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9. A counter affidavit has been filed by Shri Dharam Godha, Chairman of NCFL. It is stated therein that M/s Ashok Paper Mills which was promoted in the year 1958 5y Maharaja of Darbhanga, ran into problems and went into liquidation in the year 1963. The Governments of Bihar and Assam and IDBI and other institutions took over the company as a joint venture in 1973 and the unit started functioning from 1977. Since the unit had no pulping facility, no provision of captive power supply and several other infrastructural deficiencies, the plant became unviable and faced acute financial crisis and closed down in the year 1982. The average production in the aforesaid 5 years period was a meager 12.48 tones per day. Ultimately, the company made a reference to the BIFR in the year 1988. There was only one recognised union of the company till its closure in the year 1982, namely, Ashok Paper Mill Mazdoor Panchayat which was registered in the year 1961. All the certified standing orders and agreements with the erstwhile management were signed by this union alone. The petitioner Ashok Paper Kamgar Union was registered only in the year 1978 and was never a recognised union of the mill. When the physical possession of the unit was taken over by the new promoter (HCFL) on 18.8.1997, the assets were delivered short the value whereof was approx. Rs. 3.90 crores as per the inventory and list prepared at the time of handing over. The President of the petitioner Union, namely, Shri Umadhar Prasad Singh and officials of Government of Bihar were party to the same. The shortfall of Rs. 3.90 crores took place between the time the IDBI prepared its report in January, 1996, the preparation of the inventory list on 25.3.1996 and taking over of physical possession on 18.7.1996 despite the orders of this Court dated 18.3.1996 wherein it was directed that status quo shall be maintained. This shortfall took place as a result of theft, pilferage, damage, etc. which was caused when one Shri H.P. Singh was incharge of the site as Acting Works Manager. The plant and machinery of the unit was very old dating back to the years 1973-74 and even a decade earlier and the same had been left abandoned without any care, upkeep or watch. . It is further stated that by July 1998 NCFI had invested an approximate amount of Rs. 7 crores and thereupon IDBI disbursed the first tranche of Rs. 2 crores out of the sanctioned amount and this amount was not received by the company but was paid directly to the equipment suppliers. Clause 1.8 of the approved scheme envisaged a tentative investment of Rs. 26.15 crores (share capital of Rs. 11.15 crores and term loan/equipment finance of Rs. 15 crores) for Phase I. The NCFL and its associates had already made investment of Rs.20 crores as against Rs. 11.15 crores as per the scheme. The IDBI had granted loan of Rs. 15 crores by January 2001 against which collateral security of Rs. 10 crores of properties other than that of the mill had been furnished by the NCFL. The investment made in the project was many times the value of the old assets handed over to the new promoter who had put their further stake by way of a collateral security of Rs. 10 crores. As per Clause 1.4 of the approved scheme, prior to the take over, a tripartite agreement between the workers' union, Government of Bihar and the new management was required to be entered into. In spite of innumerable meetings and deliberations held by the Labour Commissioner, the petitioner union did not sign the said agreement. Copies of the reports dated 29.1.1998 and 4.5.1998 of the Labour Commissioner have been filed as Annexures R-2 and R-3 to the counter affidavit. In view of the reports of the Labour Commissioner and the order of the Chief Minister dated 16.3.1998, the management entered into an agreement with the sole recognized union, namely Ashok Paper Mill Mazdoor Panchayat which was representing the majority of workers. The State of Bihar gave its no objection to the above agreement by way of its letter dated 14.7.1998 and this Court also passed an order on 26.4.1999 that the said agreement was valid for the purpose of implementation of the approved scheme. In para 35 of the counter affidavit, it is averred that in spite of Clause 1.15 of the scheme stipulating the Government of Bihar to immediately connect the power line to grid power and ensure uninterrupted supply of power to the unit the Government of Bihar expressed its inability to provide requisite grid power supply for running the Unit. Thereafter, this Court passed an order on 26.4.1999 directing the Government of Bihar to stand guarantee to the tune of Rs. 3 crores for procurement of 4 DG sets so that the difficulty of power supply could be obviated. The offer of guarantee of the Government of Bihar for procuring 4 DG sets was not acceptable either to the term loan institutions or to the banks and till date no effective steps had been taken to ensure power supply. In para 37 it is averred that the entire eligible work force as directed by this Court has been in full employment since June 2000 and the cost so far incurred on the payment of salary and wages amounted to approx. Rs. 3 crores. The mill commenced production on 27.8.2000 but it could run only intermittently because of sabotage. Under the scheme, United Bank of India was to provide a working capital but the same was not done and as a stop gap arrangement the promoters managed to obtain external commercial borrowing from USA to the tune of Rs. 2.5 crores to run the mill. Inspection was done by the Deputy Director (Technical) on 27.12.2000 and by a team consisting of Industrial Development Commissioner and Industry Secretary, Director (Technical) and Managing Director, Darbangha Industrial Area Development Authority and some others on 4.1.2001 and they found that the production was going on in the mill. The mill has more than 150 or so motors running at a time which requires constant repair, upkeep and maintenance. Apart from motors, there is other equipment which also requires constant maintenance and repair. The process of repairing parts cannot be carried out at the unit itself and they are required to be sent to specialised workshops outside the mill premises and sometimes to other places. The Government of Bihar passed an order on 22.2.2001 whereby, an embargo was placed and it prevented movement of machineries or any part thereof from the factory premises and this resulted in running of the unit coming to a stand still. On 4.10.2001 one motor connecting the pulp machine to the paper machine got burnt. This could not be repaired at the factory site and was required to be sent to Calcutta for repairs. However, it could not be sent outside on account of the embargo imposed by the Government of Bihar and all the efforts to send the motor for repairs failed and the management had to purchase another motor at the cost of Rs. 2.4 lakhs. In paras 49 to 74 of the counter affidavit details of various orders passed by the authorities of Government of Bihar placing an embargo on removal of any part or machinery from the factory premises, the steps taken by NCFL to got them lifted, their eventually filing a writ petition in Patna High Court being CWJC No. 5201 of 2001, the representation made to the Chief Minister of Bihar, the letter addressed by Shri S. Jagadeesan, Chairman of the Monitoring Committee to the Industry Department, Government of Bihar have been given. In para 98 it is averred that out of Rs. 15 crores (approx.) an amount of Rs. 12 crores (approx.) was paid by IDBI directly to various equipment suppliers. The IDBI had also appointed a leading firm of Chartered Accountant namely, M/s L.B. Jha & Company to report directly to them. The Respondent No. 1 Shri Dharam Godha had given personal guarantees and the promoter company NCFL had also arranged collateral security of Rs. 10 crores of prime properties situated at Napean Sea Road, Malabar Hills and at Nariman Point, Mumbai.

10. A counter affidavit on behalf of IDBI has been filed by Nivedita Shetty, Deputy General Manager of the Bank. It is averred therein that the NCFL has paid only two instalments of Rs. 37.5 lakhs each (totalling Rs. 75 lakhs) out of Rs. 6 crores which was decided as consideration for taking over the company's assets and an account of said default pro rata settlement of dues of secured creditors and workers did not take place. In Phase I of the scheme, major repairs and rectification work was carried out and certain capital equipment, additional waste paper pulping facility, coal handling plant, one boiler of 18 tph and part of the drinking equipment were acquired. On disbursement of the entire loan of Rs. 15 crores by IDBI by March 2001 and release of working capital by Union Bank of India in August 2001, the company had started the plant. It produced 2303 tonnes of paper upto January 2002 with the average daily production being around 25 tonnes as against the capacity of 60 tpd. Out of envisaged installation of 4 MW captive power plant 1 MW captive power plant had become operational and a 3 MW turbine had reached the site in July, 2001. To meet a part of the cost over run which had occurred on account of procurement of additional machinery, delay in implementation of the scheme and higher pre-operative expenses, the company had approached IDBI for sanction of a loan of Rs. 11 crores. The above request of the company was considered and IDBI and Industrial Investment Bank of India Ltd. sanctioned Rs. 5.5 crores each in March and April 2002 respectively. The trial run was taken on 27.8.2000 but stopped after two days due to break down. There was intermittent working of the plant and the stoppages were reported to be attributable to shortage of fuel for running the captive power plant. The unit had started regular production in October, 2000 after release of working capital by United Bank of India, Work of Phase II of the plant which was estimated to cost Rs. 478 crores has not commenced. A Techno-Economic Viability Study was to be conducted for Phase II and for this purpose quotations were called by IDBI from some reputed consultants. The company/NCFL, however, was not willing to bear even the lowest fees approximating Rs. 30 lakhs for this study and, therefore, it could not be done. The IDBI had disbursed the entire loan of Rs. 15 crores by 313.2001 and the delay on the part of the NCFL in acceptance of the terms and conditions of the loan, in creation of the collateral security as per the Scheme and other non-compliances with condition alities of the loan resulted in late disbursement of the same. The arrangement regarding giving of guarantee by Government of Bihar did not work out as no bank/financial institution came forward to finance acquisition of the DG sets on payment of monthly rentals of Rs. 7.50 lakhs. In para 3 of the affidavit it is stated that the company as on 31.8.2002 had incurred an amount of Rs. 3644.10 lakhs for implementation of the project and the same had been made by promoter's contribution of Rs. 1782.99 lakhs, ECBs of Rs. 243.51 lakhs, secured creditors'/dealers' deposit of Rs. 117.60 lakhs and IDBI term loan of Rs. 1500 lakhs. In para 8 it is averred that the operations in the plant came to a stand still from 2.4.2002 as it was hit by a devastating hailstorm in which the building and the plant and machinery had been substantially damaged. The company has filed an insurance claim of Rs. 8.73 crores with the New India Assurance Company Ltd. and the said claim is yet to be settled.