrow amount with IDBI 550 Promoters contribution for interest payment to workers 775 Co-promoters contribution - already brought - to be brought 1200 3388 4588 Funds available in Escrow account with IDBI 167 Real Estate proceeds out of the sale as per orders of Hon'ble High Court - Madras 6210 Interest receivable from Insurance & IDBI 512 Total 12782 Application: OTS to Institutions 4588 Less Amount appropriated 915 3673 OTS to Banks &nbs....
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....mit tee, itself, in the meeting held on 26-6-2002 considered that Rs. 77 Crores would be a reasonable price for the sale of 1260 grounds. 8.1 According to Mr. R. Krishnamurthy, learned senior counsel, the earlier sale consideration of Rs. 75 Crores by Carnatic Real Estate Ltd., was sought to be made within 18 months from the sanction of the scheme, and the present offer namely, a sum of Rs. 60 crores for the property of an extent of 1260 grounds is agreed to be made in 15 days from the date of sanction of the scheme, which would help the petitioner company to discharge their dues in one time settlement to the secured creditors as well as the workers, and hence, it is contended that the refusal to sanction the present proposal as well as sale of 1260 grounds of land for Rs. 60 Crores alleging the same is not transparent is arbitrary and unreasonable. 8.2 Mr. R. Krishnamurthy, learned senior counsel, points out that the property sought to be disposed off by the petitioner company is not a public property, but it is a private property of the petitioner company and therefore, the decision of the Supreme Court in Contromix (P.) Ltd.'s case (supra) as followed in Haryana Financial ....
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....wn source of Rs. 200 crores to run the scheme viable. Hence, the impugned scheme is fully tied up in respect of the settlements of the secured creditors, viz., financial institutions, banks and debenture holders, as well as for settlement of dues payable to the workers. 8.7 The learned Senior Counsel also invited my attention to the shifting of a textile unit to a new location over an extent of not less than 50 acres in Kancheepuram District, which would function with 170 looms with a processing house. The capacity of the textile unit would be 40,000 metres of double width cloth, which is equivalent to 80,000 metres of cloth produced earlier. The company also would run 90 piconol loom and 66 silk looms either in the same location or at a new location at Bangalore, to safeguard the interest of workers and secured creditors. (B) - Submissions Made on Behalf of the Respondents (i) - On Behalf of Secured Creditors - Financial Institutions & Banks 9. Mr. M. Balachandar, learned counsel appearing for respondents 3 and 41, viz., State Bank of India, invited my attention to the counter affidavit filed on behalf of respondents 3 and 41, for the sale of land of the petitioner,....
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....d on behalf of respondents 6 and 28. The relevant portion is extracted hereunder : "...The petitioner has also informed the Hon'ble Court that as per the directions of this Hon'ble Court, IDBI, Operating Agency, issued an advertisement inviting offers for sale of the property belonging to the petitioner company by 12-6-2003. The Operating Agency has also informed that there is only one offer received in response to the advertisement which was opened on 16-6-2003 at the office of IDBI at Chennai. The offer for sale of 1260 grounds of land at Chennai has been received from one Mr. G.H. Reddy, promoter of Dyna Hotels, and Sri K.S. Aghoram, Director, SSI Ltd. in their individual capacities and they offered to purpose the same for a sale consideration of Rs. 6210 lakhs. Based on the said offer, the petitioner company has given a modified draft Rehabilitation Scheme in terms of which the dues of this respondent will be cleared. The six respondent had considered the revised rehabilitation scheme and have no objection to order the said scheme by approving the sale of the land, as per the advertisement of IDBI (Operating Agency) and for approval of the modified revised draft rehabilit....
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....esaid offer of payment of 6,210 lacs for the purchase of land and building situated at Perambur, Chennai. The respondent bank has considered the offer of the petitioner company and agreed to accept a sum of Rs. 2,993 lacs towards full and final settlement of the dues in respect of the account M/s. Binny Ltd., and had given a letter to the company on 24-6-2003 subject to approval of the modified/revised/rehabilitation scheme to be sanctioned by this Hon'ble Court or by the competent authority. This respondent bank is eager to recover the amount of Rs. 2,993 lacs within the stipulated period and therefore is equally interested in the approval of the scheme by confirmation of the sale of the land of the petitioner with the permission of this Hon'ble Court as suggested by the petitioner company..." 9.5 Mr. Vasan, learned counsel appearing for 15th respondent, viz., Oriental Bank of Commerce, brought to my notice the averments stated in the counter affidavit filed by 15th respondent, of which, the relevant portion is extracted hereunder : "...The offer for sale of 1260 grounds at Chennai has been received from Sh. G.H. Reddy, promoter of Dyna Hotels, and Sri K.S. Aghoram, Director....
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....has made an endorsement to the effect that the 20th respondent - Board agrees for the scheme upon receipt of the amount due to the Electricity Board. 9.9 Mr. M.S. Palanisamy, learned Additional Government Pleader appearing for respondents 22 and 44, invited my attention to the counter affidavit filed on behalf of 22nd and 44th respondents viz., B & C Mills Employees Co-operative Society, and Binny's Engineering Works Employees Co-operative Credit Society Ltd., respectively, that they have no objection for the approval of the scheme, provided the petitioner settles the amount recovered from the employees towards principal and interest and that they have no objection for the petitioner to seek waiver of interest, if the same is permissible in law. 9.10 Mr. V.G. Sureshkumar, learned counsel appearing for the 24th respondent, viz., Ministry of Railways, submits that except to demand the outstanding due payable by the petitioner to the Railways to the tune of Rs. 6,69,639, this respondent has no objection for the approval of the scheme. 9.11 Mr. V. Vibhishanan, learned counsel appearing for 49th respondent, viz., Employees Provident Fund Organization, submits that the 49th resp....
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.... submits that in any event since the issue with respect to the said claim of Rs. 1.75 Crores towards the alleged wages for the period from 1-3-1997 to 7-7-1997 is pending before the Joint Labour Commissioner (Conciliation), Chennai, the Management and the workers would abide by any decision arrived therein. 9.13-2 Mr. N.G.R. Prasad, learned counsel contending on behalf of the respondents 18, 27 and 34 representing the Binny Beach Engineering Workers Union, claims that the wages due to the workers for the months of May, June and July, 2003 should be paid to them and the same was readily accepted by Mr. R. Krishnamurthy, learned senior counsel for the petitioner. 9.13.3 With respect to the claims made by the workmen that are still pending before this Court as well as the Labour Court, in, (i)W.A. No. 640, 641/1999 on the file of this Hon'ble Court between Workmen of Binny Beach Engineering Workers Union and the Management of Binny Limited; (ii)W.A. No. 2328/2002 and W.A. No. 717/2003 on the file of this Hon'ble Court between workmen of Binny Beach Engineering Workers Union and the Management of Binny Limited; (iii)I.D. No. 24/86 & 11/88 on the file of the Indus trial T....
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....scheme for sale of 1260 grounds is accepted", provided the 43rd respondent is paid his wages for last three months of his employment at Binny Engineering Limited, of course, without prejudice to his right in the Claim Petition C.P. No. 72 of 2000 pending before the Principal Labour Court, Chennai, Mr. R. Krishnamurthy, learned senior counsel for the petitioner company agrees that the company will settle the dues to the 43rd respondent as per the decision in the said claim petition C.P. No. 72 of 2000 and shall also pay wages for three months to the 43rd respondent for his employment in Binny Engineering Limited. 9.14.1 Mr. S. Jegadeeshwaran, learned counsel appearing for the 45th respondent submits that though the 45th respondent had opted for Voluntary retirement and the same was accepted, pursuant to which the terminal benefits were arrived at, the 45th respondent did not receive the same claiming that he is entitled for Voluntary retirement compensation and the terminal benefits with accrued interest thereon as per the settlement dated 28-3-1998 entered under section 12(3) of the Industrial Disputes Act. But, Mr. R. Krishnamurthy, learned senior counsel appearing for the peti....
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.... in the impugned scheme. 9.17 Mr. K.M. Ramesh, learned counsel for the 55th respondent, contends that out of 10.25 Crores provided for payment of dues to the workers and employees of the Bangalore Mill, a sum of Rs. 8.18 Crores has already been paid and the balance amount of Rs. 2.07 Crores has to be provided in the present rehabilitation scheme. In response, Mr. R. Krishnamurthy, learned senior counsel fairly agrees to settle Rs. 2.07 Crores to the workers working in the Bangalore Woollen and Cotton Mills represented by the 55th respondent. 9.18 Of course, two employees, namely Shaik Mahboob and A. Nagarajan, working in the Management proposed to implead themselves in the above writ petition in W.P.M.P. No. 25551 of 2003. However, pending the above W.P.M.P., the said two workers along with other nine workers have entered into a compromise with the petitioner management on 22-8-2003 agreeing to settle the dues and to vacate the quarters as stated therein, which reads as follows : "1. The petitioners herein had filed a petition to implead them selves as representatives of 11 Management Staff, who have filed Computation Petitions before the Labour Court at Chennai as listed ....
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....e MAA Communication Bozell Ltd. Chennai proposed to implead themselves as proposed respondent in the above writ petition by way of W.P.M.P. No. 27238 of 2003, claiming as an unsecured creditor for the settlement of the dues, Ms. Anna Mathew, appearing for the proposed respondent withdrew the said W.P.M.P. No. 27238 of 2003 as not pressed on 22-8-2003. (iv) - Submissions made on behalf of the co-promoter : 9.20 Mr. V. Ayyadurai, learned counsel for the 46th respondent, Co-promoter had filed an affidavit agreeing to bring in 34 Crores within three weeks from the sanction of the scheme. Relevant portion of the affidavit reads as follows : "...5. I submit that since we have already been undertaken to bring in a further amount of Rs. 34 crores to discharge the liabilities of the company on sanctioning of the scheme, we have already tied-up with M/s. ICICI Bank who have agreed to advance a loan of Rs. 38 crores to be brought into the petitioner company, the Binny Limited by us for discharging its liabilities towards secured creditors. In any event we are prepared to bring in the said amount of Rs. 34 crores within three weeks from the sanctioning of the scheme by the Hon'ble Hig....
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.... submit that we are ready to comply with the terms of advertisement that require us to make the balance payment within 15 days from the date of acceptance of the bid by an order of this Hon'ble Court and the issuance of appropriate directions towards the transfer of property to BREAD, free of encumbrance, and the sale of the shares of BREAD as contemplated in the advertisement. 6. I submit that for the purpose of making the balance payment we have tied up financing arrangement with Union Bank of India, Industrial Finance Branch who have agreed to sanction and disburse a total amount of Rs. 50 crores. Once the property is transferred to BREAD, against the transfer of the entire shares to BREAD to us, the loan amount of Rs. 50 crores would be disbursed directly by Union Bank of India to the no lien account of the operating agency. Simultaneously with such disbursement, the original title deeds in relation to the property would be handed over by such of the secured creditors in whose custody the documents of title are deposited to M/s. Union Bank of India, towards the creation of equitable mortgage by us by way of deposit of title deeds to secure the disbursement of the loan. **....
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....nits from any legal proceedings for recovery of money and for enforcement of any security against the sick industrial company or of any guarantee in respect of the loan or advance granted to the sick industrial company, except with the consent of the BIFR or as the case may be, the AAIFR. Equally, there is also a bar to alienate the assets of a sick unit except with the consent of the BIFR as provided under section 22A of the SIC Act. 10.4 While exercising the powers to sanction scheme under section 19 of the Act for a sick unit or granting consent for the disposal of the assets of the sick unit under section 22A of the Act, a statutory duty is cast on the BIFR/AAIFR, as the case may be, to achieve the objects of the SIC Act, referred to above. Sections 19 and 22A of the SIC Act even though are overlapping and inter-related, they are exclusive and independent. The power, much less the discretionary power conferred on the BIFR under sections 19 and 22A of the SIC Act, coupled with the duty cast on them thereunder, are therefore, nothing but warp and weft of the cloth, but for the one, the other would be of no useful purpose. 10.5 In the instant case, concededly, the impugned r....
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.... and 28-10-2002 together, makes it clear that the Asset Sale Committee which was disbanded on 1-7-2002, was not reconstituted by the BIFR while passing the proceedings dated 28-10-2002, while directing the secured creditors, namely financial institutions and banks to take a final view including on the valuation and transfer price of the assets/property, and directed the petitioner company to allow the bankers and other secured creditors to inspect the properties/records for satisfying themselves as to the assets sold/amounts received, etc., and further directed the Operating Agency, IDBI to submit its clear report within thirty days from 28-10-2002. Therefore, the secured creditors, viz., financial institutions and banks, along with the promoters were allowed to find out a buyer for the assets of the petitioner company, without constituting the Asset Sale Committee. 10.8 It is only under such circumstances, the offer made by Shri Reddy and others for purchase of 1260 grounds at the cost of Rs. 60 Crores riped for consideration of the secured creditors and bankers fruitfully, as the proposed purchaser was willing to pay the entire sale price of Rs. 60 crores within 15 days from t....
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.... BIFR and the AAIFR. 10.10 The AAIFR in its order dated 9-5-2003 while confirming the order of the BIFR dated 24-2-2003 held that the assets of the petitioner company should be sold only by way of public auction through advertisement, referring to the decisions of the Apex Court in Contromix (P.) Ltd.'s case (supra) as followed in Haryana Financial Corpn.'s case (supra) in order to procure the best price for the sale of public property, the property should be brought on public auction. The reliance place on the said decisions is not tenable in law as the assets proposed to be sold by the petitioner company are not public properties. 10.11 In any event, when the transparency sought for by the authorities among the Operating Agency (IDBI), Secured creditors, namely the financial institutions, the banks and the petitioner company are duly satisfied, I fail to understand the reason for rejecting the sale of 1260 grounds of land to the 87th respondent, who is willing to deposit the entire sale price with the Operating Agency (IDBI) within 15 days from the date of sanction of scheme. 10.12 Be that be, while admitting the above writ petition, this Court, by order dated 13-5-2003 ....
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....ugned order dated 24-2-2003 of the BIFR as well as the order dated 9-5-2003 of the AAIFR, with the following directions : (i)The promoter and the co-promoter (46th respondent) shall deposit a sum of Rs. 7.55 crores and Rs. 34 crores, respectively, in an interest bearing 'No Lien Account' with the Operating Agency (IDBI), within 10 days from today (or) on or before 3-10-2003, whichever is earlier. (ii)The petitioner company, its subsidiary company BREAD, and the proposed purchaser (87th respondent) shall complete all necessary formalities such as transfer of shares, passing of necessary resolutions getting clearance from the secured creditors, viz., financial institutions and Banks to whom 1260 grounds of land at Perambur, Chennai that belongs to the petitioner company, proposed to be sold are furnished as security, for transferring the said property to the proposed purchaser (87th respondent), free of all encumbrances within ten days from today (or) on or before 3-10-2003, whichever is earlier; (iii)the proposed purchaser (87th respondent) shall deposit the entire balance sale price of Rs. 56.10 crores (Rs. 62.10 crores - Rs. 6 crores already paid), for the sale of 1260 gr....