WORKERS OF ROHTAS INDUSTRIES LTD. versus ROHTAS INDUSTRIES LTD.

Citation: [1989] SUPP. 1 S.C.R. 615 · Decided: 24-10-1989 · Supreme Court of India · Bench: RANGANATH MISRA, P.B. SAWANT, K. RAMASWAMY · Disposal: Directions issued
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Judgment (excerpt)

WORKERS OF ROHIAS INDUSTRIES LTD. 
v. 
ROHTAS INDUSTRIES LTD. 
OCTOBER 24, 1989 
[RANGANATH MISRA, P.B. SAWANT AND 
K. RAMASWAMY, JJ.] 
Sick Industrial Companies (Special Provisions) Act. 1985: ss.4 & 
10-Rohtas Industries Ltd.-Rehabilitation of-Directions fdr. 
Four large industrial units owned by the respondent-company 
were dosed down with effect from September 9, 1984 resulting in denial 
of employment to about 10,000 employees. In the writ petition, the 
workmen sought immediate payment of salary and wages for the period 
since closure and compensation as per the amendment to the Industrial 
Disputes Act in 1984 and payment of dues under the provident fund 
account, gratuity etc. The High Court had in the meantime on May 22, 
1986 appointed a provisional liquidator under the Companies Act. 
This Court on October 29, 1987 had directed the Central Govern· 
ment to make a reference to the Board constituted in terms of s. 4 of the 
Sick Industrial Companies Act, 1985, which had come into force, to 
frame a scheme as contemplated under s.10 thereof for revival of the 
company and submit it for consideration of the Court within four 
months time. On September 7, 1988,~he Court took note of the fact that 
the State of Bihar was inclined for nationalisation of the company and 
directed a committee with the Industries Secretary to the Union of India 
as its Chairman to be immediately constituted to work out th5 modalities 
of nationalisation. On December 13, 1988 the Court considered the 
report of the committee indicating that three units, excepting paper and 
boards unit, were viable and could be revived, and adjourned the mat-
ter to give an opportunity' to the parties to explore the possibilities of 
revival of the viable units. Till August 8, 1989 no substantial progress 
had been made:Therealler the State of Bihar and the Union of India 
filed their statements separately and the memorandum prepared by the 
Attorney General was also made available to the Court. 
In this background the Court, 
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HELD: 1. Living to about 10000 families has been denied for 
over five years and apart frum national loss, the workmen have been 
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SUPREME COURT REPORTS 
[1989] Supp. I S.C.R. 
put to serious jeopardy. There is a huge amount of wages outstanding to 
them. Several financial institutions have large dues to recover from the 
company. The Trnstees of the Debenture Trust Deeds have also sought 
to intervene to maintain their claim. Apart from these, the owners of 
the company have also pleaded that they are entitled to compensation in 
the event of the properties of the company being taken away by way 
of nationalisation. A tut of assets are fast becoming useless and will soon 
become junk. If the company gets liquidated, the liabilities would turn 
out to be far in excess of the assets and notwithstanding first or 
second charge on the assets, the creditors may not appreciably bene-
fit. It is, therefore, of paramount importance that the company in 
respect of viable units should be revived and allowed to come into 
production. (6200, A-Cl 
2.1 The State of Bihar is directed to appoint an authorised officer 
to be the Rehabilitation Administrator. [6208) 
2.2 The Provisional Liquidator appointed by the High Court 
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shall hand over to the Administrator all the assets of the company 
. which he had taken over under orders of tbat Court. The assets of 
the company not ·yet taken over shall vest forthwith in the Adminis-
trator. [621A] 
2.3 The assets of the company encumbered with financial and 
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other institutions shall not be available to be proceeded against for a 
period of one year, and there shall be a moratorium for a period of one 
year in regard to proceedings taken and pending or to be taken against 
the company hereafter, and limitation shall remain suspended for the 
period. [6210-E] 
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2.4 The State Government of Bihar shall deposit within eight 
weeks an amount of Rs.15 crores with the Administrator against the 
cost of assets to be taken over. A similar sum of Rs.IS crores shall be 
advanced by the Union of India to the State from out of plan assistance. 
The sum paid by the State shall be utilised, in due course for pay-
ment of arrears of wages of the workers and for disbursement of 
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secured loans of financial institutions and other parties for which 
security of the company's assets had been furnished. The Adminis-
trator shall open an account with the lead nationalis
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