MESSRS. UTTAM HOLDINGS LTD Vs. STATE OF KERALA

JUDGEMENT

(1.) Petitioners 1 to 4 are incorporated Companies. Petitioners 1 to 4 along with the 5 th petitioner claim to hold 70.81% of equity shares in M/s. Kerala Spinners Limited. Petitioners state that M/s. Kerala Spinners Limited (hereinafter referred to as "the Company", for brevity) is a Private Sector Company promoted by Birlas and was engaged in the manufacture and sale of textile yarn in its factory at Komalapuram in Alappuzha District. Since the year 1998, the Company was incurring losses for various WPC No.28713/2010 reasons. At this stage, in the year 2001, the petitioners acquired a majority of equities of the Company, with an intention to make the Company viable and profitable.

(2.) Things did not go in the desired direction and the Company declared lock out on 22.03.2003. The Company applied for closure under Section 25(O) of the Industrial Disputes Act, 1947. The Company had to be referred to the Board for Industrial and Financial Reconstruction (hereinafter called "BIFR", for short). Pending consideration of rehabilitation of the Company, the BIFR appointed Indian Overseas Bank as the Operating Agency invoking Section 17 (1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). The Company was declared sick on 07.09.2006. While the issue of revival of the Company was pending consideration before the BIFR, the 1 st respondent- State of Kerala promulgated Ordinance dated 19.11.2009, subsequently replaced by the Kerala Spinners Limited, Alappuzha (Acquisition and Transfer of Undertaking) Act 4 of 2010.

(3.) By the impugned Act 4 of 2010, the right of the ownership of the petitioners in respect of the Company has been acquired by the Government and transferred to the Kerala State Textiles Corporation Limited. According to the petitioners, the assets of the Company were undervalued. The assets are of value of about ?45 Crores. The Act 4 of 2010 values the assets at ?454.67 lakhs only. Petitioners contended that the gross undervaluation is in violation of the right of the petitioners under Article 14 of the Constitution of India. The right of the petitioners to trade and business has been deprived by the Act 4 of 2010, in violation of Article 19(1)(g) of the Constitution of India.