TMI Blog2013 (4) TMI 621X X X X Extracts X X X X X X X X Extracts X X X X ..... I of the soap manufacturing capacity. The conversion charges to SCL of Rs. 1,900 per tonne of soap packed was to be paid in terms of Clause 6.3(b)(i) after implementation of Phase-II of the project, i.e., after the manufacturing unit was set up. Neither did HLL opt for purchasing the soap plant nor did it proceed with Phase-II of the project. According to HLL it paid SCL conversion charges in excess of Rs. 3 crores per annum. This is not denied by SCL. Thus contention of the Applicant that SCL should have been paid enhanced conversion charges is untenable. HLL owes the Applicant arrears of conversion/processing charges - Held that:- It is seen that in a board meeting of SCL as attended by applicant that the Board was informed that the equipments in fact had got rusted and could not be used unless heavy expenditure was incurred. Quotations had been invited from two-three parties, including HLL for the sale of such equipment. In the meeting applicatant suggested that as the machines were idling it would be better to dispose them of to the highest bidder. As a result the plant and machinery was sold to HLL which was the highest bidder. The Court is unable to discern any malafides o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Respondent : Mr. Ashok Sagar, Advocate for Hindustan Lever Limited. Mr. Sanjay Bhatt and Mr. Abhishek Anand, Advocates for IDBI. JUDGMENT Co. Appl. No. 714 of 2006 1. This is an application by Mr. Inder P. Choudhrie, former Director of Sivalik Cellulose Limited ( SCL ) seeking, inter alia, various directions to Hindustan Lever Limited ( HLL ) to honour all the liabilities and commitments which arose during the period which SCL was under its management and control. 2. The background to the present application is that SCL was promoted by the Applicant, Mr. Inder P. Choudhrie, in June 1975. A plant for the manufacture of writing and printing paper with 20 tonnes per day capacity, at a cost of Rs. 312.59 lakhs, was set up at Gajraula, Moradabad District, Uttar Pradesh ( U.P. ). Although the company started production in January 1979, it was unable to achieve a production capacity higher than 10 to 12 tonnes per day, which was lower than the break-even point of about 17 tonnes per day. SCL continuously incurred cash losses and suspended operations in March 1982. As on 30th June 1986 SCL had accumulated losses of Rs. 653 lakhs. Industrial Development Bank of India ( IDBI ) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be economical for HLL to undertake the Scheme as proposed only if the production capacity of 30,000 tonnes per annum ( TPA ) was treated as additional capacity. The financial institutions/banks had also supported the submissions of HLL. Accordingly, this plea of HLL was accepted. In terms of the Scheme, it was contemplated that HLL shall have an option to purchase the soap unit, during the period of the lease, being a period of five years, from commencement of lease, at a pre-determined price of Rs. 4 crores . The Court approved the said provision. As regards the additional liability pertaining to the claims of Railways, Central Excise and Sales Tax Departments, it was noted that while contesting the above claims after the constitution of the new management of SCL, the Applicant Mr. Inder P. Choudhrie should also be associated as he would be aware of the facts. The prayer of the parties that there should be a moratorium for a period of six years for the payment of the additional liabilities was also approved. 8. The Scheme approved by the Court contained a clause titled Basic Assumptions . One of these was that HLL would have no obligation to revive the paper plant and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity towards such liabilities. During the period of lease, SCL will arrange to recruit the requisite manpower and manage and supervise their working and HLL shall have no responsibility for employment/non-employment of the work force, which would exclusively vest with SCL. (j) The unsecured liabilities of Rs. 55 lakhs, including promoter s loan of Rs. 22 lakhs (as may be certified by the auditors), would be restricted to a maximum of Rs. 75 lakhs. Any excess current liabilities at the time of exercising the purchase option beyond Rs. 42 lakhs (Rs. 75 lakhs minus Rs. 33 lakhs proposed to be paid out of net/generation during the 4th year), which includes the promoters loan of Rs. 22 lakhs (approximately) arising out of the operation of soap plant, would be borne by HLL. 10. The specific clause concerning additional liabilities is Clause 6.4(a) which reads as under: 6.4 (a) The Scheme formulated by IRBI envisages a total of Rs. 530 lakhs as dues to financial institutions banks. In the balance sheet, prepared by the auditors this figure has been shown as Rs. 10,66,92,635. HLL assumes that the total liability of SCL towards the financial institutions/banks would be restricted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g order on 9th November 2004: CA No. 1177/2004 in CP No. 5/1985 In this application filed by M/s. Hindustan Lever Limited, it is stated that since 12 years period as per the scheme for reconstruction approved by this Court expired and the Applicant does not wish to continue with the lease for any further period, the possession of the unit be taken back by the secured creditors. Learned counsel for IDBI submits that possession has since been taken over by the IDBI and money received. In view of this statement, learned counsel for the Applicant submits that no further orders are required to be passed in this application. However, learned counsel appearing for Indian Overseas Bank/R-3 and Respondent No. 4 submits that M/s. Hindustan Lever Limited has yet to comply with certain directions contained in the Scheme. If that be so, they would be at liberty to file an appropriate application in this behalf. With the aforesaid liberty, this application is disposed of. 12. Thereafter UPSIDC filed a Company Application No. 506 of 2005 praying that its earlier applications be taken up for hearing. By an order dated 28th April 2005 this Court rejected Company Application Nos. 392 and 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to an end on 30th September 2004. On 19th July 2004 HLL wrote to the financial institutions stating that it did not desire to renew the lease and further it was not exercising its option to purchase the soap plant at Gajraula. Accordingly, IDBI and other financial institutions were requested to make appropriate arrangements for taking over of the infrastructure facilities at Gajraula together with all documents and records. Pursuant thereto representatives of the IDBI and HLL as well as Mr. Inder P. Choudhrie visited the factory at Gajraula and a complete inventory was taken on all assets and files relating to SCL including files relating to sales tax, income tax and accounts. In a joint meeting dated 12th August 2004 which was held at the office of the IDBI at Mumbai, it was informed that Mr. Inder P. Choudhrie was not interested in running the unit and that he would like to retrieve his investment. Accordingly, a plan to complete the formalities of the handing over of the assets and documents to the majority shareholders, namely, IDBI was drawn up. It is stated that on 30th September 2004 HLL had completed all formalities in the presence of public financial institutions and pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would get enhanced to Rs. 6 crores only if HLL exercised its option to implement Phase-II of the soap manufacturing capacity. The conversion charges to SCL of Rs. 1,900 per tonne of soap packed was to be paid in terms of Clause 6.3(b)(i) after implementation of Phase-II of the project, i.e., after the manufacturing unit was set up. Neither did HLL opt for purchasing the soap plant nor did it proceed with Phase-II of the project. According to HLL it paid SCL conversion charges in excess of Rs. 3 crores per annum. This is not denied by SCL. In the circumstances the contention of the Applicant that SCL should have been paid enhanced conversion charges is untenable. 18. At the time of handing over of the plant to IDBI on 30th September 2004, HLL also paid Rs. 73,48,991 towards full and final payment under the rehabilitation Scheme. Annexure D to the reply of HLL is a letter dated 30th September 2004 written by IDBI to HLL regarding handing over of the assets and acceptance of the aforementioned amount discharging HLL from any liability. In its affidavit as well as written submissions filed before this Court on 19th October 2012 IDBI reiterated that it had issued a no dues certifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 1,52,32,900 from SCL on account of salaries and wages payable to managers and supervisors stated to have been deputed to SCL s factory for the period 1998-2002. It is submitted that the above provision was in respect of the paper unit of SCL which HLL neither ever revived nor was under any obligation to revive and not of the soap plant for which managers and supervisors were actually deputed. 23. As far as the above submission is concerned, HLL has denied charging Rs. 1,52,32,900 from SCL towards wages of the employees who were sent on deputation to SCL. It is stated that in the handing over docket, HLL had mentioned that Rs. 81,22,072 was payable to it towards balance part payment of salaries and wages of managers and supervisors on full time deputation to SCL factory. In the circumstances, the above plea of the Applicant is rejected. 24. The Applicant states that HLL was responsible for clearing the dues of UPSIDC. In a joint meeting held on 12th August 2004 the Applicant informed about a claim of Rs. 209 lakhs against SCL. It is seen that the land cost to the extent of Rs. 63 lakhs has been met by HLL and the responsibility of getting a no dues certificate from UPSIDC ..... X X X X Extracts X X X X X X X X Extracts X X X X
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