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Wednesday, Dec 18, 2002

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BIFR pulls up Montari Leather for violating SICA provisions

Richa Mishra

NEW DELHI, Dec. 17

THE Board for Industrial and Financial Reconstruction (BIFR) while confirming its prima facie opinion of winding up Montari Leather Ltd (MLL) has pulled up its promoters for misusing the provisions of Sick Industrial Companies (Special Provisions) Act, 1985. The Board observed that the company and its promoters were only seeking time to enjoy protection under the Act.

The BIFR bench said that the Board would not like the objectives the Act to be misused by the promoters and the company to safeguard their own interest to the detriment of the public, labour, statutory liabilities, financial institutions and banks.

Further, the Board also noted that despite having allowed enough time and opportunity, it had not been possible to formulate any acceptable revival scheme for the company enabling it to make its net worth exceed the accumulated losses within a reasonable time.

The bench, therefore, confirmed its prima facie opinion of winding up the company. It also directed that this opinion be forwarded to the concerned High Court for further necessary action.

MLL had come to the Board based on its balance sheet for 1998 and at that time its capital finances were Rs 12.16 crore and secured funds were for Rs 35.71 crore, the bench recalled.

"It was imperative on the part of the promoters and the company to show required amount of responsibility and seriousness for the funds which they had borrowed from the public institutions and banks, which was subject to protection during the past four years.

But the company had shown scant respect for the public money and even could not settle with the banks and financial institutions in the best interest of all.

It appeared that the company and its promoters were only working for their own benefit enjoying the protection to the detriment of all others concerned," the bench said.

It added that the company and its promoters had not taken any steps to prove their credibility and creditworthiness in this regard.

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