Workmen
of M/S Rohtas Industries Vs. Rohtas Industries & Ors [1995] INSC 572 (18 October 1995)
Kuldip
Singh (J) Kuldip Singh (J) Agrawal, S.C. (J)
CITATION:
1996 AIR 467 1995 SCC Supl. (4) 5 JT 1995 (7) 629 1995 SCALE (6)58
ACT:
HEAD NOTE:
WITH WRIT
PETITION (CIVIL) NO.443 OF 1986 Workers of Dehri-Rohtas Light Rly. Co. Versus Secretary of the Govt. of India and Ors.
O R D
E R
Rohtas
Industries Limited (hereinafter referred to as `the Company') was running a
large industrial undertaking comprising of units for manufacturing cement,
paper & board, asbestos, vulcanised fibres and vanaspati at Dalmia Nagar in
District Rohtas of the State of Bihar. The Company has three associate
companies, namely, Ashoka Cement Ltd., Parshava Mining and Trading Company Ltd.
and Dehri Rohtas Light Railway Company Ltd. The Company was employing about
10,000 workmen. Troubles started in 1982-83 and ultimately the units of the
Company were closed with effect from September 9, 1984 resulting in denial of employment
to the workmen. A petition (Company Petition No.3 of 1984) was filed for
winding up of the Company before the Patna High Court and in the said petition
the Patna High Court on May
22, 1986 appointed the
Provisional Liquidator. During the pendency of the said petition, the workmen
of the Company moved this Court by filing this writ petition under Article 32
of the Constitution. The petition was entertained by this Court with the object
of reviving the industry and rehabilitating the workmen. Notice was issued to
the State of Bihar and the Union of India so as to
enable the Court to solve the human problem of unemployment of large number of
workmen. While the matter was pending consideration, the provisions of the Sick
Industrial Companies (Special Provisions) Act, 1985 (for short `the Act') came
into force. As per suggestion of the learned Attorney General, the Court on October 28, 1987 passed an order whereby the Central
Government was directed to make a reference to the Board of Industrial and
Financial Reconstruction (BIFR) to frame a scheme under the Act and submit the
same to the Court. The BIFR submitted a report on April 22, 1988 wherein it was stated that three of the units of the
Company, namely, cement, asbestos and vanaspati could be revived but the paper
unit could not be revived. Keeping in view the said report of the BIFR as well
as the statements filed on behalf of the State of Bihar and Union of India and the
memorandum prepared by the learned Attorney General of India filed before this
Court, the Court passed an order dated October 24, 1989 wherein it was observed :
If the
Company is not revived and gets liquidated, the liabilities would turn out to
be far in excess of the assets and notwithstanding first or second charge on
the assets, the creditors may not appreciably benefit. This Court cannot lose
sight of the fact that living to about 10,000 families has been denied for over
five years and apart from national loss, the workmen have been put to serious
jeopardy. In these circumstances, we are satisfied that it is of paramount
importance that the Company in respect of the viable units should be revived
and allowed to come into production." The Court directed the State of
Bihar to appoint an authorised officer from the senior IAS cadre with
appropriate commercial background to be the Rehabilitation Commissioner and the
Provisional Liquidator appointed by the High Court in the winding up
proceedings was directed to hand over to the Administrator all the assets of
the Company which he had taken over under order of the Court and the several
other assets of the Company which had not been taken over the Provisional
Liquidator shall vest in the appropriate officer upon being designated and he
was entrusted with the power to lake such steps as are necessary to take over
possession of such assets of the Company. It was also directed that the assets
of the company encumbered with financial and other institutions shall not be
available to be proceeded against for a period of one year from the date of the
order and there shall be a moratorium for a period of one year in regard to
proceedings taken and pending of or to be taken against the Company hereafter
and limitation shall remain suspended under the said order of the Court. The
State Government undertook to deposit an amount of Rs.15 crores with the
Administrator and the Court directed the Union of India to advance a similar
amount of Rs.15 crores to the State of Bihar from out of plan assistance for
the State and it was directed that the said sum of Rs.15 crores be paid by the
State Government to the Administrator which amount shall be utilized, in due
course, for payment of arrear of wages and for disbursement of secured loans of
financial institutions and other parties for which security of the Company's
assets had been furnished. The Administrator was directed to set up one
Committee to examine the claims of the owners of the Company and other parties
including financial institutions.
In
accordance with said directions given by this Court, the State of Bihar designated an officer to work as
Administrator (Rehabilitation Commissioner) who took over the assets of the
Company and a sum of Rs.30 crores was paid by the State Government to the
Rehabilitation Commissioner.
Out of
the said sum of Rs.30 crores a sum of Rs.6 crores was given by the State
government by way of grant and Rs.24 crores was to be repaid by the company.
The Rehabilitation Commissioner, by his efforts, was able to start four of the
units providing employment to 2900 workmen. But due to financial constraints,
the units could not function in a way as to earn profits and had to be closed
after some time. The Rehabilitation Commissioner moved the Court seeking more
funds but the State of Bihar and the financial institutions expressed their
inability to advance the funds. In the circumstances, the Court felt that the
best course would be to dispose of the whole undertaking and that in order to
ensure that the undertaking fetches an adequate price it should be disposed of
as a running concern. The Court, by order dated September 8, 1993, directed the
State of Bihar to advance a further sum of Rs.10 crores as loan to the Company
for the resumption of the production of the units of the undertaking and in
order to enable the State Government to pay the said amount, the Union of India
was directed to advance to the State of Bihar a sum of Rs.10 crores from out of
the plan assistance for the State or any other account.
The
Rehabilitation Commissioner was directed to have the assets of the undertaking
valued by an approved valuer and the Commissioner and Secretary, Department of
Industries, Government of Bihar, was directed to publish an advertisement in
five prominent national newspapers (English language) and three national
newspapers (Hindi language) inviting offers for the purchase of the entire
industrial undertaking of the Company as a running concern. It was also
directed that out of the amount received by the disposal of the undertaking of
the Company the Rehabilitation Commissioner shall first repay the loan of Rs.10
crores advanced by the State of Bihar in pursuance of the said order before
discharging any other liability of the Company.
In
response to the advertisement which was issued in pursuance of the directions
contained in the order dated September 8, 1993,
14 offers were received by the State of Bihar for the purchase of the units as a whole and the maximum officer was
for Rs.15 crores for the entire complex.
The
said offers were placed before the Court for consideration and on March 3, 1994 this Court observed :
Keeping
in view the total assets of the company which have been assessed by the
Rehabilitation Commissioner at about Rs.250 crores, it is not possible for us
to even consider any of the 14 offers received by the State of Bihar." On May 2, 1994 the Court passed an order wherein it was observed
that "the best course would be to revive the reference which was made to
BIFR by the Central Government in pursuance of the order of this Court dated October 28, 1987." The Court, therefore,
directed that the reference that had been made by the Central Government to the
BIFR in pursuance of the directions given by this Court in the order dated October 28, 1987 be revived and a report be
submitted by the BIFR to the Court in relations to the following matters :
(a)
Whether the Company is capable of being rehabilitated in a manner that it can
operate profitably so that its net wealth would ultimately become positive and
the units become financially stable and self-supporting.
b) The
short-tern measures, if any, which can be taken immediately.
c) The
long-term measures required to rehabilitate the Company." The BIFR was
also directed that the proposal submitted by the Rohtas Industries Workers'
Co-operative Society Ltd. may also be considered.
The
BIFR appointed Industrial Financial Corporation of India (IFCI) for preparing a
report and IFCI, in turn, appointed Soni Industrial Revival Consultants
(SIRCON) to prepare schemes as per the directions of this Court. SIRCON
submitted its report on `Techno-Economic Viability Status of the Associates
Companies of Rohtas Industrial Ltd.'. After considering the said reports
submitted by SIRCON and the three proposals which were received by the BIFR
from Rohtas Industrial Workers' Cooperative Society Ltd; Shri L.N. Dalmia and Speedcrafts
Pvt. Ltd., the BIFR submitted its report dated May 22, 1995.
The
conclusions of the BIFR, as stated in the report dated May 22, 1995, are as follows
:
i) No
viable and feasible proposal for revival of the RIL or any of its units has been
received from the Rohtas Industries Workers' Cooperative Society Ltd or any
other private party. It follows that the RIL can be revived only if the State
Government and the financial institutions/banks can provide the requisite
funds.
ii)
RIL as a whole (excluding their three associated companies) are viable only
under Variani IV i.e., if the State Government brings in the entire amount of
Rs.225.71 crores required for rehabilitation as equity, makes OTS of the dues
of financial institutions and banks by paying them Rs.22.24 crores, and
provides massive reliefs by tax/royalty. Cement, Asbestos and Paper Units are
also independently viable under Variant IV with these reliefs.
iii)
Cement unit is independently viable under Variant II, i.e., if the entire amount
of Rs.155.50 crores is brought by the State Government as equity. It is also
viable under Variant IV, i.e., if there is OTS of the dues of financial
institutions and banks and the entire cost of rehabilitation of Rs.159.79 crores
is brought in by the State Government as equity.
iv)
Asbestos unit is independently viable under Variant III, i.e., if 50% of the
amount of Rs.342 lacs required for rehabilitation is brought by the State
Government as equity and 50% is arranged as loan and there is OTS of the dues
of financial institutions involving a payment of Rs.106 lacs. It is also viable
under Variant IV, i.e., if the entire amount of Rs.342 lacs is brought in as
equity by the State Government and there is OTS of the dues of the financial
institutions and banks.
v)
Paper unit is viable only under Variant IV, i.e., if the entire amount of
Rs.57.65 crores required for rehabilitation is infused as State Government's
equity, there is OTS of the dues of financial institutions and banks involving
a payment of Rs.15.35 crores, and the State Government provides reliefs by way
of deferment of sales tax for eight years (Rs.9.60 crores).
vi) Vanaspati
Unit is non-viable under all the four Variants.
vii)
Variant IV is the only viable alternative as Cement, Asbestos and Paper Units
are independently viable and the RIL as a whole is also viable under this
Variant. Under Variant III, only Asbestos Unit is viable independently and RIL
as a whole is non-viable. Under Variant II, only Cement Unit is viable and the
RIL as a whole non-viable. Under Variant I neither any Unit nor the RIL as a
whole is viable.
viii)
Non of the three associated Companies, viz, Parshava Mining & Trading Co.
Ltd. (PMTL), Dehri Rohtas Light Railway Co. Ltd. (DRLR) and Ashoka Cement Ltd.
(ACL) is viable.
ix)
There are three crucial factors for achieving long-term viability, if the RIL
is to be revived under Alternative IV.
a)
Adequate supply of raw material is to be ensured. This may involve renewal of
existing mining leases exploration of new areas and grant of new leases, in the
case of Cement Unit. Similarly, existing forest leases may have to be renewed
and/or some other leases granted, and alternative sources of raw material like bagasse,
waste paper and pulp also explored for the Paper Unit.
b)
Adequate power supply is to be ensured.
c) The
management is to be revamped, strengthened and professionalised and made
accountable. There has to be a broad based Board of Directors with
representatives of the State Government, the concerned financial institutions
and banks, workers and professionals.
Professionals
also need to be inducted in senior managerial positions, particularly in
Finance/Accountants, Production and Personnel/Industrial Relations, Internal
audit, concurrent audit, proper purchase and sales procedures, costing system
and Management Information System have also to be introduced." After
considering the said report of the BIFR, this Court passed an order dated July 21, 1995 wherein it was observed :
"The
cumulative effect of the report is that there is no possibility of the revival
of this industry through the efforts of this Court as at present. The BIFR has
also discussed various proposals for the revival of the industries received by
it. Two proposals are worth mentioning. Proposal of Shri L.N. Dalmia and his
son-in-law Shri L.N. Mittal is still under consideration.
Shri Ashok
Sen, learned senior counsel representing Shri L.N. Dalmia states that he would
consult his client in the light of the matters mentioned before the Court and
report back within four weeks from today. The other offer is from Speedcrafts
Pvt. Ltd. The learned counsel assisting us on behalf of Speedcrafts Pvt. Ltd.
also states that he would also consult his client i n similar terms and report
back to the Court. We are keeping the options open so far as the suggestions
which may come from these two private parties." Thereafter, when the
matter was taken up on August
25, 1995, Shri Ashok Sen
representing Shri L.N. Dalmia, gave a positive offer to the effect that he is
prepared to pay Rs.60 crores in the manner to be indicated by him in his
written officer. The said written offer of Shri L.N. Dalmia was filed in this
Court on August 31,
1995. The State of Bihar as well as Union of India were
directed to give their response in writing to the said offer. A copy of the
offer was also sent to the BIFR with the directions that it shall consider the
offer and give its comments. The matter was thereafter taken up on September 19, 1995 on which date the Court considered
the comments of BIFR and response of the State of Bihar and the Union of India to the offer
of Shri L.N. Dalmia. The BIFR in its comments on the said offer has expressed
the view that the total liabilities of the Company (excluding the liabilities
of the associated companies) as on march 3, 1995 are reported to be Rs.171.14 crores.
The sacrifice involved in settling the above liabilities of Rs.171.14 crores
for Rs.60 crores could be Rs.111.1 crores and the liabilities of the three
associated companies also need to be assessed and quantified and added to this
amount to arrive at the total amount of sacrifices involved. BIFR has further
observed that besides the sacrifice mentioned above, monetary value of the reliefs
and concessions to be provided by the State Government and the financial
institutions and Banks also need to be quantified and added to the cost and the
cost involved in connecting all railway sidings of the Rohtas industries with Dehri-on-Son
too would need to be added to the cost of the scheme and the reliefs and
concessions are of substantial value. BIFR has further stated that even after
such massive sacrifices by the banks, financial institutions and the State
Government, the employment of the entire work force of the Company is not
likely to be ensured and their past dues would not be paid and that Shri Mittal
also has not indicated precisely the sources from which funds of the order of
Rs.560 crores would be mobilised and the Resourcefulness of Shri L.N. Dalmia
and his associate Shri L.N. Mittal and their credibility needs to be assessed
by some independent agency.
On
behalf of the State of Bihar reply in the form of affidavit of Shri S.P. Singh,
Deputy Director, Industries, Government of Bihar, has been filed wherein it has
been stated that the offerer has sought several concessions from the State
Government and that until and unless full financial implications of these
concessions are indicated, it may not be in the interest of the State
Government to agree to the proposal and this proposal can be considered by the
State Government if the offerer agrees to pay Rs.34 crores in one instal ment
to the State Government without any pre-condition and without any concessions
and the offerer should also clear all the legal dues on account of commercial taxes,
royalty, cess, electricity, registration, etc. The State Government has also
pointed out the difficulties in the matter of allotment of forest land and the
waste land sought by the offerer and grant of mining lease for limestone and
the restoration of 2807 acres of land which has been declared surplus under the
ceiling law.
As
regards concessions/reliefs sought by Shri Dalmia, it is stated that the State
Industrial Policy, 1995 provides concessions/reliefs such as sales tax
exemption/deferment and facility of either set-off or exemption on purchase of
raw materials within the State if considered necessary for revival of the unit
by the State Government and that the Industrial Policy does not provide
facilities for exemption from royalty on bamboo, wood, limestone and
electricity duty on captive generations beyond 25 M.W.
The
response of the Union of India is contained in the affidavit of Shri Sohan Lal,
Deputy Secretary working in the Department of Industrial Development
(Industrial Renewal Section), Ministry of Industry, Government of India. In the
said affidavit it is stated that the offer of Shri L.N. Dalmia has come from an
individual and not from any corporate entity. Hence it is not possible to
assess the soundness of the financial status of the offerer and that the offer
is not accompanied by any realistic projections of profitability, cash flow,
DSCR, etc. and the long term viability of the units, therefore, need to be
looked into more closely. According to Union of India, the paramount interest
in This case has been the protection of workers' interest and their employment
and that the offerer has proposed for employment of workers on need basis only
without incurring any liability towards their past wages, etc. It has also been
stated that the liabilities of the Company are approximately Rs.171.10 crores,
some of which are required to be updated and the transfer of the assets free
from the liabilities for only Rs.60 crores would violate the pre-emptive rights
of the original owners and hence, their concurrence would be necessary. As
regards the concessions sought for in the offer towards dues on account of
railways, excise, import duty exemption, cement regulation account, etc., it
has been submitted that all the statutory dues are required to be settled as
per the existing rules, guidelines and statutory provisions only.
An
additional affidavit of Shri Sidhnath Singh, Chairman of Rohtas Industries
Workers' Cooperative Society Ltd., has also been filed before this Court
wherein it is stated that Shri L.N. Dalmia has already closed down his M/s Punalur
Paper Mills Ltd. in Kerala State and has not paid salaries and wages of five
months of about 1000 workers of that unit. Shri Sidhnath Singh has also made an
offer on behalf of the Rohtas Industries Workers' Cooperative Society to
purchase whole of movable and immovable properties of the Company and its
associated companies on payment of Rs.65 crores and has express readiness to
absorb the workers of all the units. The Society has offered to make cash payment
of Rs.16 crores after reopening of Ashoka Steel Unit, Vanaspati Unit, Cement
Unit within a month and to pay the balance amount of Rs.49 crores in three
equal installments.
Speedcrafts
Pvt. Ltd. has also submitted a revised offer on August 21, 1995 for Rs.71.51 crores
out of which Rs.40 crores will be paid to the State of Bihar by issuing zero
interest debentures redeemable at par after 10 years and out of the balance
amount of Rs.31.51 crores an initial payment of Rs.5.51 crores will be made at
the time of transfer of the entire assets free from each and all encumbrances,
liabilities, claims etc, and handing over of peaceful vacant possession and
other Rs.20 crores will be paid over a span of 12 years (with an initial
moratorium of two years) in equal yearly instalments.
After
taking into consideration the report of the BIFR dated May 22, 1995 and its
comments to the offer made on behalf of Shri L.N. Dalmia and the response made
by the State of Bihar and the Union of India to the said offer as well as the
additional affidavit of Shri S.P. Singh and the revised offer of Speedcrafts
Pvt. Ltd., this Court on September 19, 1995 fixed the matter for September 29,
1995.
But
before that date the State of Bihar appears
to have had second thoughts. an affidavit of Shri S.P. Singh, Deputy Director,
Industries, Government of Bihar dated September 26, 1995 was filed by way of
reply to the offer made by Shri L.N. Dalmia wherein it was stated that in
response to the officer made by Shri L.N. Dalmia the State Government had
reconsidered the matter and after review the State Government has decided that
in the interest of restarting the industry as also for safeguarding the
interests of labourers and employees in the said industry and having
reconsidered the whole matter the State Government was agreeable to deferment
of payment of the dues of the State Government over a period considered
appropriate by the Court and were also willing to extend all help and
facilities to any intending purchaser of the industries. In view of the said
affidavit of Shri S.P. Singh, the Court, on September 29, 1995, passed the
following order :
"Mr.
S.P. Singh, Deputy Director (Industries), Government of Bihar, Patna has filed
an affidavit dated September 26, 1995. It has been averred in the affidavit
that the State of Bihar, in the interest of restarting the various units of the
Rohtas Industries as also for safeguarding the interests of labourers ad
employees in the said industries has reconsidered the whole matter and is now
agreeable to extend all help and facilities to any intending purchaser of the
industries. The learned counsel for Shri L.N. Dalmia and Mr. B.B. Singh,
learned counsel for the state of Bihar,
state that it would be necessary for the parties to meet to sort out various issues
arising in this matter. We adjourn the matter to 13th October, 1995 at 2.00
p.m. In the meanwhile the learned counsel for Shri L.N. Dalmia, whose offer we
have already noticed in our earlier order, states that the representatives of Shri
Dalmia would meet and have discussion with the concerned officers of the Bihar
Government in the light of the affidavit filed by Mr. S.P. Singh. After
discussion the State of Bihar and Shri L.N. Dalmia may file a joint memorandum
of understanding before this Court before October 11, 1995. In the event of Shri
L.N. Dalmia being satisfied in the discussion with the State of Bihar he should
deposit a sum of rupees two crores by way of a demand draft in the name of the
Registrar General of this Court along with the memorandum of understanding. The
workers be paid salary for the month of September, 1995." When the matter
was taken up on October 13, 1995 a statement in the form of submissions was
filed on behalf of Shri L.N. Dalmia in the light of the discussions which Shri Dalmia
had with the officials of the State of Bihar and the Chief Minister of Bihar
from September 30, 1995 to October 3, 1995. The said submissions filed on
behalf of Shri Dalmia indicate that there is wide divergence between the offer
made by Shri L.N. Dalmia and the stand of the State Government on many matters
which are crucial for the revival of the industry and Shri Dalmia has expressed
his inability to proceed further with his offer in view of the stand taken by
the State Government. A supplementary affidavit of Shri S.P. Singh dated
October 9, 1995 has been filed and along with the said affidavit the draft
memorandum of understanding as proposed on behalf of the Government of Bihar as
well as the draft memorandum of understanding circulated by Shri L.N. Dalmia
and the minutes of the discussions that were held between the Committee of the
Government of Bihar and Shri L.N. Dalmia on October 1, 2 and 3, 1995 have been
filed.
We
have considered the submissions that have been submitted on behalf of Shri L.N.
Dalmia as well as the Supplementary affidavit of Shri S.P. Singh dated October
9, 1995 and the documents filed therewith. Having regard to the report of BIFR
dated May 22, 1995, the comments of BIFR on the offer of Shri L.N. Dalmia as
well as the response of the State of Bihar and the Union of India to the said
offer and the discussions which Shri L.N. Dalmia had with the officers of the
State of Bihar on October 1, 2 and 3, 1995, we have to conclude regretfully
that in spite of best efforts the object with which this Court had intervened
in the matter by entertaining the writ petition, viz. to revive the
undertakings, does not appears feasible. In these circumstances, the future
course of action which commends us is that the proceedings in this writ petition
should be brought to an end and the winding up proceedings pending before the patna
High Court be resumed.
Before
we give the necessary directions in that regard, we would briefly set out the
present state of affairs with regard to the Company :
(i)
The Rehabilitation Commissioner appointed as per directions contained in the
order dated October 24,
1989 is in possession
and control of the property of the company. To assist him there are officers,
staff and workmen. Since the units which had resumed production while the
matter was pending in this Court have been closed, the Court has been giving
directions from time to time to reduce the strength of the employees in order
to cut down the recurring expenditure on that account. By the last order passed
on July 21, 1995, the Rehabilitation Commissioner
was directed to reduce the number of workmen from 200 to 75, the staff from 75
to 40 and the officers from 25 to
10. As
per the directions contained in the order dated September 29, 1995 the salary of the officers, workmen and the staff has been
paid by the Rehabilitation Commissioner for the period upto the month of
September, 1995.
(ii)
Earlier staff was being employed by the Rehabilitation Commissioner for the
purpose of ensuring security of properties in the complex. This involved heavy
expenditure by way of salary of such staff. It was, therefore, decided to
entrust the security to the Central Industrial Security Force. When the
Rehabilitation Commissioner pointed out that a sum of Rs.10 lacs was being spent
every month on the Central Industrial Security Force deployed in the industrial
complex for the purpose of security, the Court, by order July 21, 1995,
directed the Director-General, Central Industrial Security Force to deploy the
force in such a manner from August 1, 1995 that the expenditure on that force
is reduced by 40%.
(iii)
The Rehabilitation Commissioner brought to the notice of the Court that the
electricity charges were coming to Rs.5.5 lacs per month which amount included
the monthly minimum guarantee. By order dated July 21, 1995 it was directed that keeping in view the present status of
the industry specially the fact that it is lying closed since May 1994, the
Bihar State Electricity Board shall charge only the actual consumption charges
till further orders with effect from August 1, 1995. It was also pointed out that
electricity was being supplied free of charge to workers staying in the
quarters and that many of them are no longer on the rolls of the industry. By
order dated July 21, 1995 the Rehabilitation Commissioner was directed not to
spend any more money on supplying electricity etc. or any other amenities to
all those workers, staff and officers who are no longer on the rolls of the
industry and this must be done with effect from August 1, 1995. It was also
made clear that the workers shall pay the normal electricity and water charges
to the Electricity Department directly or through the Rehabilitation
Commissioner and if any worker does not pay the charges his electric supply would
be disconnected. The Bihar State Electricity Board has made a claim with regard
to its dues which according to the Board runs into few crores. The
Rehabilitation Commissioner has disputed the said claim of the Board and has,
on the other hand, submitted that the company has suffered a loss of
approximately Rs.752 lacs on account of burning of the transformer due to the
fault of the Board and further that the meters recording the consumption were
also found to be defective by the Board itself and that the Board is claiming
the charges on the basis of the reading in those defective meters.
(iv)
As a result of resumption of production in some of the units by the
Rehabilitation Commissioner there is raw material/finished products lying in
stock. By order dated July
21, 1995 the
Rehabilitation Commissioner has been directed to sell the said raw
material/finished products in stock preferably within the period of one month.
In his affidavit dated September 20, 1995, the Rehabilitation Commissioner has
stated that in pursuance of the said directions offers have already been
invited for sale of approximately Rs.70 lacs worth of raw materials/finished
products/wasted/damaged material out of which the sale has already been made of
Rs.7 lacs and that offers have been invited in respect of the burnt out
transformer and rejected copper cable approximately of the value of Rs.20 lacs
for which confirmed offers for purchase have already been received.
(v) In
his affidavit dated September 20, 1995, the Relief Commissioner has also stated
that in respect of the period during which the units had resumed production an
amount of Rs.234.84 lacs is payable towards raw materials purchased on credit
and a sum of Rs.184.56 lacs was advanced by purchasers for supply of products
by the company. There is a total liability of Rs.419.40 lacs under both these
heads. It is stated that there is a further liability for sales tax on these
transactions to the tune of Rs.400.23 lacs as on March 31, 1995.
(vi)
Out of a total amount of Rs.40 crores paid by the State of Bihar the sum of Rs.6 crores was by way
of grant and Rs.34 crores is as loan. This amount was advanced by the State of Bihar as per directions of this Court.
(vii)
The Claims Committee constituted by the Rehabilitation Commissioner under the
directions given by this Court on October 24, 1989 has submitted its report after
assessing the various claims of the creditors, the financial institutions and
the workers.
Objections
have been submitted against the said report of the Claims Committee which are
pending consideration.
(viii)
The moratorium of one year which was imposed in respect of proceedings taken
and pending or to be taken against the company by order dated October 24, 1989
have been extended from time to time and the last such extension was given till
December 31, 1995 by order dated July 21, 1995.
Now
while putting an end to these proceedings and permitting resumption of the
winding up proceedings in Company Petition No. 3 of 1984 pending before the Patna
High Court, it is directed as under :
1. The
winding up proceedings in Company Petition pending before the Patna High Court
will be resumed by the Company Judge. The parties and the Rehabilitation
Commissioner shall appear before the Company Judge for seeking necessary directions
on November 20, 1995.
2. The
Rehabilitation Commissioner shall - (a) complete the sale of the raw
materials/finished products/wasted/damaged materials including the burnt out
transformer and rejected copper cable by November 30, 1995;
(b)
subject to availability of funds after incurring the expenses towards payments
under clauses (c), (d) and (e), pay the dues towards the supply of raw
materials on credit for the running of the units during the period of the pendency
of these proceedings as well as the amount received as advance from purchasers
for the products to be supplied to them by December 31, 1995;
(c) pay
the charges for the actual consumption of electricity for the period upto November 30, 1995 by December 31, 1995;
(d) pay
the charges for the security arrangements through the Central Industrial
Security Force for the period upto December 31, 1995 by December 31, 1995;
(e) pay
the salary of the staff employed for the period upto December 31, 1995 by December 31, 1995;
(f) prepare
an inventory of the properties, movable and immovable, belonging to the company
in his possession and control by December 10, 1995;
(g) hand
over the possession of the said properties to the official Liquidator as per
the inventory by December
31, 1995;
(h) have
the accounts for the period April 1, 1995
till December 31, 1995 duly audited and submit the same
before the Company Judge in the Patna High Court by January 15, 1996;
(i) hand
over the papers relating to the affairs of the Company while he was in control
of the same to the Official Liquidator by January 15, 1996.
3. With
effect from date the possession of the properties, as per the inventory, is
delivered to him by the Rehabilitation Commissioner, the Official Liquidator
will assume charge of the assets of the Company for the purpose of winding up
proceedings.
4. The
officers, workmen and the staff who are at present employed in the undertaking
of the Company shall continue in employment till December 31, 1995.
For
their further continuance in employment the Official Liquidator will seek the
necessary directions from the Company Judge.
5. The
present security arrangements through the Central Industrial Security Force
will continue till December
31, 1995. For further
continuance of these arrangements, the Official Liquidator may seek the
necessary directions from the Company Judge.
6. The
existing arrangement for supply of electricity by the Bihar State Electricity
Board shall continue subject to the directions that may be given by the Company
Judge. No minimum guarantee charge will be payable to the Bihar State
Electricity Board and only the actual consumption charges will be paid. The
respective claims of the Rehabilitation Commissioner and the Bihar State
Electricity Board with regard to the supply of electricity during the period
the Company was under the charge of the Rehabilitation Commissioner shall be
considered by the Company Judge.
7. The
State of Bihar will grant exemption from
sales/purchases tax in respect of sales/purchases made by the company during
the period the units were revived by the Rehabilitation Commissioner while the
matter was pending before this Court.
8. The
Report of the Claims Committee on the claims of the financial institutions,
creditors and the workers will be considered by the Company Judge in the light
of the objections that have been submitted against the said report.
9. The
Company Judge may consider whether the industrial undertakings of the Company
can be revived in the light of the offers that have been received from Shri
L.N. Dalmia, Speedcrafts Pvt, Ltd. and Rohtas Industries Workers' Cooperative
Society Ltd. along with any other offer that may be received.
10. In
the event of sale of the assets of the Company during the course of winding up
proceedings, a sum of Rs.34 crores which was advanced by the State of Bihar as
per directions of this Court in these proceedings shall be paid to the State of
Bihar out of the sale proceeds before discharging any other liability of the
Company.
11.
The Relief Commissioner shall stand discharged on January 15, 1996.
12.
The moratorium imposed under the order of this Court shall cease to operate
with effect from December
31, 1995.
13. It
will be open to the Rehabilitation Commissioner and the Official Liquidator to
seek further directions from this Court with regard to any matter pertaining to
the period this writ petition was pending in this Court.
Shri
Beck Julius, I.A.S. has been functioning as the Rehabilitation Commissioner
since April 4, 1994. During that period this court
found his work to be satisfactory and good. This may be treated as assessment
of his performance as an officer of the Bihar Cadre of I.A.S. during that
period and it may form part of his Performance Appraisal Report.
Before
we part with this case, we must say that this is a sad finale to the episode.
In order to secure the revival and rehabilitation of a large industrial
undertaking, the closure of which was not only a national loss but had also
rendered about 10,000 workmen jobless, this Court adopted the unprecedented
course of assuming direct control over the functioning of the undertaking.
The
writ petition are disposed of accordingly with no order as to costs.
A copy
of this order shall be sent to the Registrar, Patna High Court for being placed
before the Company Judge dealing with Company Petition No.3 of 1984. In
addition, the following papers be sent with the order :
(a) copies
of the orders passed by the Court in the Writ Petition.
(b) copy
of the reports of the BIFR dated April 22, 1988 and May 22, 1995 and the annexures
thereto.
(c) copy
of the report of the Claims Committee and the objections filed against the said
report.
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