INDUSIND BANK LTD Vs. ITI LIMITED

JUDGEMENT

(1.) By these proceedings under Article 226 of the Constitution, an order of the Appellate Authority for Industrial and Financial Reconstruction ("AAIFR") made under the Sick Industrial Companies (Special Provisions) Act, 1985 ("SICA") dated 27.05.2013 has been impugned.

(2.) The brief facts of the case are that the first respondent (hereafter referred to variously as "ITI" and "the company") approached the Board for Industrial and Financial Reconstruction ("BIFR") set up under SICA, on the basis of its having lost the net worth; this led to a reference, registered by the BIFR in which the cut-off date for preparation of the scheme was directed to be 31.12.2005. This was subsequently changed to 31.03.2009. Originally, the petitioner bank had sanctioned working capital limits to the tune of Rs. 40 crores (half of which was fund-based and the other, non fund-based limits) renewable annually. The BIFR had appointed the State Bank of India ("SBI") as the Operating Agency ("OA"). At the time of formulation of scheme itself, it is alleged that the petitioner had expressed reservations and decided to exit the consortium arrangement entered into between the participating banks and financial institutions.

(3.) The Consortium Agreement had been entered into by various banks, including the petitioner, all of whom were creditors of ITI, on 20.03.2002. The purpose and underlying objective of the Consortium Agreement was to enable the participating creditors to work in tandem towards the ultimate goal of realization of their dues from the ITI. On 19.08.2009, the Central Government sanctioned a grant of Rs. 28.20 crores to the ITI to discharge its liability. Taking note of this, the petitioner claims that it reduced the fund-based limits to Rs. 1.3 crores, to the ITI.