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TMI Blog2008 (12) TMI 407X X X X Extracts X X X X X X X X Extracts X X X X ..... ing capital assistance to the company. During 1970-75 the unit expanded its capacity and took term loans from the U. P. F. C. Unfortunately the unit became a sick industrial company on February 26, 1998. A reference under section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 ("the SICA") was made by the company to the BIFR for revival/rehabilitation. During the reference proceedings the BIFR appointed IDBI for formulating measures for revival of the unit. The IDBI consented to grant term loan assistance for rehabilitation package. In 1990, Sri M. M. Tayal took approval of the BIFR to induct Sri Sandhu Ram Gupta, a new promoter/managing director of the company and Sri M. M. Tayal, resigned from the board as managing director. The Punjab National Bank, respondent No. 3 assisted the sick unit by granting working capital term loan facility under the RBI guidelines during 1992-93. When the matter was before the BIFR and the draft rehabilitation scheme (DRS)-96 circulated by the BIFR vide order dated November 5, 1996, was a non starter the IDBI reported on November 3, 1997, that the revised DRS was not acceptable and since the promoters were unable to bring in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Baldev Singh Mann and his associates had been identified who promised to bring in the need based funds for revival and rehabilitation of the sick company and they would invest monies for enabling the company to arrive at one-time settlements with the IDBI and PNB. A compromise with the secured creditors, namely, IDBI and PNB was proposed under section 391 of the Companies Act, 1956, which envisaged a compromise or arrangement between the company and its creditors or between the company and its members. On May 25, 2004, an application was filed before the company court praying for induction of Sri Baldev Singh Mann and Sri Deepak Jain as promoter directors of the company and they would bring funds for settlement of secured creditors and for revival of the sick industrial company. It was also informed that a one-time settlement had been approved both by the IDBI and PNB vide their letters dated June 24, 2004 and June 25, 2004. Objections were invited from the secured creditors for induction of Sri Baldev Singh Mann and Sri Deepak Jain. The company court on August 6, 2004, passed an order under sections 255, 441 and 443, of the Companies Act, approving induction of the co-promoters ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trial unit and also approved sale of such surplus land belonging to the appellant, which was free from mortgage and was lying vacant to ensure rehabilitation of the unit. 7. On July 2, 2005, the Uttaranchal Power Corporation (UPCL) had approved a one-time settlement in three instalments of the electricity dues pending and outstanding against the appellant, waived the penal charges for late payment of electricity dues, waived charges for additional power load and allowed new connection, etc. The appellant also deposited an instalment of Rs. 5 lakhs on July 15, 2005. The State Government also directed the Labour Commissioner, Uttaranchal to decide and reconcile the wages and other dues payable to the workmen. The Central Excise Department was also requested to fix instalments for repayment of their dues. Similarly, the State Government requested the UPFC to fix instalments and waive penalties and penal interest for the payment of their dues. That more than 80 per cent, of the amounts due to financial institutions and State of U. P., has already been paid and it is only some minor dues to the UPFC, IDBI and State of U. P. which remain to be paid which aggregate to about Rs. 85 lakhs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny interference. It has further been submitted that there is no reason available with the company at this stage to request for remanding the matter for issuing the direction to the BIFR to reconsider the matter afresh looking into the fact that the financial position of the company has now been improved. 14. The record reveals that the director of the appellant-company has filed an affidavit before this court showing therein that numerous creditors of the company have been settled with and their dues liquidated in full. The appellant-company has averred in the affidavit that the Punjab National Bank, who was one of the secured creditors of the appellant-company has issued "no dues certificate" and the "no dues certificate" issued by the bank has been annexed by the appellant-company. The appellant-company has also averred that similarly the IDBI, Industrial Investment Bank of India Limited (IIBI), Uttar Pradesh Financial Corporation (UPFC), Uttaranchal Power Corporation Ltd. (UPCL), who are the secured creditors to the appellant-company have also entered into a compromise with the company and have issued "no dues certificate". Likewise the appellant-company has also deposited 3.11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the High Court in the impugned order." 18. The hon'ble Madras High Court in the case of J.M. Malhotra v. Union of India reported in [1997] 89 Comp. Cas. 600, has confirmed the finding of the single judge of the Madras High Court observing there that (headnote): "it cannot be held that it is obligatory on the High Court to order winding up of the sick industrial company once it receives an opinion from the BIFR in this regard without examining the correctness of such opinion, on hearing the concerned parties." 19. The Division Bench of the Calcutta High Court in the case of Eastern Paper Mills Ltd. v. Board for Industrial and Financial Reconstruction reported in [2002] 109 Comp. Cas. 1065, has also held as under (page 1071) : "As to the question whether on mere opinion of the BIFR/AAIFR the company could have been wound up, the judgment in J. M. Malhotra v. Union of India [1997] 89 Comp. Cas. 600 (Mad), relied upon by the learned Additional Solicitor General is relevant as also the observations made therein. In that case, the question of constitutional vires of section 20 of the Act was the subject-matter of decision. The contention was that section 20 of the Act is violative o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (5)[1983] 53 Comp. Cas. 184 (SC); [1983] 46 FLR 39 (National Textile Workers' Union v. P. R. Ramakrishnari). 22. After thoroughly considering the rulings cited above, we are of the view that the same do not apply to the facts and circumstances of the present case at this stage. However, the respondents may cite those rulings during the proceedings before the Board for Industrial and Financial Reconstruction (hereinafter called as "the Board") and it will be open for the Board to decide the matter in view of the decisions cited by the parties. 23. The Board would accordingly reconsider the matter. If the Board comes to the conclusion that the company still requires to be subjected to winding up proceeding, then the Board shall also consider that the dues pertaining to the employees/workmen of the company are settled in full. The Board shall also reconsider the matter with regard to this fact as to whether the financial position of the company has improved. However, possession with regard to the property of the company will remain with the official liquidator till the matter is finally disposed of by the Board. After the matter is finally decided by the Board, if the Board comes t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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