The Hindu : Appellate authority upholds BIFR order against Binny Ltd.

Online edition of India's National Newspaper
Wednesday, May 21, 2003

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Appellate authority upholds BIFR order against Binny Ltd.

By Our Legal Correspondent

NEW DELHI May 20. The Appellate Authority for Industrial and Financial Reconstruction has upheld an order passed by the Board for Industrial and Financial Reconstruction rejecting the Binny Ltd.'s proposal to sell 1,260 grounds of the company at Perambur, Chennai, for Rs. 60 crores.

In its order dated February 23, the BIFR held that the offer of Rs. 60 crores was 50 per cent of the earlier valuation done in 1999 at Rs.119 crores. It therefore rejected the proposal for sale of the lands for Rs. 60 crores and reconstituted an Asset Sale Committee for sale of the land.

Further it prescribed guidelines for sale and gave directions for issuing advertisement inviting tenders for the sale and subject to the condition that the sale would be finalised after prior approval of the BIFR.

The Binny Ltd. and another challenged the order before the Appellate Authority contending that it had entered into settlement with the charge holders of the land and also with about 95 per cent of the workers, who were agreeable for this sale of land for Rs. 60 crores and a rehabilitation scheme would be possible if this sale was allowed to be made.

Rejecting the appeal, the Authority said that in the sale of the land of a sick company, besides interest of the charge holders, the interest of other parties such as unsecured creditors, workers, statutory dues was also involved.

Therefore, the BIFR was justified in not accepting the sale of the land for Rs. 60 cores by private arrangement made by the company and in ordering sale by inviting tenders through advertisement.

The Authority also observed that the "banks and financial institutions are highly interested persons. They are guided more by self-interest than public interest. It appears that the property is charged with the banks/FIs and they want to grab the whole of the consideration proceeds''.

It noted that "the purpose and object of the Act is not to recover the dues of the banks and FIs only. These very banks/FIs in a letter dated January 17 have noticed that the reasonable value of this land would be Rs. 77 crores and within six months they are recommending for its sale for Rs. 60 crores. This attitude is not just and fair''.

"We do not find any illegality or infirmity in the BIFR's order'', the Authority said and dismissed the appeal.

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