BOARD OPINION Vs. HATHISING MFG COMPANY LIMITED

JUDGEMENT

(1.) The Board for Industrial and Financial Reconstruction, after having conducted an enquiry under sec. 16 of the Sick Industrial Companies (Special Provisions) Act, 1985, in accordance with the procedure laid down therein, has recorded an opinion under sec. 20(1) of the said Act on 8.3.99 in Case No. 180/87 that it is just and equitable that M/s. Hathising Manufacturing Company Ltd. should be wound up and the said opinion was forwarded to this Court for taking further action under the law. Based on this opinion, Company Petition No. 106 of 1999 was registered and placed before this Court for taking further action in the matter. On 15.6.99, a statement was made before this Curt by the ld. advocate appearing for the respondent-company that the appeal has been preferred before the AAIFR against the Board's opinion and an application for stay was also moved and on that ground, time was prayed for and same was granted by this Court.

(2.) While expressing its opinion, the Board has observed that the accumulated losses, as seen from the audited accounts for 1997-98, have further increased by Rs. 141.25 lakhs and that no viable or credible proposal had emerged till date despite further opportunities given to all concerned. The Board has further observed that the promoters were neither serious nor resourceful enough to revive the company which had been before the Board for about 12 years. A package for revival in terms of Section 17(2) of the Act and the subsequent scheme sanctioned by the Board under Section 18(4) of the Act could not also revive the company. As there was no rehabilitation proposal with means of finance fully tied up, for consideration of the Board despite ample opportunities having been given to all concerned, the Bench confirmed its prima-facie opinion that the sick industrial company - M/s. Hathising Manufacturing Co. Ltd. was 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 was not likely to become viable in future and that it was just, equitable and in public interest that it should be wound up under sec. 20(1) of the Act.

(3.) The appeal preferred by the petitioner company against this Board's opinion before the appellate authority was dismissed by an order dated 1.11.1999. While dismissing the appeal, the appellate authority have observed that though the principal dues of the IDBI & IIBI are about Rs. 3.60 crores, the total outstanding dues (inclusive of interest etc.) of the financial institutions, SBI & Govt. of Gujarat amount to Rs. 19 crores. The appellate authority have further observed that even if it is assumed that the development of shopping complex will generate a profit of Rs. 5 crores over a period of five years, this would not be sufficient even to defray the interest on the outstanding dues over the said period. The appellate authority have not seen any possibility of enabling company to fulfil its financial obligations. It was further observed that the petitioner's case has been with BIFR for about 12 years and during this period, the dues of the financial institutions have increased considerably. Repeated opportunities given by BIFR did not lead to any workable and successful scheme for the rehabilitations of the petitioner-company. The package of reliefs and concessions approved by the secured creditors prior to 1988 failed to rehabilitate the petitioner company. The scheme sanctioned by BIFR on 24.6.1996 also failed to revive the company. The advertisement given by the Board did not yield any positive development in the form of rehabilitation by change in management. The petitioner-company was too heavily indebted and the proposal presented before the appellate authority by the company did not give any hope of enabling the company to meet its financial obligations. In this view of the matter, the appellate authority have not seen any reason for interference in the order passed by the BIFR and the appeal was dismissed.