B.D. Industries Ltd. vs Board For Industrial And ...
1996 Latest Caselaw 918 Del

JUDGMENT

Manmohan Sarin, J.

(1) The petitioner, aggrieved by the order dated 21.3.1996 passed by the Appellate Authority for Industrial and Financial Reconstruction (in short 'AAIFR') has filed the present petition under Article 226 of the Constitution of India.

(2) By the order dated 21.3.1996 (hereinafter referred to as the 'impugned order') the AAIFR confirmed the order dated 17.10.1994 passed by the Board for Industrial and Financial Reconstruction (in short 'BIFR'). The BIFR vide the order dated 17.10.1994 had confirmed its prima facie opinion expressed earlier, vide its order dated 1.8.1994, regarding the winding up of the petitioner company. The BIFR reached the conclusion that in the absence of requisite reliefs and concessions from the State Government, the petitioner company would not be viable for rehabilitation on a long term basis.

(3) The AAIFR passed the impugned order dated 21.3.1996, after the State Bank of India, which was the operating agency, confirmed that M/s.Gaysons Industries Ltd., who had earlier submitted a proposal/scheme for rehabilitation of the petitioner company and had deposited a sum of Rs.one crore in pursuance to the directions given, were no longer interested to rehabilitate the petitioner company. The reply dated 16.2.1996 by M/s.Gaysons Industries Ltd. has been placed on record (page 101 of the paper book). In the circumstances, the AAIFR concluded that there was no hope for revival of the company and dismissed the appeal, confirming the order of the BIFR dated 17.10.1994.

(4) Learned counsel for the appellant, Mr. G.L. Rawal, narrated the circumstances which led to the financial difficulties of the petitioner company. He submitted that the petitioners had set up a mini steel plant in 1974 and the production capacity had been increased from 18,000 tonnes to 36,000 tonnes. However, due to disturbances and power cut, there was retardation in the production of the company, leading to the company suffering losses to the tune of Rs.175 lakhs in 1989. He submitted that the petitioners appointed Consultants to submit their report for making the company viable and were in constant touch with their Bankers. However, go slow persisted and the company faced a lock out in August 1991. Mr. Rawal submitted that from 23.12.1991, there were efforts made to revive the company and proposals were under discussion and consideration by the BIFR in December, 1991. He submitted that the petitioner gave all the details and documents, as required for seeking reliefs and concessions from the State Government of Maharashtra. Efforts were also made by all concerned and the State Government of Maharashtra had even given its consent for availability of reliefs and concessions as per the standard package.

(5) Learned counsel laid considerable emphasis on the proposal/scheme submitted by M/s.Gaysons Industries Ltd., which he urged was a bonafide one. He submitted that M/s.Gayson Industries Ltd. had even deposited a sum of Rs. one crore, besides furnishing all the details as required by the bankers. The Bank had also given indication of acceptance of the one time settlement (OTS) being proposed. In short, the submission of Mr. Rawal is that M/s.Gaysons Industries Ltd. had submitted a bonafide proposal which could have rehabilitated the company and the State Government delayed its decision on the reliefs and concessions. Deferment of sales tax payment and waiver of penal interest and electricity dues had been sought from the State Government, which was not forthcoming. The State Government was not receptive with the result that M/s.Gaysons Industries ltd., who had blocked nearly Rs.one crore, sought its refund. Mr. Rawal submitted that this was a fit case where this Court should interfere in exercise of its discretion as a viable proposal for revival of the appellant company had been submitted.

(6) Learned counsel for the petitioner relied on the judgments in Upper India Couper Paper Mills Company Ltd. Vs. Appellate Authority for Industrial and Financial Reconstruction & Others (1994 (4) (DB) Delhi Lawyer 209) and Maharashtra Tubes Ltd. Vs. State Industrial & Investment Corporation of Maharashtra Ltd. & Anr. . The said authorities would not advance the case of the petitioner. The first judgment is a Division Bench decision of this Court, wherein it was found that despite directions the operating agency had not prepared a scheme and had not considered the techno-economic feasibility project report submitted by the petitioner. It was a case where the operating agency had failed to carry out the orders passed by the AAIFR. However, the facts in the present case are clearly distinguishable.

(7) The decision in Maharashtra Tubes Ltd. (Supra) is relied upon by learned counsel for the petitioner in support of his submission that the object of the Sica Act was to secure the timely detection of sick and potentially sick companies and the speedy determination by a body of experts of the preventive and ameliorative remedial and other measures, needed to be taken with respect to such companies and the expeditious enforcement of the measures so determined. There can be no dispute with regard to the above objectives of the Act, as enumerated in the said decision. However, in the instant case, it cannot be overlooked that on the petitioner's own showing the matter was taken up by the Board in December 1991, and efforts were made and proposals and suggestions considered throughout. The BIFR had concluded as far back as October 1994, that there was no viable proposal for revival of the company while its dues to the bank were going up substantially. Finally in 1996, the AAIFR found that M/s.Gaysons Industries Ltd. who had submitted the proposal for rehabilitation were no longer interested and there was no hope for revival of the petitioner company. The said findings cannot be faulted with.

(8) We find that this is not a fit case for interference under Article 226 of the Constitution of India. As a result, the writ petition is dismissed in limine.