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Before the Hon’ble
Secretary, Board for Industrial and Traders Reconstruction, No.5, Homi Modi
Street, Mumbai-400021.
APPEAL NO. _______ OF 2017
IN THE MATTER OF:-
SUJATA
SUGAR & INDUSTRIES LTD. …SICK
COMPANY
INDEX
S.No.
|
Particulars
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Page Nos.
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1)
|
Appeal Under Regulation 19 (8) (1)
of the Board for Industrial and Traders Reconstruction Regulations, 1987.
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|
2)
|
Annexure-A:
Copy of the Order no. 5(H-5)/IB/2017
dated 12.09.2017 passed by the Ld. Registrar, BIFR.
|
|
3)
|
Annexure-B:
A copy of the challan / renewal
application of the Company’s Factory License.
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4)
|
Annexure-C:
A copy of the Company’s Board
Resolution dated 25.09.2017 to file the present reference before BIFR.
|
|
5)
|
Annexure-D:
Certificate under SARFAESI Act,
2002.
|
SUJATA SUGAR &
INDUSTRIES LTD.
Through
[PRAKASH CHANDRA PAUL]
Advocate for the Appellant
Room No.105, 4th Floor,
Rajabazar Building,
No.5, Homi
Modi Street,
Mumbai-400021.
Mumbai,
Date:
Before
the Hon’ble Secretary, Board for Industrial and Traders Reconstruction, No.5,
Homi Modi Street, Mumbai-400021.
APPEAL NO. OF 2017
IN THE MATTER OF:-
SUJATA
SUGAR & INDUSTRIES LTD. … APPELLANT
Appeal Under Regulation 19 (8) (1) of the
Board for Industrial and Traders Reconstruction Regulations, 1987
To,
The Hon’ble Secretary of the Board for
Industrial & Traders Reconstruction at Mumbai.
The Humble Appeal of the
appellant above named
Most
Respectfully Showeth:-
- The
Appellant is filing the instant Appeal under Regulation 19 (8) (1) of
Board for Industrial and Traders Reconstruction Regulations, 1987
(hereinafter referred to as "BIFR Regulations") impugning the
order passed by the Learned Registrar vide its letter No. 5(H-5)/IB/2017 dated
12.09.2017, by which order the learned Registrar after pointing out
certain curable defects has been pleased to decline registration of the
reference filed by the Company.
- It
is submitted that the BIFR Regulations duly empowers the learned
Registrar, at the first instance to call upon the Informant /company to
provide further information / clarification which may be required for
registration of a reference. Whereas in the instant case the learned
Registrar without calling upon the Informant/company to remove the
foregoing defects have declined to register the same. Copy of the impugn
order/letter No. 3 (K-3)/BC/2017 dated 12.09.2017 is annexed herewith and
marked as ANNEXURE - A.
- The
following facts in brief are set out herein below leading to the filing of
the instant Appeal:
A. Magna Agro Industries Limited a company
within the meaning of the Companies Act, 1956 was incorporated in the State of West Bengal
B. SUJATA owns a factory at M.G.Road, SUJATA,
Mouchi Bazar: District: Rajkot-360021 (Gujrat). The Appellant is registered
under The Factories Act, 1948 having License No. STR-189 dated 02.05.2000,
which has been renewed from time to time. The Appellant is also registered
under The Industries (Development & Regulation) Act, 1951 vide License No. 590/DMA/IKO/2017
dated 20.05.2017.
C. As per the Provisional ABS as on
31.06.2017, the net worth of SUJATA got completely eroded by its accumulated
losses and the Board of Directors formed an opinion and consequently passed a
resolution for filing the instant reference under section 15(1) of SICA based
upon its provisional ABS as on 31.06.2017.
D. Eventually, on 15.08.2017, a reference
in Form-A under Regulation 19(1) of the BIFR Regulations, 1987 was filed by SUJATA.
It may be pertinent to mention here that the reference was based upon the ratio
laid down by the Hon’ble AAIFR in the matter of: Asim International Ltd. v/s
BIFR; reported in (2015) 3 Comp LJ 182 (AAIFR).]
E. The learned Registrar after scrutinizing
the said reference vide its order dated 12.09.2017 has been pleased to reject
the same on account of the following deficiencies which are curable in
nature:
“a) The
Reference has been filed based on audited accounts as on 30-08-2016 whereas the
Col.5 (i) & (ii) for free reserves and accumulated loss has been shown as
on 30.06.2017.
b) Further
as seen from audited accounts as on 30.08.2016 the net worth of the company has
been shown as Rs.6118.75 lakh consisting of Paid up capital of Rs.5123.23 lakh
and Free Reserves of Rs.2145.52 lakh. The accumulated losses of the company
have been shown as Rs.5143.81 Lakh. Hence the net worth erosion of the company
is less than 100%, and therefore the company is only a potentially sick
company.
c) The
operation of unit stand suspended since 2015. The factory licence is valid till
2015.
d)
Copy of the company’s Board
of Directors resolution to file the reference before BIFR is not submitted.
e)
Certificate under SARFAESI
Act,2002 not enclosed. ”
F. It is submitted that the aforesaid
order dated 12.09.2017 is in violation of principles of natural justice and is
also not in conformity with Regulation 19 (5) of BIFR Regulation 1987, which
regulation does not envisage mandatory rejection of a reference on the ground
that the reference was discovered to be incomplete and/or not in order.
G. It is most respectfully submitted that
the learned Registrar while rejecting the registration of the reference of the
Appellant Company failed to grant single opportunity to the Appellant to remove
the defects/discrepancies that were discovered during scrutiny of the same. It
is submitted that the defects, which were pointed out, were curable defects and
the same does not make the reference bad for registration. It is further
submitted that the act of the Learned Registrar is unwarranted and does not
have any sanctity in law in as much as it has resulted in a step towards
depriving a sick company from availing the remedial and ameliorative measures
of SICA.
H. In response to the deficiencies pointed
out by the learned Registrar; it is submitted as under:
6
|
Traders
Position (as per latest audited balance sheet)
|
(In Rs.
Lakhs)
|
||||||
Liabilities
|
As on
30.06.2017
|
As on
30.08.2016
|
Assets
|
As on
30.06.2017
|
As on
30.08.2016
|
|||
A
|
Paid up capital
|
5123.23
|
5123.23
|
F
|
Fixed Assets
|
10355.82
|
10380.36
|
|
B
|
Reserves
|
2145.52
|
1209.09
|
G
|
Investments
|
2.01
|
1.51
|
|
C
|
Share Application Money
|
113.36
|
113.36
|
H
|
Net Current Assets
|
-1411.31
|
-1076.85
|
|
D
|
Secured Loan
|
6214.00
|
6726.66
|
I
|
Others
|
-
|
-
|
|
E
|
Unsecured Loan
|
2511.92
|
1725.50
|
J
|
Profit & loss Account Balance
|
6294.50
|
4843.81
|
|
TOTAL
|
16108.03
|
14897.84
|
TOTAL
|
15450.02
|
14148.83
|
|||
a) The Reference has been filed based on audited accounts as
on 30-08-2016 whereas the Col.5 (i) & (ii) for free reserves and accumulated
loss has been shown as on 30.06.2017.
The Reference has been filed based
on provisional accounts as on 30.06.2017 and is not based on audited accounts
as on 30.08.2016 and so far as Col5 (i) & (ii) is concerned the same is an
typographical error and the correct position is being set out here in below :
b)
Further as seen from
audited accounts as on 30.08.2016 the net worth of the company has been shown
as Rs.6118.75 lakh consisting of Paid up capital of Rs.5123.23 lakh and Free
Reserves of Rs.2145.52 lakh. The
accumulated losses of the company have been shown as Rs.5143.81 Lakh. Hence the
net worth erosion of the company is less than 100%, and therefore the company
is only a potentially sick company.
c)
The operation of unit stand
suspended since 2015. The factory licence is valid till 2015.
It is humbly
submitted that non-submission of Factory License is a curable defect and the
same does not warrant rejection of the reference. As mentioned hereinabove, SUJATA
is registered under the Factories Act, 1948 vide Reg. No. STR-189. Under the
provisions of the Factories Act, the factory license is issued for a limited
period of time and thereafter, the license is required to be renewed every
year. Upon an application of renewal of the factory License is made, the
appropriate authority renews the same after following its due procedure.
SUJATA
has from time to time kept the Factory License renewed. The factory /
Industrial Undertaking of SUJATA is situate over …….. acres of land located at M.G.Road,
SUJATA, Mouchi Bazar, District-Rajkot, Gujrat. In the present case, SUJATA kept
its Factory license renewed from to time. Since, the factory license had
expired in the year 2015, the company
applied for its renewal on 11.09.2017 and annexed hereto and marked as Annexure-B is a copy of the challan /
renewal application.
It
is submitted that the said renewal application is presently under process and
in due course of time, the appropriate authority after following the due
process of law would issue the renewed Certificate. As soon as the renewed
Certificate is issued to the Company by the competent Authority, the same shall
be placed on record. The learned Registrar failed to appreciate that
non-submission of renewed Factory license is not a valid ground for rejection
of the reference. Had an opportunity been given to the Appellant, it would have
explained the ground realities and given an undertaking to place the Factory License
as soon as the same was issued by the Appropriate Authority.
d)
Copy of the company’s Board
of Directors resolution to file the reference before BIFR is not submitted.
It is humbly
submitted that non-submission of company’s board resolution is a curable defect
and the same does not warrant rejection of the reference. The copy of the said resolution has been left
out inadvertently and given an opportunity, the Appellant would have placed the
said resolution on record. Annexed hereto and marked as Annexure-C is a copy of the Company’s Board Resolution dated 26.06.2017
to file the present reference before BIFR.
e)
Certificate under SARFAESI
Act,2002 not enclosed.
It is humbly
submitted that non-submission of Certificate under SARFAESI Act, 2002 is a
curable defect and the same does not warrant rejection of the reference. The said
Certificate has inadvertently been left out and given an opportunity, the
Appellant would have placed the same on record.
A copy of the Certificate under SARFAESI Act, 2002 is annexed herewith
and marked as ANNEXURE –D.
4. It is apparent from the foregoing that the
deficiencies pointed out by the learned Registrar do not warrant dismissal of
the reference. In fact given an opportunity, the Company would have submitted
all the explanations and the documents which were left out inadvertently.
5. It may not be out of place to mention here
that the Learned Registrar of this Board had in a number of cases in the past
has called upon the Informant / Company to furnish the relevant documents, in
absence of which the reference could not be registered. For instance in the
case of M/s Asim Spin Limited, (BIFR
Case No. 95/2002) the Learned Registrar during scrutiny and before
registration of the said reference had thrice vide its letter(s) dated 11.10.2007,
28.02.2008 and 14.03.2009 intimated / called upon the Company to provide
information/further information in order to remove the defects/discrepancies
pointed out in the said reference. Thereafter, upon removal of the
discrepancies, the said reference was registered on 14th March, 2009
as BIFR Case No. 95/2009.
6. It is submitted the learned Registrar before
rejecting the registration of the reference should have called upon the
company/ Informant to furnish the requisite documents/ explanation in order to
remove the defects / discrepancies that were discovered during scrutiny.
7. It is submitted that the appellant company
has been discriminated from other Informant companies in as much as the Learned
registrar was well within its right to register the reference and
simultaneously call upon the Informant to cure the said defects. Regulation
19(5) of BIFR Regulation, 1987 reads as under:
"If on scrutiny, the reference is found to be in order, it shall
be registered, assigned a serial number and submitted to the Chairman or
assigning it to a Bench. Simultaneously, remaining information/documents
required, if any, shall be called for from the informant."
8. The
Appellant being aggrieved by passing of the impugned order is filing the
instant appeal. The present appeal is being filed bonafide and in the interest
of justice. Certified copy of the impugned order / letter No. No. 5(H-5)/IB/2017 dated 12.09.2017 passed by the Learned
Registrar of BIFR has been received by the Appellant and the Appeal is being
filed within the period of limitation as prescribed under regulation 19(8)(1)
of BIFR Regulations, 1987.
9. The
Appellant has not challenged the impugned order/ letter No. 5(H-5)/IB/2017 dated
12.09.2017 before any other forum except by way of the instant Appeal. The
instant Appeal is being filed bonafide and in the interest of justice.
P R A Y E R
In the premises, it is most respectfully
prayed that this Hon’ble Appellate Authority may graciously be pleased to:
(a) allow the instant Appeal and set aside
the order/direction passed by the Learned Registrar vide its letter No. 5(H-5)/IB/2017
dated 12.09.2017;
(b) Register the reference filed by the
Informant Company based on its balance sheet as on 30.06.2017 and assign a
registration number and;
(d) pass
such other further order(s) as the Learned Secretary may deem fit and proper in
the facts and circumstances of the case.
AND FOR THIS
ACT OF KINDNESS, THE APPELLANT SHALL AS IN DUTY BOUND FOREVER PRAY.
SUJATA
SUGAR & INDUSTRIES LTD.
Through
PRAKASH CHANDRA PAUL]
Advocate for the Appellant
Room No.105, 4th Floor,
Rajabazar Building,
No.5, Homi
Modi Street,
Mumbai
Date:
Mumbai-400021
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