IFCI LIMITED Vs. STATE BANK OF INDIA

JUDGEMENT

(1.) In the captioned writ petition, a challenge has been laid to the judgment dated 06.12.2010 passed by the Appellate Authority for Industrial & Financial Reconstruction (in short, AAIFR). The AAIFR by the impugned judgment confirmed the order passed by the Board for Industrial & Financial Reconstruction (in short, BIFR) dated 18.04.2007 which infact was a clarification and/or modification of its earlier order dated 14.09.2006. The short point which arises in the present writ petition is whether the direction of the BIFR, which has been overturned by the AAIFR, to the effect that 5% of the sale proceeds, which were adjusted by the first respondent i. e. , State Bank of India (hereinafter referred to as SBI), are required to be shared amongst all other secured creditors. The petitioner herein, i. e. , IFCI Limited is one such secured creditor. It is important to note that the entire controversy centres around an order dated 04.05.1999, passed by the BIFR, in the first reference, filed by the sick industrial company, which is respondent no. 6 herein i. e. , Prashant Industries Limited, which for the sake of convenience would be referred to as PIL. Therefore, it would be important to first incorporate herein the pertinent part of the order dated 04.05.1999, passed by the BIFR.

(2.) As indicated hereinabove, this order of the BIFR dated 04.05.1999 was passed in the first reference preferred by PIL, being: case no. 342/1998.

(3.) There is no dispute that the BIFR by virtue of an order dated 08.09.2000 modified its order dated 04.05.1999. The relevant modifications carried out by the BIFR are briefly as follows:-