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TMI Blog1999 (12) TMI 755X X X X Extracts X X X X X X X X Extracts X X X X ..... of the cost of the production of aluminium. Though said company commenced production in 1965, subsequently the company was declared as a sick industrial company in terms of section 3(1)( o ) of the Sick Industrial Companies Act, 1905, ( the Act ) by the Board of Industrial Financial Reconstruction in the order dated 8-9-1987. A claim for rehabilitation was sanctioned by the BIFR to revive the petitioner-company by its order dated 3-1-1989. Subsequently, the BIFR found that the scheme of rehabilitation failed and so it issued a show-cause notice to the petitioner-company to show cause as to why the petitioner-company should not be wound up, and the same was published on 5-6-1991. The petitioner-company seems to have approached this Court by filing the writ petition in W.P. No. 4495 of 1991. This Court directed the BIFR to consider the revival scheme of rehabilitation as envisaged by the promoter. Pending the abovesaid writ petition, the petitioner-company made representations to the Government of Tamil Nadu to extend the concessions/reliefs so as to enable the petitioner to revive the company. The Government after careful consideration of the matter and to avoid unemployment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding change of management as stipulated under section 18 of the Act for revival of the petitioner-company. Pursuant to the direction, the IDBI issued a notification dated 22-1-1994 inviting for offers for merger/take over of the petitioner-sick unit. But, unfortunately, no person has come forward to take over the petitioner-company and ultimately the BIFR issued a show-cause notice dated 10-5-1994 for winding up the petitioner-company. At that stage, Agarwal Associates of Sterlite Group of Industries offered to take over the petitioner-company and undertook as co-promoters. The BIFR took note of the offer made by them and by an order dated 23-10-1994 circulated a draft scheme for rehabilitation. The Government of Tamil Nadu and the Tamil Nadu Electricity Board in and by the latter dated 21-12-1994 agreed in the course of the enquiry to grant reliefs/concessions in addition to the various concessions already afforded in and by the Government order in G.O.Ms. No. 165, Industries Department dated 23-4-1992. On the basis of the said commitments made by the said company and the Electricity Board, they sanctioned three schemes of rehabilitation, in addition to the concessions indicated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Board was losing the revenue to the extent of 170 crores per annum on account of the concession enjoyed by the HT supply industries. According to the Electricity Board, in view of the concession extended to the petitioner-company the financial sacrifice to the Board is to the extent of Rs. 332 crores. Therefore, the Board requested the Government to reimburse the loss of the revenue suffered by the Board. The Government by their letter dated 8-9-1997 informed the Board that it is not possible to reimburse the loss of the revenue to the Board. In the said circumstances, the Government passed the impugned order, since by that time the BIFR had also on a consideration of the annual report of the petitioner-company ending with 31-3-1997 had found an improvement in the performance of the company and the company had also turned positive and consequently by order dated 10-9-1997 declared that the petitioner-company had ceased to be a sick industry within the meaning of section 3(1)( o ). According to the respondent-Electricity Board, the petitioner-company had ceased to be sick industry, and it cannot be shown a preferential treatment as per the Electricity Supply Act, as the privilege c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, as laid down by the Supreme Court in AIR 1978 SC 857. The learned senior counsel appearing for the petitioners has further submitted that the respondents cannot take advantage of the order passed by the BIFR, dated 10-9-1997, as the petitioner-company is enjoying other benefits given by the Government and the Tamil Nadu Electricity Board, irrespective of the said order of BIFR. 7. Mr. N.G.R. Prasad, the learned counsel appearing for the petitioners in W.P. No. 151 of 1998 has submitted that taking into consideration the position of the petitioner-company the labourers have agreed to freezing of wages for a period of three years at pre-closure level. When the labourers themselves have come forward with such a proposal, the Government should not withdraw the concessions already given, which would make the petitioner-company again sick and so the impugned order cannot be so sustained. 8. Mr. R. Thiagarajan, the learned senior counsel appearing for the Tamil Nadu Electricity Board has submitted that though the impugned order cannot be given effect to retrospectively with effect from 28-4-1996, it would come into force from the date of the order passed by the BIFR, dated 10- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following concessions/reliefs for the revival of Madras Aluminium Co. Ltd. : ( i )Arrears of electricity charges for the period from 18-11-1988 to 28-2-1991 amounting to Rs. 9.95 crores payable to Tamil Nadu Electricity Board shall be paid by Madras Aluminium Co. Ltd. in equal monthly instalments without interest in 4 years after one year of moratorium from the date of reopening. ( ii )Towards the arrears of electricity charges amounting to Rs. 15.85 crores payable to Tamil Nadu Electricity Board for the period from 1-10-1984 to 17-11-1988 the amounts available in the Aluminium Regulation account shall be drawn and paid immediately and the balance of arrears shall be repaid in instalments in due course, the mode of which will be decided during the 5th year of operations. The Department of Mines, Government of India shall be consulted for release of the amount in Aluminium Regulation account for adjustment of the electricity arrears. These arrears also shall not bear any interest. ( iii )Madras Aluminum Co. Ltd. shall be allowed to pay Electricity tariff at a concessional consolidated rate of Re. 1 per KWH (including electricity tax) for a period of four years. This concessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion Order dated 23-10-1994 in Case No. 19/87. 3.Government Letter No. 36013/MIG-I/92-13 Industries Department, dated 21-12-1994. 4.From the Board for Industrial and Financial Reconstruction Order dated 23-12-1994 in Case No. 7/89 (19/87). ORDER The Madras Aluminium Co. Ltd. is a Public Ltd. Co. incorporated under the Indian Companies Act, 1956. The Company incurred heavy losses and finally in the year 1987 it came under the purview of Industrial Companies (Special Provisions) Industrial Financial Reconstruction as a sick unit. 2. The Madras Aluminum Co. Ltd. represented to the Government seeking certain reliefs and concessions for the revival of the company. The Government carefully examined various requests made by the company. In the Government Order first read above, the Government sanctioned the following concessions/relief for the revival of Madras Aluminium Co. Ltd. : (1)Arrears of electricity charges for the period from 18-11-1988 to 28-2-1991 amounting to Rs. 9.93 crores payable to Tamil Nadu Electricity Board shall be paid by Madras Aluminum Co. Ltd. in equal monthly instalments without interest in 4 years after one year of moratorium from the date of reope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng reliefs/concessions besides the reliefs already sanctioned in the Government order first read above : ( i )The current dues of electricity charges to Tamil Nadu Electricity Board up-to-date of reopening to be repaid in 4 equal monthly instalments commencing from 1996-97 to 1999-2000 along with payment of arrears; ( ii )No additional electricity deposit shall be required for future operations; and ( iii )Tamil Nadu Electricity Board shall ensure release of uninterrupted power supply to the extent at least 47 MVA. 4. The Government have examined the above directions of the Board for Industrial and Financial Reconstruction and direct that Madras Alumi-nium Co. Ltd. be sanctioned following reliefs : ( i )The current dues of electricity charges to Tamil Nadu Electricity Board up to date of reopening to be repaid in 48 equal monthly instalments commencing from 1996-97 to 1999-2000 along with payment of arrears ; ( ii )No additional electricity deposit shall be required for the future operations ; and ( iii )Tamil Nadu Electricity Board shall ensure release of uninterrupted power supply to the extent of at least 47 MVA. These concessions are in addition to the conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns are envisaged assuming cut-off date of 30-9-1994. In the clause mentioned as viability it is stated that the consumptions under-lying the profitability projections, profitability statements, cash-flow, balance sheet and other statements are enclosed as per Annexures I to V. The company would meet its liabilities with an average BIFR of 3-16 except payment of electricity dues and deferred sales-tax dues. The net worth of the company would exceed its accumulated losses in 1996-97 while accumulated losses of the company would be wiped off in 1997-98. As stated in the abovesaid clause, the statements have been enclosed as annexures to the said scheme. The said annexures are also relevant for the purpose of considering the issue raised in these writ petitions. 14. From the abovesaid pleadings, the Government orders, the Scheme and arguments, it is clear that the petitioner-company was allowed to pay the electricity tariff at the concessional consolidated rate of Re. 1 per KWH (including tax) for a period of four years in the Government order in G.O. Ms. No. 165. Industries Department dated 28-4-1992. The dispute now is only with respect to the starting date of the said period o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. The Board in the letter dated 18-2-1995 has stated that the petitioner can inform the Superintending Engineer that it had commenced their operation and requesting him to allow it to pay the electricity tariff at the concessional consolidated rate of Re. 1 per KWH. But for the month of February 1995, the petitioner-company received a bill without giving effect to the order, and charged the petitioner-company not at the concessional rate of tariff. So, the petitioner has sent a letter dated 13-3-1995 to the Chairman, Tamil Nadu Electricity Board requesting him to implement the said Government Order and calculate the charges at the concessional rate of tariff. Meanwhile, the Superintending Engineer, Mettur Electric Distribution Circle, Mettur Dam informed the petitioner that he had addressed to the Headquarters for implementing the said G.O. and for further instruction for issue of bills from the date of re-opening of the Company. It is also stated that on receipt of instruction, the bill for February already given to the petitioner would be revised. Thereafter the bill was revised calculating charges at the concessional tariff rate, on 25-3-1995, and charged at the regular char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30-9-1994 is the starting point for the said period for 4 years cannot be countenanced. 22. The learned senior counsel appearing for the respondent-Electricity Board, has further submitted that in view of the order of the BIFR dated 10-9-1997 holding that the petitioner-company had ceased to be a sick industrial company within the meaning of section 3(1)( O ) of the said Act, the petitioner-company cannot claim the said concession at least after 10-9-1997. The said order was passed at the instance of the petitioner-company so as to enable it to get financial assistance to establish the captive power plant at 75 KW. It cannot be denied, if the petitioner-company is a sick industry, it cannot get financial assistance and so it has come forward with the abovesaid petition. 23. The learned senior counsel appearing for the respondent-Electricity Board has relied on the petitioner-company s communication sent for the purpose of getting the order dated 10-9-1997 to the BIFR stating that the company has fully implemented the scheme and carried out all the conditions as directed in the said scheme and so the petitioner is not entitled for the said concessions. The said submission a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. As already observed, this determination cannot be done without notice to the alleged defaulter. Ms. S. Janani, the learned counsel for the respondent Financial Corpn., sought to rely upon the decision of this Court in Director of Industries v. Deep Chand Agarwal [1980] 2 SCC 322. In that case, the validity of section 3 of the Public Moneys (Recovery) of Dues Act, 1965 of U.P. was challenged. That section enabled the State Government to recover the sums advanced as arrears of land revenue and it was sought to be contended that the said provision was discriminatory and violative of Article 14 of the Constitution. The validity of the said section 3 was upheld, but we find that the Court was not called upon to deal with a question as to whether the principles of natural justice were implicity enshrined in the said section. In any case, this decision is of no assistance to the respondent for the simple reason that section 3 of the U.P. Act is not identical with section 3 of the Haryana Act, inasmuch as the U.P. Act did not contain a provision similar to section 3(1)( b ) of the Haryana Act which requires determination by the Managing Director of the sum due from the defaulter. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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