9911796707
TMI Blog2001 (1) TMI 863X X X X Extracts X X X X X X X X Extracts X X X X ..... eal, confirmed the said order. 2. Company petition No. 31 of 2000 is for consideration of Board opinion in the matter of Madhu Fabrics Limited while Company Petition No. 32 of 2000 is for consideration of Board opinion with respect to Madhu Textiles Ahmedabad Limited. The petitioner Madhu Textiles Ahmedabad Limited has also filed Company Application No. 288 of 2000 in Company Petition No. 32 of 2000 seeking directions to convene a meeting under section 391 of the Companies Act, 1956 ( the Act ). In the affidavit in support of Judge s summons, the petitioner Madhu Textiles presented a scheme to rehabilitate. Similarly Madhu Fabrics also presented a scheme to rehabilitate by filing Company Application No. 446 of 2000 in Company Petition No. 31 of 2000. Both the petitioners also produced the very scheme for rehabilitation by way of draft amendment in their respective petitions. 3. Since the order of the BIFR as well as the AAIFR is under challenge in the petitions and this Court is required to consider the opinion of BIFR for passing the order of winding up, special civil applications as well as company petitions and company applications were heard together and are disposed of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s strike, unforeseen fall in the value of the stock comprising of raw material viz., Polyester staple fibre from Rs. 110 to Rs. 40 per Kg. general recession and failure on the part of the Government of Gujarat to grant relief and concessions as per the scheme dated 22-8-1995 within stipulated time limit, etc. It is the further case of the petitioner that since the scheme was sanctioned, the petitioner had also brought capital to the extent of Rs. 355 lakhs for smooth running of the unit. In view of the above hurdles in the implementation of the scheme, another scheme was proposed which was agreed to by the creditors in a joint meeting held on 17-11-1999. After the said meeting, the Board had convened a meeting on 22-11-1999 for discussion of the aforesaid proposal. In the said meeting, there was consensus of agreement regarding the scheme proposed by the petitioner. As per the scheme, the petitioner-company was required to deposit Rs. 1 crore in No. Lien Account with operating agency, viz., IDBI on or before 25-12-1999. It is the case of the petitioner that before the expiry of the aforesaid period and without the consent or even the knowledge of the petitioner, an advertisem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 999 and 25-11-1999 whereby the promoters of the company had agreed to pay 20 per cent of Rs. 4 crores which would have come to Rs. 80 lakhs by inviting resourceful promoters, before that could be done, notice to show cause as to why the company should not be wound up was published in the newspaper under the directions of the Board on 10-12-1999 which prevented the implementation of the consensus arrived at. By inviting my attention to the scheme for rehabilitation by way of draft amendment Mr. Vakharia submitted that the company being a running concern and is likely to come out from all difficulties, order to wind up the company is not called for. Alternatively, it was submitted that the case may be remanded to BIFR for considering the scheme for rehabilitation. 7. Mr. Roshan Desai and Mr. Singhi, the learned counsel appearing for IDBI and ICICI respectively, the financial institutions, submitted that ample opportunity was given to the petitioners and they failed to avail of the same and, therefore, no interference is called for. In the submission of the learned counsels, this Court cannot sit as a Court of Appeal over the decision of the expert body and scrutinise the facts to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t resourceful enough to mobilise funds required for rehabilitation purpose. The respondent No. 5 ICICI, in its affidavit-in-reply, has given details of opportunities given to both the petitioners. It is stated that in the year 1989, as the petitioners had failed to repay the loans of financial institutions and the banks including the respondent No. 5, the respondent No. 5 granted relief by way of reschedulement of loans, funding of unpaid interest and waiver of penal interest and liquidated damages. However, the petitioners failed to honour their commitments even as per the said reliefs granted by respondent No. 5. It is further stated that the petitioners thereafter were declared sick industrial companies and BIFR had sanctioned rehabilitation scheme in the year 1995. How-ever, the petitioners failed to honour commitments and also failed to repay the dues of financial institutions including the respondent No. 5. On 2-4-1997 status report with regard to the implementation of the sanctioned rehabilitation scheme was reconsidered by BIFR. Once again, opportunity was given to the petitioners to negotiate with the financial institutions including the respondent No. 5 for revised OTS sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as indicated to the petitioners and their promoters in the meeting held on 4-9-1998 to the effect that if a fully tied-up proposal is not put forward by the promoters of the petitioners, BIFR would issue show cause notice for winding up of the petitioners without any further hearing. It is to be stated that despite the issuance of the show-cause notice on 25-11-1999 BIFR once again gave time to the promoters of the petitioners to come with a concrete rehabilitation proposal and in order to show the bona fide of the promoters in the rehabilitation of the petitioners, the petitioners were asked to deposit 25 per cent of the cost of the proposal in the interest bearing No. Lien Account. Even after the show-cause notice was issued by the BIFR vide its order dated 25-11-1999 the promoters of the petitioners failed to bring in any fully tied-up comprehensive workable rehabilitation proposal and also failed to deposit 25 per cent of the cost of the proposal in an interest bearing No Lien Account. 12. It is the contention of the petitioners that in view of the publication of show-cause notice, the third parties resiled from bringing any money for the petitioners. In my opinion, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Gazette and validity of the same was challenged. In the said petition, instructions issued by the Election Commission for counting by distributing ballot boxes of one polling station at one table was challenged and the High Court granted interim relief suspending the notification and gave direction for counting boothwise. The question before the Apex Court was whether the High Court had jurisdiction to entertain the petitions and to issue interim directions after commencement of electoral process. It was held that the petitioners have not made out any case for intervention of High Court and, therefore, the orders passed by the High Court were set aside. My attention has been invited to the observations made by the Apex Court regarding the constitutional status of the High Court and the nature of jurisdiction exercised by the High Courts. The Apex Court observed that : "High Courts in India are superior Courts of record. They have original and appellate jurisdiction. They have inherent and supplementary powers. Unless expressly or impliedly barred and subject to the appellate or discretionary jurisdiction of the Supreme Court, the High Courts have unlimited jurisdiction includin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , commercial or business like it may be, for the decision of the Corporation. Hence, whatever the wisdom (or lack of it) of the conduct of the Corporation, the same cannot be assailed for making the Corporation liable." (p. 262) In view of this, it is not possible for me to take a different view in the matter. Suffice it to say that no illegality has been committed by the BIFR or the AAIFR nor is it shown that the orders are mala fide , warranting interference in the matter. 19. Frankly speaking, the learned counsel for the petitioners is not entitled to challenge the orders passed by the BIFR and the AAIFR as in my opinion on filing section 391 scheme, the petitioners have waived their right to challenge the orders of the BIFR as well as the AAIFR. It is not the case of the petitioners that they presented the scheme before the authorities and authorities have not considered the same. As stated above by filing a scheme for rehabilitation under section 391 in company petition and also presenting the same in writ petitions by way of draft amendment the petitioners, in my opinion, have waived their right to challenge the orders of the BIFR and the AAIFR. Therefore, both the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The said order was challenged before the Supreme Court. Considering the facts of the case, the Apex Court held that the BIFR and the appellate authority are authorised to take into consideration the facts and circumstances of each case and then to decide whether any reference under section 15( i ) of the SICA was at all necessary or not and to pass any other appropriate order meeting the ends of justice in each case. Hence, the matter was remanded to the BIFR for passing a fresh order in accordance with law. That was the case where the proceedings were pending before the BIFR and permission was sought to close down its undertaking and to review the undertaking at another location which was turned down by the BIFR and, therefore, the matter was remanded by the Apex Court to the BIFR for passing a fresh order. That is not the case here. As observed earlier, in spite of ample opportunities given to the petitioners, no scheme for rehabilitation was presented. The presentation of scheme for rehabilitation by way of draft amendment in the main petitions is nothing but a further attempt to continue the proceedings and thereby to take advantage of the provisions of SICA. 22. Assumi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of petitioner Madhu Fabrics, nothing as on date has been paid to the financial institutions and in the case of Madhu Textiles, financial obligations, as agreed, have not been fulfilled. The expert bodies like the BIFR and the AAIFR have recorded a finding that the promoters of the petitioners were not serious enough to rehabilitate the petitioners-companies nor were they resourceful enough to mobilise funds for the purpose. In fact, there was no rehabilitation proposal, with means of finance, fully tied-up despite ample opportunities having been given to all concerned. As far as the petitioner Madhu Fabrics is concerned, the BIFR in its minutes recorded on 4-9-1998 has observed that the scheme has not been supported. Thus, ample opportunities having been given, no scheme is proposed. Even in the scheme for rehabilitation presented before this Court, nothing has been stated regarding the clearance of dues of banks, namely State Bank of Saurashtra, State Bank of India and State Bank of Travancore. The total dues of State Bank of India and State Bank of Travancore, as on 30-11-2000, are Rs. 13,20,00,806.82 as can be seen from the affidavits filed by the concerned banks. Needless t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In view of this, it is clear that the company has re-employed hundreds of workers in the month of August 2000 against the strength of thousands of workers. Most of the units are closed. Thus, in the name of the workers, who are quite few in number, manufacturing activities cannot be allowed to continue, especially when dues of the financial institutions and secured creditors running into crores of rupees have remained outstanding. These workers can be re-employed by the new management provided running concern. Madhu Textiles, is taken over by new management and it desires to run the unit. 28. In view of the above, I see no merits in Special Civil Applications No. 5124 and 5125 of 2000 and, hence, the following order : Special Civil Applications No. 5124 and 5125 of 2000 are rejected. Company Petitions No. 31 of 2000 and 32 of 2000 are admitted. To be heard on 14-2-2001. Official Liquidator is appointed provisionally to take charge of the movable and immovable properties of Madhu Fabrics Ltd. and Madhu Textiles, Ahmedabad Ltd. with a further direction to take inventory and submit report to this Court. Till the hearing of company petitions, the management may run Madhu Texti ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
