The assets of the unit are at present valued at Rs 10-12 crore, whereas it owes around Rs 40 crore to its creditors. The Supreme Court order was passed on a special leave petition filed by Allahabad Bank, Punjab National Bank and United Bank of India in 1990 to get back their dues of around Rs 8 crore.

The official liquidator, PK Acharya, is scheduled to take possession of the mill, situated in the coal belt of Raigunj in the Burdwan district, on May 5. Bengal Paper is owned by Eastern Mineral Trading Agency of the Burdwan-based Upadhyays, a leading coal trader. They purchased the mill as a going concern in 1989 from Bangur Brothers Ltd for Rs 2 crore by an order of the Calcutta high court.

The Supreme Court order has criticised the Calcutta high court judge for acting inhaste and not taking into consideration other proposals.

The justices have, however, allowed EMTA to appeal to the Calcutta high court for refund of the investments it had made in the unit subsequent to its purchase.

The order states: "Learned counsel for the second respondent submitted that the second respondent (EMTA) would be entitled to recover the sale price and all expenditure that it had incurred consequent upon the order of the sale. We are in no doubt that the official liquidator must refund to the second respondent the sum of Rs 2 crore. As to any other expenditure, the second respondent must apply to the high court and satisfy it, first, that it has incurred and, secondly, that, in law, the second respondent is entitled to recover it."

The chief executive of The Bengal Paper Mill (1989) Co, Bikash Mukherjee, told The Financial Express that in the present scenario EMTA was the single largest secured creditor.

"Our dues of around Rs 30 crore are legitimate, provided it is proved in the highcourt. This amount has to be cleared first, and that too not on a pro-rata basis, from the earnings of the liquidation process," he said.

Industry observers do not think that the liquidation of the unit can be completed successfully. "At present, apart from the dues of the banks, EMTA is owed around Rs 30 crore by the company and that too has to be paid off by liquidating the unit. Altogether the dues of Bengal Paper comes to around Rs 40 crore, with assets of around Rs 10-12 crore," an industry observer said.

A city-based paper mill-owner categorically said that Bengal Paper was unlikely to fetch a price of Rs 40 crore. "Going by the present recessionary conditions in the paper industry, it is most unlikely that the unit can fetch such a price," the mill-owner said.

Industry sources said that even a section of the bankers was not too happy with the Supreme Court order. "They expected that the division bench will ask the present promoters to repay their dues. Instead it has been pushed to liquidationand now the repayment will be delayed," the sources said.