Financial Daily from THE HINDU group of publications
Tuesday, Mar 12, 2002
Financial Daily from THE HINDU group of publications Tuesday, Mar 12, 2002 |
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Corporate
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Courts/Legal Issues HC orders reopening of Fidelity Ind's Pune unit Our Legal Correspondent
CHENNAI, March 11 THE Madras High Court has ordered the reopening of Shree Products, a company manufacturing pharma closures used for life-saving drugs, now in liquidation. The unit, which is located at Pune, belongs to Fidelity Industries Ltd of Chennai. Mr Justice N.V. Balasubramanian, who, in his earlier order dated April 3, 2000, had directed winding-up of the company following petitions from some of its creditors, said in his order dated March 5, that the Pune unit (Shree Products) should be reopened as early as possible, and at the earliest by March 18, 2002. The management of the unit would not be entrusted with the board of directors of Fidelity Industries Ltd and the same would be looked after by a five-member committee with Mr Justice K.A. Swami, Bangalore, former Chief Justice of the Madras High Court, as Chairman. Elaborating on the reasons for the reopening of the Pune unit, the judge said that ``in my view, it is not necessary to kill the unit at Pune when it is stated that if restarted, the unit would generate money; it also provides employment opportunity to 270 staff.'' He also said that the unit was capable of generating income and with the existing capacity, it was possible for the unit to manufacture and sell products to various pharmaceutical companies. Moreover, the products manufactured at the unit were of life-saving nature. Following the order of winding-up by the court, the respondent company preferred an appeal against the order. One of the shareholders of the company in liquidation filed applications to suspend the order of winding-up and also to recall the order. In the affidavit it was stated that a consensus had been arrived at among the lawyers appearing for various creditors to restart the Pune unit. The judge, while referring to the action of the staff of the Pune unit in collecting money from the buyers and depositing the amounts so collected, i.e., Rs 18 lakh in State Bank of India, severely warned the staff for making such collections after the winding-up order had been passed. They had no authority do so on behalf of the company, he said. The court ordered that besides the former Chief Justice of the Madras High Court, the other members of the committee to manage the affairs of the Pune unit would be Mr Krishnasami Rajaramanan, chemical engineer of the Pune unit, Mr Ravindran, Bangalore, Mr Kumar, nominee of IDBI, and Mr P.N. Swaminathan, advocate, Chennai. The committee was directed to take the inventory of the unit and submit a report to the court within one month. The erstwhile board of directors or creditors or shareholders shall not interfere with the functioning of the committee. The court said that since it was stated that the reopening of the unit would be beneficial to the general public, the committee was directed to conduct the entire exercise of reopening of the unit as early as possible, and if possible, restart it on March 18 after completing all the formalities. Out of Rs 18 lakh lying with SBI, Rs 6 lakh was sanctioned for discharge of arrears of salary and wages payable to the staff and workers of both the Pune and Chennai units. The court said that all the creditors should prefer their claims before June 30, 2002 to the official liquidator.
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