MOTILAL THANVI Vs. PUNALUR PAPER MILLS LIMITED

JUDGEMENT

(1.) In this Writ Application under Article 226 of the Constitution of India 25 workers of Purnalur Paper Mills Limited, Kerala, having its controlling office at 13, Lindsay Street, Kolkata - 700 087 have challenged the propriety of an order dated 20.10.1992 passed by Bench-II of the Board of Industrial and Financial Reconstruction and the adjournment order sine die of the Appeal No.114/92 still pending before the Appellate Authority for Industrial and Financial Reconstruction, New Delhi.

(2.) The Petitioners contend that they are the employees of Purnalur Paper Mills Limited, respondent No.1, which is an existing company having 59000 MT pulp and paper mill employing about 1000 workers. Respondent Nos. 4 to 9 are all workers trade unions. In 1967 the majority shares in the respondent- Company No.1 was acquired by one L.N. Dalmia while it was lying closed. At that time the company suffered huge losses and had various liabilities under several statutory authorities. Mr. Dalmia endeavoured to revive the company gradually and at a certain stage he was capable of wiping out the entire financial liabilities of the company. Thereafter the present management embarked on renovation and expansion programme in two phases at an estimated cost of Rs. 12 Crores. The company earned profits in 1976-77 but after 1977 it began to incur losses on account of shortage of raw materials and failure to utilize optimum production capacity. The company sustained cash losses from 1980-81 onwards and at the end of 31.3.1987 accumulated losses of the respondent No.1-company equaled to or exceeded its entire net worth which was estimated at Rs. 7,45,99,000/- only at the end of 31.07.1983. In March, 1992 the management of the respondent-Company made a reference under Section 15 of the Sick Industrial Companies (Special Provisions Act) 1985 before the Board for Industrial and Financial Reconstruction for adoption of measures by the BIFR for reviving the company. Meanwhile there was no production of the company and the employees were without any employment from 1987. Their arrear wages, gratuity etc. have not been paid and unless the company is revived, their chance of survival, recovery of arrears and maintenance of livelihood will be at stake.

(3.) On receipt of the letter dated 9th March, 1992 of the Management, the BIFR registered a case being No.50/92 and considered the matters and after hearing by order dated 20.10.92 rejected the reference on the ground that since in a suit filed by ICICI before the Bombay High Court, a Receiver had already been appointed over certain assets of the respondent No.1-Company by the Honble Bombay High Court, the BIFR could not proceed with the case and adopt any measure for revival of the company contemplated under Section 16 of the Act of 1985. Against such order of the BIFR dated 20.10.1992 the company preferred an appeal before the appellate authority for Industrial and Financial Reconstruction which was registered as Case No.114 of 1992. The authorized representatives of the respondent Nos. 4 to 9 also appeared before the AAIFR and claimed that mere appointment of a Receiver over some assets of the respondent No.1-Company in a suit filed by the ICICI before the Honble Bombay High Court does not prevent either the BIFR or the AAIFR to take steps for revival of the respondent No.1-Company under the Act of 1985. But unfortunately AAIFR like the BIFR also decided that since a Receiver had already been inducted over some assets of the respondent No.1- Company in connection with a mortgage suit for Rs. 5 Crore filed by ICICI in 1986 they will not be able to proceed any further with regard to the respondent No.1-Company under the Act of 1985 till disposal of the said suit or till the Receiver appointed over some of the assets of the respondent No.1- Company is discharged by the Honble High Court at Bombay.