The Hindu Business Line : Non-compliance of order — BIFR issues notice in Cimmco Birla case

IN the Cimmco Birla Ltd case, the Board for Industrial and Financial Reconstruction (BIFR) has directed the sub-divisional officer (SDO), Bharatpur to show cause as to why action should not be taken against him and other responsible officers for non-compliance with its order and for non-transfer of Rs 2.41 crore to a no-lien account with the operating agency, IDBI.

Cimmco Birla is part of the S.K. Birla group, mainly engaged in the manufacture of Railway wagons.

At a recent hearing, the BIFR Bench said that a rehabilitation proposal for the company was under examination with the IDBI.

Central Bank of India, a secured creditor and charge holder for the company's current and fixed assets as well as the lead banker for providing working capital, had in its applications dated May 31 and June 1, 2004 submitted that in violation of the Board's direction, the SDO Bharatpur has initiated sale of assets that were charged to the bank as security for credit facilities granted to the company.

The auction was conducted to execute the order of the Joint Labour Commissioner, Jaipur for payment of Rs 2.40 crore towards workers' wages.

In fact, in January 2002 also Central Bank of India had brought to the board's notice an advertisement issued by the SDO, Bharatpur for sale of assets of Cimmco Birla.

The bank had urged the board to stop the "illegal auction" of the stock, the BIFR Bench said.

The Bench had then pointed out that under Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, no proceedings could be initiated without its prior approval.

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