Report No. 143
To agree to one-time settlement proposal on following terms:
(a) Waiver of interest accrued and due upto 31-3-1990.
(b) Public deposits to be interest free with effect from 1-4-1990.
(c) Repayment of the public deposits in 3 annual instalments during 1991-92 to 1993-94 with 40% of the amount payable in 1991-92, 40% in 1992-93 and balance 20% to be repaid in 1993-94.
No sooner the draft circulated scheme becomes final on the next date of the Board Meeting, the repayment shall be strictly made as provided for in cash flow by BIFR.
We appreciate your anxiety in the matter on behalf of the small depositors. We ourselves are very much grateful to small depositors and appreciate their anxiety. Due to this only we had put up the scheme in 1987 itself, before Honourable High Court of Gujarat but the same was opposed by big lenders on ground of pari-passu distribution. Only on dismissal of winding up petitions we moved in the matter of repayment of small depositors.
Although we may very much like to pay back all small depositors upto Rs. 5,000 within 30 days and other within 60 days as kindly suggested by you vide your letter No. 6(2)(iv)/87/LC(LS)(RD)(15) dated 14-2-1991 in the circumstances as explained above it shall not be possible at all to do so. The company is being revived by sacrifies of all concerned and if the cash flow is upset like this the whole revival scheme will fail and it will be impossible for the company to run.
Under the provisions of section 22 of Sick Industrial Companies (Special Provisions) Act, 1985 notwithstanding any other law, no distress or winding up petition shall lie or be continued against a sick industrial company. This is because of interests of all concerned. B.I.F.R. has already appointed a nominee director on the Board of Directors of the company. We have been directed to follow strictly the directions issued by Board for Industrial and Financial Reconstruction.
However, to immediately mitigate the difficulties of such depositors who have approached you and are facing hardship you may forward the names, addresses of such depositors with deposits upto Rs. 5000 with particulars of FDRs.
Such applicants upto 50 in number of the amount of R. 5000 or less for whom you send directions for repayment without accumulated interest and who send us the original FDR duly discharged and willingness to accept deposit without interest in full settlement and in case such application are received with your directions for repayment on or before 15th March, 1991, all such directions in respect of 50 depositors shall be honoured and they shall be refunded the full principal amounts of deposits on or before 15th of April, 1991.
This is only to show our genuine desire to repay. All that has happened is most unfortunate but was only due to reasons entirely beyond, our control.
No sooner the final scheme is approved by BIFR at their next meeting all small and big depositors will receive their deposits back strictly in three years time as proposed in the scheme. We hope we have supplied all the information and shall be pleased to give any other specifically required.
Thanking you and expressing our regrets once again for failure to reply to your earlier letters.
for Shri Vallabh Glass works Ltd.
Legal Adviser and Constituted Attorney.
Encl.: As above.