9911796707
TMI Blog2003 (9) TMI 567X X X X Extracts X X X X X X X X Extracts X X X X ..... applied to pay the wages and statutory dues as also the secured creditors. The closure of the B mill was permitted by an order of the Special Industrial Tribunal way back in the year 1994 with a further direction that the employees who were working in that mill be given employment in the A mill. 2. The effective denial of relief till date to the workmen for the last five years is on account of the legal proceedings initiated by a person who was neither a creditor nor a shareholder nor connected with the company in any way, and had only made an offer when an advertisement was issued by the Board for Industrial and Financial Reconstruction (BIFR) inviting proposals for the rehabilitation of this sick industrial undertaking. 3. Dhanalakshmi Mill was incorporated in the year 1932. It established initially a spinning mill and later on, in the year 1960, added a weaving mill. The mills are located in the city of Thirupur, the flourishing hosiery capital where land values are as high as those in the metros. Thirupur is also close to the city of Coimbatore. The company by the year 1993 had accumulated losses of several crores of rupees, which resulted in its applying to the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejected both the proposals as being unviable and proceeded to give certain directions. 6. The AAIFR in its order of April 3, 1998, considered both the proposals made by the appellant as also the existing management examined in depth each one of the items constituting parts of the rehabilitation scheme submitted by the parties and found that almost all the items found in the proposal made by the existing management were better, while in a few of the items the proposal made by the appellant was better. However, after such examination it concluded that the "appellant s proposal is not better than that of the existing promoters". 7. The Appellate Authority also did not find that the appellant had the requisite financial capacity to implement the scheme proposed by him. The appellant had claimed to be able to bring in Rs. 27 crores. In the scheme proposed by him, under the head "Sources for the promoters contribution" four sources were set out they being the sale of office space in a building that was yet to be constructed on a vacant plot owned by the appellant to four entities from the first of whom the appellant expected Rs. 22.5 crores and from the others amounts varying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only if the person making the proposal is in a position to provide the funds required for carrying out those tasks immediately and within the time specified in the scheme. 10. No fault therefore can possibly be found with the view expressed by the AAIFR that "the sources of funds pointed out by the CG do not inspire any confidence and are unreliable" and that ". . . neither the existing promoter/co-promoters nor CG have established their capability to raise adequate resources for implementing their respective proposals". The rejection of the appellant s proposal brought to an end his role in matters concerning the rehabilitation of this sick industry. 11. The appellant who should have made a graceful exit at that point of time, chose to persist in imposing himself on the sick industrial undertaking and its workmen and has, by launching further litigation in this court, delayed by over five years the whole process of payment of arrears of wages to the workmen, rehabilitation of the mill, the re-employment of the workmen as also the payment of the dues to the creditors. The Sick Industrial Companies (Special Provisions) Act, 1985, was not intended to serve a purpose like the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) Any person aggrieved by an order of the Board made under this Act may, within forty-five days from the date on which a copy of the order is issued to him, prefer an appeal to the Appellate Authority: Provided that the Appellate Authority may entertain any appeal after the said period of forty-five days but not after sixty days from the date aforesaid if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal in time. (2) On receipt of an appeal under sub-section (1), the Appellate Authority may, after giving an opportunity to the appellant to be heard, if he so desires, and after making such further inquiry as it deems fit, confirm, modify or set aside the order appealed against or remand the matter to the Board for fresh consideration." Sub-section (2) of section 25 sets out that the Appellate Authority, after giving an opportunity to the appellant to be heard and after making such further enquiry as it may deem fit, may "confirm, modify or set aside the order appealed against, or, remand the matter to the Board for fresh consideration". The Appellate Authority may thus, in cases where it concurs with what had been done by the BIFR c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one which could be accepted, as that too would not subserve the object of rehabilitation of the sick industry. 19. The AAIFR was not, at that point, required to leave the whole matter in the lurch and the entire proceedings in limbo. It was indeed required of it to make an order giving directions, which it considered to be appropriate, to the BIFR. While so directing the BIFR, it was certainly open to the AAIFR to take into account the realities of the situation, the various pressing demands, the resources of the sick industrial undertaking; the available assets of the undertaking which could be converted into cash, which in turn would be applied for the purpose of taking ameliorative measures in favour of the workmen and also for the purpose of discharging the dues of the creditors. That is what exactly what the AAIFR has done. 20. The AAIFR has taken note of the fact that the sick industrial undertaking, though at the moment incapable of continuing to run the industrial unit, was nevertheless possessed of very valuable fixed assets in the form of land extending to as many as 26 acres situated in the hosiery town of Thirupur, where land values were high and that land was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue Department". That direction given by the Appellate Authority was, after it had reiterated its conclusions more than once in the course of its order : "It is our considered view that neither the existing promoters (alongwith co-promoter and associates) nor will the CG be able to revive DML. Neither of them will be able to raise resources for a revival scheme for DML." The matter was remanded to BIFR thereafter for fresh consideration which of course was to be in the light of the directions which the Appellate Authority had given and which were required to be given effect to by directing the operating agency to frame a scheme in accordance with those directions. 23. Counsel for the appellant submitted that by doing what has been done, the Appellate Authority has displaced the operating agency and taken over the role of that agency. Such criticism is not well founded. The operating agency is but an instrument which is to assist the BIFR in achieving the purpose of the Act. As the formulation of the scheme involves attention to numerous details, an adjudicating body like the BIFR, which is not likely to have the time for carrying out such a detailed task, is enabled by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n his submission, was not warranted. It was not disputed that material had been placed before the appellate forum in the form of a certificate by a valuer wherein it was stated that the guideline value for the land in this place was Rs. 1.12 crores per acre. The market value as estimated by the existing promoter s valuer was Rs. 3 crores per acre. The appellant was fully aware of the contents of that certificate and had not at any point of time disputed the same. The appellant claims to be engaged in diverse business activities in the city of Coimbatore, which is about an hour s drive from Thirupur. He did not choose to question that valuation apparently because he did not regard that valuation as being excessive. In any case, the Appellate Authority has found that the information provided to it in the form of valuer s certificate, which sets out the guideline value was reliable. The banks and financial institutions which have lent monies to this sick industrial undertaking and who are waiting to have at least a part of it repaid, must have known the value of the lands in this area. They also did not choose to object to or regard that guideline value as being in any way erroneous. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of the appellant in great detail and having rejected the same, the appellant had no further role to play in the further order that the Appellate Authority proceeded to make. 32. Learned counsel for the appellant lastly contended that the order made by this court on January 28, 1997, restricted the BIFR to consider the fresh offers, that had been directed to be invited and that it was not open to the BIFR or the AAIFR to consider the sale of the land owned by the sick industrial unit as that cannot be in the nature of offer. This submission is misconceived. In that order of January 28, 1997, made by one of us sitting singly, it is nowhere set out that BIFR is precluded from considering anything other than fresh proposal even when the proposals received were found to be notworthy of acceptance. The final order made by this court was that : "The impugned order of the Appellate Authority is therefore set aside and the Board for Industrial and Financial Reconstruction is directed to issue directives to the operating agency to call for fresh proposals after advertisement and submit a report. Opportunity should also be given to those who had submitted proposals earlier to submit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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