Document Fragment View

Matching Fragments

7. Section 18(2)(f): "the reduction of the interest or rights which the shareholders have in the sick Industrial company to such an extent as the Board considers necessary in the interests of the reconstruction, rovival or rehabilitation of the sick industrial company or for the maintenance of the business of the sick industrial company;"

PG NO 137 to the employees of the sick industrial companies. The provision for transferring the shares to the employees which makes manifest the intention of the legislature to encourage the employees to take over the sick units and to clothe the competent authority with power to direct the transfer of the shares to the employees in this behalf. Thus the authority and competence of the Board to issue a direction for the transfer of the shares to the employees has the full backing of the benevolent legislation' enacted especially in order to restructure or revive the sick undertakings. In the course of the discussion in the earlier part of this order we have referred to the abortive efforts made by the learned Mediator and the members of the different family groups of Kamanis for selling 90% of the shares of KTL. It however appears that no purchaser was coming forth. The aforesaid exercise however shows the willingness and preparedness of the concerned members of the Kamani group to transfer their shares on their own even without a directive. Their willingness is however irrelevant since the BIFR is clothed with the authority and competence to reduce the value of the shares from Rs.10 per share to Re.1 per share and direct the transfer of the shares to the employees. A point was made before the BIFR for the transfer of the shares as regards the order reducing the value of the share and the direction to transfer the shares at the reduced value of Re.1 per share. BIFR has closely, carefully and dispassionately considered this dimension of the matter and has rightly reached the conclusion that the intrinsic value of the share is zero. The liabilities far exceed the assets and even by applying the break-up or back-up method suggested by the members of the Kamani family the value of the shares could be determined only at the intrinsic value of the shares and the Board reached the firm conclusion that each share had zero value. And even so the Board directed that the value of the share be reduced to Re. 1 per share and directed them to transfer the shares at Re. l per share. Having given our anxious consideration to this factor even on our own, we are fully convinced and fully satisfied that the Board was perfectly right in directing the members of the Kamani family to transfer the shares at the rate of Re. l per share in order to effectuate the Scheme for revival of KTL. We may also mention that the BIFR was wholly right that the provisions of the Act were immune from challenge by virtue of the declaration contained in Section 2 of the Act attracting the application of Art. 31C of the Constitution. Turning to the merits of the Scheme sanctioned by