RATHORE, J. - (1.) THE petitioners are the Small Scale Industries situated at Kota. THE petitioner No. 1 was supplying coal. Petitioner No. 2 undertook the work of repairing and maintaining the machines. Petitioner No. 3 manufactured machinery parts. Petitioner No. 4 supplied machinery parts on credit basis. Petitioner No. 5 also manufactured machinery parts as an ancillary to the J. K. Synthetics Ltd. Petitioner No. 6 also undertook the work of repairing and maintenance of machines at Kota unit. Petitioner No. 7 was also doing the same work at Jhalawar unit. Petitioner No. 8 was supplying machinery components to the units of J. K. Synthetics Ltd. , Kota and Jhalawar.
(2.) THE petitioners in their petition have also shown the details of dues against J. K. Synthetics Ltd. in Para No. 5. Upon reference been made to the Board of Industrial and Financial Rehabilitation (BIFR) under Section 15 (1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short, `the Act of 1985') on 2. 4. 98, the BIFR declared the respondent No. 2 as Sick Industrial Company and proposals were asked for its rehabilitation. On 27. 4. 2000 and 6. 6. 2000 the BIFR passed the following orders:- (i) IDBI (OA) would issue an advertisement by 7. 7. 2000 for change of management of the company inviting offers for take over/leasing/amalgamation/merger for rehabilitation, with or without One Time Settlement (OTS) of the dues of FIs/banks, giving 8 weeks' time for submission of offers i. e. upto 7. 9. 2000. (ii) The change of management will be for the company as a whole. However, bids can be made for the company as a whole or any one of more of the units of the company. (iii) The present promoters may also submit an offer either on their own or with a joint venture partner or partners for the Company as a whole or one or more of the divisions of the company with MOF fully tied up. (iv) Considering the large size and the complexities involved, the IDBI is requested to submit a note to the Board indicating the time frame as well as the procedure to be adopted for evaluating the bids in a transparent manner. The procedure would be examined and approved by the board before evaluating the relative merits of the offers received by the OA. (v) As per the procedure approved by the Board of evaluation of bids, the OA would evaluate the relative merits of the bids received and submit a report to the Board within 8 weeks i. e. 7. 11. 2000 after holding a joint meeting to arrive at an agreed package. The OA would also send an interim status report to the board by 6. 10. 2000 indicating, inter-alia, the position of offers received in response to the advertisement. (vi) If no concrete rehabilitation proposal with means of finance fully tied up is received in response to the advertisement issued by the OA, the Bench may consider passing further appropriate orders which may include issue of a show cause notice for winding up the company without holding further hearing. (vii) The cost of the advertisement would initially be borne by IDBI and it would be subsequently shared by the secured creditors on a prorate basis within 15 days of the receipt of the bill from the OA. The OA would not delay the release of advertisement on this account. As per the above orders, a new company "j. K. Cement Ltd. " was to be formed and the cement manufacturing units which are running profitably are to be de-merged from J. K. Synthetics Ltd. and the new company will provide Rs. 449. 11 crores to settle the dues of certain creditors. Since the petitioners have not been included in the scheme and thus they have been completely kept out of the scheme formulated for settlement of dues of the creditors. Mr. Asopa, learned counsel for the petitioners submits that the total dues of the petitioners including interest, is only Rs. 2. 25 crores and the petitioners being small scale entrepreneurs should also be paid dues out of the amount of Rs. 511. 55 crores which was kept reserved for settlement of dues for the secured creditors. He has further contended that the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) has asked for comments in response to the scheme within 60 days from the secured creditors under Section 19/1 of the act of 1985 but the petitioners were not called upon for submitting their comments. Being aggrieved by this order of AAIFR the petitioners have preferred this present writ petition.
(3.) MR. Asopa submits that the Appellate Authority should have considered the provisions of Section 529 and 529-A of the Companies Act, 1956 with regard to preference of payment of dues. Mr. Asopa has drawn my attention towards the Scheme formulated by AAIFR vide order dated 31. 8. 2001, by which, at Item No. 30, Scheme is formulated which stipulates that "this is a scheme for the settlement of the dues of term lenders, debenture- holders, working capital financiers and preference share-holders of JKSL through de-merger of the `cement undertaking' of JKSL into JKCL. Under this scheme there is no specific mention regarding secured creditors and unsecured creditors. It only mention for settlement of the dues of term lenders, debenture- holders, working capital financiers and this includes the petitioners also. Mr. Asopa further referred a Section 13 (2) of the Act of 1985 which stipulates as under:- 13. Procedure of Board and Appellate Authority (2) In particular and without prejudice to the generality of the foregoing provisions, the powers of the board or, as the case may be, the Appellate Authority, shall include the power to determine the extent to which person interested or claiming to be interested in the subject matter of any proceeding before it may be allowed to be present or to be heard, either by themselves or by their representatives or to cross-examine witnesses or otherwise to take part in the proceedings. ;