B.P. Choudhury vs Appellate Authority For ...
1995 Latest Caselaw 1017 Del

JUDGMENT

M.K. Sharma, J.

(1) In this writ petition, the petitioner has challenged the legality and validity of the orders passed by the Board for Industrial and Financial Reconstruction, (for short "BIFR") on 15th February, 1993 and also the order dated 3rd August, 1994 passed by the Appellate Authority for Industrial and Financial Reconstruction (for short "AAIFR"), whereunder directions have been issued for winding up of the respondent No.9 company.

(2) The respondent No.9 became a sick industrial unit within the meaning of the definition of Section 3(l)(o) of the Sick Industrial Companies (Special Provisons) Act, 1985, (for short "SICA") at the end of the financial year ending 31st March, 1990. Accordingly, a reference was by respondent No.9 filed as provided under Section 15(1) of the Sika before the Board for Industrial and Financial Reconstruction (for short "Board"). After considering the various proposals for revival of the company by the petitioner and other, the Board came to a final conclusion that it was just and equitable and also in public interest that the sick company, namely, the respondent No.9 be wound up.

(3) Being aggrieved by the order dated 15th February, 1995 passed by the Bifr the petitioner and respondent No.9 filed separate appeals before the appellate authority namely, Aaifr and, the said appeals were numbered as Appeals No.49 and 39 of 1993 respectively. The Appellant Authority on hearing the parties made several attempts for rehabilitation of the Sick Company. But having failed in its attempt to rehabilitate the sick company, namely, the respondent No.9, the Aaifr dismissed both the appeals. Aggrieved by the aforesaid impugned orders dated 15th February, 1995 and 3rd August, 1995 passed by respondents No. 1 and 2 re spectively, the petitioner has filed the present petition in this Court on the ground that the said impugned orders are ultra vires to the provisions of Section 20(1) of the Sica in as much as none of the three ingredients and provisions as mentioned in the said provision is satisfied.

(4) Notice was issued by this Court on 2nd September, 1994 on the said writ petition limited to the issue as to whether there was no report by the Operating Agency to 'the Bifr and whether without there being any report before the Bifr could it direct winding up of the Sick Industrial Company. Notice having been served upon the respondents, they have filed their counter affidavits and replies to the show cause notice issued by this Court.

(5) The petitioner, however, has now filed an application which is registered as C.M.No.6817/95 contending, inter alia, that the petitioner was and is still interested in reviving and rehabilitating the respondent No.9 company and that it had formulated a scheme for rehabilitation and revival of the said company. It is contended that the petitioner made' an offer for one time settlement of the dues of the bank and financial institutions and the said proposal put forth by the petitioner has found favor with most of the creditors. According to the petitioner the said proposal as put forth by the petitioner was considered by the Ici, Dena Bank and State Industrial and Investment Corporation, Maharashtra Ltd. and accepted by them in principle. Letters of approval of the aforesaid financial institutions are annexed to the writ petition. Through the said application the petitioner has sought for examining the said scheme and the proposal put forth by the petitioner for rehabilitation and revival of respondent No.9 by the Bifr or Aaifr and on such examination accept the same for the purpose for which the aforesaid scheme has been prepared.

(6) We have heard learned counsel appearing for the parties. Respondent No.5,namely, Sangli Bank, Sangli has filed an objection before us in respect of the aforesaid application which is on record. The other respondents, however, have not filed any objection and/or rejoinder to the said application.

(7) A careful reading of the scheme and the provisions of Sica would show that all possible endeavor and efforts for revival and rehabilitation of a sick industrial company are to be made and that in case there is no option left for such revival, the provisions of the said Act permits for , direction to be issued for winding up of the said sick industrial company. In case the promoters of the company can provide finances for the revival of the company and submit a workable scheme, the Bifr should give an opportunity to the said promoters to revive the company.

(8) In view of the aforesaid provisions of the Act, we consider it appropriate that the scheme which has now been formulated by the -petitioner for the revival and rehabilitation of the respondent No.9 company should be examined by the Bifr so as to find out if the company which has been ordered to be wound up could be revived and rehabilitated through the aforesaid scheme propounded by the petitioner even at this stage. We have been persuaded to take the aforesaid view on consideration of the fact that the scheme and the proposal formulated by the petitioner has received an approval on principle from most of 'the respondents except, of course the respondent No.5 who has filed objections to the aforesaid proposal put forth by the petitioner. In our considered opinion even the aforesaid objection of the respondent No.5 to the proposal and/or the scheme propounded by the petitioner may also be examined by the Bifr at the time when the viability and/or effectiveness of the aforesaid scheme of the petitioner is examined by it from all aspects.

(9) In the result, we find it expedient to issue a direction to the Bifr to examine the proposed scheme formulated by the petitioner for revival and rehabilitation of the respondent No.9. We, therefore, formally quash the impugned orders and direct that the matter shall now be placed before the Board for Industrial and Financial Reconstruction for consideration as to whether it should proceed to pass an order in terms of the proposed scheme as formulated by the petitioner. The Board should come to a decision after notice to all the parties and it shall act in conformity with the provisions of the Act. The Board may, if necessary, adopt the proposed scheme framed by the petitioner with such modification as it deems fit. The Board shall. however. complete all exercise as expeditiously as possible preferably within a course of three months. The writ petition is, therefore, disposed of in the above terms but without any costs.

(10) The parties are directed to appear before the Bifr on 30.1.1996.