IN THE HIGH COURT OF KERALA AT ERNAKULAM
WP(C).No. 6625 of 2007(L)
1. SHRI. KURIAN PAULOSE, AGED 61 YEARS,
... Petitioner
Vs
1. APPELLATE AUTHORITY FOR INDUSTRIAL
... Respondent
2. BOARD FOR INDUSTRIAL AND FINANCIAL
3. M/S. ALLUMINIUM INDUSTRIES LTD.,
4. STATE BANK OF TRAVANCORE,
5. M/S. UNITED SHIPPERS LTD.,
6. M/S. ALIND EMPLOYEES UNION REVIVAL
7. M/S. ALIND WORKS UNION, REP. BY
For Petitioner :SRI.MURALI PURUSHOTHAMAN
For Respondent :SRI.P.M.POULOSE, ADDL.CGSC
The Hon'ble MR. Justice A.K.BASHEER
Dated :23/05/2008
O R D E R
A.K. Basheer, J.
– – – – – – – – – – – – – – – – – – – – – – – – –
W.P (C) Nos. 6625, 28280
& 34185 of 2007
– – – – – – – – – – – – – – – – – – – – – – – – – –
Dated this the 23rd day of May, 2008.
Judgment
These three writ petitions are being disposed of by this
common judgment since the issues involved in them are common
and closely inter- related. W.P.No.6625/2007 will be treated as the
leading case and the parties and documents in this petition will be
referred to in the judgment unless otherwise indicated.
2. The primary question that arises for consideration is
whether Ext.P8 order passed by the Appellate Authority for
Industrial and Financial Reconstruction, New Delhi granting a
further opportunity to the promoters to frame a comprehensive
rehabilitation scheme to revive the sick Aluminium Industries
Limited, is illegal and invalid.
3. Petitioner who is stated to be a Non Resident Indian had
submitted a proposal before the Operating Agency, State Bank of
Travancore, Thiruvananthapuram, for taking over the Relays
Division of the Company at Thiruvananthapuram. The Board for
Industrial and Financial Reconstruction, New Delhi (BIFR for
short), accepted the above offer made by the petitioner and
consequently approved sanction for the scheme to hive off the
Relays Division from the parent company as an independent entity
and to merge it with the firm of the petitioner.
W.P(C).6625,2820,34185/07
2
4. The above order of the BIFR was challenged by the
promoters/major shareholders and several others before the
Appellate Authority for Industrial and Financial Reconstruction,
New Delhi (appellate authority for short). All these 8 appeals
were heard and disposed of by the appellate authority by a
common order (Ext.P8).
5. Petitioner while calling in question the legality and
propriety of the above order contends that the appellate authority
ought not to have entertained the appeals preferred by the
promoters and other shareholders since they were hopelessly
time barred. More importantly, they had not challenged the
earlier order passed by the BIFR way back in 2003 accepting
the proposal made by the petitioner for revival of the Relays
Division. It is further contended by the petitioner that the
appellate authority was not justified in interfering with the order
of the BIFR at the instance of the promoters who had admittedly
failed to revive the Company. The BIFR had recorded its dis-
satisfaction about the indifferent attitude of the promoters who
had evinced no interest in the affairs of the Company for the last
several years.
6. Petitioners in the other two writ petitions viz.
W.P.Nos.28280/07 and 34185/07 are respectively some of the
senior executives and two of the employees’ organisations in the
Company. While the officers of the Company pray for issuance
of a writ of mandamus or such other writ, order or direction to
W.P(C).6625,2820,34185/07
3
the operating agency not to accept the proposal for change of
authorised signatories in view of the interim order passed by this
court in WP.6625/2007, the employees’ organizations pray for a
direction to the operating agency to honour the cheques issued
by the Company for its day today operations through its
authorised signatory. They further pray for a declaration that the
decisions taken at the extra ordinary general meeting of the
shareholders of the Company on March 21, 2007 to constitute
new Board of Directors is violative of the order passed by the
appellate authority and also the interim order issued by this
Court in W.P.No.6625/2007.
7. A brief reference to the chequered history of the
beleaguered sick company is necessary to decide the issue
involved in these cases.
8. The Company which was incorporated in 1946 had
been giving thrust to manufacture of products primarily to cater
to the needs of the power sector. It has got 5 manufacturing
units (consisting of 3 manufacturing divisions and 2 contracting
divisions) spread over Kerala, Andhra Pradesh and Orissa with
more than 1600 employees. The manufacturing divisions
consist of Conductor Division at Kundara (Kerala), Hirakud
(Orissa) and Hyderabad (Andhra Pradesh). There is a Steel
Products Division at Kundara, Machinery Division at
Hyderabad, Switch Gear Division at Mannar (Kerala) and
Relays Division at Thiruvananthapuram. The Services Division
W.P(C).6625,2820,34185/07
4
of the Company are: (a) Material Handling Division at
Hyderabad and (b) Contracts and Agencies Division at
Thiruvananthapuram.
9. The Company was declared sick under Section 3(1)(O)
of the Sick Industrial Companies (Special Provisions) Act 1985
(for short, the Act) by the BIFR in October 1987. A Scheme for
rehabilitation of the sick Company was sanctioned by the BIFR
by its order dated October 5, 1989. Term liabilities of financial
institutions and Banks were restructured and fixed at Rs.4040
lakhs. The cost of rehabilitation Scheme was put at Rs.949 lakhs
out of which Rs.300 lakhs had to be brought in by M/s.Somani
Group of Industries, the promoters, and Rs.649 lakhs by the
financial institutions and banks. M/s. Somani was inducted into
the management with an initial investment of Rs.300 lakhs to
the equity capital. The promoters had to arrange a further sum
of Rs.100 lakhs after one year in the form of equity and/or
unsecured loans.
10. It is beyond controversy that the Somani Group of
Industries owns approximately 45% of the equity share capital
of the Company and M/s. United Shippers Limited, which is a
part of the Somani Group, owns 29.02%. It is also on record
that the promoters had taken unsecured loans amounting to
Rs.239 lakhs and also arranged finance of Rs.240 lakhs, after
sanctioning of the Rehabilitation Scheme by the BIFR.
11. But the revival package did not achieve the results
W.P(C).6625,2820,34185/07
5
envisaged in the rehabilitation scheme. At the hearing held on
August 5, 1993 the BIFR recorded its disillusionment over the
failure of the promoters to implement the rehabilitation scheme
and directed the operating agency (IIBI) to submit a revised
Scheme within 3 months.
12. At the meeting held on July 26, 1994, the BIFR
noticed that no viable scheme had emerged. Therefore the
operating agency was directed “to issue a comprehensive
advertisement within 15 days for take over of the
Company/divisions of the Company, to formulate a viable
rehabilitation package, hold joint meeting of the involved
parties and submit the Scheme to the Board within 2 = months”.
13. At its next meeting held on December 19, 1994 the
BIFR considered the status report filed by the operating agency.
It was noticed that several enquiries from various groups/parties
had been received in response to the advertisement issued in the
newspapers for take over of the Company/divisions of the
Company and to formulate a viable rehabilitation package. But
no concrete proposal had been received from any of the parties.
14. Several meetings were held by the BIFR thereafter
between 1995 and 2001. A perusal of the summary record of
proceedings of the BIFR will reveal that several attempts were
made at various levels involving Banks, financial institutions,
State Governments, employees organizations, promoters etc. to
evolve a viable scheme for take over/change of management of
W.P(C).6625,2820,34185/07
6
the Company.
15. In the hearing held on November 8, 2001, the BIFR
concluded that only 3 units of the Company were operational
and considered viable. They were the Switch Gear Division
(SD) and Relays Division (RD) in Kerala and Machinery
Division (MD) in Hyderabad. It was also observed by the BIFR
that even after a lapse of 14 years since the proceedings had
commenced, no workable proposal for revival could be
evolved. It was clarified that sale of the above three operational
units on “going concern” basis with whatever liabilities, to the
willing parties for takeover, would have to be done.
16. At the meeting held on June 27, 2002 the operating
agency informed the BIFR that in response to the advertisement
issued by it on February 22, 2002 as directed by the BIFR, five
offers had been received for the individual running units, out of
which only 2 were accompanied by Earnest Money Deposits
(EMD). Petitioner had made an offer of Rs.1.22 crores for the
Relays Division at Thiruvananthapuram. It was further informed
by the operating agency that the petitioner had subsequently
increased his offer to 1.35 crores, apart from agreeing to take
over the liability of the workers’ dues to the extent of Rs.60
lakhs. The BIFR also noticed that the consensus at the joint
meeting of the representatives of the Banks and other parties
was that the offer made by the petitioner was too low as
compared to the value of the assets and therefore it was not
W.P(C).6625,2820,34185/07
7
acceptable. A similar view was taken regarding the offer for the
Switch Gear Division at Mannar. In this proceeding (Ext.P3)
the BIFR ordered that the operating agency be changed since it
omitted to discharge its duties and responsibilities properly.
Accordingly State Bank of Travancore was appointed as the new
operating agency under Section 17(3) of the Act, in place of
IIBI. Certain other directions were also issued in the matter of
take over of the other revivable units through merger,
amalgamation etc. I will revert back to the above record of
proceedings of the BIFR (dated June 27, 2002) a little later.
17. In the meeting held on December 19, 2002 the BIFR
directed the operating agency to issue advertisements in 2
prominent newspapers for unit-wise sale of Switch Gear
Division and Relays Division in Kerala and Machinery Division
at Hyderabad on a “going concern basis” with or without
some or all their liabilities, within one month. For the
remaining divisions which were admittedly non revivable, the
BIFR directed the operating agency to issue advertisements for
sale of assets (inlcuding land, buildings, plant and machinery
etc) in convenient packages. Several other directions were also
issued with regard to the manner in which the bids were to be
submitted by the parties and the procedure to be followed
thereafter.
18. At the meeting held on November 10, 2003, the
operating agency informed the BIFR that the petitioner had
W.P(C).6625,2820,34185/07
8
offered Rs.234.50 lakhs for take over and revival of the Relays
Division at Thiruvananthapuram in response to the
advertisement issued in this regard. It is not necessary to refer to
the other issues which came up for consideration in the
hearing, at this stage. However it may be mentioned that the
BIFR made it clear that separate orders for rehabilitation of the
three revivable units will be issued later. Accordingly a draft
rehabilitation Scheme (DRS) in respect of Relays Division was
circulated by the BIFR along with its order dated January 28,
2005 calling for objections/suggestions to be considered at the
next hearing on April 13, 2005. A copy of the said order issued
by the BIFR is on record as Ext.P5.
19. When the Draft Rehabilitation Scheme came up for
consideration before the BIFR on July 26, 2005, sanction was
accorded making it clear that the sanctioned Schemes for the
machinery/Conductor Division at Hyderabad, Relays Division at
Thiruvananthapuram and Switch Gear Division at Mannar shall
come into force with immediate effect. A copy of the
sanctioned scheme in respect of the Relays Division,
Thiruvananthapuram is on record as Ext.P7.
20. Under Ext.P7 Scheme the entire Relays Division of
the Company had to be hived off into a new Company that
would be floated as ALIND Relays Ltd. Transfer of
liabilities to the extent of Rs.234.50 lakhs under the provisions
of Section 18(1)(d) of Act 1985 was to be allowed. The Scheme
W.P(C).6625,2820,34185/07
9
envisaged that on and after the date of transfer (April 1, 2004),
the newly floated Company would be merged into the firm of
the petitioner . Yet again, it is not necessary to refer to the other
terms contained in the sanctioned Scheme at this stage.
21. As mentioned in the earlier part of the judgment, the
orders passed by the BIFR on January 28, 2005 and July 26,
2005 have been set aside by the appellate authority in the
impugned order (Ext.P8). Since we are concerned in these cases
only with the sanctioned Rehabilitation Scheme in respect of
Relays Division, for which the petitioner had submitted his bid,
it is not necessary to refer to the other schemes in respect of
Machinery Division at Hyderabad or Switch Gear Division at
Mannar.
22. As has been noticed already, the Company was
declared sick under Section 3(1)(O) of the Act 1985, way back
in the year 1987. M/s.Somani Group of Industries was inducted
into the management under a Scheme of revival sanctioned by
the BIFR in 1989. It is true that the promoters (M/s.Somani
Group) had not succeeded in implementing the Scheme of
revival though they had been in charge of the sick Company for
more than a decade. It is on record that in the year 1994, the
BIFR had noticed that the Scheme for revival had not taken
wings as envisaged or expected. The promoters who had
pumped in funds in accordance with the terms provided under
the scheme, seemed to have lost interest and enthusiasm
W.P(C).6625,2820,34185/07
10
midway through. The proceedings of the BIFR clearly revealed
that various study reports from qualified technical groups and
other financial institutions were kept in view while considering
ways and means to keep up the momentum for revival and
rehabilitation of the sinking Company.
23. It is borne out by records that the assets and
liabilities of the Company had been reckoned on more than
two or three occasions. Understandably, the liabilities had
grown manifold over the years. Curiously at one stage the
value of the assets had reportedly come down; obviously for
the reason that the valuation of the plant and machinery had
been reduced because of depreciation and other similar factors.
But significantly the value of the land owned by the Company
in the 3 States of Andhra Pradesh, Kerala and Orissa had
appreciated considerably over the years. Yet another factor
which apparently persuaded the appellate authority to set aside
the orders passed by the BIFR was the potential for growth of
the power sector in the rapidly changing industrial scenario of
the country.
24. Reference has been made to the above aspects only
as a prelude to the consideration of the main issue as to whether
the appellate authority was justified in giving another
opportunity to the promoters and other share holders to revive
the Company in a bid to put it back on rails.
25. I have heard learned counsel for the parties at length.
W.P(C).6625,2820,34185/07
11
The orders passed by the BIFR at various stages of the
proceedings have been placed for my perusal in a compilation,
which is marked as Ext.X1. A large number of other documents
have also been produced, not only on behalf of the petitioner
and the contesting respondents, but also by the various
employees’ organisations in support of their respective
contentions.
26. It is primarily contended by the learned senior counsel
for the petitioner that the appellate authority was not justified in
showing indulgence towards promoters by granting them yet
another opportunity to revive the Company, and that too at a
stage when most of its manufacturing units have remained
closed down for years. It is the admitted position that those
units were declared unviable and unrevivable. They have been
irredeemably lost for all practical purposes. It is further
contended by the learned counsel that the promoters who have
been at the helm of affairs eversince 1989 had given up the
Company as a lost cause. They had not shown any interest to
give any sustenance to the Company. The employees of two or
three units, by dint of their hard work and determination, had
managed to keep them afloat. It is also pointed out by the
learned senior counsel that the promoters never bothered to co-
operate with the operating agency for revival of the Company.
They had also not effectively participated in the proceedings
before the BIFR. While inviting my attention to some of the
W.P(C).6625,2820,34185/07
12
summary record of proceedings of the BIFR, it is contended by
the learned senior counsel that the promoters had not challenged
any of the orders issued by the BIFR during 2002-2003. In
those orders, the BIFR had directed the Operating Agency to
publish advertisement for sale of the assets of the Company’s
closed/unviable units in Kerala and Orisssa and also the
Regional Offices at Delhi, Calcutta and Kochi and the corporate
office at Thiruvananthapuram under Section 18(2)(i) and
Section 18(ii) of the Act.
27. It is true that in the proceedings dated December 19,
2002, the BIFR had noticed that only 3 units of the Company
viz., the Switch Gear Division (SD) and Relays Division (RD)
in Kerala and Machinery Division (MD) (including Conductor
Division) in Hyderabad were operational and considered viable.
Significantly in these proceedings the BIFR had further
observed thus:
“….Fifteen years had lapsed since the
company came to BIFR and it had still not
been possible to work out a concrete
revival proposal, essentially because the
company’s original promoters were not
resourceful enough to work out and support
a meaningful revival plan that could be
acceptable to all its major stake holders.
Instead of proceeding for winding up of the
W.P(C).6625,2820,34185/07
13
company in 2001 the Bench had
nevertheless allowed some more time as a
last effort for reviving at least the above
three units in the workers’ interest and
directed for issuing advertisements for
change of management (COM) including
sale of the operational units on a “going
concern” basis….”
28. In the above proceedings it was ordered that the
divisions located in Hyderabad should be spun off into a
separate company with segregated assets and liabilities as
certified by the company’s auditors. It was further ordered that
the operating agencies shall issue advertisements in two
prominent newspapers for unit-wise sale of Switch Gear
Division and Relays Division situated in Kerala on a “going
concern” basis with or without some or all their liabilities within
one month’s time. As far as the remaining divisions which were
admittedly non-revivable were concerned, it was directed that
advertisements for sale of assets (including land, buildings,
plants and machinery etc.) in convenient packages may be
issued separately giving similar time limits. The other direction
was to prepare the book and market values of the assets and the
detailed list of partywise liabilities of the two revivable units in
Kerala. The BIFR had directed the Company to submit
revised/corrected unit-wise statements of all its assets and
W.P(C).6625,2820,34185/07
14
liabilities as on 31/3/2002 and 31/12/2002, with break up into
actual and contingent liabilities, after reconciling once again the
figures in respect of the dues of the workers, secured lenders,
statutory dues etc.
29. It was obviously in terms of the above order that the
newly appointed operating agency viz., State Bank of
Travancore had issued Annexure C advertisement in the
newspaper dated January 4, 2003. The petitioner had
submitted his offer for take over and revival of Relays Division
at Thiruvananthapuram in response to Annexure C. I shall deal
with the contents of the above advertisement a little later.
30. From the record of proceedings of the hearing of the
BIFR held on November 10, 2003 it can be seen that the
representative of the operating agency had informed the BIFR
that as against the valuation of Rs.133.75 lakhs for the Relays
Division at Thiruvananthapuram, Sri.Kurian Poulose
(petitioner) had made an offer of Rs.234.50 lakhs, out of which
Rs.150 lakhs was offered to the secured debtors. The operating
agency submitted before the BIFR that the offer made by the
petitioner was acceptable to it. In these proceedings the BIFR
recorded that separate orders in respect of circulation of the
rehabilitation proposals for the 3 revivable units including the
Relays Division at Thiruvananthapuram will be issued later.
Accordingly in its proceedings dated November 18, 2003 the
BIFR stated thus:
W.P(C).6625,2820,34185/07
15
“The proposal for revival of RD submitted
by Shri Kurien Poulose vide letter dated
10/5/2003 is also prima facie acceptable.
The OA (SBT) shall submit its final report
along with the minutes of the JM and a
draft of a workable rehabilitation scheme
within 3 weeks’ time. Copies of the OA
Report should be simultaneously made
available to Shri Poulose, ALIND and all
secured creditors/Govt. and other
Departments/Organizations from whom
reliefs are expected. The Bench will
consider circulating the scheme for consent
u/s 19(2) read with Section 19(1) of the
Act.”
It may be noticed that in the above proceedings, the BIFR
further directed issuance of advertisement for sale of the assets
of only the unviable units in Kerala and Orissa as well as its
Regional Offices at Delhi, Calcutta and Kochi and the Corporate
office at Thiruvananthapuram.
31. But curiously, in the Draft Rehabilitation Scheme in
respect of Relays Division, Thiruvananthapuram, a copy of
which is available in Ext.X1 at page 279, it is seen stated by
the BIFR thus:
“…After several hearings, BIFR, finally
W.P(C).6625,2820,34185/07
16
ordered in June 2002 for sale of running
units on a merger cum revival/takeover
basis and outright sale of non-running
units of the Company in a bid to revive it.
Accordingly Sri.Kurian Poulose evinced
interest in taking over the Relays
Division, Thiruvanangthapuram,
corporate office at Thiruvananthapuram
and land at Kochi. Sri.Kurian Poulose
submitted his proposal in response to the
advertisement released by State Bank of
Travancore, the Operating Agency (OA)
appointed by BIFR calling for bids.
Subsequently, a joint meeting was called
by the OA at Thiruvananthapuram on
6/3/2002 wherein the representatives of
the lenders, bidder and AIL were present
and the bid by Mr.Kurian Poulose for
taking over the Relays Division,
Thiruvananthapuram, the corporate office
at Thiruvananthapuram and land at Kochi
was found acceptable to the lenders.
Sri.Kurian Paulose agreed to improve his
offer to the lenders for Rs.145 lakhs to
Rs.150 lakhs.” (emphasis supplied)
W.P(C).6625,2820,34185/07
17
It is in the above context that Annexure C advertisement has to
be perused. The relevant entry in relation to Relays Division,
Thiruvananthapuram comprised only of 3 acres and 13 cents of
land in Vilappilsala village of Thiruvananthapuram district,
apart from factory and non-factory buildings. Nothing more,
nothing less. In other words, Annexure C advertisement did not
refer to or include the corporate office of the Company at
Thiruvananthapuram or the land at Kochi at all. There is no clue
as to how these two assets were also included in the Draft
Rehabilitation Scheme, which was ultimately sanctioned by the
BIFR two months thereafter, in September 2005, as could be
seen from Ext.P7.
32. A perusal of the record of proceedings of the hearing
of the BIFR held on June 27, 2002 reveals that the petitioner
had made an offer of Rs,.1.22 crores for the Relays Division in
response to the advertisement issued on February 22, 2002. Of
course, the petitioner had later increased the offer to 1.35 crores,
over and above the liability on account of the workers’ dues to
the extent of Rs.60 lakhs. The said offer was found to be too
low and unacceptable at the joint meeting of the parties
concerned and it was not accepted.
33. Relevant portion of clause (ii) of paragraph 20 of the
record of proceedings dated June 27, 2002 is extracted
hereunder:
“The OA shall issue advertisements in
W.P(C).6625,2820,34185/07
18
two prominent newspapers for unit-wise
sale of SD, RD and MD of the company
on a “going concern” basis (U/s.18 of
SICA), with or without some or all their
liabilities, within two months’ time. For
the remaining divisions, which were
admittedly non-revivable, advertisements
for sale of assets (including land,
buildings, plant and machinery etc. in
convenient packages) only will be issued
separately, giving similar time-limits. The
advertisements should contain the
available details of valuation of lands,
buildings, plant & machinery and other
assets of each unit. The drafts of the
advertisements may be got approved by
the Board by fax….”
Clause (iii)(a) of the above order reads thus:
“In case of take over of the revivable units
through merger/amalgamation etc. either
all the liabilities will be taken over (as
negotiated/or the revival proposal should
ensure payment of full principal amount
and, if possible, a part of interest
apportioned to the unit ….”
W.P(C).6625,2820,34185/07
19
34. A perusal of the above clauses contained in the
proceedings of hearing held by the BIFR on June 27, 2002 will
undoubtedly show that no orders had been issued to sell the
corporate office at Thiruvananthapuram or the land at Kochi
along with the Relays Division at Thiruvananthapuram, either
as a package or otherwise.
35. At the risk of repetition it may be stated again that
Annexure C advertisement in the newspaper did not include
either the corporate office at Thiruvananthapuram or the land at
Kochi. Moreover, there is nothing on record to show that the
joint meeting called by the operating agency on March 6, 2002
had given its approval for sale of the above two properties to
the petitioner. Significantly, petitioner had only stated that the
joint meeting had “considered” the proposal made by him.
36. hus having regard to the various earlier orders passed
by the BIFR in relation to the Relays Division at
Thiruvananthapuram, it cannot be said that there was any
direction for sale of the corporate office at Thiruvananthapuram
and the land at Kochi, while sanctioning the Scheme for take
over/rehabilitation of the same. Therefore the order passed by
the BIFR in relation to the Relays Division cannot be sustained.
Consequently the sanctioned Scheme in respect of the Relays
Division, Thiruvananthapuram (Ext.P7) also cannot be
sustained.
37. It is true that there is some force in the contention
W.P(C).6625,2820,34185/07
20
raised by the petitioner that the promoters had not evinced
interest to revive the sick Company over the years as expected
of them. The Scheme of revival sanctioned by the BIFR in the
year 1989 could not yield any desired result. Similarly the
conduct of the promoters before the BIFR on almost all
occasions, as revealed from the proceedings, was also not very
positive or satisfactory. Petitioner may also be justified in
contending that the promoters ought not to have been allowed
to impugn the last two orders issued by the BIFR while
allowing the earlier orders for sale of the assets of the Company
to attain finality.
38. Petitioner has pointed out that the promoters had
never contended before the appellate authority that they had
prepared a comprehensive revival or rehabilitation package for
the sick company. It is also contended by the petitioner that the
promoters or their allies had never made a prayer before the
appellate authority to give them an opportunity to revive the
Company. Learned Senior counsel submits that the enthusiasm
now shown by the promoters is not bona fide or genuine at all
and that interest of the workers and creditors of the sick
Company will be at peril if the order of the appellate authority is
sustained.
39. I have carefully perused the order passed by the
appellate authority which has been impugned in these cases. It
has already been found that the order issued by the BIFR in
W.P(C).6625,2820,34185/07
21
respect of Relays Division as well as the sanctioned Scheme for
its rehabilitation cannot be sustained for the reasons stated by
me earlier.
40. The other question that remains to be considered is
whether in the absence of any challenge, the other part of the
order passed by the appellate authority should be interfered with
at this stage in these proceedings. The appellate authority had
noticed that the operating agency as well as the secured
creditors had offered support for revival of the Company and
that they were agreeable for settlement of their dues under the
one time settlement scheme. It was also noticed by the appellate
authority that the Central Government and the State
Governments concerned, were also in support of revival. The
appellate authority had observed that there was complete lack of
information about the Company with BIFR and the operating
agency and that the operating agency and the Company had
failed to conduct proper valuation of the assets of various
divisions of the Company.
41. It has to be noticed that the phenomenal rise in the
land value will be a very determinative factor in the process of
revival as things stand now. But above all, the prime factor
which has to be borne in mind is that disintegration of the
Company may not be to the benefit or advantage of many,
barring only a few. There is no harm in giving one more chance
to resurrect the Company, especially since it is seen from the
W.P(C).6625,2820,34185/07
22
order that the representatives of Government of Kerala,
Financial Institutions, employees’ organisations etc. and
particularly the operating agency, have expressed their
willingness to give one more try for revival. Therefore the
appellate authority, in my view, was justified in deeming it fit
to afford further opportunity to the promoters to prepare a
comprehensive rehabilitation/revival Scheme for the sick
Company.
42. Needless to mention the BIFR may have to play a
more pro-active role henceforth. It has to be ensured that the
promoters do not fail yet again in their duty to put the Company
back on rails. If the BIFR notices any slackness or lack of
enthusiasm, it will always be open to take appropriate steps in
accordance with law.
43. In this context it may be mentioned that the
promoters, in response to a query made by this Court, had
submitted the Scheme of rehabilitation of the Company
prepared by them in June 2007. On the face of it, the
proposal/Scheme looks encouraging enough; but it depends on
how earnest the promoters are in implementing the Scheme.
The above proposal submitted by the promoters shall form part
of the record and it is marked as Ext.X2. The Registry shall
forward the same to the BIFR.
44. In view of the conclusions made by me as above, I do
not deem it necessary to go into the correctness of the order
W.P(C).6625,2820,34185/07
23
passed by the BIFR in the context of the provisions contained
in Section 18 of the Act. In the larger interest of the Company
and all parties concerned, I am satisfied that Ext.P8 order
passed by the appellate authority need not be disturbed at this
juncture. As mentioned earlier, the BIFR shall keep a close
watch of the functioning of the Company. It shall be ensured
that the promoters do not allow the Company to go to ruins.
45. In the result W.P.No.6625/2007 shall stand dismissed.
W.P.Nos.22820 and 34185/2007:
In view of the orders passed in W.P.No.6625/2007
petitioners are not entitled to get any relief in these two writ
petitions. They are accordingly dismissed.
A.K. Basheer
Judge
an.