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Sunil Shivdasani
NEW DELHI, SEPT 5: Canara Bank has challenged the order of Board for Industrial and Financial Reconstruction declaring Amitabh Bachchan Corporation Ltd (ABCL) as a sick entity by moving the Appellate Authority for Industrial and Financial Reconstruction (AAIFR).
In an appeal filed on September 2 under Section 25 of Sick Industrial Companies (Provisions) Act, 1985, the Canara Bank sought quashing of the BIFR order and directions for appointment of special auditors to probe ABCL's accounts for last three years. The appeal is likely to be heard this month, Canara Bank counsel Nishit Dhruva said.
Canara Bank, in consortium with Allahabad Bank, had given a credit of about Rs 14 crore to ABCL, promoted by mega star Amitabh Bachchan, which included its share of Rs 10 crore. The bank in its petition said that BIFR in its July 9 order ignored the objections raised by it and declared ABCL a sick company.
BIFR had merely accepted ABCL's submissions without any documentary proof in support thereof, the bank said,adding that the order had provided an effective shield to ABCL under Section 25 of the Act putting creditors in a disadvantageous position. The bank said BIFR also failed to seek ABCL's explanation on allegations regarding irregularities in its balance sheet and depletion of stocks.
Canara Bank pleaded that under no stretch of imagination could ABCL be defined as an `industry' as it failed to produce the certificate showing the presence of any manufacturing capacity of five lakh units as required under law.
ABCL had stated that its main business activity was manufacturing and assembling of audio cassettes while the subsidiary business was of motion pictures production, distribution and related services besides TV serials and software, the bank said. These statements were in total contradiction of what was set out in the memorandum of association of ABCL, main objects and other incidental objects of the company, the bank pleaded.
The appellant submitted that ABCL had stated that the factory licences formanufacturing under Industries (Development and Regulation) Act, 1951, had been issued only by March 12. It is thus clear that prior to these dates ABCL was not engaged in any manufacturing activity and had just come into the ambit of the Act.
As soon as these licences were obtained, ABCL moved the BIFR (on March 22) under section 15 of Sica Act, the bank alleged.
It further submitted ABCL had falsely declared no court receiver had been appointed. The Mumbai High Court had appointed court receiver on March 17 before ABCL moved BIFR for registration on March 22.
Canara Bank said ABCL was incorporated as M/s Sapan Leasing and Holding Ltd on December 18, 1986 but subsequently changed to Amitabh Bachchan Pvt Ltd on December 29, 1994. It was only on February 28, 1995 that this company became ABCL. Hence, there was no truth in the submission that the name of the company since its inception was ABC. Since the firm has been registered for less than five years, BIFR should have dismissed ABCL's reference on thisground alone, it added.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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