BHARAT STEEL TUBES LIMITED Vs. STATE

JUDGEMENT

(1.) . The present company petition was registered on the basis of a reference made by the Board for Industrial & Financial Reconstruction (BIFR) upon reaching a conclusion that the promoters of the company were not serious in rehabilitating the company nor were they resourceful enough to mobilize the funds required for this purpose and were only enjoying the protection under the Act unduly. The Board on the facts of the case was of the prima facie confirmed opinion that the respondent company was not likely to make its net worth exceed its accumulative losses within a reasonable time while meeting all its financial obligations and that the company as a result thereof was not likely to become viable in future. Accordingly, it recommended that it was just, equitable and in public interest that the respondent company should be wound up under Section 20(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). The aforesaid opinion of the Board was forwarded, to this Court on the basis of which this company petition was registered in this Court.

(2.) . In the aforesaid company petition the applicants, namely, the owners of the property bearing No. 16, Friends Colony (West), New Delhi have filed an application registered as CA No. 1168/2002 praying for an order directing for handing over vacant, peaceful possession of the ground floor of the aforesaid property to the applicants, which was allegedly let out by them to the respondent company. In support of the aforesaid prayer the applicants have referred to the lease deed dated 11.6.1965 letting out the ground floor premises by the mother of the applicants, who was the predecessor-in-interest of the said property to the respondent company. There is also an application being CA No. 343/2003 filed by the workmen of the respondent company seeking for an order of this Court directing adjudication of the dues of the workmen and for payment of the same to them in view of the fact that they have not been paid their salary since 11.11.1988. The said applications and the main petition were listed before me for my consideration.

(3.) . The respondent company made a reference to the BIFR under Section 15(1) of the Act. The respondent company has a factory at Ganaur, Sonepat District, Haryana, for manufacturing steel tubes, PVC pipes, etc. The said company also has an engineering project division undertaking contract work in different parts of the country. The factory in Haryana was closed from the end of October 1988 and the engineering division was working on a restricted basis when the aforesaid reference was made to the BIFR. On the basis of the aforesaid reference made by the respondent company, a case was registered by the BIFR and after hearing the parties, the BIFR appointed IFCI as the operating agency in the aforesaid case under Section 17(3) of the Act. The operating agency was directed to examine viability of the company and also to prepare a rehabilitation scheme. However, since there was not much of a progress and no rehabilitation scheme could be submitted regarding viability of the company, the BIFR recorded its opinion on 8.2.1994 that the company should be wound up. The company, however, preferred an appeal to the Appellate Authority, namely, Appellate Authority for Industrial and Financial Reconstruction (AAIFR). By an order dated 28.9.1995, the appellate authority remanded the case back to the BIFR for giving another opportunity to the company to formulate a revival proposal. Thereafter at the hearing held on 22.1.1996, the BIFR re-appointed IFCI as the operating agency. Even after the aforesaid remand by the AAIFR in September 1995, it took more than another two years to finalise the rehabilitation scheme, which was sanctioned on 27.11.1997. Even the aforesaid scheme could not be implemented. It is clear from the order of the BIFR that the company and the promoters did not comply with the monetary and non-monetary conditions contained in the sanctioned scheme. The BIFR has clearly recorded that the sanctioned scheme had not taken off at all and it was not given effect to by the company and no interest was shown by the company and its promoters in implementation of the scheme. It was also found by the BIFR that the company got the scheme sanctioned only to get protection under Section 22(1) for full nine years. In the meantime, the company/promoters also disposed of some of the assets / inventory, the proceeds of which were, however, utilised to pay only to IFCI and ICICI. In paragraph No. 12 of the said recommendation the submission of the counsel appearing for the respondent company before the BIFR was recorded thus:-