KALYANPUR CEMENTS LTD Vs. STATE OF BIHAR

JUDGEMENT

(1.) THE petitioner, M/s. Kalyanpur Cement Limited, a Public Sector Company is engaged in business of cement manufacturing and marketing operations since 1946 and has expanded its capacity from time to time and at present, as alleged, the Company is operating one million tone cement plant. THE said plant was commissioned in March, 1992 and according to the petitioner the plant is of the most modern and advanced technology. According to the petitioner for the factors beyond their control and reach, the Company on account of general recession in the cement industry suffered heavy losses for past few years which resulted in erosion of net worth/capital of the Company.

(2.) THE Company faced with such a grim situation approached the Financial Institutions in May, 1997 for financial assistance and restructuring because in absence of the same the survival of the Company was almost impossible. THE Company's proposals for financial assistance and restructuring were duly approved by (1) IFCI, (2) IDBI, (3) ICICI and (4) IIBI, but the said Financial Institutions imposed a condition for grant of assistance or restructuring that the petitioner would obtain a sales tax exemption for a period of five years from the State Government in terms of the Industrial policy, 1995. While approving the proposals made by the petitioner, the Financial Institutions proposed certain concessions in favour of the present petitioner namely reschedulement of the loan, interest free funding of interest and conversion of loan into share capital.

(3.) THE petitioner says that on number of occasions the State Government reiterated its commitment to provide sales tax exemption to the Company. Annexure-8 has been pressed into service in support of this plea. In a meeting held on 17.12.1999 under the Chairmanship of the Minister of Industries. Government of Bihar which was also attended by the senior officers of All India Financial Institutions, viability of the company was discussed and it was declared by the Financial Institutions that the company was viable and if restructuring scheme is made operative the company can meet its expenses and honour its obligations and liabilities. THE petitioner says that the Hon'ble Minister assured that necessary notification for sales tax exemption would be issued by the State Government by second week of January, 2002. THE petitioner says that the Finance Commissioner in a meeting with Director of Industries and Joint Commissioner of Commercial Tax approved the draft of the notification and the same was later approved by the Economic Sub-Committee of the Cabinet of Bihar. In support of this plea Annexure-10 has been pressed into service.