D.Y.CHANDRACHUD,J. - (1.) Centre for Public Interest Litigation, while invoking the jurisdiction of this Court under Article 32 of the Constitution sought diverse reliefs in relation to the conduct of business and affairs of Industrial Finance Corporation of India. The reliefs which have been sought in these proceedings are for : (i) The removal of Atul Kumar Rai, the Respondent No. 4 from the post of Chief Executive Officer and Managing Director; (ii) An independent investigation into allegations of administrative and financial irregularities of IFCI; (iii) A direction to the Union of India to exercise its powers under the "surviving provisions" of the Industrial Finance Corporation; (iv) Transfer of Undertaking and Repeal Act, 1993, in particular by enforcing its rights for conversion of an investment of Rs. 523 crore in Optional Convertible Debentures into equity.
(2.) Industrial Finance Corporation of India (IFCI) was established as a statutory Corporation under the Industrial Finance Corporation of India Act, 1948 by the provisions of the Industrial Finance Corporation of India (Transfer of Undertaking and Repeal) Act, 1993. The Act of 948, was repealed and the Corporation was converted into a Company. The Statement of Objects and Reasons accompanying the introduction of the Bill in Parliament indicated that the conversion of IFCI from a statutory Corporation to a Company was necessitated in view of the decline in the availability of concessional funds from government and the Reserve Bank of India. As a result of the developments which took place in the financial sector, it had become necessary for IFCI to raise resources from the market.
(3.) A major shareholder of IFCI was the Industrial Development Bank of India which was essential in a competing market position. As a result of the repeal enactment a new Company governed by the Companies Act 1956 was established to which the entire undertaking business and functions of IFCI as well as its assets and liabilities were transferred. The financial position of IFCI painted a dismal picture. On 31 March 2002, its accumulated losses were over Rs. 1100 crore; its net worth stood at a negative Rs. 31 crore and non-performing assets were officially estimated at 32 per cent.;