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PETITIONER: WORKMEN OF M/S ROHTAS INDUSTRIES

       Vs.

RESPONDENT: ROHTAS INDUSTRIES & ORS.

DATE OF JUDGMENT18/10/1995

BENCH: KULDIP SINGH (J) BENCH: KULDIP SINGH (J) AGRAWAL, S.C. (J)

CITATION:  1996 AIR  467            1995 SCC  Supl.  (4)   5  JT 1995 (7)   629        1995 SCALE  (6)58

ACT:

HEADNOTE:

JUDGMENT:                             WITH             WRIT PETITION (CIVIL) NO.443 OF 1986 Workers of Dehri-Rohtas Light Rly. Co.                            Versus Secretary of the Govt. of India and Ors.                          O R D E R       Rohtas  Industries Limited (hereinafter referred to as ‘the Company’)  was running  a large  industrial undertaking comprising of units for manufacturing cement, paper & board, asbestos, vulcanised fibres and vanaspati at Dalmia Nagar in District Rohtas of the State of Bihar. The Company has three associate companies,  namely, Ashoka  Cement Ltd.,  Parshava Mining and  Trading Company  Ltd.  and  Dehri  Rohtas  Light Railway Company  Ltd. The Company was employing about 10,000 workmen. Troubles  started in  1982-83  and  ultimately  the units of  the Company were closed with effect from September 9, 1984  resulting in denial of employment to the workmen. A petition (Company  Petition No.3  of  1984)  was  filed  for winding up of the Company before the Patna High Court and in the said  petition the  Patna High  Court on  May  22,  1986 appointed the Provisional Liquidator. During the pendency of the said  petition, the  workmen of  the Company  moved this Court by  filing this  writ petition under Article 32 of the Constitution. The  petition was  entertained by  this  Court with the  object of reviving the industry and rehabilitating the workmen. Notice was issued to the State of Bihar and the Union of  India so as to enable the Court to solve the human problem of  unemployment of  large number  of workmen. While the matter  was pending consideration, the provisions of the Sick Industrial  Companies (Special  Provisions)  Act,  1985 (for short  ‘the Act’) came into force. As per suggestion of the learned  Attorney General, the Court on October 28, 1987 passed an  order whereby the Central Government was directed to make a reference to the Board of Industrial and Financial Reconstruction (BIFR)  to frame  a scheme  under the Act and

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submit the same to the Court. The BIFR submitted a report on April 22, 1988 wherein it was stated that three of the units of the Company, namely, cement, asbestos and vanaspati could be revived  but the paper unit could not be revived. Keeping in view  the  said  report  of  the  BIFR  as  well  as  the statements filed  on behalf  of the State of Bihar and Union of India and the memorandum prepared by the learned Attorney General of  India filed  before this Court, the Court passed an order dated October 24, 1989 wherein it was observed :      If the  Company is  not revived and gets      liquidated, the  liabilities would  turn      out to  be far  in excess  of the assets      and  notwithstanding   first  or  second      charge on  the assets, the creditors may      not  appreciably   benefit.  This  Court      cannot  lose  sight  of  the  fact  that      living to about 10,000 families has been      denied for  over five  years  and  apart      from national  loss,  the  workmen  have      been put  to serious  jeopardy. In these      circumstances, we  are satisfied that it      is  of  paramount  importance  that  the      Company in  respect of  the viable units      should be  revived and  allowed to  come      into production."      The Court  directed the  State of  Bihar to  appoint an authorised  officer   from  the   senior  IAS   cadre   with appropriate commercial  background to  be the Rehabilitation Commissioner and the Provisional Liquidator appointed by the High Court  in the  winding up  proceedings was  directed to hand over to the Administrator all the assets of the Company which he  had taken  over under  order of  the Court and the several other assets of the Company which had not been taken over  the   Provisional  Liquidator   shall  vest   in   the appropriate  officer   upon  being  designated  and  he  was entrusted with the power to lake such steps as are necessary to take  over possession  of such  assets of the Company. It was also  directed that the assets of the company encumbered with financial and other institutions shall not be available to be  proceeded against  for a  period of one year from the date of  the order  and there  shall be  a moratorium  for a period of  one year  in  regard  to  proceedings  taken  and pending of  or to be taken against the Company hereafter and limitation shall  remain suspended  under the  said order of the Court.  The State  Government undertook  to  deposit  an amount of  Rs.15 crores with the Administrator and the Court directed the  Union of  India to advance a similar amount of Rs.15 crores  to  the  State  of  Bihar  from  out  of  plan assistance for  the State  and it was directed that the said sum of  Rs.15 crores  be paid by the State Government to the Administrator which amount shall be utilized, in due course, for payment  of arrear  of wages  and  for  disbursement  of secured loans  of financial  institutions and  other parties for  which   security  of  the  Company’s  assets  had  been furnished. The  Administrator was  directed to  set  up  one Committee to examine the claims of the owners of the Company and other parties including financial institutions.      In accordance with said directions given by this Court, the  State  of  Bihar  designated  an  officer  to  work  as Administrator (Rehabilitation  Commissioner) who  took  over the assets of the Company and a sum of Rs.30 crores was paid by the  State Government to the Rehabilitation Commissioner. Out of the said sum of Rs.30 crores a sum of Rs.6 crores was given by  the State  government by  way of  grant and  Rs.24 crores was  to be  repaid by the company. The Rehabilitation

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Commissioner, by  his efforts, was able to start four of the units providing  employment to  2900  workmen.  But  due  to financial constraints, the units could not function in a way as to earn profits and had to be closed after some time. The Rehabilitation Commissioner  moved the  Court  seeking  more funds but  the State of Bihar and the financial institutions expressed their  inability to  advance  the  funds.  In  the circumstances, the  Court felt that the best course would be to dispose  of the  whole undertaking  and that  in order to ensure that  the undertaking  fetches an  adequate price  it should be  disposed of  as a  running concern. The Court, by order dated  September 8,  1993, directed the State of Bihar to advance  a further  sum of  Rs.10 crores  as loan  to the Company for the resumption of the production of the units of the undertaking  and in order to enable the State Government to pay  the said  amount, the Union of India was directed to advance to the State of Bihar a sum of Rs.10 crores from out of the  plan assistance  for the State or any other account. The Rehabilitation  Commissioner was  directed to  have  the assets of  the undertaking  valued by an approved valuer and the Commissioner  and Secretary,  Department of  Industries, Government  of   Bihar,   was   directed   to   publish   an advertisement in five prominent national newspapers (English language) and  three national  newspapers  (Hindi  language) inviting offers  for the  purchase of  the entire industrial undertaking of the Company as a running concern. It was also directed that  out of the amount received by the disposal of the  undertaking   of   the   Company   the   Rehabilitation Commissioner shall  first repay  the loan  of  Rs.10  crores advanced by  the State  of Bihar  in pursuance  of the  said order before discharging any other liability of the Company. In  response  to  the  advertisement  which  was  issued  in pursuance of  the directions  contained in  the order  dated September 8,  1993, 14  offers were received by the State of Bihar for  the purchase  of the  units as  a whole  and  the maximum officer was for Rs.15 crores for the entire complex. The  said   offers  were   placed  before   the  Court   for consideration and on March 3, 1994 this Court observed :      Keeping in  view the total assets of the      company which  have been assessed by the      Rehabilitation Commissioner at about Rs.      250 crores, it is not possible for us to      even  consider  any  of  the  14  offers      received by the State of Bihar."      On May 2, 1994 the Court passed an order wherein it was observed that  "the best  course  would  be  to  revive  the reference which  was made  to BIFR by the Central Government in pursuance  of the  order of  this Court dated October 28, 1987." The  Court, therefore,  directed that  the  reference that had  been made by the Central Government to the BIFR in pursuance of the directions given by this Court in the order dated October  28, 1987 be revived and a report be submitted by the  BIFR to  the Court  in relations  to  the  following matters :      (a)  Whether the  Company is  capable of      being rehabilitated  in a manner that it      can operate  profitably so  that its net      wealth would  ultimately become positive      and the  units become financially stable      and self-supporting.      b)   The short-tern  measures,  if  any,      which can be taken immediately.      c)   The long-term  measures required to      rehabilitate the Company."      The BIFR  was also directed that the proposal submitted

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by the  Rohtas Industries Workers’ Co-operative Society Ltd. may also be considered.      The BIFR  appointed Industrial Financial Corporation of India (IFCI)  for preparing  a report  and  IFCI,  in  turn, appointed Soni  Industrial Revival  Consultants (SIRCON)  to prepare schemes  as per the directions of this Court. SIRCON submitted its report on ‘Techno-Economic Viability Status of the Associates  Companies of  Rohtas Industrial Ltd.’. After considering the  said reports  submitted by  SIRCON and  the three proposals  which were received by the BIFR from Rohtas Industrial  Workers’  Cooperative  Society  Ltd;  Shri  L.N. Dalmia and  Speedcrafts Pvt.  Ltd., the  BIFR submitted  its report dated May 22, 1995.      The conclusions  of the  BIFR, as  stated in the report dated May 22, 1995, are as follows :      i)   No viable and feasible proposal for      revival of  the RIL  or any of its units      has  been   received  from   the  Rohtas      Industries Workers’  Cooperative Society      Ltd  or  any  other  private  party.  It      follows that the RIL can be revived only      if  the   State   Government   and   the      financial institutions/banks can provide      the requisite funds.      ii)  RIL as  a  whole  (excluding  their      three associated  companies) are  viable      only under Variani IV i.e., if the State      Government brings  in the  entire amount      of   Rs.225.71   crores   required   for      rehabilitation as  equity, makes  OTS of      the dues  of financial  institutions and      banks by  paying them  Rs.22.24  crores,      and   provides    massive   reliefs   by      tax/royalty. Cement,  Asbestos and Paper      Units  are   also  independently  viable      under Variant IV with these reliefs.      iii) Cement unit is independently viable      under Variant  II, i.e.,  if the  entire      amount of Rs.155.50 crores is brought by      the State  Government as  equity. It  is      also viable  under Variant  IV, i.e., if      there is  OTS of  the dues  of financial      institutions and  banks and  the  entire      cost  of   rehabilitation  of  Rs.159.79      crores  is   brought  in  by  the  State      Government as equity.      iv)  Asbestos  unit   is   independently      viable under  Variant III,  i.e., if 50%      of the  amount of  Rs.342 lacs  required      for rehabilitation  is  brought  by  the      State Government  as equity  and 50%  is      arranged as loan and there is OTS of the      dues of financial institutions involving      a payment  of Rs.106  lacs. It  is  also      viable under  Variant IV,  i.e., if  the      entire amount  of Rs.342 lacs is brought      in as equity by the State Government and      there  is   OTS  of   the  dues  of  the      financial institutions and banks.      v)   Paper unit  is  viable  only  under      Variant IV,  i.e., if  the entire amount      of   Rs.57.65    crores   required   for      rehabilitation  is   infused  as   State      Government’s equity, there is OTS of the      dues of financial institutions and banks

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    involving a  payment of Rs.15.35 crores,      and  the   State   Government   provides      reliefs by way of deferment of sales tax      for eight years (Rs.9.60 crores).      vi)  Vanaspati Unit  is non-viable under      all the four Variants.      vii) Variant  IV   is  the  only  viable      alternative  as   Cement,  Asbestos  and      Paper Units are independently viable and      the RIL  as a whole is also viable under      this Variant.  Under Variant  III,  only      Asbestos Unit  is  viable  independently      and RIL  as a whole is non-viable. Under      Variant II,  only Cement  Unit is viable      and the RIL as a whole non-viable. Under      Variant I  neither any  Unit nor the RIL      as a whole is viable.      viii)     Non of  the  three  associated      Companies,  viz,   Parshava   Mining   &      Trading Co.  Ltd. (PMTL),  Dehri  Rohtas      Light Railway Co. Ltd. (DRLR) and Ashoka      Cement Ltd. (ACL) is viable.      ix)  There are three crucial factors for      achieving long-term  viability,  if  the      RIL is  to be  revived under Alternative      IV.      a)   Adequate supply  of raw material is      to be  ensured. This may involve renewal      of existing mining leases exploration of      new areas  and grant  of new  leases, in      the  case  of  Cement  Unit.  Similarly,      existing forest  leases may  have to  be      renewed   and/or   some   other   leases      granted, and  alternative sources of raw      material like  bagasse, waste  paper and      pulp also explored for the Paper Unit.      b)   Adequate  power  supply  is  to  be      ensured.      c)   The management  is to  be revamped,      strengthened  and  professionalised  and      made accountable.  There  has  to  be  a      broad  based  Board  of  Directors  with      representatives of the State Government,      the concerned financial institutions and      banks,   workers    and   professionals.      Professionals also  need to  be inducted      in    senior    managerial    positions,      particularly   in   Finance/Accountants,      Production   and    Personnel/Industrial      Relations,  Internal  audit,  concurrent      audit,   proper   purchase   and   sales      procedures,    costing     system    and      Management Information  System have also      to be introduced."      After considering  the said  report of  the BIFR,  this Court passed  an order  dated July  21, 1995  wherein it was observed :      "The cumulative  effect of the report is      that there  is  no  possibility  of  the      revival of  this  industry  through  the      efforts of this Court as at present. The      BIFR   has    also   discussed   various      proposals  for   the  revival   of   the      industries received by it. Two proposals      are worth  mentioning. Proposal  of Shri

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    L.N. Dalmia and his son-in-law Shri L.N.      Mittal  is  still  under  consideration.      Shri Ashok  Sen, learned  senior counsel      representing  Shri  L.N.  Dalmia  states      that he  would consult his client in the      light of  the matters  mentioned  before      the Court  and report  back within  four      weeks from  today. The  other  offer  is      from Speedcrafts  Pvt. Ltd.  The learned      counsel  assisting   us  on   behalf  of      Speedcrafts Pvt.  Ltd. also  states that      he would  also consult  his client  i  n      similar terms  and report  back  to  the      Court. We  are keeping  the options open      so far as the suggestions which may come      from these two private parties."      Thereafter, when  the matter was taken up on August 25, 1995, Shri  Ashok Sen  representing Shri L.N. Dalmia, gave a positive offer  to the  effect that  he is  prepared to  pay Rs.60 crores  in the  manner to  be indicated  by him in his written officer.  The said written offer of Shri L.N. Dalmia was filed  in this  Court on  August 31,  1995. The State of Bihar as  well as Union of India were directed to give their response in  writing to  the said offer. A copy of the offer was also  sent to the BIFR with the directions that it shall consider the  offer and  give its  comments. The  matter was thereafter taken  up on September 19, 1995 on which date the Court considered  the comments  of BIFR  and response of the State of  Bihar and  the Union of India to the offer of Shri L.N. Dalmia.  The BIFR in its comments on the said offer has expressed the view that the total liabilities of the Company (excluding the  liabilities of  the associated companies) as on march  3, 1995  are reported  to be Rs.171.14 crores. The sacrifice involved  in settling  the  above  liabilities  of Rs.171.14 crores  for Rs.60  crores could be Rs.111.1 crores and the  liabilities of  the three associated companies also need to  be assessed and quantified and added to this amount to arrive  at the  total amount of sacrifices involved. BIFR has further  observed that  besides the  sacrifice mentioned above, monetary  value of  the reliefs and concessions to be provided  by   the  State   Government  and   the  financial institutions and  Banks also need to be quantified and added to the  cost and the cost involved in connecting all railway sidings of the Rohtas industries with Dehri-on-Son too would need to  be added  to the cost of the scheme and the reliefs and concessions  are of  substantial value. BIFR has further stated that even after such massive sacrifices by the banks, financial  institutions   and  the   State  Government,  the employment of  the entire  work force  of the Company is not likely to  be ensured  and their past dues would not be paid and that  Shri Mittal  also has  not indicated precisely the sources from which funds of the order of Rs.560 crores would be mobilised and the Resourcefulness of Shri L.N. Dalmia and his associate  Shri L.N.  Mittal and their credibility needs to be assessed by some independent agency.      On behalf  of the  State of  Bihar reply in the form of affidavit of  Shri S.P.  Singh, Deputy Director, Industries, Government of  Bihar, has  been filed  wherein it  has  been stated that  the offerer has sought several concessions from the  State   Government  and  that  until  and  unless  full financial implications  of these  concessions are indicated, it may  not be  in the  interest of  the State Government to agree to the proposal and this proposal can be considered by the State  Government if  the offerer  agrees to  pay  Rs.34 crores in  one instal  ment to  the State Government without

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any  pre-condition  and  without  any  concessions  and  the offerer should  also clear  all the legal dues on account of commercial taxes,  royalty, cess, electricity, registration, etc.  The   State  Government   has  also  pointed  out  the difficulties in  the matter  of allotment of forest land and the waste  land sought  by the  offerer and  grant of mining lease for  limestone and  the restoration  of 2807  acres of land which  has been declared surplus under the ceiling law. As regards  concessions/reliefs sought by Shri Dalmia, it is stated that  the  State  Industrial  Policy,  1995  provides concessions/reliefs such  as sales  tax  exemption/deferment and facility  of either  set-off or exemption on purchase of raw materials  within the  State if considered necessary for revival of  the unit  by the  State Government  and that the Industrial Policy  does not provide facilities for exemption from royalty on bamboo, wood, limestone and electricity duty on captive generations beyond 25 M.W.      The response  of the Union of India is contained in the affidavit of Shri Sohan Lal, Deputy Secretary working in the Department of  Industrial  Development  (Industrial  Renewal Section), Ministry  of Industry, Government of India. In the said affidavit  it is  stated that  the offer  of Shri  L.N. Dalmia  has  come  from  an  individual  and  not  from  any corporate entity.  Hence it  is not  possible to  assess the soundness of  the financial  status of  the offerer and that the offer is not accompanied by any realistic projections of profitability, cash  flow, DSCR,  etc.  and  the  long  term viability of  the units,  therefore, need  to be looked into more closely.  According to  Union of  India, the  paramount interest in  This case  has been  the protection of workers’ interest and  their employment  and  that  the  offerer  has proposed for  employment  of  workers  on  need  basis  only without incurring  any liability  towards their  past wages, etc. It  has also  been stated  that the  liabilities of the Company are  approximately Rs.171.10  crores, some  of which are required  to be  updated and  the transfer of the assets free from  the  liabilities  for  only  Rs.60  crores  would violate the  pre-emptive rights  of the  original owners and hence, their  concurrence would be necessary. As regards the concessions sought  for in the offer towards dues on account of  railways,   excise,  import   duty   exemption,   cement regulation account, etc., it has been submitted that all the statutory dues  are  required  to  be  settled  as  per  the existing rules, guidelines and statutory provisions only.      An  additional   affidavit  of   Shri  Sidhnath  Singh, Chairman of  Rohtas Industries  Workers’ Cooperative Society Ltd., has  also been  filed before  this Court wherein it is stated that Shri L.N. Dalmia has already closed down his M/s Punalur Paper  Mills Ltd.  in Kerala  State and has not paid salaries and  wages of  five months of about 1000 workers of that unit.  Shri Sidhnath  Singh has  also made  an offer on behalf of the Rohtas Industries Workers’ Cooperative Society to purchase whole of movable and immovable properties of the Company and  its associated  companies on  payment of  Rs.65 crores and  has express  readiness to  absorb the workers of all the  units. The Society has offered to make cash payment of Rs.16  crores  after  reopening  of  Ashoka  Steel  Unit, Vanaspati Unit,  Cement Unit  within a  month and to pay the balance amount of Rs.49 crores in three equal installments.      Speedcrafts Pvt.  Ltd. has  also  submitted  a  revised offer on  August 21,  1995 for  Rs.71.51 crores out of which Rs.40 crores  will be  paid to the State of Bihar by issuing zero interest  debentures redeemable  at par  after 10 years and out  of the balance amount of Rs.31.51 crores an initial payment of  Rs.5.51 crores  will be  made  at  the  time  of

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transfer of  the  entire  assets  free  from  each  and  all encumbrances, liabilities,  claims etc,  and handing over of peaceful vacant  possession and  other Rs.20  crores will be paid over  a span of 12 years (with an initial moratorium of two years) in equal yearly instalments.      After taking  into consideration the report of the BIFR dated May  22, 1995  and its  comments to  the offer made on behalf of  Shri L.N.  Dalmia and  the response  made by  the State of  Bihar and  the Union of India to the said offer as well as  the additional affidavit of Shri S.P. Singh and the revised offer  of  Speedcrafts  Pvt.  Ltd.,  this  Court  on September 19,  1995 fixed the matter for September 29, 1995. But before  that date the State of Bihar appears to have had second thoughts.  an affidavit  of Shri  S.P. Singh,  Deputy Director, Industries,  Government of  Bihar dated  September 26, 1995 was filed by way of reply to the offer made by Shri L.N. Dalmia  wherein it  was stated  that in response to the officer made  by Shri  L.N. Dalmia  the State Government had reconsidered  the   matter  and   after  review   the  State Government has  decided that  in the  interest of restarting the industry  as also  for  safeguarding  the  interests  of labourers and  employees in  the said  industry  and  having reconsidered the  whole  matter  the  State  Government  was agreeable to  deferment of  payment of the dues of the State Government over a period considered appropriate by the Court and were  also willing  to extend all help and facilities to any intending  purchaser of  the industries.  In view of the said affidavit  of Shri  S.P. Singh, the Court, on September 29, 1995, passed the following order :      "    Mr.  S.P.  Singh,  Deputy  Director      (Industries), Government of Bihar, Patna      has filed  an affidavit  dated September      26, 1995.  It has  been averred  in  the      affidavit that  the State  of Bihar,  in      the interest  of restarting  the various      units of  the Rohtas  Industries as also      for  safeguarding   the   interests   of      labourers  ad   employees  in  the  said      industries has  reconsidered  the  whole      matter and  is now  agreeable to  extend      all help and facilities to any intending      purchaser of the industries. The learned      counsel for  Shri L.N.  Dalmia  and  Mr.      B.B.  Singh,  learned  counsel  for  the      state of  Bihar, state  that it would be      necessary for  the parties  to  meet  to      sort out  various issues arising in this      matter. We  adjourn the  matter to  13th      October,  1995   at  2.00  p.m.  In  the      meanwhile the  learned counsel  for Shri      L.N. Dalmia, whose offer we have already      noticed in  our  earlier  order,  states      that the  representatives of Shri Dalmia      would meet  and have discussion with the      concerned   officers    of   the   Bihar      Government in the light of the affidavit      filed   by   Mr.   S.P.   Singh.   After      discussion the  State of  Bihar and Shri      L.N. Dalmia  may file a joint memorandum      of  understanding   before  this   Court      before October 11, 1995. In the event of      Shri L.N.  Dalmia being satisfied in the      discussion with  the State  of Bihar  he      should  deposit  a  sum  of  rupees  two      crores by  way of  a demand draft in the

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    name of  the Registrar  General of  this      Court  along   with  the  memorandum  of      understanding.  The   workers  be   paid      salary  for   the  month  of  September,      1995."      When the  matter was  taken up  on October  13, 1995  a statement in  the form of submissions was filed on behalf of Shri L.N.  Dalmia in the light of the discussions which Shri Dalmia had  with the officials of the State of Bihar and the Chief Minister  of Bihar  from September 30, 1995 to October 3, 1995. The said submissions filed on behalf of Shri Dalmia indicate that  there is  wide divergence  between the  offer made by  Shri  L.N.  Dalmia  and  the  stand  of  the  State Government on many matters which are crucial for the revival of the  industry and Shri Dalmia has expressed his inability to proceed further with his offer in view of the stand taken by the  State Government.  A supplementary affidavit of Shri S.P. Singh  dated October  9, 1995  has been filed and along with  the   said   affidavit   the   draft   memorandum   of understanding as  proposed on  behalf of  the Government  of Bihar as  well as  the  draft  memorandum  of  understanding circulated by  Shri L.N.  Dalmia  and  the  minutes  of  the discussions that  were held  between the  Committee  of  the Government of Bihar and Shri L.N. Dalmia on October 1, 2 and 3, 1995 have been filed.      We have  considered  the  submissions  that  have  been submitted on  behalf of  Shri L.N.  Dalmia as  well  as  the Supplementary affidavit  of Shri S.P. Singh dated October 9, 1995 and the documents filed therewith. Having regard to the report of  BIFR dated  May 22, 1995, the comments of BIFR on the offer of Shri L.N. Dalmia as well as the response of the State of  Bihar and the Union of India to the said offer and the discussions which Shri L.N. Dalmia had with the officers of the  State of  Bihar on October 1, 2 and 3, 1995, we have to conclude  regretfully that  in spite  of best efforts the object with which this Court had intervened in the matter by entertaining  the   writ  petition,   viz.  to   revive  the undertakings,  does   not   appears   feasible.   In   these circumstances, the future course of action which commends us is that  the proceedings  in this  writ petition  should  be brought to  an end  and the  winding up  proceedings pending before the patna High Court be resumed.      Before we give the necessary directions in that regard, we would  briefly set  out the present state of affairs with regard to the Company :      (i)  The Rehabilitation  Commissioner appointed  as per      directions contained  in the  order dated  October  24,      1989 is  in possession  and control  of the property of      the company.  To assist  him there  are officers, staff      and  workmen.   Since  the   units  which  had  resumed      production while  the matter  was pending in this Court      have been  closed, the Court has been giving directions      from time  to  time  to  reduce  the  strength  of  the      employees  in   order  to   cut  down   the   recurring      expenditure on  that account.  By the last order passed      on July  21, 1995,  the Rehabilitation Commissioner was      directed to  reduce the  number of  workmen from 200 to      75, the staff from 75 to 40 and the officers from 25 to      10. As  per the directions contained in the order dated      September 29,  1995 the salary of the officers, workmen      and the  staff has  been  paid  by  the  Rehabilitation      Commissioner  for   the  period   upto  the   month  of      September, 1995.      (ii) Earlier  staff   was   being   employed   by   the      Rehabilitation Commissioner for the purpose of ensuring

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    security of  properties in  the complex.  This involved      heavy expenditure  by way  of salary  of such staff. It      was, therefore,  decided to entrust the security to the      Central   Industrial    Security   Force.    When   the      Rehabilitation Commissioner  pointed out  that a sum of      Rs.10 lacs  was being  spent every month on the Central      Industrial Security  Force deployed  in the  industrial      complex for  the purpose  of security,  the  Court,  by      order July  21, 1995,  directed  the  Director-General,      Central Industrial  Security Force  to deploy the force      in  such   a  manner  from  August  1,  1995  that  the      expenditure on that force is reduced by 40%.      (iii)     The Rehabilitation  Commissioner  brought  to      the notice  of the  Court that  the electricity charges      were coming  to Rs.5.5  lacs  per  month  which  amount      included the  monthly minimum guarantee. By order dated      July 21,  1995 it was directed that keeping in view the      present status  of the industry specially the fact that      it is  lying closed  since May  1994, the  Bihar  State      Electricity  Board   shall  charge   only  the   actual      consumption charges  till further  orders  with  effect      from August  1, 1995.  It was  also  pointed  out  that      electricity  was  being  supplied  free  of  charge  to      workers staying  in the  quarters and that many of them      are no  longer on  the rolls  of the industry. By order      dated July 21, 1995 the Rehabilitation Commissioner was      directed not  to spend  any  more  money  on  supplying      electricity etc.  or any  other amenities  to all those      workers, staff  and officers  who are  no longer on the      rolls of the industry and this must be done with effect      from August  1, 1995.  It was  also made clear that the      workers shall  pay the  normal  electricity  and  water      charges  to  the  Electricity  Department  directly  or      through the  Rehabilitation  Commissioner  and  if  any      worker does  not pay  the charges  his electric  supply      would be  disconnected.  The  Bihar  State  Electricity      Board has  made a  claim with  regard to its dues which      according to  the  Board  runs  into  few  crores.  The      Rehabilitation Commissioner has disputed the said claim      of the Board and has, on the other hand, submitted that      the company has suffered a loss of approximately Rs.752      lacs on  account of  burning of  the transformer due to      the fault  of the  Board and  further that  the  meters      recording  the   consumption  were  also  found  to  be      defective by  the Board  itself and  that the  Board is      claiming the  charges on  the basis  of the  reading in      those defective meters.      (iv) As a result of resumption of production in some of      the units  by the  Rehabilitation Commissioner there is      raw material/finished products lying in stock. By order      dated July 21, 1995 the Rehabilitation Commissioner has      been directed  to sell  the said  raw material/finished      products in  stock preferably  within the period of one      month. In  his affidavit  dated September 20, 1995, the      Rehabilitation  Commissioner   has   stated   that   in      pursuance of  the said  directions offers  have already      been invited for sale of approximately Rs.70 lacs worth      of   raw   materials/finished   products/wasted/damaged      material out of which the sale has already been made of      Rs.7 lacs  and that offers have been invited in respect      of the  burnt out transformer and rejected copper cable      approximately of  the value  of Rs.20  lacs  for  which      confirmed  offers   for  purchase   have  already  been      received.      (v)  In his  affidavit dated  September 20,  1995,  the

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    Relief Commissioner  has also stated that in respect of      the  period   during  which   the  units   had  resumed      production an  amount  of  Rs.234.84  lacs  is  payable      towards raw  materials purchased on credit and a sum of      Rs.184.56 lacs was advanced by purchasers for supply of      products by  the company. There is a total liability of      Rs.419.40 lacs  under both  these heads.  It is  stated      that there  is a  further liability  for sales  tax  on      these transactions  to the tune of Rs.400.23 lacs as on      March 31, 1995.      (vi) Out of  a total amount of Rs.40 crores paid by the      State of  Bihar the  sum of  Rs.6 crores  was by way of      grant and  Rs.34 crores  is as  loan. This  amount  was      advanced by  the State  of Bihar  as per  directions of      this Court.      (vii)     The  Claims   Committee  constituted  by  the      Rehabilitation Commissioner  under the directions given      by this  Court on  October 24,  1989 has  submitted its      report  after  assessing  the  various  claims  of  the      creditors, the  financial institutions and the workers.      Objections have  been submitted against the said report      of   the    Claims   Committee    which   are   pending      consideration.      (viii)    The moratorium  of one year which was imposed      in respect  of proceedings  taken and  pending or to be      taken against  the company  by order  dated October 24,      1989 have  been extended from time to time and the last      such extension  was given  till December  31,  1995  by      order dated July 21, 1995.      Now while  putting an  end  to  these  proceedings  and permitting resumption  of  the  winding  up  proceedings  in Company Petition No. 3 of 1984 pending before the Patna High Court, it is directed as under :      1.   The winding  up proceedings  in  Company  Petition      pending before  the Patna High Court will be resumed by      the Company  Judge. The  parties and the Rehabilitation      Commissioner shall  appear before the Company Judge for      seeking necessary directions on November 20, 1995.      2.   The Rehabilitation Commissioner shall -      (a)  complete the  sale of  the raw  materials/finished           products/wasted/damaged  materials  including  the           burnt out transformer and rejected copper cable by           November 30, 1995;      (b)  subject to  availability of  funds after incurring           the expenses  towards payments  under clauses (c),           (d) and  (e), pay  the dues  towards the supply of           raw materials  on credit  for the  running of  the           units during  the period  of the pendency of these           proceedings as  well as  the  amount  received  as           advance from  purchasers for  the products  to  be           supplied to them by December 31, 1995;      (c)  pay the  charges for  the  actual  consumption  of           electricity for  the period upto November 30, 1995           by December 31, 1995;      (d)  pay the  charges  for  the  security  arrangements           through the  Central Industrial Security Force for           the period  upto December 31, 1995 by December 31,           1995;      (e)  pay the  salary of  the  staff  employed  for  the           period upto  December 31,  1995  by  December  31,           1995;      (f)  prepare an  inventory of  the properties,  movable           and immovable,  belonging to  the company  in  his           possession and control by December 10, 1995;      (g)  hand over the possession of the said properties to

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         the official  Liquidator as  per the  inventory by           December 31, 1995;      (h)  have the  accounts for  the period  April 1,  1995           till December 31, 1995 duly audited and submit the           same before  the Company  Judge in  the Patna High           Court by January 15, 1996;      (i)  hand over  the papers  relating to  the affairs of           the Company while he was in control of the same to           the Official Liquidator by January 15, 1996.      3.   With  effect  from  date  the  possession  of  the      properties, as  per the  inventory, is delivered to him      by  the   Rehabilitation  Commissioner,   the  Official      Liquidator will  assume charge  of the  assets  of  the      Company for the purpose of winding up proceedings.      4.   The officers,  workmen and  the staff  who are  at      present employed  in the  undertaking  of  the  Company      shall continue  in employment  till December  31, 1995.      For  their   further  continuance   in  employment  the      Official Liquidator  will seek the necessary directions      from the Company Judge.      5.   The  present  security  arrangements  through  the      Central Industrial  Security Force  will continue  till      December 31,  1995. For  further continuance  of  these      arrangements, the  Official  Liquidator  may  seek  the      necessary directions from the Company Judge.      6.   The existing arrangement for supply of electricity      by the  Bihar State  Electricity Board  shall  continue      subject to  the directions  that may  be given  by  the      Company Judge.  No minimum  guarantee  charge  will  be      payable to  the Bihar  State Electricity Board and only      the  actual  consumption  charges  will  be  paid.  The      respective claims  of the  Rehabilitation  Commissioner      and the  Bihar State  Electricity Board  with regard to      the supply of electricity during the period the Company      was under the charge of the Rehabilitation Commissioner      shall be considered by the Company Judge.      7.   The State  of  Bihar  will  grant  exemption  from      sales/purchases tax  in respect of sales/purchases made      by the company during the period the units were revived      by the Rehabilitation Commissioner while the matter was      pending before this Court.      8.   The Report  of the  Claims Committee on the claims      of  the   financial  institutions,  creditors  and  the      workers will  be considered by the Company Judge in the      light  of  the  objections  that  have  been  submitted      against the said report.      9.   The  Company   Judge  may   consider  whether  the      industrial undertakings  of the  Company can be revived      in the light of the offers that have been received from      Shri L.N.  Dalmia, Speedcrafts  Pvt,  Ltd.  and  Rohtas      Industries Workers’ Cooperative Society Ltd. along with      any other offer that may be received.      10.  In the  event of sale of the assets of the Company      during the  course of  winding up proceedings, a sum of      Rs.34 crores  which was  advanced by the State of Bihar      as per  directions of  this Court  in these proceedings      shall be  paid to  the State  of Bihar  out of the sale      proceeds before  discharging any other liability of the      Company.      11.  The Relief  Commissioner shall stand discharged on      January 15, 1996.      12.  The moratorium  imposed under  the order  of  this      Court shall  cease to operate with effect from December      31, 1995.      13.  It will be open to the Rehabilitation Commissioner

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    and the  Official Liquidator to seek further directions      from this Court with regard to any matter pertaining to      the period  this writ  petition  was  pending  in  this      Court.      Shri Beck  Julius, I.A.S.  has been  functioning as the Rehabilitation Commissioner since April 4, 1994. During that period this  court found  his work  to be  satisfactory  and good. This  may be  treated as assessment of his performance as an  officer of  the Bihar  Cadre of  I.A.S.  during  that period and  it may  form part  of his  Performance Appraisal Report.      Before we part with this case, we must say that this is a sad  finale to the episode. In order to secure the revival and rehabilitation  of a  large industrial  undertaking, the closure of  which was  not only a national loss but had also rendered about  10,000 workmen  jobless, this  Court adopted the unprecedented course of assuming direct control over the functioning of the undertaking.      The writ  petition are  disposed of accordingly with no order as to costs.      A copy  of this  order shall  be sent to the Registrar, Patna High  Court for  being placed before the Company Judge dealing with Company Petition No.3 of 1984. In addition, the following papers be sent with the order :      (a)  copies of  the orders  passed by  the Court in the      Writ Petition.      (b)  copy of  the reports  of the  BIFR dated April 22,      1988 and May 22, 1995 and the annexures thereto.      (c)  copy of the report of the Claims Committee and the      objections filed against the said report.