Court orders winding up of Dunlop India

Court asks official liquidator to immediately take possession of the company’s assets
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First Published: Thu, Jan 31 2013. 09 27 PM IST
Pawan Kumar Ruia, chairman, Ruia Group. The group took over Dunlop from the late Manohar Rajaram Chhabria’s Jumbo Group in 2005. Photo: Indranil Bhoumik/Mint
Pawan Kumar Ruia, chairman, Ruia Group. The group took over Dunlop from the late Manohar Rajaram Chhabria’s Jumbo Group in 2005. Photo: Indranil Bhoumik/Mint
Kolkata: Disposing of a large number of petitions filed by unsecured creditors, the Calcutta high court on Thursday passed a verdict ordering the winding up of Dunlop India Ltd—one of the oldest tyre makers in the country.
Justice Sanjib Banerjee asked the court’s official liquidator to immediately take possession of the company’s assets. He had in March last year ordered the appointment of an administrator to take control of the company’s current assets and secure those “fraudulently” sold earlier. While reading out parts of the judgement in an open court on Thursday, Banerjee said Dunlop had expressed to the chief justice its loss of confidence in his neutrality. He said he thereafter asked Dunlop’s lawyers if they too were of the same view, but because they contradicted their client, he did not release the matter.
Though he said the full text of his judgement would be posted on the high court’s website by evening, it wasn’t made public till the time of going to press.
“We are yet to receive the court order,” a spokesperson for the Ruia Group, which controls Dunlop said in an emailed statement. “We will decide on the next course of action after getting our counsel’s advice on the issue.”
If Thursday’s judgement is implemented, up to 1,500 workers could become redundant, but surprisingly, trade union leaders at Dunlop’s Sahaganj factory in West Bengal were not disappointed with the development.
Workers may now be able to recover the money Dunlop owes them—this is estimated to be Rs.70 crore, said Bidyut Raut, a leader of the Indian National Trinamool Trade Union Congress (INTTUC). “Pawan Kumar Ruia turned out to be much worse than the Chhabrias before him.”
Ruia is the chairman of the eponymous group which took over Dunlop from the late Manohar Rajaram Chhabria’s Jumbo Group in 2005. By then it was already in considerable financial stress and was seeking protection from creditors.
“We always knew Ruia would not run Dunlop,” said Santasri Chatterjee, a former lawmaker at the Centre and a leader of Centre of Indian Trade Unions (Citu). “He has ruined a company which had a lot of potential.”
Irrespective of their political affiliations, trade unions have given up hope of Dunlop ever restarting production at its factories in West Bengal and Ambattur near Chennai.
“I have no doubt in my mind that assets have been removed from Dunlop,” said Purnendu Bose, West Bengal’s labour minister. “But we will make sure that the management is unable to remove any more assets from the factory—these will be sold to clear workers’ dues.”
Ruia has lately lost control of a large number of firms he had acquired in Europe—in countries such as the UK, France, Turkey and Germany. The last to have been taken over by an administrator was Schlegel Automotive Europe Ltd, based in Leicestershire, UK. This was Ruia’s first overseas acquisition, completed in 2008. Though an administrator took control of Schlegel—a 54-year-old manufacturer of rubber sealing systems for the automotive industry—in October last year, a buyer couldn’t be found for it and it has had to suspend production in late January, making some 82 workers redundant, according to a recent press statement issued by the administrator.
Dunlop last year filed a criminal case against HT Media Ltd, the publisher of Mint, the newspaper’s editor and a reporter, alleging criminal defamation over a news report published in April. The case is being contested in a Kolkata court.
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First Published: Thu, Jan 31 2013. 09 27 PM IST
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