VARSHA SPINNING MILLS LIMITED Vs. STATE

JUDGEMENT

(1.) The Registrar of the Board of Industrial and Financial Reconstruction, Deptt. of Economic Affairs, Ministry of Finance, New Delhi has sent a communication to this Court that having conducted an enquiry under Section 16 of the Sick Industrial Companies (Special Provisions) Act, 1985 in accordance with the procedure laid down in the said Act, the Bench of the Board for Industrial and Financial Reconstruction (in short BIFR) has recorded its opinion under Section 20(1) of the said Act that it is just and equitable that M/s. Varsha Spinning Mills Ltd. be wound up and the matter be referred to this Court for opinion and for further action in accordance with law. It may be pertinent to mention that on 25.11.1997, the BIFR directed the promoters to re-negotiate the one time settlement (for short O.T.S.) with the IDBI. They arrived at a negotiated settlement and the promoters were directed to deposit a sum of Rs. 1 crore in an interest bearing 'No Lien A/c.' with IDBI in the Company's name within two weeks. The BIFR further observed that if the Company/present promoters deposited Rs. 1 crore as aforementioned, in that event the Bench would formulate and circulate a draft scheme for the rehabilitation of the Company. The IDBI, Operating Agency has reported on 12.11.1997 that the promoters of the Company have neither deposited Rs. 1 crore with the IDBI in 'No Lien A/c.' nor have they submitted revival/OTS proposal. The Bench concluded that the promoters are neither serious in rehabilitating the Company nor resourceful enough to mobilise the funds required for rehabilitation. As such, there is no viable rehabilitation proposal with the finance fully tied up for consideration of the Board, despite ample opportunities haviong been given to all concerned.

(2.) The BIFR confirmed its prima facie opinion that the Sick Industrial Company - M/s. Varsha Spinning Mills Ltd. is not likely to make its net worth exceed its accumulated losses within a reasonable time while meeting all its financial obligations and that the Company, as a result thereof, is not likely to become viable in future and hence it is just, equitable and in public interest, that the Company be wound up.

(3.) Mr. O.P. Taneja, Promoter has filed appeal against order of the BIFR dated 15.11.1997 before the Appellate Authority for Industrial & Financial Reconstruction. On 20th December, 1996 M/s. Varsha Spinning Mills Ltd. (in short VSML) was dedared sick and the IDBI was appointed as the operating agency under Section 17(3) of the Sick Industrial Companies (Special Provisions) Act, 1985. The Company was directed to submit its comprehensive rehabilitation proposal to the operating agency. The time limit was extended upto February, 1997. The operating agency was directed to have a Techno Economic Viability Study of the Company.