The Hindu Business Line : Issues raised by Dunlop

THE BELEAGUERED WORKMEN and, for that matter, the minority shareholders of Dunlop India, may see in the acquisition of promoter's stake in the company by the Kolkata-based Ruia group, a ray of hope. But only just, as they have seen many a false dawn since the company was declared sick more than seven years ago. Even if funds are infused by the new promoters, as promised, and operations resume in right earnest, the company faces the daunting challenge of winning back customers in a tyre market that has not only seen newer players come in but also significant structural and technological changes. The prospect of re-emergence of an old and established name like that of Dunlop is also an occasion for reflection on the regulatory set-up overseeing the aspect of corporate sickness. That despite the passage of years the system has been unable to determine with any degree of finality whether Dunlop could be revived and the most expedient manner of doing so.

At every twist and turn the issue had been lost to litigation and appellate proceedings till the fortuitous emergence of a strategic investor coming on board to buy out the promoter's stake. Hopefully, he will settle the question of sickness and future viability in the only way that seems beyond dispute — the infusion of fresh funds. The idea that the Board for Industrial and Financial Reconstruction as the statutory body possesses insights far superior to the collective wisdom of all the stakeholders in the affected establishment and that its ruling will be accepted without reservation by all, is flawed. If any of the stakeholders is displeased with the Board's decision the full force of the appellate mechanism, both internal to the Board and the formal judicial system, is available. It is in the nature of such an issue that each stakeholder would want to see if it could get a better deal by taking it to a higher forum. That makes the BIFR no better than a lower court to adjudicate on industrial disputes.

The contention that it is a faster mechanism than the judicial one currently available, even if accepted at face value, is a hollow one. Just as a chain is only as strong as its weakest link, so too, with a quasi-judicial system as the BIFR. Its efficacy can only be as good as the judicial system if a matter for adjudication by it is going to merge into the formal judicial process. If all disputes are going to end up in the Supreme Court because one stakeholder or the other feels done in by the ruling of the Board or the appellate mechanism under the sick companies law, then an alternative dispute resolution mechanism is no alternative at all from the standpoint of efficacious disposal of the case. It would not do to dismiss the Dunlop issue as an aberration. At stake here is the livelihood of a workforce that was once 7,000-strong but has since dwindled to around 4,000 — their end hastened by deprivation and the trauma arising from the loss of a source of livelihood.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page