On April 20, Justice SP Bharucha and RC Lahoti ordered winding up of the Ranigunj-based Bengal Paper Mill in response to a special leave petition filed by a consortium of banks led by Allahabad Bank.

In 1989, the Burdwan-based Upadhyays purchased this paper making unit from the Bangur Brothers for Rs 2 crore. The Upadhyays are a leading coal trader and the mill was purchased by their trading outfit, Eastern Mineral Trading Agency (EMTA), by an order from the Calcutta High Court. Thereafter, they floated a separate company for this unit and it was called The Bengal Paper Mill (1989) Co Ltd.

Though the banks were parties to this deal, they filed the leave petition in 1990 asking for a repayment of their dues, which is around Rs 8 crore at present. Theother banks were Punjab National Bank and United Bank of India.

The official liquidator, PK Acharya, attached the unit on May 5. However, a day before the Upadhyays had a meeting with the representatives of the banks, where they decided to work out a solution and check the winding-up process. The meeting was called by the chairman of West Bengal Industrial Development Corporation Ltd, Somnath Chatterjee. Top state government officials were also present at the meeting.

The chief executive of Bengal Paper Mill, Bikash Mukherjee, told The Financial Express that discussion with the banks were going on.

"Our discussions with the representatives of the banks are going on and I can add that the developments are positive. However, we have not finalised the details yet but it will be done soon," Mukherjee said.

However, the chief executive added that it would take some time as the Supreme Court was on summer vacation. "To vacate the orders we will have to settle the matter among ourselves and then go tothe Supreme Court but, at present, it is on vacation. The court is reopening either on July 10 or 14 and thereafter we can expect some fresh development," Mukherjee added.

The management of Bengal Paper, makers of the once-renowned Tiger brand, decided not to make a formal appeal against the judgement. However, a section of the 1700-odd workers is ready to make an appeal.

The president of the Indian National Trade Union Congress (Intuc), Subrata Mukherjee, has already advised the local union to make such a move. "I have already asked them to go ahead with the appeal," he said.

In the meantime, on April 16, the Board for Industrial & Financial Reconstruction (BIFR) approved a Rs 24-crore revival package for the unit. The Upadhyays were supposed to bring in the funds and Canara Bank was scheduled to chip in with need-based working capital.

The liquidation order had put all the creditors of the Bengal Paper Mill, including its bankers, in a spot as the move is unlikely to yield enough to repay theirdues. The assets of the unit are at present valued at Rs 10-12 crore, whereas it owes around Rs 40 crore to its creditors.