1988 (9) TMI 356 - SC - Companies Law

Summary

Issues Involved:
1. Consideration of the Scheme presented by Shri Ashish Puranchand Kamani.
2. Approval of the Workers' Scheme sanctioned by the BIFR.

Summary:

Issue 1: Consideration of the Scheme presented by Shri Ashish Puranchand Kamani
- The applicant's scheme was not presented before BIFR and was submitted only after BIFR's decision on September 6, 1988.
- The Court had given "liberty" to BIFR to consider any alternative scheme but left it to BIFR's "discretion".
- The applicant did not present any scheme within the specified timeframe.
- The applicant's scheme was compared with the Workers' Scheme and found lacking in several areas:
1. It proposed replacing existing machinery with imported second-hand equipment without clarity on timelines or costs.
2. It lacked firm financial commitments from banks or financial institutions.
3. It did not have support or concessions from the Central or State Governments.
4. The workers were not willing to make wage sacrifices or accept deferments under this scheme.
5. There were no commitments from secured creditors.
6. Its feasibility had not been examined by any competent authority.
- The Court found the applicant's scheme to be speculative and lacking concrete financial backing, and thus, refused the applicant's prayer.

Issue 2: Approval of the Workers' Scheme sanctioned by the BIFR
- The Workers' Scheme had been sanctioned by BIFR on September 6, 1988, after extensive hearings and consultations with all stakeholders, including KEU, financial institutions, and government bodies.
- The scheme envisaged starting operations with existing machinery, backed by commitments from nationalized banks, and included tax concessions from the government.
- Workers agreed to significant wage sacrifices and rationalization of staff.
- The scheme was found feasible and viable by experts and had the full backing of IDBI and nationalized banks.
- The Court emphasized the legislative intent of the Sick Industrial Companies (Special Provisions) Act, 1985, which supports the transfer of shares to employees for the revival of sick units.
- The Court stamped the Workers' Scheme with its imprimatur, highlighting that the scheme was in line with the legislative intent and was feasible and economically viable.
- The Court cautioned against any attempts to impede the implementation of the scheme and underscored the importance of the scheme's success for the future of workers in similar situations.

Conclusion:
The Supreme Court approved the Workers' Scheme sanctioned by BIFR and rejected the alternative scheme proposed by Shri Ashish Puranchand Kamani due to its speculative nature and lack of concrete financial backing. The Court emphasized the significance of the Workers' Scheme in setting a precedent for the revival of sick industrial units by the workers themselves.