Mumbai, Feb 15: The Mumbai high court has paved the way for the production units of a liquidated company to continue its operations uninterrupted. The judgment, seen as a precedent, will help workers keep their jobs should the company they are working for go into liquidation.In a verdict delivered recently, justice SS Nijjar of the Mumbai high court allowed the liquidator to lease out Amrut Industries' Taloja unit on rent to SR Karnik & Associates, which will fund and manage the plant. The move will ensure that the company's labour force is not unduly put to hardship by the liquidation.
Amrut Industries, founded by the late Rajesh Nishar and managed by his widow Alka Nishar, was in the news sometime ago for defaulting on payments to its creditors. The company, which processes milk and milk products, plunged into trouble when it ran up debts of about Rs 40 crore without matching assets. The company has its units at Taloja, Hyderabad, Kolhapur and Kalloor.
The company's fixed-deposit holders have been onthe warpath seeking the return of their investments. Several of them filed cases in the courts and with the police against managing director Alka Nishar and other directors.
IIT Capital, among the company's creditors, had last year filed a wind-up petition against Amrut Industries in a bid to recover its dues. The court had appointed a provisional liquidator before admitting the case in a bid to prevent the promoters from selling or removing assets from its units.
The liquidator made a list of the company's assets on January 22, but sealed the Taloja unit only nine days later.
In the meantime, the workers union of the company led by the Rashtriya Kamagar Union moved the court to protect the workers' interests and pleaded that the plant be allowed to function. At the same time, SR Karnik & Associates, too, pleaded with the court to allow it to take the plant on lease (for Rs 25,000 a month) from the liquidator and manage it with the same infrastructure and the labour.
Justice Nijjar agreed to therequests considering the livelihood of 200 workers and 22,000 farmers, from whom about 80,000 litres of milk is procured every day. The judge has ordered that the Taloja plant be re-opened on Monday, and that the three other plants start work subsequently.
The move could set a precedent for other instances of sick companies going into liquidation.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
