1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.1707 OF 2007 Kamani Employees Union ...Petitioners v/s Appellate Authority for Industrial and Financial Reconstruction and ors. ...Respondents Mr C.U. Singh, Sr. Counsel with Ms S. Abraham and Mr Prakash Mahadik for Petitioners. Mr Iqbal Chagla, Sr. Counsel with Mr K. Advani i/b M/s Dastur Dadhich and Kalambi for Respondent No.3. Mr D.A. Nalawade, AGP for Respondent Nos.8 and 9. Mr U.J. Makhija with Mr Parag Khandhar i/b M/s Mulla and Mulla and Craigie Blunt and Caroe for Respondent No.12. Mr V.R. Dhond i/b Mr M.R. Nair for Respondent No.17. Mr R.S. Pai with Mr T.R. Yadav for Respondent No.18. Mr D.D. Madon, Sr. Counsel i/b Mr Ramdasan KVR for Respondent No.23. 2 CORAM : D.K. DESHMUKH AND R.G. KETKAR JJ. DATE : 12TH AUGUST 2009. ORAL JUDGMENT (PER D.K. DESHMUKH ) :- 1] Rule, returnable forthwith by consent of the parties, heard finally. 2] By this petition, a Trade Union, challenges the order passed by the Board for Industrial and Financial Reconstruction (for short, BIFR) dated 21st March 2006 in relation to the respondent No.3 and the order passed by the Appellate Authority for Industrial and Financial Reconstruction (for short, AAIFR) dated 20th April 2007 confirming the order passed by the BIFR with some modifications. By those orders, the authorities have accepted the Rehabilitation Scheme in relation to the respondent No.3  Company. The principal objection to the Rehabilitation Scheme which has been accepted on behalf of the petitioner  Trade Union was that in 3 the Scheme, the market value of the properties of the Company at Bangalore and Bombay has been shown drastically lower and that the dues and claims of the employees were also computed at extremely lower level. It was also the objection that the promoters at whose instance the Scheme has been submitted had no experience of running any industry and that they had appeared on the scene to strip and sell the assets of the Company because they are mainly developers and dealers in real estate. According to the petitioners, even before the Scheme was sanctioned, the promoters entered into two agreements for sale of the property of the Company at Bangalore for approximately Rs.4,00,00,000/- and they also entered into an agreement to sell the same property for approximately Rs.9,00,00,000/-. It was submitted that the Union had produced before the BIFR a letter from a person claiming that he is willing to offer Rs.29,00,00,000/- for the same property. It was contended that as the promoters had entered into agreements for sale of the property of the Company even before they got the authority to 4 do so by sanction of the Scheme, the BIFR and AAIFR should not have sanctioned the scheme. It was also contended that the dues of the workers have not been property calculated by the BIFR and AAIFR. It was contended that as there was no closure of the industry in accordance with law, the liability o the Company to pay wages to the workers continues. It was also contended that though the claim has been made that after the sanction of the Scheme, the factory of the Company which was at Kurla, has been transferred to Wada and it has been reerected there and even trial production has also been started, it was submitted that the machinery has been shifted from Kurla and dumped at Wada and that there is no factory in existence, no work is going on. 3] The learned counsel appearing for respondents, on the other hand, submitted that though the promoters had entered into an agreement to sell the land at Bangalore, that land has not been sold. In fact, there was an order made by the 5 BIFR restraining the Company from selling the land to the persons with whom the agreement was entered into. It was submitted that the AAIFR has issued a clear direction that the properties of the Company are not to be sold by private agreement but by inviting the open offers and no property of the Company has so far been sold. It was submitted that the promoters have so far invested an amount in excess of Rs.20,00,00,000/- for making payments to the workers and others. It was contended that the Scheme has been consented to by the financial institutions, secured and unsecured creditors of the Company as also by the Trade Union which is supported by the majority of the workmen. It was submitted that the dues that are payable as per the Scheme to the workers who are parties to the Memorandum of Understanding have also been deposited and / or paid. The provident fund has also been paid to the workers. By relying on the affidavit filed by the I.D.B.I., which is the implementing agency, it was contended that the factory has actually been shifted to Wada by investing amount by 6 the promotes and trial production has already been started in the factory. It was contended that therefore considering the purpose for which the Scheme is to be sanctioned under the Sick Industrial Companies (Special Provisions) Act 1985, there is no room for this Court to interfere with the orders of the BIFR and AAIFR. 4] Now, if in the light of these rival submissions the record of the case is perused, it becomes clear that the promoters did enter into agreements for sale of the land of the Company at Bangalore even before the Scheme was sanctioned, but they did not go ahead with the transaction and therefore, proceedings under the Arbitration and Conciliation Act 1996 are filed by the persons with whom the agreements were entered into. In our opinion, the transaction entered into by the promoters before the sanction of the Scheme would not be relevant for our purpose because there is a clear direction issued by the AAIFR that the property of the Company is to be sold by open 7 bidding process and not by private negotiations and private agreements. Therefore, though the promoters might have entered into agreements, those agreements would not be binding on the Company and the property of the Company will have to be disposed off in accordance with the direction issued by the AAIFR. In our opinion, therefore, the transaction entered into in relation to the land of the Company at Bangalore by the promoters will not vitiate the orders of the BIFR and AAIFR sanctioning the Scheme. 5] For the same reason viz. In view of the direction issued by the AAIFR that the property of the Company is to be sold not by private treaty but by adopting the process of open bidding, the objection raised to the Scheme on behalf of the Trade Union that the property of the Company has been drastically under valued also looses significance because even if in the Scheme, the property is shown to have been under valued, then also because the process of open bidding is to be 8 adopted for selling the property, the property will fetch whatever may be its market value on the date of sale. So far as the objection of the Trade Union that the dues of the workers are shown in the Scheme at a considerable lower level, in our opinion, it is clear from the record that majority of the workers have entered into agreement through their Trade Union for receiving their payment which is mentioned in the agreement and they have already received the payment. The workers who are not parties to that agreement would not be bound by that agreement and they will be entitled to receive whatever payment may be directed to be made to them by the Industrial Court. It is thus clear that the figures which were mentioned in the Scheme as dues payable to the workers were the figures worked out on the basis of the agreement entered into with the Trade Union representing majority of the workers. It is clear from the order of the AAIFR that the AAIFR has noted that out of 485 workers, 299 workers were the members of the Trade Union which entered into Memorandum of Understanding with the Company and 9 have accepted the Scheme. These figures are given by the AAIFR on the basis of the order of the Industrial Court dated 18th August 2004. In our opinion, considering that majority of the workers have accepted the Scheme, all secured and unsecured creditors have also accepted the Scheme, only because few workers were objecting to the Scheme mainly on the ground of transactions entered into in relation to the Bangalore land of the Company, would not vitiate or will not impair the validity of the orders passed by the BIFR and AAIFR. In our opinion, the whole purpose of filing the petition, appears, to be to create hindrance in the implementation of the Scheme. So far as the claim made on behalf of the petitioners that the workers dues have not been properly worked out by the BIFR and AAIFR is concerned, in our opinion, that will not come in the way of the workers who are not parties to the Memorandum of Understanding in prosecuting their remedy under the industrial law for determination of their rights and in case the Industrial Court decides that the workers before it 10 are entitled to more payment, then the Company will be liable to make that payment in accordance with law. The rights of the workers against the Company under the industrial law will not be impaired by the sanction of the Scheme. There is an affidavit filed by the I.D.B.I. which shows that the promotes have invested their own money for making various payments. So far as that aspect of the matter is concerned, there is no dispute that payments have been made on behalf of the Company after the Scheme was sanctioned. The dispute is whether the factory has been set up at Wada or not. In our opinion, it is not necessary to go into that aspect of the matter. If the promotes are not implementing the Scheme properly, then the remedy of the petitioners would be, if so advised, to approach the authority concerned and not to challenge the sanction of the Scheme. In our opinion, when the Court examines the petition filed under Article 226 of the Constitution of India challenging the orders passed by the BIFR and AAIFR, which are the authorities constituted for the special purpose of dealing with the problems 11 faced by the sick industrial units, the approach of the Court should be to find out whether the BIFR and AAIFR in sanctioning the Scheme have contravened any law. If the Court finds that mandatory provision of law has not been contravened, the Court should be slow to interfere with the orders passed by the authorities which have been created for the specific purpose of sanctioning schemes for rehabilitation of sick industrial units. It is clear from the record that all relevant material has been seen by both the authorities and they have passed orders after due consideration of that material. So far as the reliance placed by the learned counsel appearing for petitioners on the judgment of the Supreme Court in the case of Oswal Agro Furane Ltd. And anr. v/s Oswal Agro Furane Workers Union and ors., reported in (2005) 3 SCC 224 and the judgment of the Delhi High Court in the case of Clifton Electroniks and anr. v/s Lt. Governor and ors., reported in 1996 II CLR 135 is concerned, in our opinion, it is not necessary for us to determine whether the closure is valid or invalid because that 12 question is pending consideration before the Industrial Court and is to be determined by the Industrial Court. Taking overall view of the matter therefore, in our opinion, there is no substance in the petition. Petition therefore fails and is dismissed. Rule is discharged with no order as to costs. 6] At this stage, a request is made that the interim order restraining the Company from disposing off the properties should be continued for a period of six weeks. In our opinion, it is not necessary to continue that order because admittedly, a direction is given by the AAIFR that sale of any property of the Company can take place only after due advertisement. There is no nothing before us to show that the Company or implementing agency have taken any steps so far for selling the properties. Therefore, in our opinion, making an order of injunction at this stage would be premature. The request is therefore rejected. 13 Parties to act on the copy of this order duly authenticated by the Associate / Private Secretary of this Court. Certified copy expedited. ( JUSTICE D.K. DESHMUKH ) ( JUSTICE R.G. KETKAR )