- (1.) The petitioner is a company, which was set up in 1986 for manufacture and sale of Ingots and Billet Casting. The petitioner entered into two lease agreements dated 16.06.1995 and 02.02.1996 with Uttar Pradesh Financial Corporation (hereinafter referred to as the UPFC) for leasing casting machine and induction furnace. Under clauses 3.3 and 4 of the agreements, the petitioner was required to deliver back the equipments after the expiry of the lease period. Under the terms of the agreements, the ownership over the equipments, at all point of time, remained with the UPFC. The lease of machinery was for a period of sixty months. In 1997 the company suffered losses and as on 31.03.1999, the accumulated loss of the company exceeded its entire net worth. The petitioner company became sick and made a reference to the Board For Industrial And Financial Reconstruction (hereinafter referred to as BIFR). On 13.08.1999, the BIFR declared the petitioner to be a sick unit.
(2.) During the pendency of the proceedings before BIFR, the petitioner entered into One Time Settlement (hereinafter referred to as OTS) on 05.01.2004 with UPFC. Clause 13, 14 and 15 of the OTS of the proposal are relevant, which are extracted hereunder: "13. Company has been granted permission for the sale of concost plant & furnace which was leased to company, at a price of Rs. 65.00 lacs + Trade Tax & same would be set off towards the OTS of lease assets. In case, it get higher value against the advertisement to sale for these assets then same difference amount is to be paid to Corporation. (14)In any case, entire sale proceeds would go towards O.T.S. (15) The O.T.S. amount of Rs. 255.55 lacs inclusive of advance lease rental and this amount would be adjusted in the last instalment of OTS of lease."
(3.) Under this proposal UPFC granted permission to the petitioner to sell concost plant & furnace, which was leased to it at a price of Rs. 65.00 lacs.;