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TMI Blog1995 (10) TMI 239X X X X Extracts X X X X X X X X Extracts X X X X ..... May 22, 1986 appointed the Provisional Liquidator. During the pendency of the said petition, the workmen of the Company moved this Court by filing this writ petition under Article 32 of the Constitution. The petition was entertained by this Court with the object of reviving the industry and rehabilitating the workmen. Notice was issued to the State of Bihar and the Union of India so as to enable the Court to solve the human problem of unemployment of large number of workmen. While the matter was pending consideration, the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short 'the Act') came into force. As per suggestion of the learned Attorney General, the Court on October 28, 1987 passed an order whereby the Central Government was directed to make a reference to the Board of Industrial and Financial Reconstruction (BIFR) to frame a scheme under the Act and submit the same to the Court. The BIFR submitted a report on April 22,1988 wherein it was stated that three of the units of the Company, namely, Cement, asbestos and vanaspati could be revived but the paper unit could not be revived. Keeping in view the said report of the BIFR as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement of secured loans of financial institutions and other parties for which security of the Company's assets had been furnished. The Administrator was directed to set up one Committee to examine the claims of the owners of the company and other parties including financial institutions. 3. In accordance with said directions given by this Court, the State of Bihar designated an officer to work as Administrator (Rehabilitation Commissioner) who took over the assets of the Company and a sum of ₹ 30 crores was paid by the State Government to the Rehabilitation Commissioner. Out of the said sum of ₹ 30 crores a sum of ₹ 6 crores was given by the State Government by way of grant and ₹ 24 crores was to be repaid by the company. The Rehabilitation Commissioner, by his efforts, was able to start four of the units providing employment to 2900 workmen. But due to financial constraints, the units could not function in a way as to earn profits and had to be closed after some time. The Rehabilitation Commissioner moved the Court seeking more funds but the State of Bihar and the financial institutions expressed their inability to advance the funds. In the circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the directions given by this Court in the order dated October 28, 1987 be revived and a report be submitted by the BIFR to the Court in relations to the fallowing matters : (a) Whether the Company is capable of being rehabilitated in a manner thatit can operate profitably so that its net wealth would ultimately become positive and the units become financially stable and self-supporting. (b) The short-term measures, if any, which can be taken immediately. (c) The long-term measures required to rehabilitate the Company. 5. The BIFR was also directed that the proposal submitted by the Rohtas Industries Workers', Co-operative Society Ltd. may also be considered. 6. The BIFR appointed Industrial Financial Corporation of India (IFCI) for preparing a report and IFCI, in turn, appointed Soni Industrial Revival Consultants (SIRCON) to prepare schemes as per the directions of this Court. SIRCON submitted its report on 'Techno-Economic Viability Status of Rohtas Industries Ltd.' and 'Viability Status of the Associates Companies of Rohtas Industries Ltd.' After considering the said reports submitted by SIRCON and the three pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ales tax for eight years (₹ 9.60 crores). (vi) Vanaspati Unit is non-viable under all the four Variants. (vii) Variant IV is the only viable alternative as Cement, Asbestos and PaperUnits are independently viable and the RIL as a whole is also viable under this Variant Under Variant III, only Asbestos Unit is viable independently and RIL as a whole is non-viable. Under Variant II, only Cement Unit is viable and the RIL as a whole non-viable. Under Variant I neither any Unit nor the RIL as a whole is viable. (viii) None of the three associated Companies, viz. Parshava Mining Trading Co. Ltd., (PMTL), Dehri Rohtas Light Railway Co. Ltd., (DRLR) and Ashoka Cement Ltd., (ACL) is viable. (ix) There are three crucial factors for achieving long-term viability, if theRIL is to be revived under Alternative IV. (a) Adequate supply of raw material is to be ensured. This may involve renewal of existing mining leases exploration of new areas and grant of new leases, in the case of Cement Unit. Similarly, existing forest leases may have to be renewed and/or some other leases granted, and alternative sources of raw material like bagasse, waste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of BIFR and response of the State of Bihar and the Union of India to the offer of Shri L.N. Dalmia. The BIFR in its comments on the said offer has expressed the view that the total liabilities of the Company (excluding the liabilities of the associated companies) as on March 3, 1995 are reported to be ₹ 171.14 crores. The sacrifice involved in settling the above liabilities of ₹ 171.14 crores for ₹ 60 crores could be ₹ 111.1 crores and the liabilities of the three associated companies also need to be assessed and quantified and added to this amount to arrive at the total amount of sacrifices involved. BIFR has further observed that besides the sacrifice mentioned above, monetary value of the reliefs and concessions to be provided by the State Government and the financial institutions and Banks also need to be quantified and added to the cost and the cost involved in connecting all railway sidings of the Rohtas industries with Dehri-on-son too would need to be added to the cost of the scheme and the reliefs and concessions are of substantial value. BIFR has further stated that even after such massive sacrifices by the banks, financial institutions and the Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e soundness of the financial status of the offerer and that the offer is not accompanied by any realistic projections of profitability, cash flow, DSCR, etc, and the long term viability of the units therefore, need to be looked into more closely. According to Union of India, the paramount interest in this case has been the protection of workers interest and their employment and that the offerer has proposed for employment of workers on need basis only without incurring any liability towards their past wages, etc. It has also been stated that the liabilities of the Company are approximately ₹ 171.10 crores, some of which are required to be updated and the transfer of the assets free from the liabilities for only ₹ 60 crores would violate the pre-emptive rights of the original owners and hence, their concurrence would be necessary. As regards the concessions sought for in the offer towards dues on account of railways, excise, import duty exemption, cement regulation account, etc., it has been submitted that all the statutory dues are required to be settled as per the existing rules, guidelines and statutory provisions only. 12. An additional affidavit of Shri Sid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or safeguarding the interests of labourers and employees in the said industry and having reconsidered the whole matter the State Government was agreeable to deferment of payment of the dues of the State Government over a period considered appropriate by the Court and were also willing to extend all help and facilities to any intending purchaser of the industries. In view of the said affidavit of Shri Clause (P. Singh, the Court, on September 29, 1995 passed the following order : Mr. S.P. Singh, Deputy Director (Industries), Government of Bihar, Patna has filed an affidavit dated September 26, 1995. It has been averred in the affidavit that the State of Bihar in the interest of restarting the various units of the Rohlas Industries as also for safeguarding the interests of labourers and employees in the said industries has reconsidered the whole matter and is now agreeable to extend all help and facilities to any intending purchaser of the industries. The learned Counsel for Shri L.N. Dalmia and Mr. B.B. Singh learned Counsel for the State of Bihar, State that it would be necessary for the parties to meet to sort out various issues arising in this matter. We adjourn the matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officers of the State of Bihar on October 1, 2 and 3, 1995. We have to conclude regretfully that inspite of best efforts the object with which this Court had intervened in the matter by entertaining the writ petition, viz, to revive the undertakings, does not appear feasible. In these circumstances, the future course of action which commends us is that the proceedings in this writ petition should be brought to an end and the winding up proceedings pending before the Patna High Court be resumed. 17. Before we give the necessary directions in that regard, we would briefly set out the present state of affairs with regard to the Company : (i) The Rehabilitation Commissioner appointed as per directions contained inthe order date October 24, 1989 is in possession and control of the property of the company. To assist him there are officers, staff and workmen. Since the units which had resumed production while the matter was pending in this Court have been closed the Court has been giving directions from time to time to reduce the strength of the employees in order to cut down the recurring expenditure on that account. By the last order passed on July 21, 1995 the Rehabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cording to the Board runs into few crores. The Rehabilitation Commissioner has disputed the said claim of the Board and has , on the other hand, submitted that the company has suffered a loss of approximately ₹ 752 lacs on account of burning of the transformer due to the fault of the Board and further that the meters recording the consumption were also found to be defective by the Board itself and that the Board is claiming the charges on the basis of the reading in those defective meters. (iv) As a result of resumption of production in some of the units by the Rehabilitation Commissioner there is raw material/finished products lying in stock. By order dated July 21,1995 the Rehabilitation Commissioner has been directed to sell the said raw material/finished products in stock preferably within the period of one month. In his affidavit dated September 20, 1995, the Rehabilitation Commissioner has stated that in pursuance of the said directions offers have already been invited for sale of approximately ₹ 70 lacs worth of raw materials/finished products wasted/damaged material out of which the sale has already been made of ₹ 7 lacs and that offers have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) subject to availability of funds after incurring the expenses towards payments under Clauses (c), (d) and (e) pay the dues towards the supply of raw materials on credit for the running of the units during the period of the pendency of these proceedings as well as the amount received as advance from purchasers for the products to be supplied to them by December 31, 1995; (c) pay the charges for the actual consumption of electricity for theperiod upto November 30, 1995 by December 31, 1995; (d) pay the charges for the security arrangements through the Central Industrial Security Force for the period upto December 31, 1995 by December 31, 1995; (c) pay the salary of the staff employed for the period upto December 31, 1995 by December 31, 1995; (f) prepare an inventory of the properties, movable and immovable,belonging to the company in his possession and control by December 10, 1995; (g) handover the possession of the said properties to the Official Liquidator as per the inventory by December 31, 1995; (h) have the accounts for the period April 1, 1995 till December 31,1995 duly audited and submit the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat may be received. 10. In the event of sale of the assets of the Company during the course of winding up proceedings a sum of ₹ 34 crores which was advanced by the State of Bihar as per directions of this Court in these proceedings shall be paid to the State of Bihar out of the sale proceeds before discharging any other liability of the Company. 11. The Relief Commissioner shall stand discharged on January 15, 1996. 12. The moratorium imposed under the order of this Court shall cease to operate with effect from December 31, 1995. 13. It will be open to the Rehabilitation Commissioner and the Official Liquidator to seek further directions from this Court with regard to any matter pertaining to the period this writ petition was pending in this Court. 19. Shri Beck Julius, I.A.S. has been functioning as the Rehabilitation Commissioner since April 4, 1994. During that period this Court found his work to be satisfactory and good. This may be treated as assessment of his performance as an officer of the Bihar cadre of I.A.S. during that period and it may form part of his Performance Appraisal Report. 20. Before we part with th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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