IN THE HIGH COURT OF DELHI AT NEW DELHI CO.PET. 539 of 1998 Reserved on: July 19, 2013 Decision on: August 13, 2013 TATA IRON & STEEL CO. LTD. ..... Petitioner Through: Mr. A.N. Das, Advocate versus JHALANI TOOLS INDIA LTD. ..... Respondent Through: Mr. Chetan Sharma, Senior Advocate with Mr. Ashutosh Dubey and Mr. Abhishek Chauhan, Advocates for exmanagement. Mr. Manish Bishnoi, Advocate for the Official Liquidator. Mr. Anil Nauriya, Ms. Sumita Hazarika & Ms. Ezekial Jarain, Advocates for the workmen (Kundli Unit) in CA 89.of 2013. Mr. Umesh Yadav, Advocate for IDBI Bank. Mr. Ramesh Kumar, Advocate for Dena Bank and Consortium of Banks. Mr. Angad Kochhar, Advocate for J.P. Morgan Chase Bank. AND CO.PET. 18 of 2001 IN THE MATTER OF: JHALANI TOOLS INDIA LTD. ..... Petitioner Through: Mr. Chetan Sharma, Senior Advocate with Mr. Ashutosh Dubey and Mr. Abhishek Chauhan, Advocates for ex-management. Mr. Manish Bishnoi, Advocate for the Official Liquidator. Mr. Anil Nauriya, Ms. Sumita Hazarika & Ms. Ezekial Jarain, Advocates for the workmen (Kundli Unit). Mr. Umesh Yadav, Advocate for IDBI Bank. Mr. Ramesh Kumar, Advocate for Dena Bank & Consortium of Banks. Mr. Angad Kochhar, Advocate for J.P. Morgan Chase Bank. Dr. Manmohan Sharma, Advocate (CA No. 835 of 2013). CORAM: JUSTICE S. MURALIDHAR JUDGMENT 13 08.2013 1. By this order, the Court proposes to dispose of some of the pending applications concerning the disbursal of the funds in the account of the company in liquidation, Jhalani Tools India Ltd. (JTIL) (hereafter the company) to its workmen and secured creditors. Proceedings between 1998 an”
2. The background to the applications is that Company Petition No. 539 of 1998 was filed by Tata Iron & Steel Company Ltd. (TISCO) seeking the winding up of JTIL on the ground of the companys inability to pay its debts. Prior to the filing of the said petition, the company had gone before the Board for Industrial and Financial Reconstruction (BIFR) with Case No. 288 of 1987 for a declaration that JTIL was a sick company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). By an order dated 16th December 1998 this Court directed notice to be issued in the company petition and restrained the company from transferring, alienating or creating third party interests in its property. An order was thereafter passed on 3rd December 1999 adjourning the company petition sine die on account of the pendency of the reference before BIFR.
3. Section 22 of the SICA states that when an inquiry under Section 16 SICA is pending or any scheme referred to under Section 17 is under preparation or consideration or a sanctioned scheme is under implementation then notwithstanding anything contained in the Companies Act, 1956 (Act) or any other law or the Memorandum and Articles of Association of the industrial company or any other instrument having effect under the said Act or other law, no proceedings for the winding up of the company shall lie or be proceeded with except with the consent of the BIFR.
4. In the reference made to the BIFR by the company, a rehabilitation scheme was approved in 1987. Industrial Development Bank of India (IDBI) had, pursuant thereto, sanctioned a term loan (TL) of Rs.2.56 crores. Out of the said TL, the financial institutions released Rs. 75 lakhs on 28th March 1988. The Consortium of Banks in March 1988 also sanctioned a TL loan of Rs.79 lakhs of which Rs.43.45 lakhs was the share of Dena Bank. In all, Dena Bank sanctioned in March 1988 various funds-based and non-funds based credit facilities aggregating to Rs. 9,98,60,000 inclusive of working capital term loan (WCTL) of Rs.2,93,90,000. Further amounts were released to the company and as on 13th June 1989, the total exposure of financial institution was Rs.2.25 crores. It is stated that in 1998 the company paid all outstanding amounts owing to SICOM Ltd., Punjab & Sind Bank and Bank of America. Consequently, SICOM returned the original title deeds of various immovable properties of the company that were mortgaged with it. These title deeds were handed over by the company to Dena Bank as the lead bank of the Consortium of Banks by way of deposit of title deeds to secure the outstanding amounts of loans advanced to the company. By an order dated 17th July 2000, BIFR made a recommendation under Section 20 (1) SICA that the company be wound up. This reference was registered as Co. Pet. No. 18 of 2001 in which notice was directed to be issued on 17th January 2001. On 27th February 2002 the Court passed an order in CP No. 18 of 2001 directing that the said petition be listed along with Co. Pet. No. 539 of 1998.
5. On 1st March 2002, the Court revived Co. Pet. No. 539 of 1998 noting that the order passed by the BIFR on 17th July 2000 in Case No. 288 of 1987 had been stayed by the High Court of Bombay at Aurangabad on 27th November 2001. The interim order dated 16th December 1998 was directed to continue. On 18th March 2003, a detailed order was passed by the Company Court in Co. Pet. No. 539 of 1998 holding that the company was indebted to TISCO and was unable to pay its debts. Accordingly, the company was directed to be wound up and the Official Liquidator (OL) attached to the Court was appointed as the Provisional Liquidator (PL) of the company. The citation of the winding up order was directed to be published in the newspaper and the gazette at least 21 days prior to the date of hearing and the PL was directed to take over possession of all the assets and books of accounts of the company.
6. The company filed Co. Appeal No. 24 of 2003 challenging the said order. The Division Bench in its order dated 22nd April 2003 noted that the company and TISCO had sought to explore the possibility of a settlement. The settlement was permitted to be placed before the Company Court and till then the order directing the PL to take over the assets and books of accounts of the company was kept in abeyance. When no settlement as such was placed before the Company Court, the stay on the operation of the order dated 18th March 2003 was not continued. By order dated 5th March 2004 the PL was directed to take over charge of the assets and records of the company and file a report before the Company Court.
7. Consequently, the following units were taken over by the OL on the dates mentioned: Sl.No. Particulars Date of taking over possession 1. Unit No.1-10, 11, 12, 05.10.2004 New Industrial Area, Faridabad.
2. Unit not II-4, Industrial Faridabad.
3. Unit not III-1 & 2 New 07.10.2004 Industrial Area, New 07.10.2004 Area, Faridabad.
4. Unit not IV-Narela 08.10.2004 Road, Village Kundli, Distt. Sonepat.
5. Unit not V-E-29 & E- 13.10.2004 30 Chikalithana Industrial Area, Aurangabad.
6. Unit not VI-C-1, 10.10.2004 Additional Industrial Area, Jalna.
8. Of the aforementioned units, 5 units were sold for Rs.59 crores in compliance with an order dated 20th October 2005 passed by the Court.
9. On 1st September 2005, the Court dealt with an Application CA No. 246 of 2004 filed by the workers union seeking a clarification that the OL should have been appointed as Liquidator and not PL. Accepting this plea, the Court modified the order dated 18th March 2003 by deleting the line Accordingly, the Respondent company is directed to be wound up and substituted it by the sentence: Accordingly this petition is admitted hearing. The order dated 4th December 2003 was recalled allowing the workers union to be impleaded as a party. Proceedings afte”
10. The ex-Management of the company filed CA No. 2352 of 2010 proposing a scheme for revival of the company. By a detailed order dated 24th May 2011, the Company Court dismissed the said application. One of the reasons was that the scheme was opposed by the lead Bank i.e. Dena Bank. On the following date, i.e. 25th May 2011, the Court directed that the remaining unit of the company at Faridabad should also be sold. ITCOT Consultancy and Services Ltd. (ITCOT) was directed to file its valuation report within six weeks and upon receipt of the report, the OL was directed to convene a meeting of the secured creditors to finalise the draft sale notice.
11. The order dated 24th May 2011 was carried in appeal by the exManagement to the Division Bench by way of Co. Appeal No. 39 of 2011. By an order dated 20th July 2011 the order dated 24th May 2011 was stayed. Co. Appeal No. 40 of 2011 was filed against the order dated 25th May 2011 and that too was stayed by another separate order dated 20th July 2011. The report of the Dhingra Committee 12. By this date claims had been invited from the secured creditors and workmen. Around 4325 claims were received. These were referred for adjudication to a three-Member Committee presided over by Justice S.N. Dhingra, a former Judge of this Court (hereafter the Dhingra Committee). Justice Dhingra gave his report which scrutinised the above claims including 8 claims of secured creditors. As regards 2018 workers of the three units in Faridabad, a one-time settlement (OTS) was entered into between them and the ex-management and in terms thereof they were found entitled to Rs.14,64,88,422. The Dhingra Committee found that the total workers dues were Rs.51,95,03,803. The claims of the seven secured creditors i.e. Dena Bank, IFCI (assignee of IIBI), Kotak Mahindra Bank (assignee of American Express Bank), Syndicate Bank, Indian Overseas Bank, Canara Bank and IDBI Bank was determined at Rs.93,37,90,231. The dues of the Provident Fund (PF) authorities was Rs.27,50,38,384 as determined by the Provident Fund Commissioner (PFC) and against which no appeal has been filed. The Division Bench noted the above facts and the fact that the funds position of the company was not sufficient for working out the scheme proposed by the ex-Management. Accordingly, all the company appeals pending before it were dismissed by the Division Bench by an order dated 21st August 2012.
13. On 31st July 2012, the Company Court considered the Report No. 357 of 2011 of the OL. The second sentence in the order passed on the said date reads: The company M/s. Jhalani Tools India Ltd. was wound up on 25.5.2011. The Company Court noted that the funds position of the company as on 18th July 2012 was Rs.71,99,93,780. The Company Court took note of the findings in the report of the Dhingra Committee and that the said Committee had issued admission letters to 3125 workmen. The OL was asked to submit the status of the remaining workmen in his next report. It noted that claims of seven secured creditors to the tune of Rs.93,37,90,231 had been admitted and letters of admission had been sent to them on 13th July 2012. As regards the PF dues, the OL was directed to apportion the sum of Rs. 27,50,38,384 in favour of the PF authorities and distribute the balance amount pari passu between the secured creditors and the workmen. The Court noted: There is an urgency in the matter as secured creditors and the workmen who are present in the Court state that this petition relates to the year 1998 and none of them has received even a single paisa. It is evident from the above order that the parties before the Court were eager for the recommendations of the Dhingra Committee to be acted upon. The Courts directions were an implicit acceptance of the report of the Dhingra Committee.
14. On 25th September 2012, while considering Report No. 523 of 2012 by the OL, the Company Court reiterated that after apportioning the aforementioned sum found due to the PFC, the balance should be distributed pari passu between the secured creditors and the workmen. At this stage it was submitted by the PFC that the amount apportioned for PF dues may fall short if it was held that the PFC was entitled to be reimbursed up to the date of the final winding up, which was 25th May 2011. The Court then noted the undertaking of learned counsel appearing for both the secured creditors and workmen that in case if it is found that any amount has been paid in excess to them and the amount is actually to be paid to the Provident Fund Commissioner, their undertaking to the effect that they will return this amount to the Official Liquidator to the extent of the short fall has been recorded. In its order dated 25th September 2012, the Court noted the directions of the Division Bench issued on 21st August 2012 regarding the sale of the Faridabad Unit. ITCOT was directed to give its report within two weeks. Thereafter the draft sale notice was asked to be prepared and submitted by the OL. In its order dated 25th September 2012, the Court noted the submission by the OL that in accordance with an order passed on 31st May 2005 reiterated on 31st May 2012, the OL had been deducting 50% of the interest amount of the company and was depositing it in the Common Pool Fund (CPF) of the OL. Reliance was placed by the OL on Rules 293 and 309 of the Company (Court) Rules in support of the said action. This was countered by learned counsel for both the secured creditors and the workmen. The Court directed that the aforementioned orders passed by the Court be placed on record.
15. Report No. 790 of 2012 was submitted by the OL to the Court stating that Rs.20,01,33,555 had been released to the secured creditors i.e. Dena Bank, Kotak Mahindra Bank, Indian Overseas Bank, Syndicate Bank, IFCI, IDBI and Canara Bank. It was noted that J.P. Morgan Chase Bank had submitted its documents to the OL on 4th December 2012. It was further stated that the sum of Rs.27,50,38,384 was required to be apportioned in favour of the PFC and that the sum available for distribution in terms of Section 529 A of the Companies Act was approximately Rs.24 crores which had to be paid pro rata between the workers and the remaining secured creditor i.e. J.P. Morgan Chase Bank. Accepting this submission the Court in its order dated 11th December 2012 directed that payments be disbursed within a period of four weeks from today.
16. The ex-Management filed an application stating that it had filed an appeal against the order passed by the PFC in the Employees Provident Fund Appellate Tribunal and therefore disbursement in favour of the PFC should be stayed till such time the appeal is not decided. This plea was accepted by the order dated 4th January 2013 in Co. Appl. No. 2537 of 2012 in Co. Pet. No. 539 of 1998.
17. ITCOT submitted its report of valuation of the Faridabad Unit. Copies thereof have been made available to learned counsel for the secured creditors, the workmen and the ex-Management. Copies of ITCOTs report of valuation of the movable assets and articles of the company at its branch office in Chennai have also been made available to learned counsel for the parties.
18. Along with status Report No. 153 of 2013, the OL has enclosed the copy of the Report dated 8th January 2013 submitted by Ms. Alpana Saxena, Chartered Accountant (CA), SSAS & Associates. The pro rata distribution of balance sum to be paid to the workmen and the secured creditors was determined as 71.46:
28. 54% i.e. Rs. 9,33,79,0231 and Rs.3,73,01,5381.
19. SLP (Civil) Nos. 3204 of 2012 filed by the ex-Management against the order dated 21st August 2012 of the DB were dismissed by the Supreme Court. Thus the order dated 24th May 2011 of the Company Court dismissing the application filed by the ex-management of the company for revival of the company, and the order dated 25th May 2011 directing the sale of the sixth unit at Faridabad, have attained finality. The present applications 20. Turning now to the applications pending before this Court, CA No. 145 of 2013 is an application filed by the OL seeking permission to disburse the available funds in the account of the company between the secured creditors and the workmen on the basis of the aforementioned report dated 8th January 2013 submitted by the CA. Notice in this application was directed to be issued on 30th January 2013, noting that the workers at Kundli Unit had filed their replies to the said application. The Court by its order dated 30th January 2013 required copies of the said reply to be furnished to the other parties to file their replies before the next date.
21. CA No. 236 of 2013 is an application by the ex-Management asking the Court to consider their objections to the report of the Dhingra Committee and to appoint an independent Auditor to check the calculations made by the Dhingra Committee. Notice in the said application was directed to be issued on 13th February 2013. Replies have been filed to the said application.
22. CA Nos. 302, 303, 304 and 305 of 2013 are four applications by Dena Bank. CA No. 302 of 2013 seeks fixation of pro rata ratio for distribution of funds on pari passu basis between the secured workmen (inter se as well as between the secured workers and the workmen), CA No. 303 of 2013 seeks a direction to the OL to disclose the amounts appropriated out of the interest accrued of the fixed deposit towards the CPF of the OL and make that fund available for distribution amongst secured creditors and workmen. CA No. 304 of 2013 is for a direction to the OL for rendition of accounts and CA No. 305 of 2013 is for release of the original title deeds of immovable properties of the company which have been deposited in the Registry. Notices in these applications were directed to be issued on 20th February 2013.
23. CA No. 361 of 2013 is an application by workers of the Faridabad Unit for condonation of delay to file claims with the OL. CA No. 362 of 2013 is an application by the Faridabad Unit workers for a direction to the OL to calculate their claims. CA No. 835 of 2013 is an application by one of the ex-workmen of the Faridabad unit Mr. Mahesh Chander Sharma who claims that he has submitted his claim which was admitted by the OL on 5th February 2011/10th January 2012 and that he has still not received payment. CA No. 836 of 2013 is an application by the OL praying that ITCOTs valuation report dated 11th December 2012 regarding the Faridabad Unit be opened in the Court and the OL be permitted to prepare a draft sale notice.
24. There is another application CA No. 890 of 2013 in Co. Pet. No. 18 of 2001 filed by the Dena Bank. The submission therein is that Co. Pet. No. 18 of 2001 has to take precedence over Co. Pet. No. 539 of 1998 in view of the judgment of the Supreme Court in view of NGEF Ltd. v. Chandra Developers (P) Ltd. (2005) 8 SCC 219.It is stated that since the winding up is taking place pursuant to the recommendations of the BIFR under Section 20(1) SICA, it should be deemed to have been started from the date winding up proceedings were initiated before the BIFR. It is stated that since no formal winding up orders have been passed the cut-off date has been taken as 18th March 2003. On the other hand, if the company is ordered to be wound up as per the recommendations of the BIFR, the winding up would relate back to 17th July 2000. Accordingly, it is prayed that the Court should pass an order winding up the company in terms of the recommendations dated 17th July 2000 of the BIFR in terms of Section 20(2) SICA. Decision on Dena Banks plea 25. The Court first proposes to deal with CA No. 890 of 2013 in Co. Pet. No. 18 of 2001. The narration of facts shows that the proceedings in Co. Pet. No. 539 of 1998 commenced earlier than Co. Pet. No. 18 of 2001. The controversy is as regards the cut-off date i.e. the date from which the winding up should be taken to have commenced. It is necessary at this juncture to recall that an earlier order dated 18th March 2003 directing that the company be wound up was corrected by the Company Court by a subsequent order dated 1st September 2005. The sentence in the order dated 18th March 2003 that the company is directed to be wound up was substituted by Accordingly, this petition is admitted to hearing. It was noted that since the order dated 18th March 2003 had only appointed the OL as PL, it was not a final winding up order since citations were still required to be published and objections and claims were to be invited.
26. However, all of those steps now have been taken. Claims have been invited and adjudicated by the Dhingra Committee. A few remaining claims require to be adjudicated but that need not hold up the disbursement of the available funds. One feature that distinguishes the stage of provisional winding up from a final winding up, is that the former triggers the processes of inviting claims and settling of the admitted claims, whereas the latter is at the conclusion of those processes. It may be recalled that in the instant case, the revival scheme filed by the ex-Management was rejected by the order dated 24th May 2011. On the next date, 25th May 2011, the Company Court ordered that the Faridabad Unit be immediately sold and appointed ITCOT as Valuer to prepare a valuation report and submit it within six weeks. Both the orders were carried in appeal but the Division Bench dismissed both appeals on 21st August 2012. The SLPs against that order were dismissed by the Supreme Court on 19th March 2013. To repeat, the orders dated 24th and 25th May 2011 have attained finality.
27. For all practical purposes, therefore, the order dated 25th May 2011 should be taken to be the order finally winding up the company. By then the claims had been invited and were being adjudicated. The scheme for revival had been rejected. There was no prospect of revival of the company. As on 25th May 2011, all that was required to be done was to finally wind up the company. This explains why in the order dated 31st July 2012 the Court correctly noted that the company was wound up on 25th May 2011.
28. As far as the Dhingra Committeee is concerned, the date of provisional winding up of 18th March 2003 has been rightly taken to be the cut off date. Although a reference was made to the Court by the BIFR, and that was registered as a separate petition in 2001, the fact remains that the provisional winding up order was only passed in Co. Pet. No. 539 of 1998. Shifting the actual date of winding up to an earlier date i.e. 17th July 2000 will lead to needless confusion at this stage. All calculations by the Dhingra committee as well as the Chartered Accountant (CA) are on the basis of the cut off date being 18th March 2003. The future interest payments will also have to be worked out on that basis. The dues of the secured creditors have been calculated on that basis. Barring Dena Bank, the secured creditors and workmen have accepted this. Most of the workmen are yet to receive their dues.
29. In Chandra Developers (P) Ltd., no doubt the Supreme Court opined that Section 20(4) SICA would prevail over the provisions of the Act. It was further observed that the BIFR is the authority proprio vigore which continues to remain as custodian till the winding up orders are passed by the Company Court. However, in the present case, both petitions have been listed together. Dena Bank participated throughout in the steps taken pursuant to the orders in Co. Pet. No. 539 of 1998 by which 5 units of the company were sold. It raised no plea about shifting the date of winding up to an earlier date. For all practical purposes, all the parties, including Dena Bank, proceeded on the basis that the provisional winding up order was rightly passed in Co. Pet. No. 539 of 1998. The final winding up order had to logically follow. Consequently, at this stage the Court is not prepared to entertain the plea of Dena Bank that the winding up date should be shifted back to 17th July 2000. Apart from leading to needless confusion, it will not really be in the interests of justice to set the clock back at this stage.
30. For the aforementioned reasons, C.A. No. 890 of 2013 by Dena Bank is dismissed. Co. Pet. No. 18 o”
31. Since the final winding up order has already been passed in Co. Pet. No. 539 of 1998 on 25th May 2011, to which order all financial institutions are parties, and the cut off date would relate back to 18th March 2003, there is no need to keep Co. Pet. No. 18 of 2001 pending. It is accordingly disposed of. Objections of the ex-Management to the Dhingra Committee report 32. Detailed written submissions have been filed by the ex-Management. The ex-Management again seeks acceptance of its revival scheme, which has already been rejected by the Court by the order dated 24th May 2011 and which order has been affirmed by the Supreme Court by the order dated 19th March 2003. This Court cannot obviously revisit that issue.
33. The ex-Management assails the Dhingra Committee Report saying that its objections raised at the time the Committee made its recommendations were simply brushed aside. The Dhingra Committee had representation of the workers and the ex-management. It was constituted in recognition of the urgency in the matter as neither secured creditors nor workmen had received any money since 1998 whereas the funds position was Rs.71.99 crores. The Dhingra Committee has undertaken a painstaking exercise. No doubt certain objections were raised by Mr. Dubey, the representative of the exManagement on the Committee. Those objections have been reiterated by the ex-Management and are dealt with hereafter.
34. It is first submitted that there were different dates of closures of the Units. It is stated that the Aurgangabad Unit closed on 29th March 1997 when a lock-out was declared by the ex-Management as the workers resorted to an illegal strike. The challenge by the workers to the said order was negatived on 28th December 1998. As far as the Kundli unit was concerned, the management declared a lock out on 23rd March 2000 and that was never challenged. The Faridabad unit stopped working on 1st November 2002. The Jalna unit continued to run under an arrangement between the company and a buyer and was finally closed by the OL on 12th August 2004. It is submitted that since the lock outs were valid no closure compensation is payable. It is submitted that the provisions concerning strikes and lock out in Chapter V of the Industrial Disputes Act, 1947 (ID Act) do not envisage payment of compensation. It is submitted that the provisions applicable to closure cannot be made applicable to a lock out. It is further submitted that the decision of the Committee that where there is no proof then 50% claim amount should be payable to the workmen is improper and without any reasons. It is stated that even in terms of the proviso to Section 25 FFF of the ID Act, the compensation to be payable to the workmen in the event of the closure of an undertaking on account of unavoidable circumstances beyond the control of the employer cannot exceed his average pay for three months. It is accordingly submitted that the maximum compensation which could have been awarded is an average pay of three months.
35. As far as the above submissions are concerned, the ex-Management overlooks the fact that this Court is not determining either the validity of the lock out or closure or the compensation payable as a result under the ID Act. The ex-management conveniently overlooks one glaring fact that a sizeable percentage of the workers have not received a single paisa since 1998 more than 10 years now. It is also a stark reality that beyond a certain age it is next to impossible for a worker to get any form of a decent wage or employment. The workers and their families have suffered for many years. If one were to calculate even the interest payable on the three months average pay, a reasonable sum would have to be paid to each workman. The Dhingra Committee has taken a pragmatic view. Not surprisingly, in many cases workers are unable to preserve the documentation necessary to substantiate their claims. Considering the funds position of the company and the fact that the workers would at best be getting only pro rata payments and not their actual dues, the ex-Management is not justified in questioning the report of the Dhingra Committee. After the closure of the units for so many years and with there being no prospect of revival, the award of relatively meagre sums as compensation to the workmen by the Dhingra Committee does not call for interference.
36. It is next contended that the Dhingra Committee has applied different yardsticks for the workmen of different units. It is stated that the exManagement entered into settlements with the workmen of the Jalna and Aurangabad units as they did with the Faridabad unit by adopting a formula for calculating the payments involved. It is stated that the total amount of the majority of the claims of workers with the largest period of service is far less than the amount calculated by the Dhingra Committee for workmen with a far less period of service. Reliance is placed on the decisions in Vinod Kumar v. Presiding Officer, Labour Court 110 (2004) DLT 65.All India Textile Janta Union v. Dy. Labour Commissioner, Sonepat 1994 LLR 200.and ITC Ltd. Workers Welfare Association v. Management of LTC Ltd. AIR2002 SC 93.to urge that the claims of the workmen with whom OTS had not been arrived should also be decided on the same formula.
37. As far as the above submissions are concerned, the Court finds that the Dhingra Committee rightly held that workers who had filed claims on the basis of the OTS should not be permitted to make claims beyond the OTS. The Court finds no conflict or contradiction in the report of the Dhingra Committee as far as the workers not covered by the OTS were concerned. The decisions cited by the ex-Management do not contradict the above finding of the Dhingra Committe. It is possible that the amounts payable to the workers not covered by OTS may be higher than the workers covered by the OTS. That is a conscious choice made by a section of the workmen. Further, considering that none of the workmen at this stage is going to get the entire amount claimed, it cannot be said that the said determination by the Dhingra Committee is unfair or unreasonable.
38. Lastly, it is contended that the Dhingra Committee could not have ordered the payment of bonus for five years rejecting the certificate of the CA. It is submitted that the Committee also ignored the different dates of lock outs of the different unions. The Court is constrained to observe, at the cost of repetition, that where workmen have gone without payment of dues for over ten years, these objections can only be considered as technical. The amounts found admissible by the Dhingra Committee would not be sufficient to compensate the workmen for what they have lost in these ten years in terms of livelihood and employment opportunities. The admitted claims do not account for the interest on the said amounts. In these circumstances, the Court finds no merits in any of the objections raised by the ex-Management to the Dhingra Committee Report.
39. Accordingly CA No. 302 of 2013, filed by the ex-Management is hereby dismissed. Challenge by Faridabad workmen to the Dhingra Committee report 40. The summary of the objections raised by the workers union of the Faridabad Units (applicant unions) to the report of the Dhingra Committee is as under: (i) The applicant unions state that they had filed claims for 2295 workers in 2006 for a total sum of Rs.64,49,70,787. They further filed claims for interest in 2009 in the sum of Rs.114,20,44,053. It is stated that if further interest is calculated till November 2012, their total claim would be Rs. 143,32,65,286.51. (ii) However the applicant unions entered into an OTS with the exManagement since they were desperate for payment to be made at the earliest. Therefore, they agreed to accept Rs.18 crores under the OTS which was 1/8th of their actual claim. The ex-Management had agreed to pay the OTS amount in one go and at that stage the applicant unions were under the impression that the company may be revived in the near future. (iii) It is stated that the OTS was only with the ex-Management. The claims by these applicant unions before the Dhingra Committee were only for the OTS amount since they were expecting payment of their dues at the earliest. It since transpired that the workmen of the other units filed exaggerated claims which have been admitted. On the other hand, the applicant unions have had to give up their legitimate dues and settle for less. It is urged that the OTS amount should be released in one go in terms of the OTS as arrived at between the applicant unions and the ex-Management as finalised by the report of the Dhingra Committee.
41. On the other hand, the workers of Kundli unit have pointed out that when the OL commenced disbursing amount to the workmen it was not done on a pro rata basis. While payment to the Faridabad workers was sought to be made lumpsum, the payments to the workers of the other units was done pro rata thus drawing a further distinction between the workers inter se. In the reply filed by the OL on 22nd January 2013 this fact has been confirmed.
42. The above submissions have to be appreciated in the background of the facts already narrated. It is seen that the applicant unions, who constituted a large percentage of the Faridabad unit workers, consciously entered into an OTS, and agreed to accept payments less than what they had claimed. Even before the Dhingra Committee, they filed their claims on the basis of the OTS. The Dhingra Committee has completed the formidable task of examining and adjudicating over 4000 claims. It has been a time consuming exercise. To permit the applicant workers to resile from the OTS at this stage, would inevitably delay the exercise of making payments found due to the workmen indefinitely. As already noted, the workmen, barring a few, have not got any payment for over fifteen years. It is not fair to them, and even to the applicant union members, to delay the payments any further. It will hurt the workers of the Faridabad Union themselves as admittedly they too are in the urgent need of funds. The objection of the applicant union to the Dhingra Committee Report is accordingly rejected.
43. The next issue is of disbursement of funds amongst the workers. Pursuant to the orders dated 31st July and 25th September 2012, the OL started disbursing the amount to the workers of the Faridabad units. Permission was sought by the OL to disburse the amount on the basis of the calculation set out in the CAs report dated 8th January 2013. The Court has examined the report of the CA. There is merit in the contention of the workers of units other than Faridabad that there was no justification for treating the workers of the Faridabad units on a different footing. The Courts orders dated 31st July and 25th September 2012 make it absolutely clear that the entire dues of the workmen have to be disbursed. There was no occasion to treat the workers of the Faridabad units as constituting a separate category for the purposes of payment of the pro rata amounts. The fact that an OTS was arrived at with the workers of the Faridabad units did not entitle to them the payment of that entire amount as lump sum, while the other workers would get payment only pro rata. Once the workers dues have all been settled, the disbursement of all workers dues has to take place pro rata. Nevertheless, the Court realises that at this stage, to the extent that certain disbursements have already taken place, it may be harsh to require the Faridabad workers to refund such amounts. The Court therefore directs that, without requiring any of the workers of the Faridabad units to refund the amounts already disbursed to them, the disbursement that is to take place hereafter will be pro rata to all workers who will be treated at par for that purpose.
44. It is further clarified that this will be the first round of payments on the basis of the funds positions of the company as on date. As and when the Faridabad Unit is actually sold and some funds are available, a further round of payments will be ordered to be released and this again will be done pro rata till such time the entire dues as determined to be paid by the Dhingra Committee are actually disbursed.
45. As regards CA No. 145 of 2013 and CA No. 302 of 2013, it is directed that hereafter all workers will be treated as one category for the purpose of pro rata disbursement of the funds and inter se amongst the workers there will be no distinction for calculation of the pro rata funds. It is clarified that whatever amounts have been disbursed to the workmen thus far will not be asked to be refunded. This will be the first round of payment to the workmen. As and when more funds are received, another round of pro rata disbursement of payments will take place. This will, of course, be apart from further claims of workmen that may be decided by the OL.
46. CA No. 145 of 2013 and CA No. 302 of 2013 are disposed of with the above directions. CA 83.o”
47. In CA No. 835 of 2013, the OL has filed a reply stating that the claim has been scrutinised by the Dhingra Committee and has been admitted and that the amount will be disbursed along with the other workmen. The said statement is taken on record and the application is disposed of as such.
48. CA Nos. 835 of 2013 is accordingly disposed of. Draft sale notice for the Faridabad unit 49. Copies of the report submitted by ITCOT have been provided to the secured creditors. In the Report No. 437 of 2013 filed by the OL, it is stated that the meeting of the secured creditors was held on 14th June 2013 for finalising the draft sale notice. The Consortium of Banks (COB), by the letter dated 19th June 2013, were not agreeable to the ITCOT on the ground that it was on the lower side. They accordingly wanted the properties and assets at Faridabad to be re-valued. However, IFCI accepted the valuation of ITCOT stating that the present valuation may attract some buyers. IFCI is also agreeable to maintaining the earnest money at 10% of the valued price. However, in view of the objections raised by the COB, the draft sale notice could not be finalised.
50. The Dena Bank has, pursuant to the request made by the OL, furnished the photocopy of the reports dated 3rd December 2009 and 3rd November 2011 of valuation of the land and building of the Faridabad unit prepared by their valuer. The said valuation does not cover the plant and machinery. The methodology adopted is also not known as the unit was under the possession of the OL throughout, whose permission was not sought for the valuers visit, if any. The valuer of the COB appears to have taken the value at Rs.17,000 per sq. yard whereas ITCOT has gone by the circle rate and also by the market rate. In the circumstances, the OL is of the opinion that the valuation by ITCOT is more authentic.
51. Having considered the above submissions, and having examined the valuation report of the valuer engaged by the COB, the Court is inclined to concur with the view expressed by the OL that the valuation report of ITCOT is more authentic. ITCOT has been rendering assistance to the Court with its reports from time to time. The Court finds that ITCOT adopts a scientific approach. It is an independent authority and it has gone by the circle rate as well as the market rates. A large number of years have already gone by in trying to dispose of these assets. There is an urgent need to realise the best possible price and make available more funds for disbursing payments to the workmen and secured creditors.
52. In the circumstances, the valuation report of ITCOT is accepted and the objection thereto by the COB is rejected. A draft sale notice be prepared by the OL and placed before the Court on the next date by adopting 10% of the valuation by ITCOT of the Faridabad unit as reserve price. The COB may also bring in bidders who may offer the best possible price at the time of bidding. The bids will be opened in their presence in the Court and the views of the COB will be taken into consideration even at that stage.
53. The draft sale notice for disposal of the moveables at the Chennai unit of the company, with the reserve price being the valuation thereof by ITCOT, be also placed before the Court by the OL for approval on the next date.
54. CA No. 836 of 2013 is accordingly disposed of with the above directions. CA Nos. 303 and 304 o”
55. A direction is issued to the OL to place before the Court, by the next date, the complete accounts as regards the amounts deposited in the CPF from the funds of the company pursuant to the earlier directions issued by the Court. Copies thereof be served in advance to the counsel for the workmen, the ex-Management and the secured creditors.
56. The Court is of the view that augmentation of the CPF of the OL should not result in depletion of funds that should be available for disbursement to the workmen and secured creditors. Given that there is a sufficient amount in the CPF, the Court directs the OL to forthwith cease diverting any further sum from the interest accrued on the FDs created from the companys funds. It is further directed that in the event there is any shortfall in the funds available to make payment to the workmen and the secured creditors after the sale of the Faridabad unit, the OL will refund to the account of the companys fund the sum thus far taken from it for the CPF.
57. CA Nos. 303 and 304 of 2013 are accordingly disposed of. CA No. 305 o”
58. For the reasons aforementioned, the request by Dena Bank for return of the title deeds of the immovable property of the company cannot be acceded to. This application is rejected. Summary of Conclusions 59. To summarise the conclusions in this order: (i) C.A. No. 890 of 2013 by Dena Bank is dismissed and Co. Pet. No. 18 of 2001 is disposed of. (ii) The date of provisional winding up of 18th March 2003 has been rightly taken to be the cut off date. The date of final winding up is 25th May 2011. (iii) CA No. 302 of 2013, filed by the ex-Management raising objections to the report of the Dhingra Committee, is dismissed. (iv) The objections of the Faridabad workers unions to the Dhingra Committee Report are rejected. (v) CA No. 145 of 2013 and CA No. 302 of 2013 are disposed of by directing that hereafter all workers will be treated as one category for the purpose of pro rata disbursement of the funds and inter se amongst the workers there will be no distinction for calculation of the pro rata amounts. It is clarified that whatever amounts have been disbursed to the workmen thus far will not be asked to be refunded. This will be the first round of payment to the workmen. As and when more funds are received another round of pro rata disbursement of payments will take place. This will, of course, be apart from further claims of workmen that may be decided by the OL. (vi) The applicant in CA Nos. 835 of 2013 will be paid the amount found admissible along with other workmen and on the same basis. (vii) The report of ITCOT valuing the Faridabad unit is accepted. CA No 836 of 2013 is disposed of with a direction to the OL to place the draft sale notices for the Faridabad unit and the moveables in the Chennai unit with the respective reserve prices being the prices as per the valuation done by ITCOT. (viii) CA Nos. 303 and 304 of 2013 are disposed of by directing the OL to place before the court the complete accounts and to forthwith cease diverting any further sum from the interest accrued on the FDs created from the companys funds. It is further directed that in the event there is any shortfall in the funds available to make payment to the workmen and the secured creditors after the sale of the Faridabad unit, the OL will refund to the account of the companys fund the sum thus far taken from it for the CPF. (ix) The request by Dena Bank for return of the title deeds of the immovable property of the company is declined and CA No. 305 of 2013 is dismissed. Co. Petition No. 539 o”
60. The matter is released from part-heard. List before the roster bench on 23rd October 2013. S. MURALIDHAR, J AUGUST 13 2013 dn