JAWAHAR LAL GUPTA, J. - (1.) ON October 14, 1999, the Boad for Industrial and Financial Reconstruction found that the petitioner "fulfilled the criteria for Sick industrial Company in terms of Sections 3(1)(o)" of the Sick Industrial Companies (Special Provisions) Act, 1985. It was also "satisfied that the Company could not revive on its own and that it was in public interest on take measures specified under Section 18 of the Act". Accordingly, the Industrial Finance Corporation of the India (in short IFCI) was appointed as the Operating Agency "to examine the viability of the company and formulate a rehabilitation scheme for its revival if it was found viable". The guide- lines were laid down. The petitioner was inter alia directed to submit a "Comprehensive rehabilitation proposal with the means of finance fully tied up alongwith audited balance sheets for the last five years duly approved by their Board of Directors........within six weeks". It was also directed that in case "the company/promoters failed to submit their rehabilitation proposal within the specified time, the Bench might consider withdrawal of protection provided to the company under the provisions of the Act". The petitioner having failed to submit the proposal, the Board vide its order dated April 4, 2000 directed the Operating Agency to issue an advertisement "for change in management of the company inviting offers to take over/leasing/amalgamation/merger for rehabilitation, with or without One Time Settlement of the dues of Financial Institutions/Bank...." The "Present promoters" were also permitted to "submit an offer in response to the advertisement issued by the Operating Agency". A copy of this order has been produced as Annexure P.6 with the writ petition. On the next date viz. April 5, 2000, the petitioner submitted a proposal for the rehabilitation of the company and also filed an appeal. Vide order dated April 19, 2000, the appellant authority dismissed the appeal with the finding that the proposal was not viable. It was specifically observed that the margins were "too optimistic". A copy of this order is at Annexure P.8. Aggrieved by the orders, the petitioner-company has approached this Court through the present writ petition. It prays that the orders at Annexure P.6 and P.8 be quashed.
(2.) A short reply has been filed by respondent No. 3 viz. the IFCI only. It has been inter alia averred that its Order dated October 14, 1999, the petitioner had been asked to submit a rehabilitation proposal with means of finance fully tied up within a period of six weeks i.e. by December 1, 1999. It was made clear in para 9(vi) of the Order that extension of the time would be given. Since no proposal had been submitted, the respondent vide its letter of December 6, 1999 had informed the Board that the petitioner having failed to do the needful, suitable directions be given. A copy of this letter has been produced as Annexure R.3/1. On the same day, the petitioner had requested for extension of time of a further period of six weeks. However, by its letter dated December 9, 1999, the third respondent informed the Board that in its view, "the petitioner-company was not interested in rehabilitation and was using the provisions of SICA for insulating itself against any legal action". It has been further mentioned that the third respondent had "already filed a Recovery Application dated 23.12.1998 against the petitioner-company and its guarantors for recovery of its dues of Rs. 8,02,15,104/- in the Hon'ble Debt Recovery Tribunal at Jaipur.." On this basis, it was urged that the protection as given to the Company be withdrawn so that the secured creditors could pursue their legal remedies. A copy of this letter has been produced as Annexure R-3/2. Ultimately on February 8, 2000, the IFCI (respondent No. 3) once again wrote to the Board pointing out that the petitioner had not "submitted any proposal..in the matter". Thus, it was submitted that the "promoters do not have any proposal for rehabilitation/are not interested in rehabilitation.." Thus, it was prayed that the secured creditors be granted permission to proceed against it. The matter was considered by the Board and the order dated April 14, 2000 was passed. Thereafter, the petitioner had filed an appeal. However, it had not "bothered to explain the reason for delay in submission of the proposal". Despite that, the "proposal was examined by the Operating Agency and after detailed deliberations thereon, the OA expressed its inability to consider the same for various reasons as set forth in their letter dated 28.4.2000..." A copy of this letter has been produced as Annexure R.3/4. Finally, the matter was considered by the appellate authority. The appeal was dismissed. It has been pointed out that the petitioner owed a sum of Rs. 8,02,15,104/- to the third respondent as on December 22, 1998 and the interest thereon. Since the amount was increasing and the petitioner was delaying the matter, the third respondent maintains that the impugned orders as are legal and valid.
(3.) COUNSEL for the parties were heard by us today in the forenoon session. After hearing, we had found no merit in the contentions and pronounced the order dismissing the petition. We are now recording our reasons.;