The National Company Law Appellate Tribunal (NCLAT) Monday stopped the closure of West Bengal based wagon maker Burn Standard Company and retrenchment of its workers.
The NCLAT set aside the Kolkata NCLT's approval to close down the PSU as part of a resolution plan.
"We set aside the part of the approved 'Resolution Plan' in so far as it relates to closure.... The 'Corporate Debtor' is directed to ensure that the company remains a going concern and employees are not retrenched," the NCLAT order passed by Justice S J Mukhopadhayay and Justice Bansi Lal Bhat said.
It said, "The 'Resolution Plan' is against the object of the (insolvency) Code and the application under Section 10 was filed with intent of closure of the 'Corporate Debtor' for a purpose other than for the resolution of insolvency, or liquidation.... We hold that the part of closure of the 'Corporate Debtor'/'Corporate Applicant' being against the scope and intent of the I&B Code is in violation of Section 30(2)(e) of the I&B Code."
In March 2018, NCLT Kolkata approved closure of Burn Standard's insolvency resolution plan, which included Rs 417 crore worth of financial package to pay back creditors and suppliers and a voluntary retirement scheme (VRS) for 500 employees.
Burn Standard is currently under the Ministry of Railways.
Anutosh Bandyopadhyay, president of Burn Standard Ex- Officers Welfare Association (BSEOWA) who was in the forefront of agitation and moved the NCLAT against the closure said they are very happy as their struggle finally paid off.
When Trinamool Congress supremo Mamata Banerjee was the railway minister, she had taken over the ailing Burn Standard, the history of which dates back to 1781.
Banerjee, now the chief minister of West Bengal, recently said in election rally, "I had taken over Burn Standard when I was railway minister. I always tried to save industries but now, one after another, factories are being closed by the Centre."
Burn & Company came into existence in 1781 at Howrah in West Bengal. Following nationalization in 1976, the company was amalgamated with the Indian Standard Wagon Company and renamed as Burn Standard Company Limited.
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