MUMBAI, Aug 20: The Mumbai high court on Wednesday held the entire board of directors of Khatau Makanji Spinning & Weaving Mills guilty of contempt of court for wilfully disobeying its orders for payment of salary to the workers for the month of February, 1997.

The court sentenced Panna S Khatau, wife of assassinated businessman Sunit Khatau, and finance director Capt HL Saxena to one month's simple imprisonment and a fine of Rs 2,000 each.

Panna Khatau is the main stakeholder in the company though officially she is an executive director. Saxena is a nominee director of the State Bank of India.

February was the last working month for Khatau Mills before it closed down. The workers' dues for the month were worth Rs 2.15 crore. Of this amount, Panna Khatau had promised to bring in Rs 43 lakh, with the rest coming from the institutions as loan.

Though the court held the entire board guilty, it did not award any punishment to the rest of the directors namely, K Madhav Kumar, SS Kumar, MP Tellis, BD Basu and Kailash Prasad. Except Prasad, all others are nominees of the UTI, ICICI, IDBI and BIFR. All of them tendered apologies, which were accepted by the court.

The sentence awarded to Panna Khatau and Saxena will, however, stand suspended for a period of two weeks. If within this period the company pays the entire outstanding wages, then this sentence will be waived. However, both Khatau and Saxena will have to pay their fines of Rs 2,000 not from the company's coffers but from their own pockets.

In an hard-hitting judgement on a writ petition filed by the Rashtriya Mill Mazdoor Sangh, Justice RM Lodha said the action of Panna Khatau and Saxena was highly reprehensible and unbecoming of the status and position held by them.

The court observed that Panna Khatau had breached her own solemn word given on three occasions. She had agreed to bring in Rs 43 lakh towards the payment of outstandings. In fact, it was the precondition for the financial institutions to extending the remaining 80 per cent amount.

Khatau failed to honour her solemn word given on August 6. On August 8, she, through her counsel, gave an undertaking to the court that she would deposit a demand draft and banker's cheque to the tune of Rs 43 lakh.

Earlier, Khatau, during a meeting with chief minister Manohar Joshi and at the company's board meeting, had made a similar promise to bring in Rs 43 lakh. But instead of honouring these promises, on August 19 she filed an affidavit in which she tried to wriggle out by claiming that she was not in a position to bring in Rs 43 lakh.

The court noted that Khatau had received Rs 10 crore by way of earnest money towards sale proceeds of a vast tract of land at Borivli (a north-western Mumbai suburb). This fact was admitted by Khatau in her affidavit as well.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.