UPPER INDIA COUPER PAPER MILLS COMPANY LIMITED Vs. APPELLATE AUTHORITY FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION

JUDGEMENT

(1.) The petitioner company has challenged in this writ petition under Article 226 of the Constitution the order of the Appellate Authority for Industrial and Financial Re-construction (hereinafter referred to as the Appellate Authority) whereby it has upheld the order of the Board for Industrial and Financial Reconstruction (hereinafter referred to as the Board) who had decided vide its order dated 17th August, 1990 that proceedings should be taken before the High Court for winding up the petitioner company.

(2.) . Briefly stated, the facts are that the petitioner company was stated to have been established over a 100 years ago and has its registered office at Lucknow. For various reasons it started incurring losses. It is alleged that in order to make the company viable application was filed with the appropriate Authority in the State of Uttar Pradesh for permission to expand the unit on the existing site. This permission was not granted. In view of the accumulated loss and the acute financial condition, the Board of Directors of the company on 21st November, 1987 passed a resolution to the effect that a reference should be made to the Board under Section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as the said Act).

(3.) . After the case was registered, the Board passed on 24th February, 1989. In this order the petitioner was declared to be a sick industrial company within the meaning of that expression occurring in Section 3(l)(o) of the Act. The Board also appointed one Director of the Company. After taking Other facts and circumstances into consideration the Board further came to the conclusion, by the said order that the petitioner company could not make its net worth positive on its own with a reasonable time without special assistance. The Board then appointed I.C.I.C.I. (respondent No 3) as the operating agency under Section 17(3) of the Act. The said operating agency was required to submit a report after consultation with all concerned including the labour unions. According to respondent No. 3 no positive assistance was rendered by the petitioner so as to enable the said respondent No. 3 to prepare a report or a scheme as contemplated by the order which had been passed by the Board on 24th February, 1989. The case of the petitioner is that it had appointed a firm of Consultants who was to prepare the feasibility report which was to be submitted to respondent No. 3. The Consultants did not carry out this project with the result that the petitioner was obliged to appoint another Consultant. The newly appointed Consultant gave the report add. according to the petitioner, this report was submitted to respondent No. 3 sometime in April, 1990. Be that as it may, the operating agency, respondent No. 3. still did not submit any scheme. It appears that in the meantime the case was being listed, from time to lime, before the Board. The petitioner pleaded before the Board that the operating agency should be directed to complete the examination of the proposal which was submitted by the petitioner in April. 1990. The Board then passed an order on 7th May, 1990 in which it took note of the contention of the operating agency to the effect that the petitioner bad only submitted certain papers/information which contained general outline of their plans/ideas etc., but no definite, workable or acceptable proposals had been received by the operating agency so far. On behalf of the labour unions it was contended before the Board that there appeared to be possibility of reviving the existing unit at Lucknow. We may here notice that the proposal which was sought to be mooted by the petitioner was that it should be allowed to sell its assets at Lucknow and a new industrial undertaking or unit should be set up at Koldwar with the assistance from some financial institutions. With regard to this it was held by the Board vide its order of 7th May, 1990 that this case of starting a new industrial unit at Kotdwar could not be dealt within the scope of the Act "which visualises rehabilitation or sale of the unit, amalgamation or a winding up thereof.'' The Bench of the Board reserved orders and on 17th August, 1990 final orders were pronounced by the Board.