DUNLOP INDIA LTD Vs. E V MATHAI

JUDGEMENT

(1.) CP No. 233 of 2008 is the lead matter. Such petition and CP No. 159 of 2011 have both been advertised. The petitioners in the other winding-up petitions are represented. In addition, there are a number of supporting creditors who seek the winding-up of the company and are represented pursuant to advertisements being published. There appear to be several classes of creditors; informally classified, there are the secured creditors, trade creditors, statutory creditors, unpaid employees and workmen, suppliers, trade depositors, financiers and sundry other creditors. Some of the creditors have obtained decrees or awards and there are several creditors who have instituted proceedings against the company whether by way of suits or by way of proceedings under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 or under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Two orders of some substance were passed in course of the present round of proceedings. On December 9, 2011 the company was directed to file a comprehensive affidavit indicating, inter alia, the following:

(2.) PURSUANT to the direction contained in the order dated January 6, 2012 a further affidavit has been filed today on behalf of the company. It appears from the two affidavits filed on behalf of the company thus far at the post-admission stage, that the value of the company's indebtedness to its secured creditors is to the extent of Rs.127 crore; to its unsecured creditors to the extent of Rs.33 crore; and, to its statutory creditors including 5 workmen to the extent of Rs.25 crore. Thus according to the company, its exposure to its creditors seems to be about Rs.185 crore in all. On the company's admission, some of the claims of the creditors may be indicated in the company's books without providing for any interest; but even if any reasonable provision for interest were to be made and some other dues of the company are recognised which may not find mention in the company's books, the extent of the company's indebtedness will appear to be somewhat below Rs.500 crore. Of course, such a tentative assessment is made on the basis of the material now produced by the company and cannot be treated as any final or accurate assessment of the extent of the company's indebtedness. At one point of time the company had substantial assets by way of land and immovable property. It appears that the two most prominent immovable properties now available to the company are the freehold land at its Ambattur factory in Tamil Nadu and the Sahaganj factory near Calcutta. The company was the owner of several prominent properties, including in up-market areas in Mumbai, which the company appears to have alienated in the last few years and the circumstances in which such alienation has taken place raises serious doubts as to the bona fides of those now in the management of the company.

(3.) THE company has volunteered, at paragraph 9 of the affidavit filed on its behalf today, that though no immovable or other property of the company has been sold since the time CP No. 233 of 2008 was filed in this Court, some of the company's properties were sold prior thereto. One of the company's properties sold prior to the middle of 2008 (that is when CP No. 233 of 2008 was filed) was the Worli property which uninformed newspapermen still regard as a property of this company without being aware of the transaction recorded in the company's books relating thereto. THE additional information that the company has volunteered corroborates the case made out by Madura Coats in its application for appointment of a provisional liquidator. THE company has confirmed that during the year 2006-07 the company sold off some of its immovable properties to four of its fully owned subsidiaries at a price of about Rs.350 crore. Such payment of Rs.350 crore was apparently adjusted against issuance of shares of such amount by the subsidiaries in the name of the company. In effect, therefore, it may be regarded that there was no benefit to the company upon the sale of its valuable properties. THE company makes no attempt to show how these properties were valued at Rs.350 crore and not at a tenth of the value or at hundred times the amount. THE company did not receive any money but it notionally received the consideration in its shareholding in the subsidiary companies swelling by the corresponding amount. What is more important is that the company is unable to apprise the Court today as to whether these once fully-owned subsidiaries of the company continue to be fully-owned subsidiaries of the company today or whether these once fully- owned subsidiaries of the company continue to hold the properties of the company that had been parked there by the company in the year 2006-07. This is a matter of great concern, considering that the statutory and other creditors of the company had been kept at bay during the period that the reference relating to the company remained pending before the BIFR and, particularly considering the plight of the workmen of the company at its Sahaganj unit who have remained without work and pay for a substantial period in the last decade or so.