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regular-article-logo Sunday, 14 July 2024

Legal circles express concern about slow pace of resolution of bankrupt companies owning tea gardens

Tea garden land belongs to state government and lease is usually renewed from time to time

Our Special Correspondent Calcutta Published 06.05.24, 10:47 AM
Representational image

Representational image File picture

A section of the legal circles involved in insolvency matters have expressed their concern about the slow pace of resolution of bankrupt companies owning tea gardens in Bengal and urged all stakeholders, especially the state government and labour unions, to come forward and save the estates.

They say there are often found to be too many litigations around gardens which are impeding resolutions. Problems are compounded as the primary assets of the garden, the land, do not belong to the corporate debtor, which is the company that went into insolvency.

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The tea garden land belongs to the state government and the lease is usually renewed from time to time.

However, in a few instances, the lease has not been renewed by the state. While land is owned by the state and leased to companies, the tea stock and machinery belong to the debtor.

Unions in the gardens also have a strong say in the manner the gardens are managed and run and they usually prefer people close to them taking charge of the business.

“In the process, the teas for which we are world famous, are suffering,” said a participant involved in the insolvency process but did not wish to be named.

A case in point, some people observed, is the corporate resolution insolvency process (CIRP) surrounding Duncan Industries Ltd, once a well-known company having multiple gardens.

CIRP on Duncan has been going on for six years; though a successful resolution applicant was found about two years back, the new entity is yet to get control of CD.

The latest attempt to throw a spanner in the process by a labour union was dismissed by the National Company Law Tribunal, Kolkata last month.

It was observed from the court documents that only three out of 14 gardens that formed the part of information memorandum prepared by the resolution professional of Duncan Industries have their lease renewed by the state.

“The resolution applicants, being already notified vide Information Memorandum about the status of lease would express their interest to acquire the debtor company, and with their eyes wide open would either bid or refrain from bidding having noticed that the company’s lease has already expired.

“If the present successful resolution applicant has given its offer to acquire the Corporate Debtor with its assets as mentioned in the IM, we find no reason to interfere,” the NCLT observed in its order on April 26.

Uniglobal Papers Pvt Ltd is the successful resolution applicant for Duncan. RP informed that CD is in control of only one tea garden.

Sources said that the rest of the gardens are controlled by outsiders, blessed by political masters, who are running the gardens.

However, the state government is losing out on the lease rent having not renewed the leases.

A case is now pending before the National Company Law Appellate Tribunal if
the gardens can be part of information memorandum.

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