9911796707
TMI Blog2001 (3) TMI 959X X X X Extracts X X X X X X X X Extracts X X X X ..... at Package with the rider that no change in choice once exercised will be permitted and the employees were directed to avail the benefit offered by the Government of India on or before 10-1-2001 under the said scheme. 3. In W.P. Nos. 157 to 159 of 2001, the very writ petitioners have assailed the order passed by the AAIFR dated 15-11-2000 confirming the order passed by the BIFR dated 12-6-2000. In all these petitions, the petitioners have approached for issue of a writ of certiorari and to quash the said orders. W.P. 1343 of 2001 is filed by the writ petitioners praying to issue a writ of certiorari or any other appropriate writ quashing the order dated 12-6-2000 passed by the BIFR and AAIFR and also to direct the Government of India to re-consider the matter and to see that the Bharat Gold Mines Ltd. is not wound up and the Mines is revived and to pass such order bearing in mind the provisions of articles 14, 21, 41, 42 and 43 of the Constitution of India and the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 ("the Act 1985"). 4. In W.P. Nos. 4503 to 4507 of 2001 and W.P. No. 5118 of 2001, the writ petitioners have prayed this Court to quash the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of gold to the then Government of Mysore. The State Government of Mysore nationalised three gold mines with effect from 29-11-1956 as the then Government felt that the companies would not be making necessary long-term investments as their leases were to expire in 1970 and paid a compensation of Rs. 1.64 crores. In June 1958 the Government of India decided to strengthen the gold reserves and directed the Government of Mysore that the gold produced by the Kolar Mines be made over to it and as a Member of the International Monetary Fund, the Government could pay no more than the IMF rates. However, a subsidy representing the difference between the cost of production and the IMF price was given to the State Government under article 282 of the Constitution of India. Since payment of subsidy became embarrassment to the Government of India, the State Government agreed to transfer the mines to the Central Government for operation under the style of Kolar Gold Mining Undertakings (KGMU), in December 1962 as a subordinate office of the Ministry of Finance. The Board of Management had the Finance Minister as the Chairman, the Deputy Finance Minister as one of the Members. In 1968, a full-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ween total closure and the present period; and c. the scope for diversification of operations and alternative utilisation of the Company's infrastructure in the intervening period so as to minimise losses. 10. In his report submitted to the Government of India, Mr. K.S.R. Chari observed that the Kolar Gold Mines history over a century has been one of a series of challenges posed by technical problems of a magnitude rarely encountered elsewhere in the world of hard-rock mining. These have seen days when the market prices for gold were as low as Rs. 1.82 per gram for almost six decades. The study team was constituted in September 1984 by the Department of Mines and the Study Team submitted a report on capacity utilisation, profitability and corporate recovery plan. The Chari's report discloses that the KGF, in their lifetime spanning over hundred years, appear to have brought to the surface 50 million tons of gold-bearing rocks, yielding 800 tons of gold valued at Rs. 17,000 crores at today's prices in the market. During the first two decades, the gold values were as high as 40 gms./ton, gradually coming down to the present 3 to 4 gms./ton. The Chari report further noticed that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price for the gold right from the start. A positive and more helpful gold pricing policy by the Govern-ment could largely have prevented BGML from getting into the present unfortunate position it is in to-day. It has resulted in BGML being portrayed as a losing concern which really it has not been so far but is rapidly becoming one. By 31-3-1985, the Government had built up a surplus of Rs. 154.88 crores accruing to it through gold made over by BGML since its inception. The Company deserves to be given market price for gold produced by it with immediate effect to enable it to function as a comer-cial venture. He recommended that the Government could treat BGML as the canalising agency and advance necessary FE from its reserves to import 50 to 60 tons of gold annually for sale in the open market at the ruling prices, at a pre-determined rate of 10/20 gms. per occasion of wedding etc., and in the process not only will the financial losses incurred by the BGML be wiped out but at the same time, smuggling of gold with all its risks and uncertainties will become a highly uneconomic venture and should get quickly eliminated. Problems would not have become so serious today if only strict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and exploration of mining at Kolar made by one S. Natrajan, former Director (Technical), the documents furnished by the Ministry of Mines, the oral evidence of the representa-tives of the Ministry, Workers' Unions, management of Bharat Gold Mines. An impression was given to the Parliamentary Committee that faulty process of extraction and pilferage of the finished gold are the two important factors responsible for escalation of cost of production. The machines and other equipments used in extraction of gold ore are either defective or have become outdated in terms of their viability. The mining technology is at present is in dire need of modernisation. BGML Authorities have submitted a rehabilitation proposal worth Rs. 107.83 crores to the Industrial Credit and Investment Corporation of India Ltd., the operating agency appointed by BIFR and a copy of the report has been sent to Central Government and suggestion was made to Government of India to consider it sympathetically. Insofar as security and pilferage in the BGML premises, Chari Committee and also the Parliamentary Committee noticed the lapses with much anguish. It was submitted before the Parliamentary Committee that leakag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le live in the area do not know any other profession except mining because they are in this field generation after generation and when these people are not given jobs in KGF they remain unemployed and loiter around in the hope of getting job. The unemployed youth of the area may join hands with these anti-socials. The scavenging by scavengers is still in existence in KGF despite its abolition at the national level. The Sub-Committee made certain recommendations for revival of the company. The company has been referred to BIFR. Now it cannot take any action for the revival without the prior permission of BIFR and, therefore, recommended that the reference by BGML, Kolar to BIFR be revoked. The Government may either make available 41 crores of rupees as Budgetary support or soft loan to the company or stand as a guarantor to enable the company to get loans from banks and financial institutions. The Management can raise the requisite funds for its revival by selling its surplus land at the existing market rates. The security network of the company should be streamlined and every effort should be made to prevent pilferage of gold produced by the company. Frisking be made compulsory for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll of them have assailed the act of the Management of BGML, the final order passed by the BIFR and AAIFR and the Government order for closure of the company. Each Workers' Union has its own grouse against these orders. 14. The orders of the BIFR, AAIFR and the order passed by the Government under section 25-O are assailed on the following, among other grounds in these batch of writ petitions. That the order of the BIFR is wholly erroneous. It has failed to take steps for revival of BGML and relied on the statements made by the represen-tatives of Government of India without even verifying the correctness of the same and rejected the proposal for takeover of the company by the private companies. The BIFR has failed to explore the possibility of reviving BGML. The BIFR and AAIFR have failed to consider the various reports submitted for its consideration. The BIFR has failed to consider the reports submitted by the ICICI and that BIFR has failed to find viable alternative within a reasonable time. The order of the competent authority granting permission for closure of BGML is totally violative of Rules of Natural Justice, inasmuch as the competent authority has not applied its mind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement Scheme (VRS) and decided to explore the possibility of rehabilitation through joint venture route. After decision of the BIFR to wind up the company, the Government of India once again offered VRS for one month's period which was valid up to 10-1-2000. The Ministry of Labour had already passed an order permitting the closure of the Company. That the report submitted by K.S.R. Chari, formerly Secretary, Department of Mines, Government of India, New Delhi, also advised the Central Government to close the company in a phased manner. In view of the accumulated loss there is no chance of the company to revive its mining. Therefore, the only alternative for the Government was to close the mining. The orders of the BIFR and AAIFR in this background is justifiable. The order passed under section 25-O is not arbitrary as the authority has taken into consideration all the factors for passing the said order. 16. In the statement of objections filed by the Government, it is narrated the affairs of the company, the losses accrued and there is no spec of chance to revive the company in view of the huge accumulated loss. According to them, production of gold in KGF goes thrice the value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by taking all the major recommendations. 20. The Supreme Court in the case of Navnit R. Kamani v. R.R. Kamani AIR 1989 SC 9 explicitly explained the object of this legislation in the following words : "...the legislation has been enacted with the end in view to : 1.Afford maximum protection of employment; 2.optimise the use of the funds of the companies etc.; 3.salvaging the production assets; 4.realising the amounts due to the banks, etc.; and 5.to replace the existing time-consuming and inadequate machinery by efficient machinery for expeditious determination by a body of experts." (p. 17) Various High Courts while considering the object and purport of the Act made the following observations : "Sick Industrial Companies (Special Provisions) Act, had been enacted to safeguard the economy of the nation and to protect viable sick units. It is aimed at reviving and rehabilitating sick industries." (Testeels Ltd. v. Radhaben Ranchhodlal Charitable Trust AIR 1988 Guj. 213. "The object of the Act like Sick Industrial Companies (Special Provisions) Act, 1985 is to resuscitate, revive and rehabilitate potentially viable industries and suggest ameliorative and recuperatory measu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). In the same text, we find at page 11 the economic survey for the year 1996-97 and Table 3 - Profile of sick industrial undertakings. The total sick industrial units in the country were 2,40,700 out of which 2,38,176 were Small Scale Industries while 1,867 were Non-Small Scale Industries and 657 were Non-SSI weak units. Out of these sick units 16,362 were considered as viable and 2,50,454 were considered as non-viable and 2,390 whose viability, not decided. The outstanding bank guarantee at the end of March 1995 was Rs. 13,739 crores, the total sick units involved as on March 1995 was 2,71,206. These statistics only go to show the shocking and alarming industrial scenario of the country. 21. Where a reference is made by the industry under section 15, the Board, viz., the BIFR can make for determining whether industry has become a sick industry or not. The Board may require by order any operating agency to inquire into and make a report on the aspects as may be specified in the order. Section 16(3) further provides for that the Board or the operating agency, as the case may be, shall make the inquiry expeditiously and shall try to complete it within a period of 60 days from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Ministry submitted that the matter was referred to the group of Ministers who in turn remitted it to the Commit- tee of Secretaries. Government of Karnataka have agreed to give relief in royalty, but have regretted their inability to grant concessions in power tariff. Similarly, Andhra Pradesh Government have not agreed to grant reliefs in royalty as well as power tariffs. The Board noticed during the course of deliberations that Company had floated global tenders for (i) recovery of gold from the mine tailing dumps, and (ii) exploration and exploitation for gold in all the lease areas through shallow surface mining. In response to the tenders five offers had so far been received, out of which four were from Australian Companies and one from a Canadian company which have been processed by the Government. The Director, Ministry of Mines stated the issue of global tenders by the company was in line with the current policy of the Government globalisation and liberalisation. This has added a new dimension, which too would be considered by the Committee of Secretaries which is at present examining the matter for report to the Group of Ministers which would take a final view. The BI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s providing cash support of Rs. 14 crores per annum from non-plan assistance of BGML for payment of wages and salaries. Shri V.A. Gore, DGM, ICICI submitted that the projection would need to be revised in consultation with NAAL and BGML. The OA would need three months' time to submit the revised proposal." Having regard to these submissions, the Board gave certain directions to reformulate and recast the rehabilitation scheme since M/s. NAAL has been selected as a joint venture partner. New development took place when further sitting was made and the Ministry of Mines desired that the company should re-negotiate with the prospective joint venture partner to obtain their equity participation of at least 40 per cent. The meeting was held with NAAL but they did not agree to enhance BGML's equity beyond 30 per cent. This position was reported to GOI and the matter was under consideration of the Ministry. The Bench also noticed that BGML incurred an operating loss of Rs. 3,873 lakhs during 1993-94 and of Rs. 4,026 lakhs during 1994-95 etc. when the matter was still at the Cabinet level. In the meantime, the NAAL has withdrawn from the MOU and the Company are now negotiating with MPI f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revival and have clearly recommended that winding up is the only course of action available inasmuch as their effort to privatise the Company also through a process of global tender has failed." The Board further observed that the Unions are totally dependent on the Government of India and the State Governments for not only massive reliefs and concessions but also additional financial support of a very large order which is clearly not forthcoming. Therefore, the Board finds that there is no merit in the submissions made by the employees for revival of the company and conclude that the only course of action open in this case is to wind up the company in all round public interest. Therefore, it ordered issue of show-cause notice for winding up to all the parties concerned and their objections/suggestions to this winding up proposal was called for. 23. It is submitted before the Court that the Board has passed the order to wind up and that the Government has passed an order for closure of the Company under section 25-O and that winding up proceedings under the companies law are now placed before this Court. It is in this background, the learned standing counsel for the Central Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Government feels that Rs. 100 crores is a sum which is too high to meet the demand of BGML for its survival, the company could have sought the financial assistance from the other financial institutions which has not been done in this case. The writ petitioner in W.P. 7987 of 2001 painted a very bright picture of exploitation of gold both in the mines and tailing dumps and they gave a rosy picture of making profits after second year. When a private company hopes to revive it with work force of 1200 from out of the present work force of BGML, it is not known what made the Government of India to refuse offering its helping hand to revive a century old gold mine. Various obstacles appear to have been placed in the matter of revival. The BIFR was so optimistic at some stage after considering various proposals for revival, but suddenly turned down and accepted the submission made by the Central Government only on the ground that it will not help BGML to revive the company. It may be noticed that the statutory Boards like BIFR and AAIFR were not bound to accept this contention of the Government of India as the Board was specifically meant in law to find out the causes, ways an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he management as such. No effort has been made by the management to curb unlawful expenditure and also cut down the working force, dismantle old machinery and no serious attempt has ever been made to infuse new life to this century old gold mines. 27. Under section 20, where the Board, after making inquiry under section 16 and after consideration of all the relevant facts and circumstances and after giving an opportunity of being heard to all concerned parties, is of opinion that the sick industrial company is not likely to make its net worth exceed the accumulated losses within a reasonable time while meeting all its financial obligations and that the company as a result thereof is not likely to become viable in future and that it is just and equitable that the company should be wound up, it may record and forward its opinion to the concerned High Court. 28. The learned standing counsel for the Central Government, Shri Ashok Haranahalli, having regard to the order of the BIFR under section 20(1) submitted that it is for the company court to take all the circumstances into consideration including the opinion of the Board and it is not for this Court in exercise of powers under ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lusion that running of mine is not viable and this was so solely on the plea of the Government of India that it is not prepared to pump in the required money. The BIFR has failed to act within the stipulated time or at least within the reasonable time. The reasons assigned for the final order which is accepted by the AAIFR, in my opinion, are not tenable and acceptable. There is no offer to the workers to run the mine. Where the Central Government found it hard to pump in hundred crores of rupees to revive the factory, it is not worthwhile to ask the workers who had sacrificed their salaries for over five years to find necessary funds unless Government of India was prepared to transfer the management to the workers themselves. 30A. In this background, the Court has to consider whether it can step in to stop the rot set in, in this century old mine and whether the Tribunals in performance of their sacred duty of finding ways and means to revive the sick industry, have erred in their jurisdiction and whether this Court can interfere in exercise of its powers under Articles 226 and 227 of the Constitution of India. 31. The Apex Court in the case of Shama Prashant Raje v. Ganpatrao A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... social justice do require the protection of the labour. But it is reasonable to give them protection against all unemployment after affecting the interests of so many persons interested and connected with the management apart from the employers. Is it possible to compel the employer to manage the undertakings even when they do not find it safe and practicable to manage the affairs ? Can they be asked to go on facing tremendous difficulties of management even at the risk of their person and property ? Can they be compelled to go on incurring losses year after year ? As we have indicated earlier, in section 25-FFF retrenchment compensation was allowed in cases of closure and if closure was occasioned on account of unavoidable circumstances beyond the control of the employer a ceiling was put on the amount of compensation under the proviso. The explanation postulates the financial difficulties including financial losses or accumulation on undisposed stocks etc. as the closing of an undertaking on account of unavoidable circumstances beyond the control of the employer but by a deeming provision only the ceiling in the matter of compensation is not made applicable to the closure of an u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ex Court while deciding Excel Wear's case. 33. The case on hand is a Central Government Undertaking. The deficiency in the management of the company, the loopholes in the administration, the age-old machineries installed by the management for excavating the gold ore, the pilferage of the gold output and other criminal activities, the failure of labour in providing its 100 per cent efficiency in the production of gold-the combination of all these factors which brought the BGML to the present situation. If that were not so, the Parliamentary Committee would not have suggested certain measures for revival of the Company. NAAL-one of the writ petitioners before this Court would not have come forward to take over the Company and hopes to earn profits after two years. The Secretaries have taken into consideration only the accumulated losses and the interest accrued thereon amounting to Rs. 500 crores, have not gone further and suggested measures to revive the sick factory. The learned standing counsel for the Central Government has no answer to the Court queries-After closure what ? The Government of India is not prepared to divulge its mind to the Court whether there was any intention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fects large number of employees, members of the general public, production of the country etc., . . . ." The Kerala High Court held that there are orders arising under the provisions of section 25-O of the I.D. Act, are assailable under article 226 of the Constitution of India, specially where the Government failed to exercise wrongly or mala fide exercised the discretion. 36. A Division Bench of the Gujarat High Court in Associated Cement Companies Ltd. v. Union of India 1989 LLJ (1) Guj. 599 held that the requirement of section 25-O(2) is in the nature of a restriction imposed upon the right of the employer to close down the business. Therefore, this phrase must be so construed as to make the restriction which is imposed on the right of the employer reasonable within the meaning of article 19(6) because the right to close down is not an absolute right and it can certainly be restricted, regulated or controlled by law in the interest of the general public. The question whether the reasons given by employer are genuine and adequate will, no doubt, depend upon facts of each case. A right to close down a business being an integral part of the fundamental right to carry on business, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AIR 1978 SC 851. The Supreme Court while considering the powers of the Election Commissioner under Article 324 of the Constitution of India commented upon the said question at para 8 held as follows : "The second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order Bad in the beginning may, by the time it comes to Court on account of a challenge, get validated by additional grounds later brought out. We may here draw attention to the observations of Bose., J., In Gordhandas Bhanji AIR 1952 SC 16 (at p. 18) : 'Public orders publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant, or of what was in his mind, or what he intended to do so. Public orders made by public authorities are meant to have public effect and are intended to affect the acting and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and other interested parties. Except accepting the reasons assigned by the BGML Management, no other reasons assigned by the authority in passing the order of closure. The authority has not taken into consideration the public interest involved, the loss of wealth to the country by forceful closure of the company. Therefore, under the circumstances there is no application of mind to all the factors which were placed before the authority while passing the impugned order. It is true that the writ petitioners could have applied for review of the order under section 25(5). Instead, they have chosen to challenge the impugned order in these writ petitions. The impugned order suffers from arbitrariness for want of application of mind to all the factors before the Court and where there is no statutory requirement and where the order is not in the interest of the workers as well. The order is liable to be quashed. 41. In W.P. 154 of 2001, the writ petitioners have challenged the circular issued as in Annexure-F dated 8-12-2000 issued by the Deputy General Manager (Personnel) regarding Voluntary Separation Scheme in BGML under which the workers were given option to VSS under heavy industry ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
