9911796707
TMI Blog2003 (9) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of the SIC Act blended with the duty cast on them under the SIC Act, is the short, but, vital issue that arises for my consideration in the above writ petition, testing the same in the teeth of judicial review conferred under Article 226 of the Constitution of India, to render complete justice in order to achieve the object of the above legislation. 2. The petitioner company is having the following divisions : ( a )a textile division manufacturing and marketing cotton, silk and man-made fibre blended fabrics and woollen blended fabrics like cotswool and Angola having its mills, namely Buckingham and Carnatic Mills (B C Mills) at Perambur (Chennai) and Banga lore; ( b )an Engineering Division (manufacturing and marketing of C.I. Castings, Forgings, Sugar Mill Machinery and Equipment, Rice Mills, Granite Cutting Machinery, Electric Smelting Furnaces, Mini-Cement Plants and structural fabrication, ship repair works) at Meenambakkam, Chennai; ( c )a Services Division (marketing of engineering and miscellaneous products) at Armenian Street, Chennai; Handloom, Power Loom and Woollen products and Hosiery at Armenian Street, Chennai; besides acting as shipping, stev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easures which need to be taken with respect to such companies; for expeditious enforcement of the measures so determined; and for matters connected therewith or incidental thereto. Therefore, it is clear that the SIC Act has been brought in the statute book in the public interest. 3.2 The preventive, ameliorative, remedial and other measures are required to be determined by the body of experts expeditiously or otherwise, the ill effects of the sickness in industrial companies such as, ( i )loss of production; ( ii )loss of employment; ( iii )loss of revenue to the Central and State Governments; and ( iv )locking of investable funds of the banks and financial institutions, are serious concerns not only to the company in question and to the Central and State Governments, but also to the society at large. It would, therefore, be imperative to revive such sick industrial companies as quickly as possible and salvage the productive assets and realise the amounts due to the banks and financial institutions, as otherwise the economy of the country itself would be eroded. 3.3 It is needless to point out that the industrialist must also have a vision, real desire and should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed losses within a reasonable time and in that event the BIFR shall, by order in writing, give such time to the company as it may deem fit to make its networth exceed the accumulated losses. If the BIFR decides that it is not practicable for a sick industrial company to make its networth exceed the accumulated losses within a reasonable time and that it is necessary or expedient in the public interest to adopt all or any of the measures specified in section 18 in relation to the said company it may, by order in writing, direct any operating agency specified in the order to prepare, having regard to such guidelines as maybe specified in the order, a scheme providing for such measures in relation to such company. 4.2-4 Section 18 makes provision for preparation and sanction by the BIFR of a scheme with respect to a sick industrial company providing for any one or more of the measures, namely, ( i )financial reconstruction of the sick industrial company; ( ii )the proper management of the sick industrial company by change in, or take over of, management of the sick industrial company; ( iii )the amalgamation of the sick industrial company with any other company or of any oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... twithstanding anything contained in the Compa- nies Act, 1956, or any other law or the memorandum and articles of association of the industrial company or any other instrument having effect under the said Act or other law, no proceedings for the winding up of the industrial company or execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof and no suit for the recovery of money or for the enforcement of any security against the industrial company or of any guarantee in respect of any loans or advance granted to the industrial company shall lie or be proceeded with further, except with the consent of the BIFR or, as the case may be, the Appellate Authority, namely the AAIFR. 4.2-9 Section 22A, which was introduced by Act 12 of 1994, provides that the BIFR may, if it is of opinion that any direction is necessary in the interest of the sick industrial company or creditors or shareholders or in the public interest, by order in writing direct the sick industrial company not to dispose of, except with the consent of the BIFR, any of its assets ( a ) during the period of preparation or consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d up. Therefore, it is clear that the winding up of the sick industrial company should be opted as a last resort where the operating agency reports that it is not viable to revive or rehabilitate the sick industrial company. There is no provision even under section 22-A of the SIC Act to impose a total ban on the power of a sick industrial company to dispose of a part of its assets and the only restriction is that the right of a sick industrial company to dispose of its assets is subject to the specific orders of the BIFR for the same under section 22-A of the SIC Act. In other words, making of a reference under section 15 of the SIC Act, by itself, does not ipso facto attract any restriction on the right of a sick industrial company to dispose of its assets. A specific order, contemplated by the BIFR under section 22-A for disposing the assets of the Sick Industrial Company, can be passed after considering the matter in accordance with the provisions of sections 16 and 17 of the SIC Act and framing a scheme under section 18 of the SIC Act. 4.7 A Division Bench of the Allahabad High Court in U.P. State Sugar Corpn. Karamchari Association v. U.P. State Sugar Corpn. Ltd. [C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t competent to sell the 8 sugar mills which it was proposing to sell in view of the provisions contained in the Act . The judgment of the High Court cannot, there fore, be upheld and the appeal must be allowed." [Emphasis sup plied] (p. 1494) 4.9 The statutory authorities, namely the BIFR and AAIFR are, therefore, under an obligation to exercise the powers, much less their discretionary powers, blended with the duty cast on them, in order to achieve the objects of the SIC Act, namely : ( i )to afford maximum protection of employment, ( ii )to optimise the use of financial resources, ( iii )to salvage the assets of production, ( iv )to realise the amounts due to the banks, and ( v )to replace the existing time-consuming and inadequate machinery by efficient machinery for expeditious determination by a body of experts to safeguard the economy of the country and protect viably sick units. 4.10 The SIC Act is, thus, intended to revive and rehabilitate sick industries before they can be wound up under the Companies Act, 1956, as held by the Apex Court in Real Value Appliances Ltd. v. Canara Bank [1998] 5 SCC 554. 4.11 Failure to keep a track of the above object ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d W.P. No. 1198 of 1997 set aside the order dated 12-1-1996 of BIFR regarding de-registration of the petitioner Company. ( vi )Pursuant to the order of this Court dated 25-2-1998 in W.P. No. 1198 of 1997, the petitioner Company submitted a fresh rehabilitation proposals to the BIFR which provided for : ( a )bifurcation of the assets and liabilities of the petitioner company between the original promoters and co-promoters; ( b )Voluntary Retirement Scheme for the entire workforce both at Chennai and Bangalore units; ( c )relocation of the manufacturing facilities and processing house from Chennai to Singaparumal Koil, near Kancheepuram, as well as Bangalore Silk Mills at a new location in Bangalore; and ( d )investment in subsidiary, namely Binny Engineering Ltd. (BEL). Even though the said revised proposal was broadly accepted by the financial institutions and the State Bank of India, the same was not accepted by other consortium banks. ( vii )Pending the above proceedings before the BIFR, the petitioner management and the workers entered into a settlement under section 12(3) of the Industrial Disputes Act on 28-3-1998, in the presence of the then Hon ble the Chi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Management including that of recruitment. Similarly the management will not interfere in the rights of the Union. 11. After implementation of the above settlement in full, all the cases will be withdrawn. Both the parties fully agree to the above settlement." ( viii )Hence, a third revised rehabilitation proposal was submitted, which provided for reduction in cost of scheme. Even though the same was accepted in the joint discussion dated 15-3-1999 by all, the consortium banks did not agree to grant any concession in the interest rates. As a result, the said proposal was declared failed by the BIFR on 17-9-1999 and IDBI was reap pointed as Operating Agency under section 17(3) of the SIC Act. ( ix )Thereafter, the petitioner company submitted another rehabilitation scheme on 19-11-1999 and again submitted another revised proposal on 13-12-1999 and thereafter, two more proposals one on 24-5-2000 and another on 29-5-2000 for scrutinization by the IDBI as per the guidelines enclosed by the BIFR with the proceedings dated 31-7-2000. A hearing was held to examine the above proposals, dated 19-11-1999, 13-12-1999, 24-5-2000, 29-5-2000, before the BIFR on 31-7-2000 and in the said m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on such terms and conditions to be approved by the Asset Sale Committee, including transferring such properties to 100% subsidiary of M/s. Binny Ltd. and M/s. Binny Karnataka Ltd.; ( g )the transfer of properties to any subsidiary would be done with the prior approval of BIFR; ( h )if any amount is realised through sale of immovable properties and sale of machinery within 90 days of sanction of the scheme, such amount would be deposited in a separate interest bearing No-lien account with the Operating Agency; ( i )the sale proceeds along with loans from the associate companies of the promoters and co-promoters were to be distributed by the operating agency for payment of the secured creditors, statutory liabilities and workers dues within 90 days from the date of sanction of the scheme; ( j )in case the funds raised within 90 days by sale of assets and brought in by the promoters/co-promoters were not sufficient to pay all the secured creditors, statutory liabilities and workers dues, the amount lying in the No-Lien account to the extent of proceeds from the sale of aforesaid assets would be distributed by the Operating Agency among first charge holders on pro rata ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d co-promoters shall be distributed by the Operating Agency for payment of the secured creditors, statutory liabilities and workers dues within 90 days and as per the scheme. However, in case the funds raised within 90 days by sale of assets and brought in by the promoter/co-promoter were not sufficient to pay all the secured creditors, statutory liabilities and workers dues, the amount lying in the No-lien account to the extent of sale proceeds of the aforesaid assets would be distributed by the Operating Agency among first charge holders on pro rata basis. After demerger, each company would meet its various commitments, as per the provisions of the rehabilitation scheme sanctioned by BIFR." ( xv )Thereafter, the matter was adjourned for further hearing on 13-12-2001 and finally the scheme was sanctioned by order dated 13-12-2001 of the BIFR, but holding that the period of 90 days provided for in the scheme to make payment of the one time settlement to the financial institutions would commence from 13-12-2001 and would, therefore, expire on 12-3-2002. ( xvi )It is, therefore, the scheme approved by the IDBI by the letter dated 5-10-2001, which provides for splitting of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheques from the petitioner company for the amounts due and hand over the cheque to the concerned occupant after collecting the key and taking possession of the quarters on behalf of the Management of the petitioner Company, if necessary with police assistance, and the said order had become final. ( xx )Since the dues were not paid within 90 days from 28-12-2001, the financial institutions consortium banks and the Unit Trust of India, requested for the payment of interest in terms of the sanctioned scheme and therefore, a meeting was convened on 24-4-2002 calling on the promoters to implement the scheme without any modification. ( xxi )A show-cause notice was issued to the petitioner company on 1-5-2002 for non-payment of dues of the financial institutions and banks as per the sanctioned scheme and a status report was called for from the Operating Agency (IDBI). ( xxii )On receipt of the said show-cause notice, the Company submitted its reply to the BIFR, and the Operating Agency (IDBI), which was appointed as the monitoring agency as per the sanction order of the BIFR, also submitted a status report dated 25-6-2002. ( xxiii )As per the direction of the Asset Sale Committe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to consider any viable rehabilitation proposal which the promoters with or without a co-promoter may submit within 30 days from the date of receipt of the order dated 1-7-2002, and disbanded the Asset Sale Committee with immediate effect and restrained the company from proceeding further in the matter in regard to sale/development of properties of the company. ( xxvi )Pursuant to the option given to the petitioner in the order dated 1-7-2002, the petitioner company submitted a revised draft reha-bilitation scheme to the BIFR and the BIFR, in turn, directed the Operating Agency to examine the same. Accordingly, a joint meet-ing was convened on 10-10-2002. In the meeting held on 10-10-2002, the petitioner company also brought to the notice about the proposed sale of 1260 Grounds of land proposed to be transferred to BREAD, a subsidiary company at Rs. 79 Crores. In the said meeting the Promoters had agreed to deposit Rs. 20 Crores on or before 28-10-2002. But, since the petitioner could not deposit Rs. 20 Crores with the Operating Agency till 25-10-2002, as they only anticipated to effect the sale of properties to BREAD, a subsidiary company and proposed to take loans from other ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh there is a difference of Rs. 15/17 Crores, the petitioner company get Rs. 60 Crores within 15 days which would meet the needs of the petitioner company to discharge the dues of the secured creditors, viz., financial institutions and banks in one time settlement. ( xxx )As per the directions of the BIFR dated 28-10-2002, the proposed offer of Sri Reddy and others was discussed at the joint meeting held on 9-1-2003, whereat all the secured creditors were agreeable for sale of the said property/land at the valuation/transfer price of Rs. 60 Crores, subject to the condition that the sale proceeds shall be deposited directly in No-Lien Account with the Operating Agency, IDBI, within thirty days from the date of approval of the BIFR. This proposal, acceptance and agreement among the petitioner company and the proposed purchaser through BREAD, a subsidiary company was also agreeable to the secured creditors, viz., financial institutions and banks, workers, and the Operating Agency, IDBI, strictly in accordance with the directions of the BIFR dated 28-10-2002. ( xxxi )Accordingly, the petitioner company submitted a revised draft rehabilitation scheme on 14-2-2003, thereby agreei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red into by them on their own, so that there is no legal hurdle in the disposal of the land; ( b )the Asset Sale Committee could be reconstituted comprising the Operating Agency (IDBI), State Bank of India (SBI), Indian Bank (lead bank) and the company for the proposed sale and the representative of the Operating Agency would be the Chairman of the Asset Sale Committee; ( c )the Asset Sale Committee would fix a reserve price for the land and the same has to be approved by the BIFR; ( d )a fresh advertisement would be issued for the sale of 1260 grounds of land at Perambur, Chennai and the Asset Sale Committee would meet within 15 days to finalise the detailed terms of sale; ( e )If no bids are received in response to the advertisement or the bids received are not acceptable to the Asset Sale Committee, the company/promoters would be free to locate buyers and finalise the deal through mutual negotiation; ( f )the advertisement should be issued within 15 days in view of the eagerness of the secured creditors; ( g )on receipt of the offers, the Asset Sale Committee would analyse the bids; ( h )the company would prepare a composite scheme including the rehabilitati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to an agreement dated 12-3-2002 entered into between them. The payment of the aforesaid sum is made by way of pay order No. 050252 dated 20-3-2003 issued by the Union Bank of India, T. Nagar Branch for a sum of Rs. 6,50,00,000 and Banker s cheque No. 100618 drawn on American Express Bank Limited dated 20-3-2003 for a sum of Rs. 39,96,164. 2. The parties acknowledge that the agreement dated 12-3-2002 entered between the parties shall hereby stand cancelled without any claim whatsoever by one party to the agreement against the other. 3. Both parties agree that this Memorandum of Compromise shall be placed before the BIFR/AAIFR at its next hearing to be held on 27-3-2003. In witness whereof the parties hereto have set their signatures unto this agreement on 20-3-2003." ( xxxv ) Aggrieved by the order dated 24-2-2003 of the BIFR, in the light of the memo of compromise entered into between the petitioner company and CREL on 20-3-2003, the petitioner company preferred an appeal to the AAIFR seeking to set aside the order of the BIFR dated 24-2-2003 and to approve the scheme dated 14-2-2002, expeditiously. However, the AAIFR, by order dated 9-5-2003 in Appeal No. 83 of 2003, conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the eagerness of the secured creditors; ( g )on receipt of the offers, the Asset Sale Committee would analyse the bids; ( h )the company would prepare a composite scheme including the rehabilitation of Binny Engineering Limited and submit the same to the Operating Agency (IDBI); and ( i )the amount of Rs. 1.7 Crores would be paid to the workers out of Rs. 20 crores lying in the No Lien Account with IDBI. 6.2 On an appeal preferred by the petitioner Company, the order of the BIFR dated 24-2-2003 was confirmed by an order dated 9-5-2003 of the AAIFR, holding that the petitioner company failed to bring the funds into the company for disbursement of the out standing dues to the secured creditors, viz., financial institutions and banks for a long time, even though they are prepared to sacrifice the interest considerably. While confirming the order of the BIFR dated 24-2-2003, the AAIFR, making a reference to the decision of the Supreme Court in Chairman and Managing Director, SIPCOT v. Contromix (P.) Ltd. JT 1995 (6) SC 283 as followed in Haryana Financial Corporation v. Jagadamba Oil Mills JT 2002 (1) SC 482, observed that for sale of the public property, adequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in by the promoters. The Bangalore Woollen, Cotton and silk Mills together with the land relating to the Mills, Agraharam Road and Tank Bund property at Bangalore and all current assets and liabilities relating to the manufacturing operations. 3. Binny Engineering Ltd. (BEL) BKL would not be engaged in any manufacturing activity. would be under BL. 7.2 As per the scheme, the contribution by the Promoters and the Co-promoters shall be made as follows : "Promoters Contribution The promoters have brought in Rs. 2,300 lakhs in the year 1998-1999 and Rs. 1,300 lakhs in March 2002 utilised towards part payment of workers dues. A further sum of Rs. 800 lakhs is deposited in NLA account with IDBI on behalf of Ethurajan Group in November 2002. Out of this a sum of Rs. 250 lakhs has been paid in May 2003 towards 1st instalment of interest as per the direction of Hon ble High Court of Madras. The balance funds in No Lien Account would be lien marked on sanction of Scheme by High Court of Madras. The promoters are also bringing Rs. 755 lakhs to meet the balance interest p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the same has to be arranged by the Promoters. The scheme also provides for settlement of dues to the financial institutions, namely IDBI (respondent 4), IFCI (respondent 5), ICICI (respondent 6), SBI (respondents 3 and 41), as well as Government of India (respondents 12 to 14 and 23) and debenture holders, which works out to Rs. 4,588 Lakhs, out of which they have already settled Rs. 915 lakhs and the balance amount to be settled is Rs. 3,673 lakhs, and the same has to be arranged by the co-promoter, crystallised as follows : Name of the Bank Crystallised Amount as on 31-3-2001 Name of Institution/ Bank Crystallised amount as on 31-3-2001 Already paid Balance payable Funds to be arranged by promoters Funds to be arranged by co-promoters Indian Bank 2993 IDBI 949 223 726 Oriental Bank of Commerce 1802 IFCI 125 29 96 Bank of Baroda 789 ICICI 241 57 184 Federal Bank Ltd. 552 Debenture-Holders 73 17 56 SBI 2500 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... There are number of workers unions at the B C Mills, Chennai. The Madras Labour Union (which represents more than 90% of the workers) and B C Staff Union are the recognised unions. The company had, on March, 28, 1998, entered into a settlement with the workers which envisaged VRS to majority of the workers. Accordingly, first instalment of VRS compensation amounting to Rs. 2,642 Lakhs was paid to the employees. The remaining dues of the workers were provided for payment in the sanctioned scheme of October/December 2001 as under : (Rs. Lakh) Total amount payable to workers 6775 Amount paid till October 21, 2001 2642 Balance amount payable as on October 31, 2001 which was provided for payment in the rehabilitation scheme sanctioned in October/December 2001 4133 Less : Amounts paid after 31, 2001 Released by OA as per BIFR order from Insurance Claim Paid by the company in March, 2002 from their own sources 958 1950 2908 Balance payable to workers/Staff Workers Staff Dues 200 Management Staff dues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had not been paid first instalment, would be repayable in 4 equal annual instalments, the first instalment commencing from one year from the date of payment of principal. The company has clarified that interest is payable on the amount of Rs. 3,374 lakhs only, representing the liabilities directly payable to workers and workers Co-op. society. No interest is payable on balance amount of Rs. 759 lakhs which represents arrears of PF, ESIC and gratuity payable to management staff, etc. The total balance dues in respect of workers along with interest as above upto March 31, 2002 (cut off date), have been estimated at Rs. 5,138 lakhs (inclusive of interest of Rs. 40 lakhs as stated above). Clause 7( d )( iii ) : Workmen occupying the company s quarters shall vacate all the quarters occupied by each one of them. With the handing over of clear vacant possession of each quarter, the company would simultaneously hand over the cheque in full settlement of each work man s dues as per the scheme. Apart from advising the workmen to vacate the quarter as per the manner detailed above, the Worker s Union will also cooperate with the management in all possible legal manner in taking vacan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unds for a consideration of Rs. 6,210 lakhs : Binny Limited currently owns a wholly owned subsidiary viz., Binny Real Estate and Asset Developers (Madras) Ltd. (BREAD), it is proposed to transfer 1260 grounds of land of the company located at Perambur to BREAD. Thereafter, BREAD would be acquired by Shri G.H. Reddy, promoter of Dyna Hotels Limited, Shri G.V. Prasad, Vice Chairman and CEO of Dr. Reddy laboratories and Shri K.S. Aghoram, Shri K.S. Suresh and Shri K.S. Ganesh, Directors of SSI Limited in their individual capacities as per their offer letter dated 12th June, 2003 for an amount of Rs. 6,210 lakhs. The terms and conditions would be as prescribed in the advertisement dated 23-5-2003." 7.10 After settling the dues by way of one time settlement to the secured creditors, namely the Financial institutions and the consortium banks as well as the Workers, as provided under the scheme referred to above, there shall be a balance of Rs. 345 lakhs out of the source of funds covered under the scheme after discharging the liabilities as stated hereunder : (Rs. Lakhs) SOURCES Promoters Contribution already brought in 800 Interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture has been estimated at Rs. 2,321 lakhs (weaving section Rs. 1,236 lakhs, processing Rs. 1,085 lakhs) for Chennai operations. Besides this, an expenditure of Rs. 300 lakhs (140 lakhs already incurred) has been estimated/incurred for the Container Freight Station (CFS) services." VI - Submissions (A) - Submissions Made on Behalf of the Petitioner Company 8. Mr. R. Krishnamurthy, learned senior counsel appearing for the petitioner company, contends that the earlier agreement between the petitioner company and the Carnatic Real Estate Ltd., for sale of 1260 grounds for sum of Rs. 75 crores was also subject to the approval of the BIFR. Even though the said proposal did not fructify, it is relevant to observe that the Asset Sale Commit tee, itself, in the meeting held on 26-6-2002 considered that Rs. 77 Crores would be a reasonable price for the sale of 1260 grounds. 8.1 According to Mr. R. Krishnamurthy, learned senior counsel, the earlier sale consideration of Rs. 75 Crores by Carnatic Real Estate Ltd., was sought to be made within 18 months from the sanction of the scheme, and the present offer namely, a sum of Rs. 60 crores for the property of an extent of 1260 gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh advertisement was made as per the orders of this Court dated 13-5-2003 in the present writ petition for the sale of 1260 grounds, the petitioner could get offer for only Rs. 62.10 crores. 8.5 The attention of this Court is also invited to the opinion of the secured creditors that M/s. Binny Engineering Limited, should be de-linked, as it requires techno-economic viable study, which the petitioner is willing to conduct in thirty days from the sanction of the present scheme. 8.6 It was further agreed that the promoter and co-promoters are willing to bring in Rs. 7.55 crores and Rs. 34 crores respectively, immediately, apart from Rs. 158 crores already brought in by the promoters and co-promoters. Thus, the petitioner company would satisfy their own source of Rs. 200 crores to run the scheme viable. Hence, the impugned scheme is fully tied up in respect of the settlements of the secured creditors, viz., financial institutions, banks and debenture holders, as well as for settlement of dues payable to the workers. 8.7 The learned Senior Counsel also invited my attention to the shifting of a textile unit to a new location over an extent of not less than 50 acres in Kanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also agreeable to make payment of the entire balance amount within 15 days of receipt of acceptance. All secured creditors found the offer valid and agreed to accept the offer. This respondent further submits that the charge on the properties at Chennai and Bangalore, proposed to be sold for raising the OTS amount will be released on receipt of the sale proceeds in the No Lien Account with the respondent and the charge on the remaining properties, except properties worth double the amount of interest payable on the OTS amount, would be released after the entire crystallised liabilities are fully discharged..." 9.2 Mr. Murali, appearing for respondents 6 and 28 viz., ICICI Bank and Federal Bank Ltd., respectively, invited my attention to the counter affidavit filed on behalf of respondents 6 and 28. The relevant portion is extracted hereunder : "...The petitioner has also informed the Hon ble Court that as per the directions of this Hon ble Court, IDBI, Operating Agency, issued an advertisement inviting offers for sale of the property belonging to the petitioner company by 12-6-2003. The Operating Agency has also informed that there is only one offer received in response t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h advertisement. The petitioner company, has given a letter dated 18-6-2003 that as per the directions of the Hon ble Court, the IDBI the Operating Agency issued an advertisement inviting offers for sale of the property belonging to the company. The offers were to be received on or before 12-6-2003. The company has also stated that only one offer was received in response to the advertisement which was opened on 16-6-2003 at IDBI office, Chennai. The offer for sale of 1260 grounds at the Chennai has been received from one Mr. G.H. Reddy, Promoter of Dyna Hotels and from Mr. K.S. Aghoram, Director SSI Ltd., in their individual capacities. The offere quoted is Rs. 6,210 lacs. The petitioner has given their offer for one time settlement with the Indian Bank based on the aforesaid offer of payment of 6,210 lacs for the purchase of land and building situated at Perambur, Chennai. The respondent bank has considered the offer of the petitioner company and agreed to accept a sum of Rs. 2,993 lacs towards full and final settlement of the dues in respect of the account M/s. Binny Ltd., and had given a letter to the company on 24-6-2003 subject to approval of the modified/revised/rehabilitatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 62.10 crores by Shri Reddy and others is the only single offer to the advertisement made by the Operating Agency (IDBI) for the sale of the said 1260 grounds of land, as per the orders of this Court dated 13-5-2003 in the present writ petition, and that there is no other response to the said advertisement. 9.7 Mr. V.K. Vijayaraghavan, learned counsel appearing for the 19th respondent viz., Employees State Insurance Corporation, submits that the petitioner company would be liable to pay the statutory liabilities and whatever waiver the petitioner is entitled to with respect to the interest, penalty, etc., will be considered by the 19th respondent in accordance with law. 9.8 Mr. G. Vasudevan, learned counsel appearing for the 20th respondent viz. , Tamil Nadu Electricity Board, has made an endorsement to the effect that the 20th respondent - Board agrees for the scheme upon receipt of the amount due to the Electricity Board. 9.9 Mr. M.S. Palanisamy, learned Additional Government Pleader appearing for respondents 22 and 44, invited my attention to the counter affidavit filed on behalf of 22nd and 44th respondents viz., B C Mills Employees Co-operative Society, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... willing to settle Rs. 7.55 Crores towards the interest on delayed payment of VRS compensation and Rs. 2 Crores towards the gratuity. But, however, the liability of the peti tioner towards the alleged wages for the period actually worked, viz., from 1-3-1997 to 7-7-1997, for the B C Mills Workmen, is disputed as the management already paid a sum of Rs. 6 Crores towards wages, ration and provision to the workmen during the period of closure and both the Management and the Workmen agreed as per clause 5 of the settlement dated 28-3-1998 entered under section 12(3) of the Industrial Disputes Act that the management would not recover the said Rs. 6 Crores from the workmen and the workmen also would not press the demand that they should be paid wages for the said closure period, viz., 1-3-1997 to 7-7-1997. However, Mr. R. Krishnamurthy, learned senior counsel submits that in any event since the issue with respect to the said claim of Rs. 1.75 Crores towards the alleged wages for the period from 1-3-1997 to 7-7-1997 is pending before the Joint Labour Commissioner (Conciliation), Chennai, the Management and the workers would abide by any decision arrived therein. 9.13-2 Mr. N.G.R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring for the respondents 16 to 18, 27, 34, 42 and 56 to 86 agrees for the sanction of the impugned scheme with an earnest claim that some funds may be reserved to meet the claims of the workmen in such of their pending cases. 9.14 Mr. S. Jegadeeshwaran, learned counsel appearing for the respondents 43 and 45 submits that the 43rd respondents is one among the 39 workers who did not offer for voluntary retirement but wanted to continue in service. Concededly, the 43rd respondent has now been reinstated in Binny Engineering Limited with effect from 17-2-2003 and he has also filed a claim petition C.P. No. 72 of 2000 before the Principal Labour Court, Chennai for backwages from 15-6-1996 till he was reinstated on 17-2-2003. However, an endorsement was made by Mr. S. Jegadeeshwaran, learned counsel appearing on behalf of the 43rd respon- dent to the effect that "the scheme for sale of 1260 grounds is accepted", provided the 43rd respondent is paid his wages for last three months of his employment at Binny Engineering Limited, of course, without prejudice to his right in the Claim Petition C.P. No. 72 of 2000 pending before the Principal Labour Court, Chennai, Mr. R. Krishnamurthy, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as modified by proceedings dated 13-12-2001, submits that the petitioner company is willing to settle the dues to the petitioner as per the settlement dated 28-3-1998 in the light of the said Clauses 3(B)( ii ), 7( d )( iii ) and 7( d )( iv ) of the scheme sanctioned by the BIFR, and that in any event, since the 47th respondent had also raised the above issue before the Joint Commissioner (Conciliation) claiming wages even for the closure period, the petitioner company is willing to abide by the decision arrived thereunder. 9.16 Mr. R. Neelakandan, learned counsel appearing for the respondent 54 submitted that the petitioner company should settle all the dues towards the gratuity, cooperative arrears and the interest for the delayed payment on VRS, for which Mr. R. Krishnamurthy, learned senior counsel appearing for the respondents pointed out that the provisions are already made in the impugned scheme. 9.17 Mr. K.M. Ramesh, learned counsel for the 55th respondent, contends that out of 10.25 Crores provided for payment of dues to the workers and employees of the Bangalore Mill, a sum of Rs. 8.18 Crores has already been paid and the balance amount of Rs. 2.07 Crores ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s only) as aforesaid shall be made within a period of 2 weeks or the date of surrender of the quarters of the staff, whichever is later, subject to a maximum period of three months. 5. In the event of any of the parties defaults in complying with any one or more of the terms stated herein above, the other party would be at liberty to work out their rights independently and this arrangement will stand revoked. All the above 11 management staff agree to withdraw the computation petitions stated above on receipt of the entire amount as mentioned above. 6. It is agreed by both the parties that the payment for the 11 Management Staff mentioned above will be paid simultaneously on handing over vacant possession of the quarters occupied by the 7 of the above management staff. 7. In view of the above arrangement, the above WPMP No. 25551 of 2003 is not pressed by the petitioners." In view of the above joint memorandum dated 22-8-2003, the above WPMP No. 25551 of 2003 is dismissed. 9.19. Even though one MAA Communication Bozell Ltd. Chennai proposed to implead themselves as proposed respondent in the above writ petition by way of W.P.M.P. No. 27238 of 2003, claiming as an unsecu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have to be made within 15 days from the date of such acceptance. I submit that the modus operandi for effecting such transfer was also set out in the advertisement in terms of which the property would be transferred to a wholly owned subsidiary of the petitioner company under the name M/s. Binny Real Estate and Asset Developers (Madras) Ltd. (BREAD). Once the transfer of the assets is effected to the wholly owned subsidiary, the shares of the wholly owned subsidiary would be transferred to the purchaser against which the amount would be released. 4. I submit that we have made an offer to the tune of Rs. 62.10 crores on the terms and conditions set out in the advertisement. I submit that we are filing this affidavit pursuant to a direction by this Hon ble Court on 23-7-2003 requiring us to inform this Hon ble Court the terms of our proposal for making the balance payment. 5. I submit that as stated earlier, we have already deposited Rs. 6 crores in a no lien and no interest bearing account with M/s. IDBI. I submit that we are ready to comply with the terms of advertisement that require us to make the balance payment within 15 days from the date of acceptance of the bid by an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service to the consumer, loss of employment and employment opportunities, loss of revenue like tax and duties to the Government and local authorities non recovery of loans and advances made by lenders like financial institutions and banks, that constitutes the "public interest", enshrined in the SIC Act. The expression "public interest" is also to be understood in the interest of the general public which includes a section of the public, say even the employees of the sick industrial company. 10.3 The SIC Act is, therefore, basically and predominantly remedial and ameliorative insofar as, it empowers the quasi-judicial bodies, namely, the BIFR and AAIFR to determine the sick industry and to take appropriate measures for revival and rehabilitation of the same expeditiously. Thus the BIFR and AAIFR are assigned a more active role to evolve a sanctioned scheme for the revival and rehabilitation of the Sick Industrial Company. During such process, section 22 of the SIC Act provides a genuine protection to the sick units from any legal proceedings for recovery of money and for enforcement of any security against the sick industrial company or of any guarantee in respect of the loan o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s dated 1-7-2002 recommended for the winding up of the company and also disbanded the Asset Sale Committee and re strained the company from in any manner selling the property, but at the same time gave an option to submit a viable rehabilitation scheme within thirty days from 1-7-2002. Hence, the petitioner gave a revised scheme, and the BIFR by proceedings dated 28-10-2002 directed the petitioner company/Promoter/Co-promoter to trans- fer/deposit Rs. 20 Crores within 2 or 3 days and also permitted the secured creditors, namely financial institutions and banks to take a final view including on the valuation and transfer price of the assets/property, and directed the petitioner company to allow the bankers and other secured creditors to inspect the properties/records for satisfying themselves as to the assets sold/amounts received, etc., and further directed the Operating Agency, IDBI to submit its clear report within thirty days from 28-10-2002. 10.7 A careful and closer reading of the proceedings dated 1-7-2002 and 28-10-2002 together, makes it clear that the Asset Sale Committee which was disbanded on 1-7-2002, was not reconstituted by the BIFR while passing the proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank of India, Indian Bank (Lead Bank) and the petitioner-company. Be sides, the BIFR required the Asset Sale Committee to advertise the sale of 1260 grounds of the land at Perambur and also gave an option to the petitioner company to locate the buyer and finalise the deal through the Asset Sale Committee, and the petitioner-company/promoter would be free to locate the buyers and finalise the deal through mutual negotiation, if no bids are received in response to the advertisement or the bids received are not acceptable to the Asset Sale Committee. It is not in dispute that the constituent members of the Asset Sale Committee had already given their consent for the sale of 1260 grounds of land at Perambur for Rs. 60 Crores. This aspect of the case was not either weighed or considered by the authorities, viz., the BIFR as well as the AAIFR. The failure of appreciation of the above aspect of the case and non application of the mind by the authorities, requires the interference of this Court in the impugned proceedings of the BIFR and the AAIFR. 10.10 The AAIFR in its order dated 9-5-2003 while confirming the order of the BIFR dated 24-2-2003 held that the assets of the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. 10.15 In any event as observed by the Apex Court in U.P. State Sugar Corpn. Ltd. s case ( supra ), prior consent contemplated under section 22-A of the SIC Act should not be construed as a power to prohibit the sale of assets itself as it would run counter to the express terms under section 22-A of the SIC Act. 10.16 Of course, the matter of revival and rehabilitation of the petitioner company is pending consideration for nearly about 10 years. Time and again for some reason or the other, the schemes offered by petitioner company could not get the sanction of the BIFR for want of due diligence on the part of the promoters and co-promoters. Therefore, as a condition precedent, the promoters and co-promoters are required to deposit their respective contri butions with the Operating Agency (IDBI) before offering sanction of the impugned scheme and giving consent for the disposal of the 1260 grounds of land at Perambur, Chennai that belongs to the petitioner company. 10.17 For all these reasons, I am inclined to set aside the impugned order dated 24-2-2003 of the BIFR as well as the order dated 9-5-2003 of the AAIFR, with the following directions : ( i )The promoter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... workers, after getting vacant possession of the quarters from the workers who are in occupation of the quarters and handing over the same to the petitioner company simultaneously, within ten days from the date of sanction of the scheme (or) on or before 2-11-2003 whichever is earlier; ( vii )the petitioner company shall submit a techno-economic valuable scheme for the Binny Engineering Limited through the Operating Agency and the Operating Agency shall after due scrutiny, forward the same to the BIFR for necessary approval within thirty days from the date of sanction of the impugned scheme; ( viii )the promoter, in order to show his bona fide to rehabilitate the petitioner s sick unit, shall also make a further deposit of Rs. 1.5 crores in addition to the sum of Rs. 7.55 crores, referred to in direction ( i ) above, within fifteen days from today (or) on or before 8-10-2003, whichever is earli er, with the Operating Agency (IDBI) in an interest bearing No Lien Account , out of which Rs. 50 lakhs shall be kept as deposit in the interest bearing No lien account with the Operating Agency (IDBI) till all the claims of the workers in all the pending cases, referred to above, ..... 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