AB Corp’s creditors wait in anticipation as KBC success grows

These small business houses are mostly manufacturers of audio magnetic tapes. Details of some of the cases are listed below: * Tarana Music Tapes Pvt Ltd gave statutory notice to ABCL on June 13, 1998 under section 434 of the Companies Act asking it to pay up an amount of Rs 35 lakh. Tarana has also filed a winding up petition in the High Court, but in the meantime, ABCL had approached BIFR. Tarana has been in correspondence with ABCL since March 97. The amount does not include interest.

* Jai Electronic Industries Pvt Ltd has been claiming an amount of Rs 18 lakhs (plus Rs 12 lakh in interest to date) through correspondence which started in January ’98.

* Mars Enterprises gave ABCL a lawyer’s notice on June 14, 2000 under section 434 of Cos Act for the amount due — Rs 32.63 lakhs. On March 23, 1998, they had agreed to settle for almost half that amount — Rs 17.50 lakh. But with ABCL not making any move to pay up, MARS has decided to ask for the whole amount.

* In the case of Bahubali Electronics, ABCL owes it Rs 23 lakhs. Bahubali and ABCL entered into a consent decree on Feb 11, 1999. After paying the initial Rs one lakh immediately on signing the consent decree, ABCL stopped paying and promptly went to BIFR.

* ABCL owes ACM Industries Rs 13.47 lakh. Correspondence has been on since the last three years. ACM has also sent a lawyer’s notice.

That ABCL went to BIFR when Canara Bank was closing in on it is now well known. But even as most of Canara Bank’s dues are coming through, small businessmen like those named above, are still waiting.

ABCL was registered before BIFR on Mar 22, 1999. On July 9, 1999 BIFR declared ABCL sick under section 3 (1) (O) of SICA. In fact, Canara Bank has appealed before the Appellate Authority for Industrial and Financial Reconstruction against the BIFR order, refuting ABCL’s claims that it was a manufacturing company.

In fact, Canara Bank has pointed out that while ABCL went to BIFR on March 17, 1999, the application for a factory licence, on which they are relying now to claim that ABCL was a manufacturing company had been given to them less than a week earlier, on March 12, 1999.

The bank also pointed out that the company had written off Rs 4.31 crore after an out of court settlement with one M/S Multichannel Advertising and Productions Pvt Ltd (MAPPL), for which they gave no ostensible explanation. In the balance sheet for the year ended Sept 1998, which the company submitted along with other documents to BIFR, they had mentioned a remuneration of Rs 2.25 crore to Amitabh Bachchan, a director in the firm, for the year 1997-98. This was a 300 per cent increase over the previous year’s remuneration, the appellants pointed out.

The appeal before AAIFR is still pending.

ABCL officials did not respond to questions sent by ENS on fascimile.