W. P. No. 1191 (W) of 2010, W.P. No. 3085 (W) of 2010. Case: 1. Uniglobal Papers Private Limited, 2. Universal Paper Mills Limited Vs Appellate Authority for Industrial and Financial Reconstruction and others. High Court of Calcutta (India)
| Case Number | W. P. No. 1191 (W) of 2010, W.P. No. 3085 (W) of 2010 |
| Counsel | For Appellant: S. N. Mitra, A. Mukherjee, S. K. Kapur, D. Basak, D. Jain, R. Kapur, S. C. Prasad, M. Agarwal, S. Sharma, D. Jain, R. Banerji, S. Sharma, Advs. |
| Judges | Debasish Kar Gupta, J. |
| Issue | Sick Industrial Companies (Special Provisions) Act, 1985 - Sections 3(1)(o), 15(1), 17(2), 17(3) 18, 18(2)(a), 18(3), 22A |
| Judgement Date | September 23, 2013 |
| Court | High Court of Calcutta (India) |
Judgment:
Debasish Kar Gupta, J.
1. The subject-matter of challenge in both the aforesaid writ applications is an order dated January 14, 2010 passed by the Appellate Authority for Industrial and Financial Reconstruction Corporation, New Delhi in the matter of M/s. Universal Paper Mills Ltd. (Godha Group) (in re: Appeal No. 190/2008).
2. By virtue of the impugned order dated January 14, 2010, the Appellate Authority for Industrial and Financial Reconstruction (hereinafter referred to as the AAIFR) set aside the order dated September 5, 2008 passed by the Board for Industrial and Financial Reconstruction (hereinafter referred to as the BIFR) in the matter of M/s. Universal Paper Mills Ltd. (Godha Group) (in re: Case No. 122/ 1989) and remanded the case to the BIFR to consider the formulation of a fresh or modified Draft Rehabilitation Scheme within a period of three months from the date of communication of that order as also thereafter to proceed further to finalize the Draft Rehabilitation Scheme in accordance with the law.
3. The first writ application is filed by the Uniglobal Papers Pvt. Ltd. (Godha Group) assailing the impugned order dated January 14, 2010. The writ petitioner of the second writ application is the respondent No.2 in the above writ application, amongst other respondents.
4. The second writ application is filed by the Universal Paper Mills Ltd. assailing the above impugned order dated January 14, 2010. The writ petitioner of the first writ application is the respondent No.2 in the above writ application, amongst other respondents.
5. Since the one and same order dated January 14, 2010 passed by the Appellate Authority for Industrial and Financial Reconstruction in Appeal No. 190/2008 is under challenge in both the aforesaid writ applications, the aforesaid writ applications are taken up for analogous hearing.
6. The relevant facts and circumstances under which the AAIFR passed the impugned order are as follows in a nutshell:
7. In the year 1974, a manufacturing unit of M/s. Universal Paper Mills Ltd. was promoted by Khemka-Kanoria Group. The above group ran the above company till 1988. In the year 1988-89 Godha Group took over the management of the above company from the original promoters. The above transfer and took over of management was approved by the Industrial Development Bank of India upon furnishing of undertakings for non- disposal of shareholdings by the above transferee group.
8. In the same year, i.e., in 1989, the above company was referred to the BIFR under the provisions of Sub-section (1) of Section 15 of Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as SICA, 1985) and a Case No. 122/ 1989 was registered.
9. On February 9, 1990, the above company was declared sick. By an order dated October 1, 1990, an on-going moderation-cum-rehabilitation scheme undertaken by the company was noted by BIFR under the provisions of Sub-section (2) of Section 17 of SICA, 1985.
10. However, consequent upon failure of the above scheme, the BIFR appointed Industrial Development Bank of India (hereinafter referred to as IDBI) as operating agency under the provisions of Sub-section (3) of Section 17 of SICA, 1985, on March 15, 1994 with a direction upon the IDBI to prepare a revival scheme for the aforesaid sick industrial company under the provisions of Section 18 of SICA, 1985.
11. On November 10, 1994, a scheme based on one time settlement of the dues of financial institutions and banks was submitted by the IDBI and the BIFR imposed a condition of depositing an amount of Rs.50 lac in a non-lien account with the IDBI, the aforesaid operating agency by November 30, 1994. In compliance of the above direction, the Godha Group deposited the aforesaid sum of Rs.50 lacs with the operating agency by a cheque dated November 30, 1994.
12. On January 8, 1996, after considering the above scheme, the BIFR prepared a Draft Rehabilitation Scheme in accordance with the provisions of regulation 28 of the Board for Industrial and Financial Rehabilitation Regulations, 1987 (hereinafter referred to as the BIFR Regulations, 1987). A copy of the above Draft Rehabilitation Scheme was forwarded to the Sick Industrial Company in question as also the operating agency for their consent within sixty days from the date of publication of the Draft Rehabilitation Scheme.
Short particulars of that Draft Rehabilitation Scheme was also published in Newspapers by way of notification at the instance of the BIFR in accordance with the provisions of regulation 29 of BIFR Regulations, 1987 inviting suggestions and objections in respect of the same from the shareholders, creditors and employees of the sick industrial company in question. On May 7, 1996, objections to the aforesaid Draft Rehabilitation Scheme were considered by the BIFR and after some modifications to the same it was kept reserved.
On November 6, 1996, though the BIFR directed the operating agency once again to recast the projections and to submit a report. The BIFR did not finalize the above Draft Rehabilitation Scheme after hearing of objections on the same.
13. By an order dated March 8, 2007, the BIFR directed the sick industrial company in question to submit the status of M/s. Uniglobal Papers Pvt. Ltd. - whether it had become a shareholder or a secured creditor of the above company and the position of net worth as per the latest balance sheet of the above company within two weeks to the BIFR serving a copy to the IDBI, the operating agency.
Further direction was given to the effect that in case the net worth of the company had not turned positive to submit fully tied up Draft Rehabilitation Scheme under Section 17(2) of SICA, 1985 to the BIFR within four weeks. The BIFR further imposed a restriction invoking the provisions of Section 22A of SICA, 1985 upon the sick industrial company not to dispose of any fixed or current assets without the consent of the secured creditors and the BIFR.
Further direction was given to the above sick industrial company in question that in case it was running, the current assets could be drawn down to the extent required for day-to-day operations, proper accounts of which would be maintained.
14. On June 19, 2008, it was submitted before the BIFR on behalf of the Universal Paper Mills (P) Ltd. that on an application filed by the respondent No.4, the BIFR had directed the Oriental Insurance Company Ltd. by an order dated January 21, 2008 to deposit the insurance amount of Rs.3.12 crore and interest in a non-lien account with the IDBI as and when the same was due and payable to the company but the respondent No.4 did not even furnish a copy of application to the company.
It was further submitted that the Universal Paper Mills (P) Ltd. had cleared the...
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