1 board for industrial and financial reconstruction ma no. 553/bc ...

M.A. NO. 553/BC/2011CASE NO. 516/92M/S. HINDUSTAN FERTILIZER CORPN. LTD.BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTIONM.A. NO. 553/BC/2011CASE NO. 516/92 M/S. HINDUSTAN FERTILIZER CORPN. LTD.BENCH-IISUMMARY RECORD OF THE PROCEEDINGS OF THE HEARING HELD ON22.09.2011 AT 12.00 P.M. BEFORE SMT. SAROJ BALA, MEMBER AND SHRIY.K.GAIHA, MEMBERPresentName and Designation of theRepresentativeShri/Ms.M/s. Hindustan Fertilizer Corporation Ltd.State Bank of IndiaDIT ( R )Ms. Shweta Bharti, AdvocateVineet Dwivedi, AdvocateRadhika Jain, AdvocateTCA Kalyani, Dir (F)Raman Mattoo, Chief ManagerD.R.Jain, AdvocateIn the hearing held on 12.11.1992, the company M/s. Hindustan FertilizerCorporation Ltd. was declared sick u/s 3 (1) (o) of SICA. Since no fully tied up draftrehabilitation scheme (DRS) was received even after lapse of 9 years, the Benchconfirmed the winding up of the company vide its order dated 12.12.2001. TheHon ble AAIFR vide its order dated 29.11.2002 set aside the Board s order dated12.12.2001 and remanded the case to the Board. In the hearing held on 9.4.2003,the Bench directed OA to submit the DRS in respect of the company to the Board.1

M.A. NO. 553/BC/2011CASE NO. 516/92M/S. HINDUSTAN FERTILIZER CORPN. LTD.In the hearing held on 29.11.2005, the Bench directed the company, Government ofIndia and the OA to submit the DRS in respect of the company to the Board.1.1 In the hearing held on 21.9.2006, the Bench conveyed its displeasure overthe delay on the part of the company and ICICI Bank Ltd. (OA) in submission of afully tied up rehabilitation proposal to the Board. However, the Bench allowed a finalopportunity to the company, ICICI Bank Ltd. (OA) and the Government of India tosubmit a fully tied up rehabilitation proposal to the Board within 4 months. Further,the Bench directed that the proposal of the company to surrender/hand over ofsurplus land of 57.92 acres to Kolkata Port Trust (KPT) for the proposed transfer toIndian Oil Corporation for Rs.5.62 crores may be decided by mutual negotiations ofthe parties concerned.The Bench had also directed that the disposal ofsurplus/obsolete assets of the company may be done in accordance with the ASCguidelines. The next hearing was fixed for 1.2.2007.1.2 In the hearing held on 1.2.2007, the Bench appointed IDBI as the OperatingAgency u/s. 17(3) to issue advertisement for change of management of the companywithin two months as per the guidelines enclosed. IDBI (OA) was further directed tosubmit its report within next one month. The company was directed to make apayment of Rs.5.00 lacs as OA fee and Rs. 1.00 lac to meet the cost ofadvertisement to IDBI. The company was directed to make suitable arrangementsfor protection of the property, and to settle the outstanding dues of ex-employeeswithin two months.2

M.A. NO. 553/BC/2011CASE NO. 516/92M/S. HINDUSTAN FERTILIZER CORPN. LTD.The company was further directed to settle the dues of rent of KPT andtransfer the predetermined land to KPT within two months as per the decision takenin the inter-ministerial meeting.KPT would consider the renewal of lease onpayment of its dues. The company had constituted a High Power Committee (HPC)for identifying old /obsolete assets. IDBI (OA) was directed to attend the meetings ofthe HPC and nominate other members of the ASC to attend the meetings of HPC toensure compliance of ASC guidelines/procedures. IDBI (OA) was further directed tosubmit its recommendations on the sale of assets to the Board for approval.1.3 In the hearing held on 7.1.2008, the Bench observed that the company andthe Government had taken some measures for revival of Barauni and Durgapur unitsof the company.However, their efforts to revive Haldia unit had not beensatisfactory, as the State Government had already conveyed its unwillingness torevive the unit.Keeping in view the positive developments, the Bench directed tokeep the order dated 1.2.2007 for change of management of the company in respectof Barauni and Durgapur units in abeyance.The Bench directed IDBI (OA) to issuethe advertisement for change of management in respect of Haldia unit only, as perthe guidelines enclosed with the proceedings of the hearing held on 1.2.2007 andsubmit its report within 3 months to the Board.The company was directed to make a payment of Rs.5.00 lacs as OA fee andRs. 1.00 lac on account to meet the cost of advertisement to IDBI (OA).Thecompany was also directed to settle the balance outstanding dues of the exemployeesby 31.3.2008. The company was directed to settle the dues of rent ofKPT and transfer the predetermined land to KPT after identification of contiguous3

M.A. NO. 553/BC/2011CASE NO. 516/92M/S. HINDUSTAN FERTILIZER CORPN. LTD.land within two months as per the decision taken in the inter-ministerial meeting.KPT would consider the renewal of lease on payment of its dues.State Bank of India, State Bank of Patiala, State Bank of Hyderabad andCentral Bank of India were exempted from attending future hearings in the case.The Department of Fertilizers and the company were directed to submit a copy eachof the TEV Study reports got conducted in respect of Barauni and Durgapur unitswithin 15 days to IDBI (OA) and the Board. The next hearing in the case was fixedfor 9.6.2008.1.4 In the hearing held on 9.6.2008, the Bench observed that the company hadmade concrete efforts towards revival of the company, including Haldia unit of thecompany.The Department of Fertilizers had given its in principle approval forrevival of the company on 12.4.2007 and was in the process of obtaining theapproval of the competent authority in the Government for revival of the company.The Bench also appreciated the fact that the procedural requirements, including theapproval of the competent authority, would take some time.The Bench also observed that the sick companies were not subjected topayment of penal interest for delayed payments, as was being attempted by KPT.The Department of Fertilizers had informed that they had not so far decided todisinvest any of the units of the company. Further, the Department of Fertilizers didnot have any objection in considering the proposal from M/s. Shriram EPC Ltd., in4

M.A. NO. 553/BC/2011CASE NO. 516/92M/S. HINDUSTAN FERTILIZER CORPN. LTD.case it was decided to invite proposals from private parties and M/s. Shriram EPCLtd. applied in response thereto. The Bench directed:-(a)to keep the order dated 7.1.2008 for change of management of Haldia unit inabeyance.(b)the company and the Government of India, Department of Fertilizers to obtainthe approval of the competent authority in the Government for revival of thecompany, make necessary arrangement for gas pipeline for all the three unitsof the company etc. and submit a fully tied up DRS u/s 17 (2) of the Act, asper the guidelines enclosed, within six months to the Board.(c)the company and the Government of India, Department of Fertilizers wouldmake adequate provision for workers dues in the DRS and also continue toexplore the possibility of their re-employment in other PSUs, as per theircircular dated 14.8.2004.(d)the Secretaries of the Department of Fertilizers and Department of Shippingwould hold meetings to sort out by mutual consent the issue of transfer ofland by the company to KPT, before the approval of the competent authorityfor revival of the company.(e)to discharge IDBI from the responsibility of Operating Agency.(f) the next hearing in the case would be held on 8.12.1008.1.5. In the hearing held on 8.12.2008, the Bench issued the following directions:-(a)the company and the Department of Fertilizers to arrange gas linkages,obtain approval of the competent authority in the Government for revival of5

M.A. NO. 553/BC/2011CASE NO. 516/92M/S. HINDUSTAN FERTILIZER CORPN. LTD.the company and submit a fully tied up DRS u/s 17 (2) of the Act within threemonths to the Board.(b)the Secretaries of the Department of Fertilizers and Department of Shippingto hold meetings to sort out with mutual consent the issue of transfer of landto KPT within three months.(c)GAIL may be impleaded as party in the case in view of the gas linkagerequired for revival of the company.(d)the Department of Fertilizers to appoint a full time CMD for the company inthe interest of revival of the company.(e) the next hearing in the case would be held on 26.3.2009.1.6 In the hearing held on 26.3.2009, the Bench issued the following directions:-(a)the company and the Government of India to sort out the outstanding issuesin the company s revival process and submit a fully tied up DRS u/s 17 (2)of SICA within six months to the Board.(b)the company to make its written submissions on the outstanding issues withKPT, within 15 days.(c)the company to furnish its application giving details of the assets forpermission of BIFR for disposal of its surplus assets within 15 days.(d)M/s. Shriram EPC Ltd. is directed not to attend future hearings in the case assuch parties can attend hearing only on their selection in response toadvertisement for change of management.(e)The employees unions representing only retired employees may take up theirissues at the appropriate forum and they need not attend future hearings.6

M.A. NO. 553/BC/2011CASE NO. 516/92M/S. HINDUSTAN FERTILIZER CORPN. LTD.(f)Appointment of Shri Deepak Singhal, Joint Secretary DOF, GOI as CMD ofthe company is noted by BIFR.(g) the next hearing in the case would be held on 19.10.2009.1.7 Shri Siddharth Gautam, advocate on behalf of West Bengal Agro-IndustriesCorporation Ltd. vide letter dated 24.9.2009 filed an M.A. No. 142/BC/2009 seekingpermission of the Board u/s 22 (1) of SICA. He requested the Board to list theapplication on 19.10.2009. In the hearing held on 6.10.2009, the Bench dismissedthe M.A. No. 142/BC/2009 dated 24.9.2009 for non-prosecution.1.8. In the hearing held on 19.10.2009, the Bench issued the following directions:-(i)The company / Ministry of Chemicals and Fertilizers, Government ofIndia shall file a written submission giving details of milestones to beachieved in revival of the company specifying the time lines.(ii)Gas Authority of India Ltd. (GAIL) shall attend the next hearing andnotice in this regard should sent to Chairman and MD of GAIL.(iii)The company may file Miscellaneous Application in respect ofdirections to be issued to the Secretary Shipping regarding the issuespending before Kolkatta Port Trust after serving copy of the applicationon Secretary, Ministry of Shipping and Kolkatta Port Trust.(iv)The company may file Miscellaneous Application seeking permissionfor disposal of old/obsolete/unusable assets giving a list of such assetsalong with valuation report. The permission obtained from Ministry ofChemicals and Fertilizers also may be attached.A copy of the7

M.A. NO. 553/BC/2011CASE NO. 516/92M/S. HINDUSTAN FERTILIZER CORPN. LTD.application should be served on the Ministry of Chemicals andFertililzers also.(v) The company and Kolkatta Port Trust (KPT) should keep BIFRinformed of the status of the appeal filed by KPT in Hon ble AAIFR.(vi) West Bengal Agro Industries Corporation Ltd. may file theirimpleadement application in this case under copy to the company.(vii) The next hearing will be held on 8.3.2010.1.9. The company filed an M.A. No. 275/BC/2009 registered on 3.12.2009 seekingdirection to the Ministry of Shipping and KOPT to implement the decisions takenduring meeting dated 22.4.2009. In the hearing held on 11.12.2009, the company sM.A. No. 275/BC/2009 registered on 3.12.2009 was dismissed for non-prosecution.1.10 The company has filed an M.A. No. 98/BC/2010 registered on 18.2.2010seeking direction to the Ministry of Shipping and KOPT to implement the decisionstaken during meeting dated 22.4.2009.1.11. Shri Siddharth Gautam, Advocate on behalf of West Bengal Agro-IndustriesCorporation Ltd. vide letter dated 3.3.2010 has filed an MA No. 134//BC/2010 datedregistered on 3.3.2010 seeking permission of the Board u/s 22 (1) of SICA. Herequested the Board to list the application on 8.3.2010.1.12. In the hearing held on 8.3.2010, the Bench issued the following directions:-8

M.A. NO. 553/BC/2011CASE NO. 516/92M/S. HINDUSTAN FERTILIZER CORPN. LTD.(a)The company to submit its DRS u/s 17 (2) of the Act with the consent of theparties from whom reliefs and concessions are envisaged in the DRS, withinthree months to the Board.(b)In the hearing held on 11.12.2009, the Bench had dismissed the company sM.A. No. 275/BC/2009 seeking a direction to the Ministry of Shipping andKPT to implement the decisions taken in the meeting held on 22.4.2009, fornon-prosecution.The company vide its M.A. No. 98/BC/2009 has againmade a similar request.The Bench observed that since the Board hadalready issued order on an application, it could not revise its orders.(c)In the hearing held on 6.10.2009, the M.A. No. 142/BC/2009 filed by WestBengal Agro-Industries Corporation Ltd. (WBAICL) seeking permission of theBoard u/s 22 (1) of the Act was dismissed for non-prosecution. WBAICL filedanother M.A. No. 134/BC/2010 with a similar request. The Bench observedthat once the Board had issued order on an application, it could not revise itsorders.(d)the Ministry of Environment & Forests to expedite its decision on thecompany s application for environmental clearance within two months.(e)GAIL to furnish the time schedule for gas linkages to the company within twomonths.(g)the company provide civic amenities to its townships and submit its reportalongwith its comments on the request of the State Government and theworkers to transfer the township to the State Government within two monthsto the Board.9

M.A. NO. 553/BC/2011CASE NO. 516/92M/S. HINDUSTAN FERTILIZER CORPN. LTD.(h)the company to furnish a copy of the letter from the Government of WestBengal informing that the State Government would waive all its dues to theBoard within 15 days to the Board.(i)SBI was exempted from attending future hearings in the case.(j) the next hearing in the case would be held on 8.7.2010.The hearing was fixed on 8.7.2010 had been postponed and re-scheduled on7.9.2010.1.13. In the hearing held on 07.09.2010, the Bench issued the followingdirections:-(i)Company to submit its composite DRS u/s 17 (2) of the Act indicatingproposal of waiver of liabilities of the company by the Central/ State Govt. andreliefs and concessions envisaged in the DRS from various Central/StateGovt., Ministry of Corporate Affairs, if any, within one month to the Board.(ii)In the meantime the Ministry of Fertilizer to get the firm approval of thecompetent authority on waiver of liabilities by the Central Govt., as envisagedby the company in its DRS.(iii)Company to file written submission on the land dispute with BTPK in view ofthe AAIFR s order dated 09.08.2010 to the Board with a copy to the BTPKwithin 15 days. The BTPK to file a re-joinder to the written submission thusfiled by the company within further 15 days.10

M.A. NO. 553/BC/2011CASE NO. 516/92M/S. HINDUSTAN FERTILIZER CORPN. LTD.(iv)The next hearing in the case would be held on 02.12.2010 has beensubsequently postponed.1.14. In the hearing held on 18.08.2011, the Bench observed that the company sDRS is envisaging reliefs and concessions from Govt. of India and otherCentral/State Govt. agencies. Thus it would not be appropriate to formulate the DRSunder section 17(2) of SICA. Hence the Bench appointed SBI as an operatingagency with the consent of the company to formulate company s DRS under section17(3) of SICA. The Bench issued further the following directions:-(i)The SBI will function as Operating Agency. The Company will pay Rs. 5 lakhsto the SBI as OA s fee. Rs. 2 lakh will be paid along with the submission of DRS tothe SBI(OA) and the balance Rs.3 lakhs after circulation of DRS.(ii)The company to submit rehabilitation proposal to the SBI(OA) within twoweeks.(iii)The SBI(OA) to examine company s DRS and convene joint meeting with allconcerned within one month thereafter and submit tied up DRS to the Board in theformat prescribed by the BIFR within two weeks from the date of Joint meeting. Inorder to expedite the process and to have a smooth co-ordination between companyand the SBI(OA), the concerned Joint Secretary, Department of Fertilizer, willfunction as nodal officer. The SBI will nominate DGM or above level officer, wellexperienced in formulation of Revival Schemes of big companies, to function as OAso that the task of formulating the DRS is completed within stipulated time.(iv) The next hearing would be held on 15.11.2011.11

M.A. NO. 553/BC/2011CASE NO. 516/92M/S. HINDUSTAN FERTILIZER CORPN. LTD.1.15 Ms. Radhika Jain, Advocate on behalf of the captioned company has filed aMisc. Application No. 553/BC/2011 which is listed today for hearing. She requestedthe Board to allow the present application and direct the deletion of the names ofparties whose presence is not needed before BIFR.2. In the hearing held today (22.09.2011) in MA No. 553 of 2011 filed by theCompany, requesting for removal of 30 parties from the list of necessary parties inthe case 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 notnecessary in the matter, as they are workers unions which are not in existence asthere are no workers on role. Majority of workers have accepted VoluntarySeparation Scheme (VSS). No offices of these workers unions are present at themailing addresses mentioned in the list. Some of parties are the Banks whose dueshave already been settled and the Hon ble Bench has already exempted them fromattending the future hearings. She prayed that the MA be allowed and names of theparties not necessary be deleted and the Hon ble Bench was requested dispensewith the requirement of serving of notices to these parties.2.1 The Ld. Advocate of the DIT(R) stated that the company may be seekingreliefs and concessions from the Income Tax Departments, hence their name maynot be deleted. The Ld. Advocate of company had no objections to the request ofDIT(R).12

M.A. NO. 553/BC/2011CASE NO. 516/92M/S. HINDUSTAN FERTILIZER CORPN. LTD.2.2 The representative of SBI(OA) stated that he is agreeing to the request of thecompany. He added that the SBI s name is also mentioned at Sr. No. 2. The dues ofSBI have been settled.However, the SBI is also performing the duties of anOperating therefore the name of SBI may not be deleted. The Ld. Counsel of theCompany also accepted that the name of SBI may not be deleted.3. Having considered the facts and submissions made during the hearing theBench issued following directions:(i)Company to serve a copy of MA on all the concerned parties and submitproof of service within one week.(ii)The concerned parties to file their objections, if any to the MA within furthertwo weeks.(iii)The Bench adjourned the hearing in MA to 13.10.2011 for taking a finaldecision. No more opportunity would be given to any party, as this issueneeds to be decided prior to convening of the Joint Meeting by the SBI(OA).(Y.K.GAIHA)MEMBER(SAROJ BALA)MEMBER13