Case No.

119/2005 M/s Singer India Ltd

BOARD FOR INDUSTRIAL & FINANCIAL RECONSTRUCTION BENCH-II / MON-III MISC APPLICATION NO. 111/2013 CASE NO. 119/2005 : M/S SINGER INDIA LTD. (SIL) SUMMARY RECORD OF PROCEEDINGS OF THE MISC APPLICATION HEARING HELD ON 28.02.2013 BEFORE BENCH-II CONSISTING OF SHRI YK GAIHA AND SHRI SC SINHA, MEMBERS Present Name and Designation of the representative(s) S/Shri/Smt/Kum 1. Alok Dhir, Adv 2. Nilesh Sharma, Adv 3. Rajeev Bajaj, MD 4. T. V. Rajan 5. Sanjay Dewani, CA Jayarajan N, Chief Mgr *****
1. Th e Boa r d , in its h ea r in g h eld on 2 8 / 0 4 / 0 8 , s a n ction ed a s ch em e u / s 1 8 (4 ), r ea d with S ection 1 9 (3 ) of th e Act , for r eh a b ilita tion of th e s ick com p a n y M/ s Singer In d ia Ltd (S IL) h a vin g con s id er ed th e cut-off-dat e (COD) as 3 1 / 0 3 / 0 7 , which, hereinafter, wou ld b e ter m ed a s SS-08. Th e Boa r d a p p oin ted S t at e Ban k o f Travan c o re (S BT) as t h e Mo n it o rin g Age n c y (MA) t o m on itor th e p r ogr es s of implementation of SS-08. SS-0 8 envisages, in te ralia , as under :(a) E xit fr om u n via b le a p p lia n ces a n d con s u m er d u r a b les b u s in es s ,

M/s Singer India Ltd

State Bank of Travancore (MA)

r ed u ction in exp en s es a n d in ter es t cos t s a n d r ed u ction in m a n p ower through de-fattening measures. (b) Pr om oter s / As s ocia tes to b r in g in Rs . 8 3 5 la k h s (Rs . 3 8 5 la k h s in FY

2007-0 8 a n d Rs . 4 5 0 la k h s in FY 2 0 0 8 -0 9 ) a s s h a r e ca p ita l t o m eet th e cos t of scheme, with lock-in period of three years from the date of allotment. (c) On e Tim e s ettlem en t (OTS ) with its s ecu r ed len d er s viz S ta te Ba n k of

Tr a va n cor e (S BT), Cor p or a tion Ba n k (CB), S ta te Ba n k of Hyd er a b a d (S BH) a n d Ba n k of Ba r od a (BOB) for t h e a m ou n t of Rs . 7 0 0 .0 0 la k h s ou t wh ich Rs . 1 4 0 la k h s a lr ea d y d ep os ited in NLA with OA (S BT) a n d b a la n ce Rs . 5 6 0 lakhs to be deposited with OA on or before 31/10/07.

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(d)

Th e con s or tiu m m em b er s of b a n k s con s is tin g of S BT, CB, S BH a n d

BOB to wa ive p a n el in ter es t, com p ou n d in ter es t, s im p le in ter es t etc. u p to the cut-off date. (e) J & K Govt. to d ecla r e th e com p a n y a s a r elief u n d er ta k in g a n d gr a n t

all benefits and concessions as per the State Govt. policies. (f) J &K Ba n k to s a n ction Rs . 5 0 0 la k h s b y wa y of ter m loa n a n d Rs . 2 5 0

lakhs by way of cash credit facilities aggregating to Rs. 750 lakhs. 2. The cost of SS-08 vis- -vis the means of finance are as under :Cost of Scheme I year 2007-08 12.00 25.00 700.00 28.00 72.50 37.50 5.28 119.28 33.51 50.00 229.91 1312.98 89.60 150.00 -119.28 35.51 163.53 79.43 647.34 111.00 150.00 ----24.48 309.48 II year 2008-09 12.00 --(Rs. in lakhs) III year Total 2009-10 24.00 48.00 --25.00 700.00 28.00 273.10 337.50 5.28 238.56 67.02 213.53 333.82 2269.80

Capital Expenditure Other start-up expenses OTS with Bank Intt. on OTS payment Payment to deposit holders Term loan repayment Payment of statutory dues Payment of workers dues Decrease in provisions Decrease in other current liabilities Additional working capital requirement Total

Means of finance I year 2007-08 385.00 750.00 177.98 1312.98 (Rs. in lakhs) II year III year 2008-09 2009-10 450.00 0.00 -197.34 647.34 -309.48 309.48 Total 835.00 750.00 684.80 2269.80

Contribution by promoters Associates TL to be arranged by promoters Internal cash accruals Total

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3.

Th e n et wor th of th e com p a n y wa s exp ected to t u r n p os itive a s on

31.03.2009. Accumulated losses would be wiped out as on 31.03.2012.

4.

AAIFR vid e or d er d a ted 0 3 .1 0 .2 0 0 8 a ga in s t th e a p p ea l No. 2 0 3 / 2 0 0 8 m a d e com p a n y (S IL) h a s s ta yed till

b y M/ s NS IC Ltd a ga in s t BIFR Ca s e No. 1 1 9 / 2 0 0 5 th e d is p os a l

of th e a p p ea l, a n d lis ted th e ca s e for h ea r in g on 1 1 .1 1 .2 0 0 8 . Th e

com p a n y (S IL) filed a n MA No. 3 4 6 / 2 0 0 8 in a p p ea l No. 2 0 3 / 2 0 0 8 h a s a s k ed for pre-p on em en t of th e d a te of h ea r in g fr om 1 1 .1 1 .2 0 0 8 , a n d th e AAIFR vid e its hear in g d a ted 1 0 .1 0 .2 0 0 8 h a s h ea r d th e MA a n d m od ified th eir ea r lier or d er d a ted 0 3 .1 0 .2 0 0 8 , d ir ected to m a in ta in th e s ta tu s qu o with r ega r d to th e r es tr u ct u r in g of th e ca p ita l of th e r es p on d en t com p a n y a s well a s wit h r ega r d to its s h a r eh old in g. AAIFR vide order dated 20.02.2009 has dismissed the appeal No. 203/2008.

5.

AAIFR vid e or d er d a ted 2 4 .1 1 .2 0 0 8 a ga in s t th e a p p ea l No. 2 2 6 / 2 0 0 8 m a d e

b y M/ s TVS S ewin g Need les Ltd a ga in s t BIFR Ca s e No. 1 1 9 / 2 0 0 5 (S IL) h a s a ccep ted th e a p p lica tion filed on 2 2 .1 0 .2 0 0 8 , is a d m itted a n d in s tr u cted th e a p p ella n t t o s er ve on a ll p a r ties a n d file a ffid a vit of s er vice. Next d a te of h ea r in g wa s s ch ed u led on 1 9 .0 1 .2 0 0 9 . On en qu ir y fr om AAIFR a b ou t th e n ext h ea r in g it is confirmed that the next date of hearing is 11.08.2009.

6.

In th e r eview h ea r in g h eld on 0 9 .0 6 .2 0 0 9 , th e Ben ch is s u ed t h e followin g

direction :i) J a m m u & Ka s h m ir Gover n m en t to com p ly with th e p r ovis ion s of th e

sanctioned scheme under para 11.2. ii) J a m m u & Ka s h m ir Gover n m en t t o con s id er a s s is tin g th e com p a n y in

r ea ch in g a n a m ica b le s ettlem en t with th e wor k er s in t er m s of th e s a n ction ed scheme in the interest of revival of the company. iii) iv) State Bank of Hyderabad is exempted from attending future hearing. The next date of hearing in the case will be held on 16.12.2009.

7.

In th e r eview h ea r in g h eld on 1 6 .1 2 .2 0 0 9 , th e Ben ch is s u ed th e followin g

directions :i) Th e com p a n y is d ir ected to p r ovid e th e cop ies of th e com m u n ica t ion s

made with State Government of J & K.

Case No.119/2005 M/s Singer India Ltd

ii)

A S h ow Ca u s e Notice (S CN) b e is s u ed t o J & K Ba n k a s to wh y Boa r d

s h ou ld n ot ta k e a ction u / s 3 3 / 3 4 of th e Act for n ot im p lem en tin g p a r a 1 1 .3 of S S -0 8 , with in a p er iod of on e m on th . J & K Ba n k to a tt en d th e n ext hearing. iii) Cor p or a tion Ba n k is exem p ted fr om a t ten d in g Boa r d s fu t u r e h ea r in g

in this case. iv) Com p a n y t o a p p r is e th e Boa r d a b ou t th e la tes t p os ition of a p p ea ls

pending in AAIFR and DHC. v) Th e Boa r d r eiter a tes p a r a 1 1 .2 of S S -0 8 a n d p a r a 1 0 .4 of th e

p r oceed in gs d t 0 9 .0 6 .0 9 a n d d ir ected Govt of J & K to con s id er a s s is tin g th e company to restart operations in J & K. vi) Next date of hearing 19.04.2010.

8.

In th e r eview h ea r in g h eld on 1 9 .0 4 .2 0 1 0 , th e Ben ch is s u ed t h e followin g

directions :(a) A S h ow Ca u s e Notice (S CN) is h er eb y is s u ed to CE O of J & K Ba n k

u / s 3 3 of S ICA, r et u r n a b le with in 1 5 d a ys , for th eir a b s en ce in tod a y s hearing and for not complying with the terms of Sanctioned Scheme (SS-08). (b) A Show Cause Notice (SCN) is issued to State bank of Travancore (MA)

for th eir a b s en ce in t od a y s h ea r in g. (c) The Bench fixed the next date of hearing on 19.8.2010.

9.

Hon b le AAIFR vid e or d er d a ted 2 8 .0 5 .2 0 1 0 h a s s et a s id e p a r a 1 1 .8 (a ), (b )

and (c) of the sanctioned scheme dated 28.04.2008 and directed BIFR to provide an op p or tu n it y of h ea r in g to th e a p p ella n ts b efor e p a s s in g a p p r op r ia te or d er s in accordance with law. 10. In th e r eview h ea r in g h eld on 1 9 .0 8 .2 0 1 0 , th e Ben ch is s u ed t h e followin g

directions :(a) S ecr eta r y, In d u s tr ies Dep a r tm en t, Govt . of J a m m u & Ka s h m ir is He is fu r th er a

d ir ected to a llow r eliefs gr a n ted in th e S a n ction ed S ch em e.

d ir ected to a tten d th e n ext h ea r in g, eith er p er s on a lly or th r ou gh

Res p on s ib le a u th or ized r ep r es en ta tive, wh o is well ver s ed with th e ca s e a n d s u b m it a d eta iled r ep or t on th e a ction t a k en b y h im , fa ilin g wh ich th e Ben ch may be constrained to take action according to Law.

Case No.119/2005 M/s Singer India Ltd

(b)

Th e S ecr eta r y, BIFR is d ir ected to file a com p la in t with th e con cer n ed

Ch ief J u d icia l Ma gis t r a te, S r in a ga r t o in itia te a ction in ter m s of In d ia n Pen a l Cod e (IPC) a ga in s t CE O of J &K Ba n k for n on -com p lia n ce of th e following d ir ection is s u ed b y th e Ben ch in th e h ea r in g h eld on 1 6 .2 .2 0 0 9 & 19.04.2010 :(i) A S h ow Ca u s e Notice (S CN) is h er eb y is s u ed to CE O of J & K

Ba n k u / s 3 3 of S ICA, r etu r n a b le with in 1 5 d a ys , for th eir a b s en ce in tod a y s h ea r in g a n d for n ot com p lyin g with th e ter m s of S a n ction ed Scheme (SS-08). (c) Th e Ben ch d ir ected th a t t h e com p a n y s h ou ld p la ce a n a d ver tis em en t

in Na tion a l Da ily News p a p er a n d Loca l Da ily News p a p er b oth in E n glis h a n d Loca l La n gu a ge, in vitin g th e wor k er s to collect t h eir d u es a s p er th e s a n ction ed s ch em e fr om th e com p a n y on a s p ecified d a te, tim e a n d ven u e. Th e Ad ver tis em en t s h ou ld b e p u b lis h ed with in 1 5 d a ys a n d th e en tir e p r oces s of a d ver tis em en t a n d p a ym en t of wor k er s d u es s h ou ld b e com p leted with in 6 week s . Th er ea fter , th e com p a n y s h ou ld fu r n is h a d et a iled lis t of

wor k er s wh os e d u es h a ve b een p a id b y th e com p a n y a n d th e lis t of th os e whose dues still remain outstanding. (d) All th e u n s ecu r ed cr ed itor s wh o wer e p r es en t in tod a y s h ea r in g a n d

a ls o a ll ot h er u n s ecu r ed cr ed itor s wh o wer e n ot p r es en t a r e d ir ected to file th eir wr it ten s u b m is s ion with th e Boa r d (in qu a d r u p lica te) with in a p er iod of 3 week s , with a cop y to th e Com p a n y a n d MA (S t a te Ba n k of Tr a va n cor e). Th er ea fter , th e Com p a n y is d ir ected t o file r ep ly, if a n y, with in a fu r ther p er iod of 3 week s wit h cop ies t o th e r es p ective p a r ties , MA a n d t o th e Boa r d (in quadruplicate). (e) The next date of hearing in this case is fixed for 09.11.2010.

11.

In th e h ea r in g h eld on 09.11.2010, t h e Ben ch is s u ed th e followin g

directions:(a) Th e com p a n y is d ir ected to file wr it ten s u b m is s ion s on a ll th e is s u es

r ela tin g to th e wor k er s a lon gwith ju d gm en ts th er eof, if a n y, wit h in a p er iod of two (0 2 ) week s , to th e Boa r d , with a cop y to th e IS MACO Wor k er s Un ion and SBT (MA). (b) Th e a gita ted wor k er s a r e d ir ected to s u b m it th eir wr it ten s u b m is s ion s

on th e is s u es p en d in g b efor e th e Hon b le High Cou r t a lon g with t h e cop ies of or d er (s ), if a n y is s u ed b y a n y a u th or ities con cer n ed . Th ey wer e a ls o d ir ected

Case No.119/2005 M/s Singer India Ltd

to s u b m it lis ts of wor k er s wh o a r e n ot willin g t o r eceive r etr en ch m en t p a ym en ts fr om t h e com p a n y, t o th e Boa r d with in a p er iod of 0 7 d a ys with a cop y t o th e Com p a n y a n d to S BT (MA). Th er ea fter , th e com p a n y is d ir ected to s u b m it its r ep ly on th e wr it ten s u b m is s ion s of th e a gita ted wor k er s to t h e Board and SBT (MA), within a further period of two weeks. (c) The Company is also directed to make payments to the workers within

a period of 30 days and file its compliance report to the Board. (d) MA (S BT) is to exa m in e th e is s u e of wor k er s and fin a n cia l

implica tion s of p a ym en t of wor k er s d u es in view of or d er s of a u th or ities con cer n ed a n d s u b m it its d eta iled r ep or t b efor e th e Boa r d with in a p er iod of two (02) weeks. (e) Th e Boa r d r es er ved its Or d er on th e is s u es of u n s ecu r ed cr ed itor s

and directed that the order will be pronounced on a later date.

12.1

Th e d a te fixed for p r on ou n cin g t h e or d er is 1 5 .0 2 .2 0 1 1 . In th e h ea r in g h eld

on 15.02.2011, th e Ben ch p r on ou n ced th e or d er a s u n d er in r es p ect of is s u es relating to the unsecured creditors. (a) Th e Com p a n y wa s d ecla r ed s ick on 1 7 .0 8 .2 0 0 6 . Th e r eviva l s ch em e

wa s s a n ction ed on 2 8 .0 4 .2 0 0 8 (S S -0 8 ). As p er Cla u s e 1 1 .8 (a ) (b ) & (c) t h e u n s ecu r ed cr ed itor s wer e to b e p a id @ 1 0 % of th e p r in cip a l ou ts ta n d in g a m ou n t. Th e u n s ecu r ed cr ed itor wen t in a p p ea l b efor e Hon b le AAIFR a n d proved to the satisfaction of AAIFR that DRS was not published in any of the n a tion a l n ews p a p er a n d th a t u n s ecu r ed cr ed itor s wer e loca ted in Lu d h ia n a and the Company was located in J&K. (b) Hon b le AAIFR vid e or d er d a ted 2 8 .0 5 .2 0 1 0 s et a s id e p a r a 1 1 .8 (a ) (b ) and d ir ected th e Boa r d for In d u s tr ia l & Fin a n cia l

& (c) of S S -0 8

Recon s tr u ction t o p r ovid e op p or tu n ity of b ein g h ea r d to th e u n s ecu r ed cr ed itor s , wh o wer e th e a p p lica n ts . Accor d in gly, u n s ecu r ed cr ed itor s , th e

company and as well as other related parties were heard.

12.2

After h ea r in g th e s u b m is s ion s m a d e, m a ter ia l on r ecor d a n d a ft er exa m in in g

th e lega l is s u es in volved , th e Ben ch a r r ived a t th e followin g con clu s ion s a n d is s u ed the following directions :(a) All th e n in e (0 9 ) u n s ecu r ed cr ed itor s wer e s u p p lyin g va r iou s p a r ts of Th ey wer e m a k in g s u p p lies b efor e th e Th e Hon b le

m a ch in es to th e s ick com p a n y.

com p a n y wa s d ecla r ed s ick a n d a fter it wa s d ecla r ed s ick .

Case No.119/2005 M/s Singer India Ltd

S u p r em e Cou r t of In d ia in th e ca s e of S ou t h er n S teel Ltd a n d Or s Vs J in d a l Vijayn a ga r S teel Ltd (2 0 0 8 ) [Cr im in a l Ap p ea l Nos 8 4 5 -8 4 6 of 2 0 0 8 ; Cita tion No.AIR2 0 0 8 S C3 1 4 3 ] a n d Hon b le High Cou r t of Ka r n a ta k a in th e ca s e of Tu n gb h a d r a In d u s tr ies Ltd Vs Cr own Oil & Da l In d u s tr ies [C.R.P No.3 3 8 0 of 1 9 9 7 ; Cita tion No.(2 0 0 2 )1 0 9 Com p Ca s 4 6 8 (k a r )] h a ve la id d own th e b a s ic p r in cip le th a t a d is t in ction h a s to b e d r a wn b etween th e tr ea tm en t of u n s ecu r ed d eb ts in r es p ect of p r e-s ick n es s s u p p lies a n d p os t s ick n es s s u p p lies a n d h a d fu r th er h eld th a t it is n ot fa ir on t h e p a r t of a n y com p a n y to p u r ch a s e good s fr om a n y p a r t y a fter b ein g d ecla r ed s ick a n d th en n ot p a y the dues claiming that the case is pending under SICA. (b) At th e s a m e tim e, it is qu ite s ettled p r in cip le, th a t th e u n s ecu r ed In

cr ed itor ca n n ot b e given a b ett er tr ea tm en t th a n th e s ecu r ed cr ed itor s .

th is ca s e th e s ecu r ed cr ed itor s wer e s ettled a t 3 0 % of th eir p r in cip a l ou ts ta n d in g d u es . Th er efor e in th is ca s e th e u n s ecu r ed cr ed itor s ca n n ot b e paid @ more than 30% of their principal outstanding dues. (c) Th u s k eep in g in view th e r eviva l p r oces s of th e com p a n y a n d th e

ob s er va tion s m a d e a b ove th e Ben ch d ir ected th a t th es e u n s ecu r ed cr ed itor s b e p a id @ 2 5 % of th eir p r in cip a l ou ts ta n d in g d u es in r es p ect of p r e-sickness supplies. However, for the post sickness supplies, these suppliers be paid (at the normal contracted rate) according to law in vogue.

13.

In the r eview h ea r in g h eld on 02.02.2012, th e Ben ch d ir ected th e com p a n y

to file cop y of Hon b le S u p r em e Cou r t of In d ia d ecis ion in S LP filed b y M/ s NS IC on th e is s u e of r ed u ction of s h a r e. progress report (in quadruplicate). 14. In the hearing h eld on 26-12-2012, th e Ben ch is s u ed t h e followin g Th e com p a n y t o con tin u e t o s u b m it qu a r ter ly

directions: (i) (ii) Th e com p a n y to con tin u e to s u b m it qu a rte rly progre s s re port. J &K Gov t to prov id e th e reliefs / con ces s ion s to th e com p a n y a s en v is age d in th e S S . 15. Th e com p a n y h a s filed a Mis c. Ap p lica tion d a ted 0 7 .0 2 .2 0 1 3 r egis ter ed in

BC S ection vid e No.1 1 1 / 2 0 1 3 / BC d a ted 1 9 .0 2 .2 0 1 3 . In th e Mis c. Ap p lica tion , th e company made the following prayer:-

Case No.119/2005 M/s Singer India Ltd

i) ii)

De-register the case of the applicant company Dir ect th a t u n im p lem en ted p r ovis ion s of t h e s ch em e s h a ll r em a in in fu ll for ce a fter d er egis tr a tion and th a t th e con cer n ed

Au th or ities / p a r ties s h a ll p r ovid e th e r eliefs & con ces s ion s a s p er S S ; and iii) Pa s s s u ch or d er or a n y oth er or d er a s m a y b e d eem ed a p p r op r ia te in view of the facts and circumstances of the case.

16.1

In t o day s h e arin g (2 8 .0 2 .2 0 1 3 ), th e a d voca te r ep r es en tin g th e com p a n y

(Ap p lica n t) s ta ted th a t t od a y s MA h a s b een filed to r equ es t th e Ben ch t o d is ch a r ge the com p a n y fr om th e p u r view of S ICA/ BIFR a s its n etwor th h a s b ecom e p os itive b y Rs .1450.10 La c, a s p er its ABS a s on 3 0 -06-2 0 1 2 . All th e s ecu r ed cr ed itor s

h a ve b een s ettled a n d p a id a n d No Du es Cer tifica tes ob ta in ed . Neces s a r y Au d itor s Cer tifica te a n d ABS h a s b een filed a lon gwit h th e MA. All th e m a t er ia l p r ovis ion s of th e S S -08 h a s b een com p lied with b y th e com p a n y. deregister/discharge the company from SICA/BIFR. He r equ es ted th e Ben ch to

16.2

Th e r ep r es en ta tive of SBT (MA) s t a ted th a t th ey h a ve n o ob jection in

discharging the company from SICA/BIFR.

16.3

Th e B en ch obs erve d th a t th e s ch e m e s a n ction ed for re v iv al of th e s ick h as been s u bs ta n tia lly im p le m e n te d , all s ecu red cred itors h a v e bee n

com p an y

s e ttled , a ll s ta tu tory d u es p a id by th e com p a n y an d th e n e tw orth of th e com p a n y h as tu rn ed pos itiv e b y Rs .1 4 50.10 lacs as on 3 0 .0 6 .2 0 1 2 . Ha vin g con s id er ed th e

s u b m is s ion s m a d e in th e h ea r in g a n d m a ter ia ls on r ecor d , th e Ben ch is s u ed th e following directions:- :i) The company M/s Singer India Ltd (Case No.119/2005) ceases to be a

sick industrial company, within the meaning of Section 3(1)(o) of the SICA as its n et wor th h a s t u r n ed p os itive. purview of SICA/BIFR. ii) All Cr ed itor s , S ta t u t or y Au th or ities a r e a t lib er ty to r ecover t h eir It is , th er efor e, discharged fr om th e

dues, if any, according to Sanctioned Scheme. iii) Th e S p ecia l Dir ector , if a n y, a p p oin ted b y th e Boa r d on com p a n y s

Boa r d of Dir ector s (BOD), wou ld s ta n d d is ch a r ged wit h im m ed ia te effect . iv) Un im p lem en ted p or tion s of t h e S a n ction ed S ch em e wou ld be

implemented by all concerned.

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vi)

Th e com p a n y wou ld com p lete n eces s a r y for m a lities with t h e con cer n ed

Regis tr a r of Com p a n ies (ROC), a s m a y b e r equ ir ed .

(SC SINHA) MEMBER

(YK GAIHA) MEMBER

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