- (1.) Heard learned counsel for the parties. In this writ petition, the petitioner has prayed for quashing of the order dated 23.12.2011 passed by the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) in Appeal Nos. 306/2007 and 303/2010, whereby the AAIFR has upheld the order dated 03.09.2007 and 22.09.2010 passed by the Board for Industrial and Financial Reconstruction (BIFR). The facts of the case are that a revival scheme for M/s Bihar Sponge Iron Ltd. (BSIL) was sanctioned by BIFR on 29.07.2004 with cut off date as 30th September, 2001. BIFR thereafter held several review hearings to monitor the implementation of the sanctioned scheme. In the hearing on 03.09.2007 the Monitoring Agency ICICI submitted before BIFR that although repayment of the dues of the Rupee Payment Lenders (RPL) was going on without any delay or dispute, certain dispute and delay has arisen in regard to payment of the dues of the Foreign Currency Lenders(FCL). BSIL had raised certain issues regarding payment of foreign exchange fluctuations, which needed BIFR's clarifications and directions. IFC(W), one of the Foreign Currency Lenders, had submitted that in terms of the provisions of SS-04, the company was to pay the differential due to foreign exchange fluctuations(FEFD) to its FCLs, and the company has been paying FEFD to IFC(W), but the company had not paid the installment due on July, 2007 and the foreign exchange fluctuations on the instalments due to IFC(W) so far. At the same time, on behalf of the Deutsche Investitions -und Entwicklungsgesellschaft Mbh (DEG), it was submitted that the company was mis-interpreting the provisions of SS-04 in regard to foreign exchange fluctuation dues, and the company, while withholding the FEFD, has also not paid the instalment due to DEG in July, 2007. The BIFR passed certain directions in respect of the same, which is also quoted in the impugned order at para 2.1(f) which is as follows:- "As the statement of installment payments' to be made by the company to its foreign current year lenders for the period from July,2004 to September, 2011 attached as Annexure II page 31 of SS-04 clearly shown that the installment amounts are to be paid to FCLs in Euro and also as in terms of 8.1(c)(iii) & (iv) of SS-04, the payment of said installment are to be serviced only in Euro, the BIFR in exercise to powers conferred u/s 18(5) & Section 18(9) of SICA hereby clarifies and directs that the company M/s BSIL would make payment of the dues installment to the FCLs in Euro in said Annexure II page 31 of SS-04 along with applicable interest LIBOR +1% p.a.(LIBOR + 3% in case of delay/default in payment of installments)." The appellant-petitioner preferred appeal against the said direction in Appeal No. 306/2007. Subsequently, in its review meeting dated 22.09.2010 BIFR reiterated the directions passed in the order dated 03.09.2007, which was also challenged by the petitioner-company in Appeal No. 303/2010. Both these appeals were decided by the common impugned order dated 23.12.2011 by the AAIFR.
(2.) It has been urged on behalf of the petitioner before this court while challenging the impugned order dated 23.12.2011 that the sanctioned scheme does not contain any provision for payments of foreign exchange fluctuation short fall by the company to its FCLs either on the upfront payment amount of Rs.65 crores or on balance amount of Rs.70 Crores to be paid in quarterly installment. It has been contended that AAIFR and BIFR have both failed to appreciate that under the sanctioned scheme the exchange fluctuation is fixed and not floating. It was further contended that the AAIFR had earlier dismissed the appeal filed by IFC(W) and DEG vide order dated 21.6.2007 which was preferred against the order of the BIFR dated 21.7.2004 thereby confirming the total liabilities of the company under the sanctioned scheme at Rs. 135 Crores. It was also contended that the order of the BIFR amounts to a modification of scheme which is impermissible without following the procedure prescribed u/s 18(5) of the SICA and any directions contrary to the provisions of the sanctioned scheme would have been issued by the BIFR u/s 18(9) of SICA. Having heard the counsel for the petitioner, at length and from perusal of the facts of the case it appears that all the contentions of the appellant/petitioner-company were taken note of by AAIFR in the impugned order at para 3 thereof. The contesting respondent Nos. 17 and 19 had also appeared and advanced their submissions opposing the contention of the petitioner before the AAIFR which is further been noticed in para 4 of the impugned order in detail.
(3.) It appears that upon hearing the rival parties, the AAIFR framed two issues, which were relevant for determination in the instant case: (i) Whether the sanctioned scheme had put a cap on all the liabilities of the company at Rs. 135.00 crore thereby implying that the company was not liable to bear the foreign exchange rate differential as it was paying earlier; and (ii) whether AAIFR order's dated 21.06.2007 has decided that all liabilities of the company would be met only within Rs. 135.00 crore, beyond which the company has no liability. Learned AAIFR has noticed the relevant clauses of the sanctioned scheme based on the OTS proposal. The relevant Clauses are quoted herein below:- ""Clause 6 The settlement of the dues of the secured creditors envisages payment of the principal amount aggregating Rs.135 Crores with upfront payment of Rs.65 crore and the balance Rs.70 Crores over a period of 10 years from the cut off date of 30th September, 2001 carrying interest at 9% p.m. On R.T.L and LIBOR + 1% on FCLs. All other dues are to be waived. The amount of upfront payment has been brought in by private promoters(Rs.32.5 crores) which will be converted into equity and GOJ ( short loan of Rs.32.50 Crore). The balance will be made from internal generation". "Clause 8.1(c)(iii) Respective share of IFCW and DEG out of aforesaid Rs. 75 crore as on 30.09.2001 shall continue as foreign currency loan in Euro and shall be serviced as FCLs in quarterly instalments." "Clause 8.6 (vii).......Any financial shortfall out of the delayed implementation of the schedule or for any other reason shall be made by the company's promoters by bringing in fresh funds as equity/subordinate unsecured loan without any recourse to FIs and banks or seeking any further reliefs/concessions from them than what had already been provided for in the scheme." "Clause 10 Any cash flow projections, apart from actual foreign exchange fluctuation as on date, depreciation at 3.25% p.a. On the FCL portion of Rs. 70 crore of the settlement amount for the period 31.07.2004 till repayment has been provided so as to take care of future fluctuation in foreign exchange payments.";