TRINITY AUTO COMPONENTS LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) IN this proceeding under Article 226 of the Constitution of India, an order of the Appellate Authority for Industrial and Financial Reconstruction ("AAIFR") constituted under Sick Industrial Companies (Special Provisions) Act, 1985 ("SICA") dated 6.2.2015 in Appeal No.207/2014 has been impugned. Though the AAIFR set aside the order of the Board for Industrial and Financial Reconstruction ("BIFR") dated 14.10.2014 partly, the petitioner is aggrieved to the extent of the consequential directions given by AAIFR and also by its not entertaining the appeal with respect to the other parts of BIFR's order.

(2.) BRIEFLY , the facts are that M/s Trinity Auto Components Ltd. (hereafter referred to as "the sick company") lodged a reference with BIFR in 2011 and was declared sick under Section 3(1)(o) of SICA on 6.9.2011. An unsuccessful attempt was made by unsecured creditors to be impleaded in the proceedings under SICA and the BIFR rejected their application on 26.9.2011. Since the existing promoters of the sick company had sought for change of management, the BIFR directed the Operating Agency (OA) i.e. the Axis Bank to submit a comprehensive report with regard to such change. Ultimately on 6.3.2012, the BIFR held that M/s Tarini Steels Company Ltd. had offered the highest bid; it was declared as successful bidder for change of the management of the company. During the succeeding hearings, the Draft Rehabilitation Scheme (DRS) was submitted by the OA. On 4.3.2013, BIFR directed the examination of the DRS. By an order dated 20.3.2013 BIFR circulated the DRS to all concerns for consent in terms of Section 19 of the Act. It was noted on 20.6.2013 that objections from the Sales Tax Department and two unsecured creditors of the sick company had been received. No objection to the DRS from the sick company was filed or lodged. Subsequently, various hearings took place and pursuant to directions of the BIFR, the OA filed its synopsis and submissions. On 25.2.2014, BIFR was requested to pronounce final orders under Section 18 (4) since hearings had been concluded. Since no orders were forthcoming, a writ petition - W.P.(C)5176/2014 was initiated before this Court, in which notice was issued on 19.08.2014. Within two days of that order on 21.08.2014, BIFR issued its order in respect of the matter, which had been reserved on 30.1.2014. On two different occasions, the OA was directed to examine what BIFR termed as "gaps" in the DRS. On 7.11.2014, BIFR released its reserved orders.

(3.) THE petitioner felt aggrieved by directions contained in paragraph 6.2 on two counts, viz the de -rating valuation of shares and consequent pay out to promoters. As against the derating of 60% proposed, BIFR directed the full face value of the shares to be paid. Secondly, the petitioner had proposed to compensate Fixed deposit holders at a certain ratio; the BIFR however again directed the full value to be compensated.