1 BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION ...

M.A. NO. 338/BC/2011
&
M.A.NO. 554/BC/2011
CASE NO. 515/92 M/s. FERTILIZER CORPN. OF INDIA LTD
BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION
M.A. NO. 338/BC/2011
&
M.A.NO. 554/BC/2011
CASE NO. 515/92 M/s. FERTILIZER CORPN. OF INDIA LTD.
BENCH-II
SUMMARY RECORD OF THE PROCEEDINGS OF THE HEARING HELD ON
22.09.2011 AT 12.00 P.M. BEFORE SMT. SAROJ BALA, MEMBER AND
SHRI Y.K. GAIHA, MEMBER.
Present
M/s. Fertilizer Corp. of India Ltd.
Name and Designation of the
Representative
Shri/Ms.
Shweta Bharti, Advocate
TCA Kalyani, Director (F)
A.K.Ghosh, Consultant (T)
Sant Ram, L.O.
State Bank of India (OA)
Vijaya Bank
Govt. of Chattisgarh
FCI Employees Union
(Ramagundam Unit)
Fertilizer Officer Association
Fertilizer Corpn. Mazdoor Union
Raman Mattoo, Chief Manager
Arun Aggarwal, Manager
Dhruv Dhar, OSD
Ch. Rangaraju, President
K.Lingamurthy, Secretary
G.Balaraju, President
P.Bhoomaiah,Secretary
Moh.Ibrahim, Treasurer
M. Sundararaju, President
Sewa Singh, President
G.Gopal, Secretary
K.Srinivas, Vice President
illegible
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M.A. NO. 338/BC/2011
&
M.A.NO. 554/BC/2011
CASE NO. 515/92 M/s. FERTILIZER CORPN. OF INDIA LTD
Indian Oil Corporation
H.K.Puri, Advocate
Priya Puri, Advocate
In the hearing held on 02.04.2004, the Bench came to the conclusion that
despite having allowed enough time and opportunity to all concerned, it had not
been possible to formulate any acceptable revival scheme for the company which
could enable it to make its net worth exceed the accumulated losses within a
reasonable time, while meeting all its due financial obligations, and that the
company as a result thereof was not likely to become viable in future and that ,
therefore, it was just, equitable and in public interest that the company be wound
up u/s 22(1) of SICA. It was also directed that this opinion be forwarded to the
concerned High Court along with copies of all earlier orders/proceedings in the
case for further necessary action according to law. The Bench further directed as
follows:
a) The Bench allowed the sale of the assets of the unviable units of the F.C.I.
under Section 20(4) of the Act through an Assets Sale Committee.
b) An Asset Sale Committee (ASC) to decide on the sale of assets of unviable
units of FCIL shall be constituted by the GOI, keeping in view the guidelines given
below, with one nominee of the rank of Joint Secretary/Additional Secretary from
the MCF, CMD of the company or his nominee, representatives of PNB and SBI
(OA) not below the rank of DGM and a representative of the concerned State
Govts. if sale of land is involved. The nominees would be appointed within one
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M.A. NO. 338/BC/2011
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M.A.NO. 554/BC/2011
CASE NO. 515/92 M/s. FERTILIZER CORPN. OF INDIA LTD
month of the date of hearing and ASC would start functioning at the end of one
month from the date of hearing, without waiting for such nominations.
1.1 Pursuant to the order dated 30.08.2010 of Hon ble Delhi High Court. the
Fertilizer Corporation of India Ltd. has filed a Misc. Application No. 629/BC/10. The
Hon ble Delhi High Court in its order observed that the matter has been pending in
this court ever since the year 2004 and no orders either appointing the provisional
liquidator or finally winding up the company have been passed, hence it would be
appropriate, keeping in view the developments and in the light of the
circumstances noted above, that this matter be also sent back to the BIFR to be
considered along with the matter pertaining to Hindustan Fertilizers Corporation
Ltd. in case no. 516/1992. Thus Delhi HC has remanded the case to BIFR to
consider it s revival along with HFCL (Case No.516/92) and directed to list the case
in BIFR on 08.11.2010. FCIL requested the Board to take up this matter along with
HFCL and grant time for obtaining approval of the Cabinet for its revival process.
1.2 Fertilizer Corporation of India Ltd. has filed a Misc. Application No.
629/BC/10 in compliance with the order dt. 30.8.2010 of Hon ble Delhi High Court.
Hon ble Delhi High Court has remanded the case to BIFR to consider it s revival
along with HFCL (Case No.516/92) and directed to list the case in BIFR on
8.11.2010. FCIL requested the Board to take up this matter along with HFCL and
grant time for obtaining and submission of approval of the cabinet for its revival
process.
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M.A. NO. 338/BC/2011
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M.A.NO. 554/BC/2011
CASE NO. 515/92 M/s. FERTILIZER CORPN. OF INDIA LTD
1.3. In the hearing held on 12.11.2010 in MA No. 629/BC/2010, the Bench
issued following directions:
(i)
In view of direction of the Hon ble Delhi High Court the Bench accepted the
MA and directed to list the case alongwith the matter of HFCL for further
consideration of their revival.
(ii)
Bench appointed the State Bank of India as an Operating Agency under
section 17(3) of SICA for preparation of rehabilitation scheme for the company
under section 18 of SICA as per enclosed guidelines.
(iii)
(iv)
The company to submit DRS to the SBI within six weeks.
The SBI to convene joint meeting with all concerned and submit fully tied up
DRS to the Board, if it emerges within next four weeks.
(v)
The company to negotiate with DVC and reconcile their dues and also file
written submissions to their claim petition to the Board with a copy to DVC, within
four weeks. The DVC to file re-joinder , if any within further two weeks.
(vi)
The Bench directed to fix this case for hearing on 03.03.2011 along with
Case No. 516/1992 (HFCL) which was subsequently postponed.
1.4 Harsh Kumar Puri, Advocate on behalf of Indian Oil Corporation Ltd. has
filed a Misc. Application No. 338/BC/2011 which is listed today for hearing. They
submitted that a sum of Rs. 91.50 crores as on 31.12.2007 plus interest thereon is
outstanding against the captioned company. They requested the Board that the
outstanding dues of the applicant have to be considered while formulating any
revival scheme for the company.
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M.A. NO. 338/BC/2011
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M.A.NO. 554/BC/2011
CASE NO. 515/92 M/s. FERTILIZER CORPN. OF INDIA LTD
1.5 In the hearing held on 20.06.2011, the Bench observed that no
representative from the sick company was present in the hearing. The Bench
issued the following directions:
(a) Applicant of the Misc. application to serve the Misc. application on FCI
and on SBI (OA) and to submit the proof of service to the Board within
two weeks.
(b) The sick company (FCI) to submit reply to the Misc. application to the
Board with a copy to SBI (OA) and to the applicant within 3 weeks
thereafter.
(c) The Applicant to file rejoinder if any within next 2 weeks and OA to
submit comments immediately thereafter.
(d) Next date of MA hearing is fixed on 22.09.2011, which is to be clubbed
with the regular hearing of the case.
1.6. In the hearing held on 18.08.2011 the Bench issued following directions:
(i)
The SBI will continue to do the duties of Operating Agency. The Company
will pay Rs.5 lakhs to the SBI as OA s fee. Rs. 2 lakh will be paid along with the
submission of DRS to the SBI(OA) and the balance Rs.3 lakhs after circulation of
DRS.
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(ii)
M.A. NO. 338/BC/2011
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M.A.NO. 554/BC/2011
CASE NO. 515/92 M/s. FERTILIZER CORPN. OF INDIA LTD
The company to submit rehabilitation proposal to the SBI(OA) within two
weeks.
(iii)
The SBI(OA) to examine company s DRS and convene joint meeting with all
concerned within one month thereafter. Thereafter submit company s tied up DRS
to the Board in the format prescribed by the BIFR within two weeks thereafter. In
order to expedite the process and to have a smooth co-ordination between
company and the SBI(OA), the Joint Secretary, concerned from the Department of
Fertilizer will function as nodal officer. The SBI will nominate DGM or above level
officer who is well experienced in formulation of revival schemes of big companies
to function as OA so as to complete the task within stipulated time.
(iv)
Allahabad Bank, Punjab National Bank, State Bank of Hyderabad and
Vijaya Bank are exempted from attending future hearings in this case.
(v) The next hearing would be held on 15.11.2011.
2. In the hearing held today (22.09.2011) in MA No.338 of 2011 the Ld.
Advocate representing the Applicant (IOCL) re-iterated that an amount of Rs.91.50
crore is recoverable from the sick company on account of materials supplied. She
added that the company has filed reply to the MA in which they have not
mentioned the manner how they will pay the amount on sanction of scheme. She
confirmed that the IOCL has not received copy of Draft rehabilitation scheme of the
company.
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M.A.NO. 554/BC/2011
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2.1 The Ld. Advocate of the Company (FCI) submitted that the IOCL is a
unsecured creditor and in the DRS the company has proposed to settle them at
30% of the amount due to them as per company s books as on 31.03.2003. She
added that during the hearing held on 18.08.2011 this issue has already been
discussed and the directions were issued accordingly.
3. Having considered the materials on records and submissions made during
the hearing the Bench observed that the issue of settlement of unsecured creditors
were discussed during the hearing held on 18.08.2011. The SBI(OA) was also
directed to convene joint meeting after examining the DRS. Hence the Bench
directed SBI to call IOCL also in the joint meeting to settle the issue. The Bench
clubbed the hearing of MA No. 338/2011 with the hearing of the main case listed
on 15.11.2011.
4.1 The Bench thereafter heard the MA No. 554 of 2011 filed by the Company
requesting for removal of 35 parties from the list of necessary parties in the matter
as mentioned in the table given under para V at page 3 of the MA. The Ld.
Counsel of the Applicant (Company) stated that most of these parties are not
necessary in the case, as they are workers unions, which are not in existence,
after accepting Voluntary Suspension Scheme (VSS). No offices of these workers
unions are present at the mailing addresses mentioned in the list. She prayed that
MA be allowed and requested the Bench to delete the names of these parties
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M.A. NO. 338/BC/2011
&
M.A.NO. 554/BC/2011
CASE NO. 515/92 M/s. FERTILIZER CORPN. OF INDIA LTD
being not necessary and dispense with the requirement of serving of notice to
these parties.
4.2 The representatives of FCI Employees Union Ramagundam unit, Fertilizer
Officer Association FCI, Ramagundam and Sindri Units submitted that the issue of
their wage revision is still unresolved. The employees/ officers were forced to
accept VSS in 1999. At that point of time the issue of wage revision was pending
before the Hon ble Supreme Court. The Ld. Counsel of the company intervened
and stated that the Hon ble Supreme Court has decided the matter on 24.03.2003.
The Workers/officers union accepted this fact and stated that prior to order of
Hon ble Supreme Court the company had forced them to accept VSS and the
Hon ble Supreme Court had accordingly directed to give some adhoc payment to
the workers. He requested the Bench not to delete their names from the list of
parties until the concerns of worker/officers are taken care of in the rehabilitation
scheme of the company.
4.3 The representative of Vijaya Bank stated that their dues have been settled
and the Hon ble Bench has already exempted them from attending the hearings.
4.4 The representative of SBI stated that As a creditor he is supporting the
request of the company. He added that the SBI s name is also mentioned at Sr.
No. 10. The dues of SBI have been settled, however, the SBI is also performing
the duties of an Operating Agency therefore the name of SBI may not be deleted.
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The Ld. Counsel of the Company also accepted that the name SBI, being an OA,
may not be deleted.
4.5 The Ld. Advocate of the DIT(R) stated that the company may be seeking
reliefs and concessions from the Income Tax Departments in the DRS, therefore,
their name may not be deleted. The Ld. Advocate of company clarified that they
are not seeking deletion of name of Income Tax Department in this case.
5. Having considered the facts and submissions made during the hearing the
Bench issued following directions:
(i)
Company to serve a copy of MA on all the concerned parties and submit
proof of service within one week.
(ii)
The concerned parties to file their objections, if any to the MA within further
two weeks.
(iii)
Company to submit Govt s order approving VSS for workers and to intimate
if after VSS to various workers, any issues of workers are pending. If so, whether
such dues have been provided in the DRS. They may also refers to assurances, if
any, given by the company before Hon ble Supreme Court.
(iv)
The Bench adjourned the hearing in MA to 13.10.2011 for taking a final
decision. No further opportunity would be given to any party, as this issue
needs to be decided prior to the convening of the Joint Meeting by the
SBI(OA).
(Y.K.GAIHA)
MEMBER
(SAROJ BALA)
MEMBER
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