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2001 Supreme(Guj) 796
Gujarat High Court
Judgename :K.R.VYAS
MADHU FABRICS LIMITED - Appellant
Versus
STATE BANK OF INDIA - Respondent
S.C.A. 5124 of 2000
Decided On : 12/01/2001
Headnote:Sick Industrial Companies (Special Provisions) Act, 1985 (Central Act 1 of 1986) - Sec. 20(1) - Winding up - Order of BIFR and AAIFR recommending winding up - Challenged on the ground that publication of notice of winding up pending the implementation of consesus arrived with Board - Affected reputation of company and collection of money from promoters - Held, petitioners not entitled to challenge order of BIFR confirmed by AAIFR - Petitioners waived the right by filing a scheme under Sec. 391 of Companies Act - Court cannot sit in appeal over expert opinion - If secured creditors object per se for sanctioning the rehabilitation scheme which does not speak any thing regarding clearing bank dues, it would be an empty formality to direct holding of meeting for revival - No illegality committed by BIFR or AAIFR - Order not shown to be mala fide - Manufacturing cannot be allowed due to re-employment of few hundred workers against thousand of workers when dues of secured creditors are running in crores of rupees - No merit in petition.
The petitioners is not entitled to challenge for orders passed by BIFR and AAIFR as in Courts opinion, on filing Sec. 391 scheme, the petitioners have waived their right to challenge the orders of BIFR as well as AAIFR. It is not the case of the petitioners that they presented the scheme before the authorities and the authorities have not considered the same. As stated above, by filing a scheme for rehabilitation under Sec. 391 in Company Petition and also presenting the same in writ petitions by way of draft amendment, the petitioners, in Court opinion, have waived their right to challenge the orders of BIFR and AAIFR.
[Para 19]
The company has re- employed hundreds of workers in the month of August 2000 against the strength of thousands of workers. Most of the units are closed. Thus, in the name of the workers, who are quite few in number, manufacturing activities cannot be allowed to continue, especially when dues of the financial institutions and secured creditors running into crores of rupees have remained outstanding. These workers can be re-employed by the new management provided running concern M/s. Madhu Textiles is taken over by new management and it desires to run the unit.
[Para 27]
( 1 ) THE petitioners M/s Madhu Fabrics Ltd. and M/s Madhu Textiles Ahmedabad Limited, by filing Special Civil Application No. 5124 and 5125 of 2000 respectively, have challenged the orders dated 14. 2. 2000 passed by the Board for Industrial and Financial Reconstruction (In short, bifr) annexure A and order dated 4. 5. 2000 passed by the Appellate Authority for Industrial and Finance Reconstruction (In short, aaifr) annexure B. The BIFR, after considering the facts, opined that the petitioner company is not likely to become viable in future and, therefore, it is just, equitable and in public interest that it should be wound up under section 20 (1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (In short, sica ). AAIFR, in appeal, confirmed the said order.
( 2 ) COMPANY Petition No. 31 of 2000 is for consideration of Board opinion in the matter of M/s Madhu Fabrics Limited while Company Petition No. 32 of 2000 is for consideration of Board opinion with respect to M/s Madhu Textiles Ahmedabad Limited. The petitioner M/s Madhu Textiles Ahmedabad Limited has also filed Company Application No. 288 of 2000 in Company Petition No. 32 of 2000 seeking directions to convene a meeting under section 391 of the Companies Act, 1956 (In short, the Act ). In the affidavit in support of judges summons, the petitioner M/s Madhu Textiles presented a scheme to rehabilitate. Similarly,m/s Madhu Fabrics also presented a scheme to rehabilitate by filing Company Application No. 446 of 2000 in Company Petition No. 31 of 2000. Both the petitioners also produced the very scheme for rehabilitation by way of draft amendment in their respective petitions.
( 3 ) SINCE the order of BIFR as well as AAIFR is under challenge in the petitions and this Court is required to consider the opinion of BIFR for passing the order of winding up, Special Civil Applications as well as Company Petitions and Company Applications were heard together and are disposed of by this common judgment and order.
( 4 ) THE petitioner M/s Madhu Fabrics Limited is engaged in the business of process of grey cloth, printing, dyeing and bleaching of fabrics; faced financial difficulties because of the circumstances beyond control in the year 1991-92. The petitioner made reference under section 15 of SICA to the BIFR which was registered as Case No. 74 of 1992. In the said reference, the scheme was approved by an order dated 22nd August 1995 by the Board. It appears that the said scheme was approved on the basis that the petitioner Company would be getting sufficient job work from different exporters. Even though the petitioner Company made efforts to restart the unit, however,it could not succeed. It appears that in view of many hurdles in the implementation of the scheme, the Board directed the petitioner Company to submit a workable rehabilitation proposal within four weeks from 25. 11. 1999 on which day, a joint meeting was held at BIFR, New Delhi. The Board further directed the petitioner Company to deposit 25% of the cost of the proposal in an interest bearing No Lien Account within a month from 25. 11. 1999. It is the case of the petitioner that the promoters had agreed to pay a sum of Rs. 80 lakhs against OTS (One Time Settlement) of the dues of secured creditors, financial institutions and banks. However, before the expiry of the aforesaid period and without the consent or even the knowledge of the petitioner, an advertisement dated 11. 12. 1999 was published by the Board in daily Jansatta published from Ahmedabad giving a notice for winding up of the Company and the said advertisement seriously affected the petitioner Companys reputation and all sources of collection of money by the promoters of the Company.
( 5 ) THE petitioner M/s Madhu Textiles Ahmedabad Limited is engaged in the business of blended yarn; faced financial difficulties because of the circumstances beyond control in the year 1991-92. Therefore, it made a reference under section 15 of
