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TMI Blog2003 (9) TMI 802X X X X Extracts X X X X X X X X Extracts X X X X ..... tion No. 174 of 1991. Initially the respondents arrayed in the contempt petition were Shri Dharam Godha, Chairman, Nouveau Capital & Finance Ltd., Shri S. Jagadeesan, Joint Secretary, Ministry of Industry, Deptt. of Industrial Policy and Promotion, Government of India; and Shri G.S. Kang, Secretary, Department of Industry, Govt. of Bihar. Subsequently, Shri S.N. Khan, Chairman and Managing Director and Shri R.P. Chhabra, Chief General Manager, Rehabilitation Finance Department, Industrial Development Bank of India, were also impleaded as respondents. 2. Ashok Paper Mills was a joint sector company and its shares were held by Government of Bihar, Government of Assam and Industrial Development Bank of India (for short 'IDBI'). The company had two units; one in Darbhanga, Bihar and the other in Assam. The company became sick in the year 1988 and was referred to BIFR. A decision was taken on 15.11.1989 to bifurcate the two units and give the responsibility of administering/taking over the units to the concerned State Governments. The Assam unit was thus taken over by the Government of Assam in 1990. The Bihar unit was, however, not taken over by the Government of Bihar. The pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to take over a tripartite agreement between workers' union, government of Bihar and NCFL will be entered into. NCFL will not take over way of the past liabilities in respect of the workers. However, there would be no break in services and wages would be paid as per the prescribed norms of the industry on the date of absorption. Besides from the date of the take over NCFL will also pay to the worker (as are willing to be absorbed) a monthly salary @ 50% of their last earned salary of the month when production was not terminated. The scheme provided for rehabilitation and running of the units in two phases. Para 1.7 of the Scheme gave details of the expenditure and tentative cost for Phase I as Rs. 26.15 crores. Paras 1.8 and 1.9 gave details as to how this amount was to be raised and they are as follows : 1.8 The total cost estimated is Rs. 26.15 crores. The above requirement of funds would be financed as under:- 1. Share capital from promoters 11.15 2. Term loans/equipment finance 15.00 26.15 1.9 The implementation of Phase-I would be over a period of 18 months. JDBI would extend term loan (jointly or otherwise by both participating institution) provided colla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... workers, the same would be kept pending and decided by the new management. 1.36 The implementation of Phase-I would be completed within a period of 18 months from the date of signing of agreement and taking over the possession of assets of M/s. Ashok Paper Mills (Bihar Unit). Implementation of Phase-II should be taken up concurrently alongwith Phase-I and completed within a period of 3 years. 1.37 On failure of NCFL to bring in the required investment as envisaged in Phase-I and Phase-II within the stipulated time, the agreement concluded with NCFL would be liable to be cancelled and transferred assets would revert to M/s. Ashok Paper Mills Ltd. 4. By the order dated 8.7.1996 the writ petition was disposed of in terms of the report submitted by Government of India on 28.6.1996 which contained the aforesaid scheme. Subsequent thereto, the petitioner moved I.A. No. 11 of 1996 on account of certain objections raised by IDBL After hearing counsel for the parties an order was passed on 1.5.1997 directing all persons and institutions concerned to participate in the implementation of the scheme and the Finance Secretary, Ministry of Finance, Government of India was directed to ensure t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of Bihar in APM Rameshwarnagar, Darbhanga is 16%. After several efforts to revive the units failed, the company made a reference to the BIFR. The State Governments of Assam and Bihar agreed to bifurcate and nationalise their respective units and in consequence thereto the Assam unit was nationalised in February, 1990. This Court by its order dated 4.1.1995 had directed the Secretary, Industrial Development to explore the possibility of the revival of the mill by privatisation, consistent with the requirement to safeguard the rights and interests of the workmen, through negotiations. It was accordingly decided that IDBI would act as merchant banker for the purpose of privatisation of the unit. In response to an advertisement issued by IDBI, offers were received from two firms. The negotiating committee constituted by the Ministry of Industry considered the proposals and finally recommended that the unit could be handed over to NCFL. Accordingly, the Department of Industrial Policy & Planning submitted a Scheme on 28.6.1996 which was approved by this Court on 8.7.1996. 7. It is further stated in the affidavit that the revival scheme had stipulated that NCFL would pay a considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlier the Bihar unit of Ashok Paper Mills never functioned properly and it remained closed most of the time. Under the rehabilitation scheme, Government of Bihar, Government of Assam, LIC and financial institutions were to transfer their shares to NCFL at 10% of the face value. The cost of the shares was to be paid by NCFL after 12 months of taking over ownership of the factory. Since there was a dispute on the date of take over and some shares of financial institutions and Government of Assam could not be transferred to NCFL, the cost of shares was not paid. NCFL paid the first installment of Rs. 37.5 lakhs out of Rs. 6 crores before the taking over of the unit. Before the take over, there was a tripartite agreement between the labour organisations, Government of Bihar and NCFL. The main cause of dispute arose because the Monitoring Committee decided to transfer the ownership to NCFL before signing of the tripartite agreement. When the negotiations for tripartite agreement began, there was a dispute as to which union was to represent the labour. The Industries Department and the Monitoring Committee were of the opinion that since Ashok Paper Kamgar Union had espoused the cause and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e inventory and list prepared at the time of handing over. The President of the petitioner Union, namely, Shri Umadhar Prasad Singh and officials of Government of Bihar were party to the same. The shortfall of Rs. 3.90 crores took place between the time the IDBI prepared its report in January, 1996, the preparation of the inventory list on 25.3.1996 and taking over of physical possession on 18.7.1996 despite the orders of this Court dated 18.3.1996 wherein it was directed that status quo shall be maintained. This shortfall took place as a result of theft, pilferage, damage, etc. which was caused when one Shri H.P. Singh was incharge of the site as Acting Works Manager. The plant and machinery of the unit was very old dating back to the years 1973-74 and even a decade earlier and the same had been left abandoned without any care, upkeep or watch. . It is further stated that by July 1998 NCFI had invested an approximate amount of Rs. 7 crores and thereupon IDBI disbursed the first tranche of Rs. 2 crores out of the sanctioned amount and this amount was not received by the company but was paid directly to the equipment suppliers. Clause 1.8 of the approved scheme envisaged a tentative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ara 37 it is averred that the entire eligible work force as directed by this Court has been in full employment since June 2000 and the cost so far incurred on the payment of salary and wages amounted to approx. Rs. 3 crores. The mill commenced production on 27.8.2000 but it could run only intermittently because of sabotage. Under the scheme, United Bank of India was to provide a working capital but the same was not done and as a stop gap arrangement the promoters managed to obtain external commercial borrowing from USA to the tune of Rs. 2.5 crores to run the mill. Inspection was done by the Deputy Director (Technical) on 27.12.2000 and by a team consisting of Industrial Development Commissioner and Industry Secretary, Director (Technical) and Managing Director, Darbangha Industrial Area Development Authority and some others on 4.1.2001 and they found that the production was going on in the mill. The mill has more than 150 or so motors running at a time which requires constant repair, upkeep and maintenance. Apart from motors, there is other equipment which also requires constant maintenance and repair. The process of repairing parts cannot be carried out at the unit itself and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ping facility, coal handling plant, one boiler of 18th and part of the drinking equipment were acquired. On disbursement of the entire loan of Rs. 15 crores by IDBI by March 2001 and release of working capital by Union Bank of India in August 2001, the company had started the plant. It produced 2303 tonnes of paper upto January 2002 with the average daily production being around 25 tonnes as against the capacity of 60 tpd. Out of envisaged installation of 4 MW captive power plant 1 MW captive power plant had become operational and a 3 MW turbine had reached the site in July, 2001. To meet a part of the cost over run which had occurred on account of procurement of additional machinery, delay in implementation of the scheme and higher pre-operative expenses, the company had approached IDBI for sanction of a loan of Rs. 11 crores. The above request of the company was considered and IDBI and Industrial Investment Bank of India Ltd. sanctioned Rs. 5.5 crores each in March and April 2002 respectively. The trial run was taken on 27.8.2000 but stopped after two days due to break down. There was intermittent working of the plant and the stoppages were reported to be attributable to shortage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re liable to be proceeded with. By the order dated 8.7.1996, the writ petition was disposed of in terms of the report dated 28,6,1996 submitted by Government of India in consultation with various agencies. The report contained the Scheme for revival of Ashok Paper Mills Ltd. and the relevant terms thereof have already been set out earlier. By the order dated 1.5.1997, I.A. No. 11 of 1996 was disposed of and a direction was issued to all persons and institutions concerned to participate in the implementation of the Scheme and the Finance Secretary, Government of India was directed to ensure that the legal conditions are fulfilled and the mill is rehabilitated and both Phase I and Phase II of the scheme are given effect to. It was further directed that the arrears of the workers would be taken care of by the Committee during the process of implementation. By the order dated 31.7.2000 several I.A.s were disposed of on the statements made by the counsel appearing for Union of India and the Monitoring Committee and also the petitioner to ensure that the factory is inaugurated and the production commences. The time given to those workmen who were willing to join after giving an undertaki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the Patna High Court praying that direction be issued to permit it to take out the iron scrap for the purpose of sale. The writ petition was disposed of on 28.6.2001 with the direction to the Monitoring Committee to decide the issue regarding removal of scrap for the purposes of payment of wages to the workers. The Government of India also sent a letter dated 25.7.2001 to the Government of Bihar requesting it to revoke the direction given by it to the District Magistrate on 22.2.2001. The machines installed in a big factory may break down or may need repairs and it is not always possible to repair the same within the factory premises. In such circumstances, it is quite natural to send the machines outside the factory premises or even outside the town to a big place for the purpose of repairs. However, on account of the orders issued by the Government of Bihar, the management was restrained from taking out the machines and this at times resulted in closure or non-functioning of the factory. 14. Another reason given by respondent No. 1 for improper functioning of the Unit is the non-supply of power. Clause 1.15 of the Scheme specifically provided that the Government of Bihar wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts President (Shri Umadhar Prasad Singh) in the meetings of the Monitoring Committee and on account of their non-involvement in the opening and running of the unit, there has been a disobedience of the orders passed by this Court. The material on record shows that as Shri Umadhar Prasad Singh was not cooperating and was creating hindrance in arriving at a tri-partite agreement, the Labour Commissioner wrote to the Government of Bihar for signing of the agreement with Ashok Paper Mill Mazdoor Panchayat, which was a recognised Union. The Government of Bihar also gave its consent for the same. In these circumstances, the fact that the agreement was signed only with Ashok Paper Mill Mazdoor Panchayat cannot amount to wilful disobedience of the orders passed by this Court. 16. Under the Scheme which was formulated on 28.6.1996 and had been approved by this Court by the order dated 8.7.1996, NCFL had to pay a fixed Consideration of Rs. 6 crores over a period of four years in 16 quarterly installments of Rs. 37.5 lakhs each. The NCFL has no doubt defaulted in payment of the aforesaid amount as it has paid only two installments of Rs. 37.5 lakhs each. The IDBI has disbursed a term loan of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en formulated by Government of India on 28.6.1996 and had been approved by this Court by the order dated 8.7.1996 could not be implemented in letter and spirit as many factors have contributed to the same. The reasons given for non inclusion of Shri Umadhar Prasad Singh in signing of the agreement appear to be quite plausible. NCFL has undoubtedly not discharged its liability of making payment of its entire liability of Rs. 6 crores. However it has come out with a case that some additional expenditure has been incurred in running the unit. It is not possible to get the complete financial picture only on the basis of the affidavits filed in the present petition. On the material on record, therefore, it is not possible to hold that the charge of having committed contempt of Court on account of alleged non-compliance of the orders passed by this Court on 8.7.1996, 1.5.1997 and 31.7.2000 has been established against any one of the respondents. 18. The petition is accordingly dismissed and the notices issued to the respondents are discharged. It is made clear that any observation made in this order is only for the limited purpose of deciding the present contempt petition and shall not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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