LexNAVNIT R. KAMANI & ORS. versus R.R. KAMANI
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
NA VNIT R. KAMANI & ORS. v. R.R. KAMANI SEPTEMBER 19, 1988 A [A.P. SEN, M.P. THAKKAR AND S. NATARAJAN, JJ.] B Constitution of India, 1950: Articles 3 IC and 142-Sick Indus- trial Companies (Special Provisions) Act, 1985-Constitutional validity of-Workers' Scheme for revival of Kamani'Tubes Limited-Directions by Courts. Sick Industrial Companies (Special Provisions) Act, 1985: Sec- tions 2 and 18-Kamani Tubes Limited-Workers' Scheme for revival of company. A dispute between different branches of an industrialist family culminated in the instant special leave petition. This Court, with a view to speedily resolve the dispute between the parties, and keeping in view the interest of the workers employed in the Kamani Tubes Ltd. (KTL). in August 1984 persuaded a retired Judge of the Supreme Court to mediate between the parties. In August 1985, (KTL) .stopped produc- tion. During the discussions before the Mediator on July 2, 1986 it was decided that the different groups of the family would try to find a willing buyer for 90% shares held by them. At the same time, the Mediator permitted the workers to frame a scheme on their own for restarting the factories. In July 1987 the Kamani Employees Union (KEU) instituted a petition seeking Court's directions for the sale of KTL shares to KEV and for expeditious consideration of the scheme submitted by the work- ers for the revival of the factories. In pursuance of the directions of the Court, the scheme was scrutinised by the Board for Industrial and Financial Reconstruction (BIFR) constituted under the Sick Industrial Companies (Special Provisions) Act, 1985. The Board after consultation with various agencies including the Industrial Development Bank of India, sanctioned the Workers' Scheme on 6th September 1988, which was placed before the Court for further orders. At this stage one of the parties (Shri Ashish Kamani) submitted an alternate scheme. While stamping the Workers' Scheme with the imprimatur of the Court, it was, - 123 c D E F G H 124 SUPREME COURT REPORTS [1988) Supp. 3 S.C.R. HELD: (1) When the two Schemes are viewed in juxtaposition, A there is no manner of doubt that the scheme presented by Shri Ashish Kamani appears in a rather poor light. The entire scheme is wrapped in imponderables and Is bunt on a l10ll-i!Xistant foundation, [134G; 135B, 135C) (2) Section 18 of the Sick Industrial Compa!Jies (Special Provi- B sions) Act, 1985 inter-alia provides for the reduction of the interest or rights of the shareholders in the sick industrial company to the extent necessary for the reconstruction, revival or rehabilitation of the sick company, and further provides for the transfer of its shares at their face value or Intrinsic value to the employees of the sick company. [136F-G] (3) The provision for transferring the shares to the employees · C ·makes manifest the Intention of the legislature to encourage the emp- loyees to take over the sick units and io clothe the competent authority with power to direct the transfer of the shares to the employees In this behalf. Thus the authority and competence of the BIFR to issue a direc- tion for the transfer of the shares to the employees has the full backing D of the benevolent legislation enacted especially in .order to restructure or revive the sick undertakings. [137A-B] ( 4) The BIFR has rightly reached the conclusion that the intrinsic value of the KTL share is zero and the Board was perfectly right in directing the members of the Kamani family to transfer the shares at E the rate of Re. I per share in order to effectuate the Scheme for revival ofKTL. [137E-G] ( 5) Since the Scheme Is being framed under the statutory autho- rity and directive In order to revive the Industry in the larger public interest and inasmuch as there is a necessary declaration contained in F Section 2 of the Act which attracts the applicability of Art. 31C of the Constitution, the decision rendered by the BIFR is unassailable and unimpeachable. [1380] (6) The Scheme has been framed as per the direction and mandate of this Court in exercise of its inherent jurisdiction and its G constitutional jurisdiction under Art. 142 of the Constitution and there- fore the framing of the Scheme and the enforcement of the sanctioned scheme does not detract from or have any impact on the obligation incurred by the guarantors in regard to the debts incurred by KTL in the past .. The concerned
Excerpt shown. Read the full judgment & AI analysis in Lexace.