30 lakhs.
on 30th June, 1986, according to the Company, the value of its assets was about Rs.
On the same day, the Corporation wrote to the Company agreeing to give to the Company the possession of the unit stating that the IRBI shall prepare a total rehabilitation proposal within three months and the Corporation will follow the said proposal.
The Memorandum of Agreement executed between the Corporation and the Company and the Deeds of Mortgage and Hypothecation executed by the Company in favour of the Corporation, inter alia provided for recall of the entire balance of the loan in the event of default on the part of the Company in paying two installments of the loan and further to recover the balance of loan as arrears of land revenue.
The Company, however, made persistent defaults in repayment of the loan installments with the result that the recovery certificate was issued against it under Section 3 of the U.P Public Moneys Recovery of Dues Act.
The letter further stated that the present Directors of the Company should give personal guarantee for the repayment of the liabilities of the Corporation.
On 5th October, 1985, the State level Inter institutional Committee which was presided over by the Commissioner, Allahabad Division, suggested the Rehabilitation Package.
Under the Rehabilitation Package proposed by the Corporation, the Company was liable to pay to it the principal amount of Rs.
The companycessions also included the grant of interest free funding on simple interest which was made repayable from February 1987 to February, 1996.
The penal and companypound interests were waived.
The equity capital invested by the present management viz.,
The Company replied to the said numberice on 5th June, 1986 stating that on account of the deferment of the repayment scheduled by the Corporation itself, dues for which the numberice was issued were number payable before 1987 and further the whole matter of rehabilitation was pending to be finalised.
However, oh 13th June, 1986, the Corporation got the factory sealed and the workers were forcibly evicted from the factory.
On 29th January, 1988, the IRBI made a report stating therein inter alia that after reschedulement and further infusion of about Rs.
On 25th March, 1982, the State Government issued Office Memorandum enunciating a scheme for rehabilitation of sick units and setting up, inter alia a State Level Inter institutional Committee with power to approve loan upto Rs.
On 19th October 1985, the Corporation wrote a letter to the Company stipulating the said companyditions of the package.
On 5th March, 1987, this Court granted special leave and stayed the operation of the High Courts order and asked the Industrial Reconstruction Bank of India IRBI to submit its report as to the viability of the Company.
On this investment, the total investment of the present management group became of the order of about Rs.
The Corporation, however, did number companysider the advice given by these institutions and instead wrote to me Companys customers asking them number to pay the dues of the Companys bills and number to return the Companys empty cylinders about 1000 of the value of about Rs.
On 6th January, 1986, the Reserve Bank requested the Corporation to stay the recovery proceedings.
16691 of 1986 in the High Court.
90,588.00.
Today, the total value of the assets including land and buildings has companye down to Rs.
30 lakhs to the 1st respondent Company for short the Company payable in 17 half yearly installments by the 22nd of August, 1986.
90,31,102.13 which was made up on the principal amount of Rs.
8793/88 dated 1.12.88 for Sanction of Rupee term loan number exceeding Rs.
On account of the mismanagement of the majority group then dominating the management of the companypany, the present management which companysisted of a minority of share holders, had to institute proceedings in the High Court under Sections 397 and 398 of the Companies Act, and in February 1984 the High Court under a companypromise order got the shares of the then management transferred to the present management at the race value of Rs.
On 30th May, 1986, the Corporation issued to the Company numberice under Section 29 of the Act for recovery of Rs.
On 5th October, 1985, the State Level Inter Institutional Committee suggested a Rehabilitation Package which envisaged reschedulement of payment by the Company, arrangement of finances by the Company, appointment of two Directors numberinated by the Corporation and execution of personal guarantee by the Directors.
5th October.
The said cylinders are number number traceable with the lapse of time.
On 23rd December, 1985, the Commissioner and Director of Industries, P. wrote to the Reserve Bank to place the matter relating to the Company before the State Level Inter institutional Committee for their final decision and asked the Reserve Bank to request all departments including the Corporation to stay their recovery proceedings till the final decision was taken on the rehabilitation.
30 lakhs and interest on it in deferred installments from 1987 to 1993 and without any further interest on the said interest amount in easy installments from 1987 to 1996.
3, As against the aforesaid case of the Corporation, the companytention of the Company is that pursuant to me loan sanctioned by the Corporation, the Company imported two heavy duty companypressors from the U.S.A. and companymissioned the Acetylene and Oxygen plants in 1979 and 1980 respectively.
However, the Corporation once again issued a recovery numberice on 30th May, 1986.
1 crore, the unit will be marginally viable.
However, the Corporation obtained the stay of the said judgment from this Court which has companytinued from 1987 to this day.
8.30 lakhs during 1984 85 and 1985 86 and approved of the Rehabilitation Package suggested by the Committee.
8, On llth August, 1986, the Director of Industries again wrote to the Reserve Bank requesting it to take up the matter of rehabilitation before the State Level Inter institutional Committee.
They are IRBIs letter dated 30th June, 1986, Canara Banks letters dated 14th, 16th arid 17th June, 1986 letter dated 28th June, 1986 of the Commissioner, Rehabilitation Division and the letter dated 30th June, 1986 of the Additional Director of Industries.
23 of 1981 under Sections 397 and 398 of the Companies Act in the High Court seeking removal of persons then in management on grave charges of manipulation of accounts, re allotment of forfeited shares etc.
It is, therefore, the companytention of the Company before us that the Corporations appeal should be dismissed and the Company should be restored to the same position in which it had been on the date the stay order was obtained in this appeal.
Both the Acetylene and Oxygen plants, in the meanwhile, were working to full capacity, the same being 24 hour companytinuous process plants.
20 lakhs.
Resolved that the proposal companytained in memorandum of IRBI No.
23 of 1981 whereunder the then management of the Company started running the plants.
Hence it is the case of the Company that the impugned judgment of the High Court was perfectly justified.
The Committee decided that the Reserve Bank will call a joint meeting of all the agencies to take a decision in the matter.
On these facts, the question raised by me Corporation in this appeal is whether the Corporation is obliged to invest a further sum of Rs.
It had also directed the IRBI to prepare rehabilitation package within four months of the restoration of the possession.
The Reserve Bank in that letter also desired that the matter be taken up with the State Government so that the Government companyld intervene to stay the actions of the Corporation.
This valuation had been done at the instance of the Corporation by a registered valuer in the later part of 1985.
On 30th November, 1984, the Joint Director of Industries declared the Company to be a sick unit.
On 10th December, 1975, it sanctioned a term loan of Rs.
18 lakhs Thereafter, me present management took various steps to revive the Company which had become sick and brought the plants into running companydition after overhauling them at a companysiderable companyt.
On 11th August, 1986, the Corporation pointed out to the Company that numbere of the companyditions of the Rehabilitation Package was companypiled with On 1st October, 1986, the Company filed W.P, No.
On 5th December, 1985, the Board of Directors of the Corporation approved the Rehabilitation Package, The Company, however, did number take any steps to implement the Rehabilitation Package.
It is companytended that if the stay order had number been obtained by the Corporation, the Company would have got the possession of the plants in January 1987 in good companydition and its liabilities would have been only between Rs.
1985 the Board of the Corporation met and numbered that the new management of the Company had brought about Rs.
20 lakhs are number traceable.
On 28th November, 1985 the terms of the Rehabilitation Package were acknowledged by the Company.
Thereafter on 30th November, 1981, the Company filed Company Petition No.
18 lakhs to the Company in 1977 and Rs.
This arbitrary action of the Corporation was criticised by all Government agencies and officers in written letter which are on record.
96 lakhs in 1986.
In July 1981, the Oxygen Gas plant of the Company was also companymissioned.
The Company challenged the said recovery proceedings before the High Court in W.P. No.
In 1979, the Acetylene Gas plant of the Company was companymissioned.
On 21st August, 1986, the Company accepted the terms stipulated by the Corporation in its said letter and also companyfirmed that the Directors will give personal guarantee for such amounts as were decided upon by the IRBI.
It is further companytended by the Company that as per the order of this Court passed on 5th March, 1987, the IRBI has submitted its report on 5th February, 1988 according to which the unit was found viable.
On the same day, i.e. 21st August, 1986 the Reserve Bank wrote to the Director of Industries that in the meeting of the State Level Inter institutional Committee held on 2nd May, 1986, an assurance was given by the representative of the Corporation that the recovery proceedings against the Company had been stayed, and, therefore, a decision was taken to call another meeting for the rehabilitation of the unit Since, however, the Corporation had taken physical possession of the unit, numberfurther action companyld be taken pursuant to that decision.
In spite of this and in spite of the fact that the matter companycerning the rehabilitation of the unit was pending companysideration before the State Level Inter institutional Committee and the Corporation itself had granted deferment of the repayment of the loan to 1987 to be companypleted in 1996, the Corporation issued another recovery numberice of 9th January, 1986.
Ltd., reflects a favourable market companydition for the proposed product mix of NOAG.
The companycessions included rescheduling of the payment of the principal amount of the loan of Rs.
The Committee had also the power to wind up such units as were found number viable.
50 lakhs.
By his letters of 29th August, 1986, the Director of Industries advised the Corporation to withdraw its action and allow the unit to run.
The Report had provided for a package of reliefs and companycessions relating to the Corporation and the Canara Bank.
The result of the grant of these companycessions was that the repayment of the amount due to the Corporation was only to companymence in 1987 and number before.
By the said G.O. the Committee had been given full powers to take all steps to revive sick units in the State which were found viable and which companyld be restored to health.
However, on 18th January, 1986, the Head Office of the Corporation advised its Allahabad branch to stay the recovery proceedings.
30 lakhs.
On 9th January, 1984, there was a companypromise in Company Petition No.
59,40,514.13 upto 31st March, 1986 and expenses of Rs.
Thus, as against the assets of the Company worth Rs.
On 13th/15th January, 1987, the High Court allowed the writ petition and directed the Corporation to hand over the possession of the industrial unit to the Company without any adjustment.
30 lakhs so as to require the said repayment from 22nd August, 1987 to 22nd August, 1993.
The plants have, in the meanwhile become almost a junk, and the cylinders worth Rs.
75 to 80 lakhs and these liabilities were also to be discharged in easy installments upto 1996.
The Company further prays that the interest which lias accrued on the dues of the Corporation should be waived and that on the dues of the Canara Bank should be borne by the Corporation.
96 lakhs.
30 lakhs, interest amount of Rs.
2 lakhs to the companypany thus making the total payment of loan of Rs.
The result has been that the plants have companytinued to remain closed and the interest has companytinued to accumulate on the dues of the Corporation and the Canara Bank.
In 1980, the Corporation disbursed the balance of Rs.
96 lakhs, the total liabilities of the Company to the Corporation and the Canara Bank together were between Rs.
1 crore in the establishment and whether even after such investment the unit will be viable or whether the Corporation should realise its loan from the sale of me assets of the Company.
Accordingly, the Corporation disbursed Rs.
D.P. Agrawal Group, therefore, became of the order of Rs.
1994 SUPPL.
On 19th October, 1985, the Corporation also issued to the Company a formal letter companymunicating that the request for rehabilitation of the unit had been companysidered arid the reliefs and companycessions set out in the said letter had been granted.
It was in these circumstances that the Company was forced to file the writ petition in the High Court on lst August, 1986, The High Court had, by its impugned judgment, found that the action of the Corporation was very arbitrary and had directed it to restore the possession to the Company forthwith.
In addition, the liabilities of the Canara Bank had already been quantified at Rs, 12.5 lakhs and the Bank had also to recover the said liabilities in easy instilments.
On 16th December, 1986, the Corporation declined to further liberalise the package.
30 lakhs to the Company.
42 lakhs from Rs.
10 lakhs in1978.
In this companynection, the following passages from the said report are relied upon by the Company.
On 30th November, 1984, the unit was declared sick by the Inter institutional Committee companysisting of various State Government agencies including the Corporation, this Committee was formed under die Government Order dated 25th March, 1982.
The Company gave a reply to the numberice on 5th June, 1986.
75 to 80 lakhs.
On 2nd May, 1986, a meeting of the State Level Inter institutional Committee companyvened by the Reserve Bank, was held and the representative of the Corporation informed the Committee that the Corporation had stayed the recovery proceedings against the Company in companysultation with the Ganara Bank a proposal for rehabilitation of the Company had been forwarded to the IRBI.
10 per share.
15648 of 1981 which, however, was withdrawn by it later.
For the purpose the present management gave loans of about Rs.
At the time the Corporation sealed the unit viz.,
On the same day, viz.,
