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Case No. 149/1994 : M/s JK Jute Mills LtdBOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTIONCASE NO.149/94 : M/S. J.K.JUTE MILLS LTD.SUMMARY RECORD OF THE PROCEEDINGS OF THE HEARING HELD ON8.11.2010 BEFORE THE BENCH CONSISTING OF SHRI NIRMAL SINGH,CHAIRMAN, SHRI V.K.MALHOTRA, MEMBER AND SMT SAROJ BALA,MEMBERBENCH-IPresentM/s. J.K.Jute Mills Ltd.IDBI (OA)Punjab National Bank (PNB)ESICJ.K.Jute Mill Mazdoor PanchayatJK Jute Mill Mazdoor MorchaJK Jute Mill Trade UnionSanyukta MorchaName & Designation of theRepresentatives S/Shri/MsNeha Singhal, ConsultantImran Khan, AMSurinder Kumar, Sr. ManagerSaurabh Chadda, Standing CounselDaulat Ram, PresidentRaju Prasad, General SecretaryAkshat Kumar, Advocate______________1.1 After declaring M/s. J.K.Jute Mills Ltd. (JKJML) (hereafter referred toa s `th e com pa n y ) a s a s ick in du s tria l com pa n y a s per th e provis ion s ofSection 3(1)(o) of th e Sick In du s tria l Com pa n ies (Specia l Provis ion s ) Act,1985 (h erein a fter referred to a s `SICA ), a s ch em e for reh a bilita tion of th ecom pa n y wa s s a n ction ed by th e Boa rd a t th e h ea rin g h eld on 20.11.1995,u/s 18(4) read with Section 19(3) of SICA.1.2 After observing the lack of revival in a number of review hearings, theBoard in the hearing held on 1.11.2000, declared the sanctioned scheme of20.11.1995 a s failed , a n d rea ppoin ted IFCI a s th e Opera tin g Agen cy (OA)to prepa re a reh a bilita tion s ch em e a s per RBI gu idelin es wh ich cou ld beoffered to in teres ted pa rties, a n d directed th e OA to is s u e a nadvertisement for ch a n ge in th e m a n a gem en t of th e com pan y. Aga in s t th is1

Case No. 149/1994 : M/s JK Jute Mills Ltdorder of th e Boa rd, th e com pa n y filed a n a ppea l before th e Hon bleAppella te Au th ority for In du s tria l a n d Fin a n cia l Recon s tru ction (AAIFR).Th e Hon ble AAIFR vide order da ted 9.2.2001 a llowed th e a ppeal, anddirected th e com pan y/ exis tin g prom oters to s u b m it th eir u pda ted m odifieds ch em e to th e OA. Th e OA wa s directed to exa m in e th e propos a l a n ds u bm it a report to th e BIFR. Th e AAIFR a ls o a ppoin ted PNB a s OA in pla ceof IFCI a s IFCI s du es h a d been paid off.1.3 In th e n ext h ea rin g h eld on 8.5.2001, th e Boa rd directed th ecom pa n y to s ort ou t th e ou ts ta n din g is s u es with PNB, a n d s u bm it a fu llytied up scheme to the OA.1.4 In th e h ea rin g h eld on 5.8.2003, th e Boa rd n oted th a t th ere wa s s tillno fully tied up scheme for their consideration. It therefore formed a primafacie opin ion for win din g u p th e com pan y, a n d a s h ow ca u s e n otice (SCN)was issued accordingly.1.5 Objection s / s u gges tion s to th e SCN were con s idered a t th e h ea rin gheld on 30.10.2003 wh en , a t th e requ es t of th e workers u n ion , th e Boa rdgra n ted th e com pa n y 15 da ys tim e for s ortin g ou t th e is s u e of workersdu es . As th ere wa s n o progres s in fin a lizin g reh a bilita tion s ch em e th eBoa rd, vide order da ted 5.1.2004, con firm ed th eir opin ion for win din g u pthe company.1.6 Ba s ed on th e com pa n y s a ppea l, Hon ble AAIFR vide order da ted5.9.2005 s et a s ide BIFR s order da ted 5.1.2004 a n d directed th e PNB (OA)and the company to submit a draft rehabilitation scheme before the BIFR.1.7 In th e h ea rin g h eld on 28.11.2007 th e Ben ch a llowed 15 da ys to th ecom pa n y to m a ke its s u bm is s ion a s to wh y th e a rra n gem en t en tered in toby th em with M/s Ra in ey Pa rk Su ppliers Pvt Ltd (RPSPL) s h ou ld n ot becon s idered to be Ch a n ge of Ma n a gem en t (COM) th rou gh ba ck door, andwh y th a t a rra n gem en t s h ou ld n ot be n u llified. Fu rth er, a s a greed by th e2

Case No. 149/1994 : M/s JK Jute Mills Ltdcom pa n y s repres en ta tive, on e-tim e OA fees of Rs .3.00 la kh s s h ou ld bepaid to PNB(OA) together with out of pocket expenses.1.8 In th e h ea rin g h eld on 18.9.2008, th e Ben ch is s u ed th e followin gdirections :-(i) Th e OA(PNB) h a d con firm ed th a t a tra n s pa ren t procedu re wa sfollowed by RPSPL for a cqu irin g m a jority s ta ke in th e com pa n y a n dth e SEBI gu idelin es were com plied with . Th e rem a in in g creditorsalso supported reviva l u n der th e RPSPL. Th e workers repres en ta tivea ls o h a d n o objection if th e com pa n y wou ld com e forwa rd to s ettletheir du es . In th e ligh t of th e a fores a id circu m s ta n ces , th e Ben chh a d ta ken n ote of th e ta ke over of th e m a n a gem en t of th e com pan yby RPSPL.(ii) Sta te Ba n k of In dia wa s a ppoin ted a s OA in th e pla ce of PNB. Th ecom pa n y wou ld pa y a n OA fee of Rs 3.00 la kh to SBI(OA) a n d Rs1.50 lakh to PNB as agreed by the company in the hearing.(iii) Th e com pa n y wou ld en ter in to a n a greem en t with th e workers u n ionJ .K.J u te Mill Ma zdoor Pa n ch a ya t (CITU) a n d s u bm it a fu lly tied u pdra ft reh a bilita tion s ch em e (DRS) to th e OA(SBI) with in 4 weeks .Th e OA wou ld con ven e a join t m eetin g of a ll con cern ed a n d s u bm it afu lly tied u p DRS/ s ta tu s report to BIFR with in a fu rth er period of 6weeks.(iv) The next date of hearing was fixed on 17.12.2008.1.9 In th e h ea rin g h eld on 17.12.2008, th e Ben ch is s u ed th e followin gdirections :-(i) Pu n ja b Na tion a l Ba n k (PNB) wa s re-a ppoin ted a s Opera tin g Agency(OA).(ii) Th e com pa n y wou ld expla in a s to wh y it h a d n ot s u bm itted th ecom m en ts a s a s ked for vide th e Boa rd s fa x da ted 10.11.2008.(iii) Th e com pa n y & OA (PNB) wou ld s u bm it th eir com m en ts on th edetailed submissions dated 16.12.2008 filed by JKJMMP.(iv) Th e com pa n y wa s directed to file a n a ffida vit with in 30 days givingdeta ils of in ven tory/ a s s ets of th e com pa n y h eld a n d th e com pa n y3

Case No. 149/1994 : M/s JK Jute Mills Ltdwou ld a ls o give th e deta ils of a s s ets dis pos ed of, if a n y s in ceregistered in the Board.(v) Th e com pa n y wou ld n ot en cu m ber/ a lien a te/ lea s e/ s ell a n y propertywithout the specific prior approval of the Board.(vi) Th e com pa n y wou ld n ot dis -crim in a te in s ettlem en t with u n -securedcreditors.(vii) J KJ MMP wou ld s u bm it th e deta ils of m em bers h ip of th eir u n ionwithin 15 days.(viii) PNB(OA) wou ld exa m in e th e dra ft reh a bilita tion propos a l s u bm ittedby th e com pa n y in a join t m eetin g a n d s u bm it a s ta tu s reportalongwith the DRS to the Board within two months.(ix) Th e n ext da te of h ea rin g wa s fixed on 11.3.2009 (wh ich wa spostponed and later fixed on 29.6.2009).1.10 In th e h ea rin g h eld on 29.6.2009, th e Ben ch h a d is s u ed followin gdirections :-(i) Th e com pa n y would submit its com m en ts on th e deta ileds u bm is s ion s da ted 16.12.2008 filed by J KJ MMP a s wa s directed inthe last hearing.(ii) J KJ MMP would s u bm it th e deta ils of m em bers h ip of th e u n ionwithin 15 days as was directed in the last hearing.(iii) PNB (OA) would examine the affidavit and also compare the propertieslis ted in a ffida vit with th e properties listed in Form A of th e com pa n ya n d m a ke a n in s pection a t th e com pa n y s s ite a n d s u bm it a report toth e Boa rd with in 15 da ys . Th e com pan y wou ld pa y to PNB(OA) theOA fees, and actual expenses incurred by it for inspection.(iv) The company would submit its written submissions on the reasons fors ign in g th e con vers ion (lea s e) a greem en t, with ou t th e con s en t of th eBoa rd. Th e com pa n y will ca n cel th e s a id con vers ion a greem en twith in 7 da ys fa ilin g wh ich th e Boa rd will be con s tra in ed to is s u en otice u / s 33 & 34 of SICA or de-regis ter th e com pa n y from th eBoard.(v) M/s AK Products was directed to attend the next hearing of the case.(vi) The next hearing of the case would be held on 20.7.2009.4

Case No. 149/1994 : M/s JK Jute Mills LtdMoreover, th e Com pa n y h a s s ou gh t protection u n der BIFR s in ce 1994, a n dh a s over th e yea rs rem a in ed u n der protection , a n d wh ile a m ple tim e a n dopportu n ity h a s been offered, it h a s regretta bly don e little to revive its elf.Boa rd does n ot vis u a lize th e Com pa n y revivin g its elf in th e fores eea blefu tu re. As a Ch a n ge of Ma n a gem en t ordered ea rlier h a s n ot produ ced th edes ired res u lts , th e Boa rd ca m e to th e con clu s ion th a t it wa s equ ita ble a n dju s t in p u blic in teres t to win d u p th e Com pa n y. Th e Boa rd th ereforedirects that(a ) a Sh ow Ca u s e Notice be is s u ed u n der s ection s 33 a n d 34 of SICAa ga in s t th e Com pa n y for willfu lly dis obeyin g th e orders of th e Cou rtby n ot ca n celin g th e lea s e ( con vers ion ) a greem en t with M/ s RTAPL.If n o reply is received with in 3 weeks , it will be pres u m ed th a t th eCompany has no comments to offer; and(b) a Sh ow Ca u s e Notice s h a ll be issued to th e Com pa n y to s ta tereasons why it should not be wound up u/s 20 of SICA.1.12 Th e com pa n y filed a n a ppea l No. 64/ 2009 before Hon ble AAIFRa ga in s t th e Boa rd s order da ted 17.12.2008. Hon ble AAIFR vide orderda ted 17.7.2009 (a copy of order received from th e com pa n y on 22.7.2009)h a d directed th a t At th is s tage, the ld couns els for the parties s ubm ittedth at the BIFR is tak in g up th is m atter on 20.7.2009 for further ord ers .Therefore, w e d irect th at B IFR s h all not pas s an y fin al ord ers till th e appealis fin ally d is pos ed of.1.13 Th e com pa n y vide letter da ted 14.9.2009 h a d s u bm itted a copy oforder of Hon ble AAIFR da ted 26.8.2009 in Appea l No. 64/ 2009. Hon bleAAIFR directed th a t Thus cons id ering the totality of th e facts andcircu m s tances of th e cas e, w e partly allow th is appeal w ith a d irection th atthe BIFR w ill appoin t IDB I as th e Operating Agency in place of PNB an dallow th e s ale of the s urplu s as s ets of th e com pan y s itu ated at four places inBih ar and u tiliz e th e s am e as per the provis ion s of the s anctioned s chem e forreh abilitation of the appellan t com pan y . W ith th e afores aid d irections , th isappeal as w ell as M.A No. 221/ 2009 is fin ally d is pos ed of accord ingly .Parties to appear before the B IFR on 15.9.2009 for further hearings .6

Case No. 149/1994 : M/s JK Jute Mills Ltd1.14 In th e h ea rin g h eld on 15.9.2009, th e Ben ch is s u ed th e followin gdirections:-(i) In com plia n ce with th e direction s of Hon ble AAIFR, th e Ben chappoints IDBI as the Operating Agency in place of PNB.(ii) Th e repres en ta tive of IDBI (OA) will a tten d th e n ext h ea rin g of th ecom pa n y s ca s e. PNB s h a ll a ls o a tten d th e n ext h ea rin g. A copy ofthese proceedings shall be sent to IDBI(ii) The next hearing of the case will be held on 5.11.2009.However, the hearing scheduled for 5.11.2009 was postponed.1.15 J K J u te Mills Tra de Un ion Sa n yu kta Morch a filed a W.P. No.32854/ 2010 before Hon ble High Cou rt of Alla h a ba d a ga in s t th e Hon bleAAIFR s order dt. 26.8.2009 a n d Hon ble High Cou rt of Alla h a ba d videorder dated 28.5.2010 directed that until further orders of the Hon ble HighCou rt, th e opera tion of th e im pu gn ed order dt. 26.8.2009 of AAIFR shallrem a in s ta yed in s o fa r a s it directs for s a le of th e s u rplu s a s s ets of th ecompany M/s J.K. Jute Mills Ltd.1.16 Th e com pa n y filed a n a ppea l No. 186/ 2009 before Hon ble AAIFRa ga in s t th e Boa rd s order da ted 20.7.2009. Hon b le AAIFR vide order da ted16.7.2010 had issued following directions :-S ince th e parties to the appeal h ave no objection to th e s tay of th eoperation of the im pugned ord er an d are oppos ed to the s tay of furtherproceed ings before th e BIFR, it is d irected th at in m od ification of th ein terim s tay ord er d t. 18.9.2009 gran ted by th is Au th ority , th at furth erproceed ings before th e BIFR w ill con tin ue in view of th e ord er of th isAu thority d ated 26.8.2009 pas s ed in Appeal No. 64/ 2009 s ubject tos tay ord er gran ted by th e Hon ble High Court of Allah abad an d th eoperation of the im pugned ord er d t. 20.7.2009 d irectin g is s ue of S CNund er S ection s 33 and 34 of S ICA as w ell as S CN for w ind ing up ofth e com pan y und er s ection 20 of S ICA s h all rem ain s tay ed untilfurther ord ers . The BIFR s h all be free to proceed further in th ereference cas e in view of th e ord er pas s ed by th is Au thority on7

Case No. 149/1994 : M/s JK Jute Mills Ltd26.8.2009 in Appeal No. 64/ 2009. The s ale of s urplus as s ets of th ecom pan y M/ s J.K.Jute Mills Ltd ., w h ich h as been s tay ed by th e ord erd ated 28.5.2010 pas s ed by the Hon ble High Court of Allah abad inWrit C.No.32854 of 2010, s h all be s ubject to th e fin al ou tcom e of thew rit before the Hon ble High Court. S h. Dhir als o s ubm itted th at h isWrit Petition again s t th e im plead m en t of one party in the appeal is als opend ing before the Hon ble High Court of Delhi in w h ich s tay h as beengranted. Parties are d irected to s ubm it th e ou tcom e of both th e WritPetitions pend ing before the Hon ble High Court of Delhi as w ell asHon ble High Court of Allah abad on the next d ate of hearing. Lis t th isappeal for completion of pleadings on 13.9.2010.1.17 In th e h ea rin g h eld on 6.9.2010, th e Ben ch is s u ed th e followin gdirections:-(i) Pu n ja b Na tion a l Ba n k (PNB) s h a ll s u bm it copy of Deed ofAs s ign m en t to th e Boa rd with in 30 da ys .(ii) As a s s u red, th e com pa n y s h a ll s u bm it a revis ed DRS to IDBI (OA)a n d th e Boa rd with in 15 da ys , with a n u n derta kin g to brin g bridgeloa n pen din g s a le of a s s ets a s propos ed by th e com pa n y a n d a greedin the hearing today.(iii) IDBI (OA) s h a ll exa m in e th e DRS, con du ct a J oin t Meetin g (J M) of a llth e con cern ed a gen cies from wh om th e com pa n y h a s s ou gh t reliefsa n d con ces s ion s a n d s u bm it a fu lly tied u p DRS, if it em erges to th eBoard within further 6 weeks.(iv) Th e com pa n y s h a ll keep th e Boa rd in form ed of th e progres s of ca s epen din g before Hon ble AAIFR in a ppea l No. 64/ 2009 filed by th ecom pa n y a ga in s t th e Boa rd s order da ted 17.12.2008.(v) Th e com pa n y s h a ll keep th e Boa rd in form ed of th e progres s of ca s ein Writ Petition No. 32854 of 2010 filed by J K Grou p Mill Tra d eUnion Sanyukta Morcha before Hon ble High Cou rt of Alla h a ba d.(vi) The next hearing in the case will be held on 8.11.2010.2.1 In th e h ea rin g h eld to-da y (8.11.2010), th e repres en ta tive of IDBI(OA) s ta ted th a t th e com pa n y h a s s u b m itted th e DRS of th e com pa n y on8

Case No. 149/1994 : M/s JK Jute Mills Ltd27.10.2010 wh ich wa s circu la ted by IDBI to a ll th e s ta keh olders a n d join tm eetin g wa s propos ed on 15.11.2010 for its fin a liza tion . Th e Ben chen qu ired th e repres en ta tive of OA (IDBI) a s to wh eth er th e com pa n y wou ldrevive with ou t th e s a le of a s s ets wh ich wa s s ta yed by Hon ble High Cou rtand also the Bridge loan required to be brought in by the company within aperiod of 15 da ys , if n ot in fu s ed, th e repres en ta tive of OA(IDBI) s ta ted th a ta ll th es e problem s wou ld be ta ken before th e join t m eetin g a n d th eou tcom e will be u pda ted. He requ es ted th a t th e Ben ch to fix th e n exthearing after two weeks.2.2 The representative of Punjab National Bank (PNB) submitted that thecom pa n y h a s pa id th eir du es a s per th e s ettlem en t a n d PNB m a y beexem pted from a tten din g th e Boa rd s fu tu re h ea rin gs in th is ca s e.2.3 The repres en ta tive of J K J u te Mill Ma zdoor Pa n ch a ya t(J KJ MMP),Kanpur s u bm itted th a t th e com pa n y wa s to s ta rt opera tion a s per th edirection s of th e Boa rd dt 18.09.2008 bu t th e com pa n y declared lock ou tfor 23 da ys a n d on e m on th s la y-off du rin g 2009 a n d a ga in from05.04.2010 th e m a n a gem en t of th e com pa n y decla red lock-out. Hes u bm itted th a t th e m a n a gem en t of th e com pa n y is relu cta n t to s ta rt th ecom pa n y a n d th ey a re pla yin g with th e fa te of 2300 workers . He requ es tedthe Board that stern action may be initiated against the management of thecompany and the operation may be started.2.4 The repres en ta tive of J K J u te Mill Ma zdoor Morch a (J KJ MMM),Ka n pu r s u bm itted th a t J KJ MMM wa s regis tered a s a u n ion on 01.10.2010a n d wa s im plea ded a s a pa rty in th is ca s e before th e Hon ble AAIFR. Herequ es ted th a t th e com pa n y m a y n ot b e perm itted to s ell th e a s s ets of th ecom pa n y till its reviva l a n d a ls o J KJ MMM be im plea ded a s a n eces s a ryparty before the BIFR.2.5 Th e ld a dvoca te of J K J u te Mill Tra de Un ion Sa n yu kta Morch as u bm itted th a t h is clien t wa s im plea ded a s a pa rty before th e Hon ble AAIFRand requested for impleadment before the BIFR.9

Case No. 149/1994 : M/s JK Jute Mills Ltd2.6 Th e ld con s u lta n t a ppea rin g on beh a lf of th e com pa n y s u bm itted th a tth e com pa n y h a d a lrea dy s u bm itted th e DRS to th e OA (IDBI) a n d th e OAwould convene the joint meeting of the stake holders on 15.11.2010 and timemay be granted to finalise the DRS by OA (IDBI) before taking any decision.2.7 Th e ld a dvoca te of ESIC s u b m itted th a t a n a m ou n t of Rs 34.00 la kh isoutstanding for payment.2.8 After con s iderin g th e s u bm is s ion s m a de a n d m a teria l on record th eBench obs erved th a t in term s of th e Boa rd s order dt 06.09.2010, th ecom pa n y s u bm itted a revis ed DRS to IDBI (OA) with ou t a n u n derta kin g tobrin g bridge loa n pen din g s a le of a s s ets wh ich wa s a greed by th e com pa n y.Th e Ben ch a ls o n oted th a t th e OA (IDBI) would con ven e a J M of th econcerned a gen cies on 15.11.2010, to obta in a clea r view on th e DRS. Th eBench issued the following directions:-(i) OA (IDBI) to s u b m it m in u tes of th e join t m eetin g s ch edu led on15.11.2010 a lon g with its com m en ts on th e DRS s u bm itted by th ecompany for consideration by the Bench.(ii) The com pa n y to file a written s u bm is s ion in rega rd to th e brin gin g ofbridge loa n a n d a ls o h ow th e com pa n y will revive with ou t it a s th e s a leof a s s ets h a s been s ta yed by Hon ble High Court of Allahabad.(iii) The J K J u te Mill Tra de Un ion Sa n yu kta Morch a to file th eim plea dm en t a pplica tion with a copy to th e com pa n y a n d OA (IDBI)with in a p eriod of 07 da ys a n d both th e com pa n y a n d OA to file th eirreply in this regard within a further period of 7 days.(iv) The next hearing in the case will be held on 06.12.2010.(SAROJ BALA) (V.K.MALHOTRA) (NIRMAL SINGH)MEMBER MEMBER CHAIRMAN10