STATE OF U P Vs. UPTRON EMPLOYEES UNION CMD
LAWS(SC)-2006-4-31
SUPREME COURT OF INDIA (FROM: DELHI)
Decided on April 26,2006

STATE OF UTTAR PRADESH Appellant
VERSUS
UPTRON EMPLOYEES UNION, CMD Respondents





Cited Judgements :-

GUJ STATE TEXTILE CORP. & OFFICERS & TECHN. UNION VS. GUJARAT STATE TEXTILE CORP LTD. [LAWS(GJH)-2012-9-242] [REFERRED TO]
WORKMEN BY THE SECRETARY SOUTHERN STRUCTURALS STAFF UNION VS. MANAGEMENT OF SOUTHERN STRUCTURALS LIMITED [LAWS(MAD)-2011-7-133] [REFERRED TO]
HENNA GEORGE VS. UNION OF INDIA AND ORS. [LAWS(DLH)-2015-11-223] [REFERRED TO]
M/S. HINDUSTAN CABLES LTD. & ORS. VS. TAPAN KUMAR SARKAR & ORS. [LAWS(CAL)-2016-8-28] [REFERRED TO]
ULTRATECH CEMENT LIMITED VS. STATE OF GUJARAT AND ORS [LAWS(DLH)-2017-12-231] [REFERRED TO]
STATE OF ORISSA VS. NITYANANDA SETHY [LAWS(ORI)-2012-9-12] [REFERRED TO]
AMBUJA CEMENTS LTD. VS. THE STATE OF RAJASTHAN [LAWS(RAJ)-2014-12-77] [REFERRED TO]
BIHAR STATE ARDH SARKARI ARAJPATI KARAMCHARI MAHA SANGH VS. STATE OF BIHAR [LAWS(PAT)-2017-2-62] [REFERRED TO]
D.K. CHEMICALS LTD VS. RANA MAHENDRA PAPERS LTD [LAWS(P&H)-2009-2-104] [REFERRED TO]
SITAL KUMAR BISWAS VS. STATE OF WEST BENGAL [LAWS(CAL)-2023-9-83] [REFERRED TO]


JUDGEMENT

B. P. Singh, J. - (1.)The State of Uttar Pradesh is the appellant in these appeals. Civil Appeal No. 6176/1999 has been preferred against the order of the Board of Industrial and Financial Reconstruction (hereinafter referred to as the "BIFR") dated 28-8-1998 whereby it directed the State of Uttar Pradesh to make on account payment to the workers towards their wages for the period June, 1998 onwards on humanitarian grounds. Civil Appeal Nos. 6171-6172/1999 has been preferred against the order of the High Court of Delhi whereby the writ petition preferred by the State of Uttar Pradesh against the order of BIFR dated 27-8-1997, as affirmed by the Appellate Authority vide its order dated 6-5-1998, was rejected. Civil Appeal No. 6217/1999 has been preferred against the interim order of the High Court of Judicature at Allahabad, Bench at Lucknow dated 23-12-1998 directing the State of Uttar Pradesh to pay salary to the workers of M/s. UPTRON, as directed by the BIFR till the State Government takes final decision in the matter relating to revival/rehabilitation proposal made by it.
(2.)A few facts which are relevant may be noticed at the threshold. M/s. UPTRON is a company incorporated under the Companies Act, 1956 and is a subsidiary of U.P. Electronics Corporation, a company wholly owned and controlled by the State of Uttar Pradesh. UPTRON became a sick industry since its net worth became negative and, therefore, a Reference was made under Section 15 of The Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as "SICA"). The Reference was made on 22-1-1994 and M/s. UPTRON was declared a sick industry on 19-8-1994. The Industrial Finance Corporation of India (IFCI) was appointed the Operating Agency. It appears from the record that advertisements were issued in normal course inviting proposals for take over and/or revival of the sick unit. From the order of the BIFR dated 27-8-1997 it appears that advertisement was issued pursuant to its order dated 29-1-1997 but no viable acceptable offer was received. The Company had proposed a one time settlement whereby it offered to pay off 100% of the principal amount and only 25% of the interest due. However, for whatever reasons this proposal made no progress in the absence of a confirmation by the State Government. M/s. UPTRON India Ltd. stated that it had made a fresh proposal which had been submitted to the Government and that the Government was likely to consider it on 1-9-1997. In these circumstances, the BIFR considered the matter and passed certain directions by its order of 27-8-1997. It directed the Operating Agency to make an indepth study of the proposal submitted by M/s. UPTRON to the State Govt. of Uttar Pradesh and to make its suggestions. It was directed to submit its report within 10 weeks after holding a joint meeting with the concerned parties. It also directed the Managing Director of M/s. UPTRON to discuss the matter further with the concerned banks with a view to obtain their consent as to the minimum acceptable quantum of one time settlement and quantum of sacrifices in terms of waiver of interest. M/s. UPTRON was also directed to have discussions with the Chief Secretary of the Govt. of Uttar Pradesh in regard to the quantum of funds proposed to be inducted by the Govt. of Uttar Pradesh for revival/rehabilitation of M/s. UPTRON. The last direction made by the BIFR was in the nature of a direction to the Govt. of Uttar Pradesh to make arrangements for payment of salaries/wages of the workers till the proposed package of revival/rehabilitation of M/s. UPTRON was finalised by the BIFR. This last direction for payment of salaries/wages to the workers of M/s. UPTRON was challenged by the U.P. Electronics Corporation before the Appellate authority under SICA which was dismissed. Thereafter, the State of Uttar Pradesh filed a writ petition before the High Court of Delhi which was dismissed by order dated 9-9-1998. As noticed earlier, C.A. Nos. 6171-6172/1999 have been preferred against the aforesaid order of the High Court of Delhi.
(3.)From the order of the BIFR dated 28-8-1998 it would appear that there was a proposal submitted by the State of U.P. for the revival of M/s. UPTRON. The Operating Agency was directed to examine the proposal and hold a joint meeting and submit its report by 17-7-1998. It also appears that the Operating Agency prepared a background note to be considered in the joint meeting wherein it was estimated that a sum of Rs. 171.04 crores was required for the revival of the sick industrial unit. The fund was to be provided by the Govt. of Uttar Pradesh. The joint meeting considered the proposals of the Govt. of Uttar Pradesh in the light of the background note prepared by the Operating Agency and though no final decision was taken, the financial institutions and the banks took time to consider the matter particularly by reference to the working capital loans after receiving the concrete proposal from M/s. UPTRON. Ultimately, the State Bank of India on behalf of the consortium of banks did not respond and it appears that no further development took place. The Operating Agency also found the proposal received from the State Government to be sketchy and not providing any details relating to the assumptions underlying the projections.


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