ALLIED INTERNATIONAL PRODUCTS LIMITED Vs. APPELLATE AUTHORITY FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION

JUDGEMENT

(1.) This petition under Article 226 of the Constitution of India is directed against an order of the Appellate Authority for Industrial and Financial Reconstruction (for short AAIFR), dated 28/05/1999 whereby the Appellate Authority dismissed the appeal against the order of the Board for Industrial and Financial Reconstruction (for short BIFR), dated 30/11/1998. By the impugned orders the Authorities under the Sick Industrial Companies (Special Provisions) Act, 1985 (for short SICA), directed that the sick company namely, M/s. Allied International Products Limited (for short AIPL) be wound up under Section 20(1) of the SICA.

(2.) To give a brief background, AIPL was promoted in the year 1962 for setting up a plant for manufacture of industrial fasteners, components and sub-assemblies for automobiles and aircrafts including nuts, bolts, screws, brackets, couplings etc. The cost of the project was originally estimated at Rs. 110 lacs which was to be financed by equity share capital amounting to Rs. 75 lacs and term loan of Rs.35 lacs. The factory was to be located at Anurahnagar, District Muradabad, Uttar Pradesh. The promoters had entered into technical collaboration with Textron Industry Inc., U.S.A. The foundation stone for the factory premises was laid on 1/01/1965.

(3.) Almost right from the beginning the company was embroiled in litigation. First litigation was on account of non-listing of shares in Delhi and Calcutta Stock Exchanges as proposed in the prospectus issued at the time of public issue in the year 1965. This litigation ended in the year 1972. The lending institutions agreed to sanction additional assistance to the company to complete the project. Therefore, the implementation of the project again started in 1972. In the meanwhile the collaborator M/s. Textron Industries Inc. had withdrawn on account of delay in implementation of the project. The company had to look for another collaborator which it found in M/s. Oriental Industry Inc., U.S.A. It appears from the status report prepared by the Operating Agency M/s. ICICI that the project implementation cost in the year 1977 had escalated to Rs. 372 lacs. Ultimately in April, 1978 the company commenced commercial production. In July, 1978 the institutions agreed to the request of AIPL for grant of reliefs and concession but before the reliefs could be given effect to, the institutions received letters from the Company Law Board revealing irregularities on the part of the promoters. The statutory auditors of the company in the year 1975-76 also reported irregularities at the Company's Board meeting held in December, 1978. The Industrial Financial Corporation of India (for short IFCI) and the Industrial Development Bank of India (for short IDBI) filed suits for recovery of their respective dues. Another round of litigation started. The company's bankers i.e., Central Bank of India stopped the working capital assistance to the company in July, 1980. In the result the operations of the company became marginal and ultimately came to a complete halt in 1985.