Madhya Pradesh High Court
Indore Wire Co. Ltd. vs Union Of India (Uoi) on 8 March, 2004
Equivalent citations: [2004]53SCL204(MP)
Author: A.M. Sapre
Bench: A.M. Sapre
ORDER A.M. Sapre, J.
1. By filing this writ under Article 226/227 of the Constitution of India, the petitioner seeks to challenge the order, dated 28-5-2003 (Annexure P-4), passed by BIFR in case No. 207 of 2001. According to petitioner they have filed an appeal against the impugned order before A.A.I.F.R. but since the appellate authority has not yet been reconstituted and hence, this writ.
2. It is not necessary for this Court to burden this judgment by taking note of entire factual aspect of the case. It is for the reason that this court is not exercising the powers of the original authority under the Act (SICA) nor is acting as an appellate authority. In other words, this Court has to examine the issue keeping in view the jurisdictional constraints put on the writ court while hearing the writ petitions in such cases.
3. Petitioner is a limited company engaged in the business of manufacture and sale of certain special type of steel items. It is not in dispute that the petitioner has suffered huge financial losses and approached to BIFR under Section 15 of SICA for claiming a status of a Sick Industrial Company within the meaning of SICA. It is in these proceedings, the BIFR had appointed O.A. (operating agency) and then proceeded to pass the impugned order after taking into consideration all facts and circumstances of the case. This is what the BIFR directed:--
"(i) OA would issue advertisements in leading newspapers within 2 weeks inviting offers for the takeover/leasing/amalgamation/merger for rehabilitation, with or without OTS of the dues of FIs and Banks, including measures listed under Sections 18(2)(i) and 18(11) of the Act, giving 6 weeks time for submission of offers. The present promoters may also submit, if they so wish, a fully tied up comprehensive rehabilitation proposal in response to the advertisements, indicating clearly the means of finance with or without induction of resourceful co-promoter. In case the proposal is based on settlement of the dues of the secured creditors by way of OTS, the same should have the approval of the secured creditors. The relative merits of the offers received would be examined by the OA, who would prepare a comparative statement indicating the details of the proposals received, hold a joint meeting after circulation of a background note to all concerned and submit a report to the Board, based on the evaluation of the relative merits of the offers received and the consensus arrived at in the joint meeting within a further period of 4 weeks. The cost of the advertisements would initially be borne by the OA and would subsequently be reimbursed by the company.
(ii) The company would furnish to the OA the details of its assets as on 31-3-2003 along with their book value and market price as on a recent date. The company would also submit details of its liabilities as on 31-3-2003.
(iii) The OA would prepare a profile of the company based on the details available with it, highlighting the strengths of the company that could be of interest to the prospective buyers and would also prepare a list of the inventory and make the same available to the interested bidders.
(iv) The OA would submit a report to the Board with a copy to the company on the expiry of 12 weeks, but not later than 31-8-2003 along with the details of the offers received in response to the advertisements, IDBI would inform the Board by fax on 31-8-2003 and the Board may consider issuing a show cause notice for winding up the company without holding any further hearing.
(v) The Board permitted IDBI Bank Ltd., Exim Bank and State Bank of Indore who had earlier filed applications for permission under Section 22(1) of the Act, to proceed legally against the company and guarantors for recovery of their dues subject to the condition that decrees, if issued, would not be executed without prior approval of the Board.
(vi) On receipt of the OA's report, the Board would pass further appropriate orders."
The petitioner has felt aggrieved of the aforementioned directions as according to petitioner, impugned directions are uncalled for and ought not to have been issued in the facts and circumstances of the case. Notice of the writ was issued. Respondents are served and represented.
4. Heard Shri Vivek Tankha, learned senior counsel with Shri U.K. Choukse for petitioners, Shri T.N. Singh, learned senior counsel with Ku. Hemlata Gupta for respondent No. 1, Shri R.S. Lal, learned counsel for respondent No. 2, Shri B.K. Dubey and Shri Manoj Munshi, learned counsel for respondent Nos. 3, 4, 6, 8 and 9 and Shri Satyajeet Mitra, learned senior counsel with Shri B. Chitale, learned counsel for respondent No. 11.
5. One of the main submissions of learned counsel for the petitioner was that petitioner on 29-4-2003 had submitted one revised proposal in the form of revival of the petitioner company but the same was not at all considered by the learned members of B.I.F.R. It was thus, submitted that non consideration of the revised proposal though viable for the revival of the company vitiates the impugned directions. It is submitted that this has caused immense prejudice to the rights of the petitioners. I find no substance in this submission because in my view, the submission is factually incorrect and contrary to the record.
6. In para 3 of the impugned order, learned members of B.I.F.R. has in clear terms examined revised proposal of the petitioner company with a view to find out, as to whether it is viable, or not ? While rejecting the proposal and finding it to be almost on the same lines as was earlier submitted. This is what the learned members held:--
"3. Ms. Hema Thakur, DGM, IDBI submitted that IDBI (OA) have since received Techno Economic Viability Study Report (TEVS), according to which the company was technically viable. The TEVS report was received on 2-5-2003. The company submitted a revised rehabilitation proposal. The revised proposal submitted by the company was more or less similar to the earlier one which had not been found acceptable by the secured creditors. The proposal envisaged conversion of 50% term loan into zero coupon debentures (ZCDs) payable in 8th, 9th and 10th year. IDBI needed time to examine the proposal submitted by the company."
7. This Court while hearing the writ cannot act as an appellate court and re-examine on facts as to whether finding reached by the B.I.F.R. on this issue be reversed or not. In any event, no case on facts even made out for such reversal. The B.I.F.R. has examined the proposal submitted by the petitioner. They found the same to be not viable, so far as the rights of the secured creditors is concerned. In such circumstances, there arises no case for calling any interference in such finding. It is essentially for the Board who is seized of the entire factual dispute in relation to petitioner (Company) to decide, whether a particular scheme/proposal submitted by the Company should be accepted, or not and whether it is viable, or not, or that it is acceptable to all secured and/or unsecured creditors ? Indeed, once the company applies to the Board for being declared as a Sick Industrial Company under the provisions of SICA then it is equally important to see the interest of creditors who have invested money in the company. In other words, the interest of secured creditors cannot be ignored. Rather it has to be given due weightage while considering any proposal submitted by the company.
8. It is not in dispute that in this case none of creditors whose huge investment is at stake in petitioner's company have agreed to any of the revised proposal submitted by the petitioner. Rather they have objected to the same.
9. One of the submission of learned counsel for the petitioner was that petitioner being a prosperous company at one time be allowed to come out of the crisis and hence, keeping this factor in consideration, the proposal submitted should be accepted. I do not agree to this line of attack. It is already dealt with supra and found no substance. This consideration is present in every case which is dealt with by the B.I.F.R. Moreover, the impugned directions have been given keeping in view this relevant consideration.
10. In my considered view, thus, I am unable to notice any infirmity in the impugned directions, as they are based on proper consideration of entire facts and circumstances of the case emerging from the record. The BIFR was quite conscious of all relevant facts while passing the impugned directions which are duly supported with the reasons, calling no interference.
11. In view of aforesaid discussion, the petition fails and is hereby dismissed.
No costs.