BHARAT HEAVY ELECTRICALS LTD Vs. BHPV OFFICERS ASSOCIATION

JUDGEMENT

(1.) THE petitioner M/s Bharat Heavy Electricals Ltd. (hereinafter referred to as "BHEL") made a proposal to take over M/s Bharat Heavy Plates and Vessels Ltd. (hereinafter called "transferor company" BHPVL) which had been referred to the Board for Industrial and Financial Reconstruction (BIFR), under the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). Various proposals for its rehabilitation were pending and under examination. The Union Cabinet - - on 07.05.2008 - - approved BHEL's takeover of the said transferor company holding it a subsidiary and an on going concern. The Operating Agency (OA) prepared a rehabilitation scheme which was sanctioned by the BIFR on 21.10.2010. This led to the process of merger and integration of the transferor company. The initial scheme of constituting the transferor company as a subsidiary apparently was not very successful since it failed to revive financially. Consequently, a modified proposal whereby the BHEL offered a merger of the transferor company, was made. This ultimately shaped into a Modified Draft Rehabilitation Scheme (MDRS) which was approved by the Union Cabinet on 21.02.2013. Consequently, the transferor company filed an application under Section 18(5) read with Section 18(6) of SICA to take on board the MDRS, on 19.03.2013. BHEL contends that the MDRS was approved for circulation in the newspaper and notified objections and suggestions received from all interested parties. The MDRS was ultimately sanctioned on 29.08.2013.

(2.) THE three respondents who are before this Court in the present proceedings moved an application for review of the order dated 29.08.2013 for approving the MDRS. This was, however, rejected. Aggrieved, they preferred appeals to the appellate authority "AAIFR". The AAIFR reserved orders on the appeals on 16.04.2014. By its impugned order of 17.07.2014, the AAIFR allowed the appeals which had the effect of not only undoing the MDRS but the entire basis of sanction for rehabilitation of the transferor company. BHEL urges that the impugned order is passed on a narrow and hyper -technical appreciation of the terms of the MDRS and the so called seeming confusion between the "effective date or dates and the appointed date". The BHEL's counsel highlights the discussion by the AIIFR in this context which is at para 3 of its impugned order. The AAIFR pointed to several discrepancies, such as the BIFR giving different dates having direct bearing for giving effect to the provisions of the sanctioned scheme, there being different appointed date in para 2, and a different effective date in paras 9.2.7, 9.2.12 and 9.2.1. The AAIFR also wondered about the date of the pronouncement of the order, which was given to one of the members for signing on 08.04.2013 and that the pronouncement of the order was made on 29.08.2013. The relevant discussion by the AAIFR in this regard which ultimately persuaded it to set aside the MDRS is extracted as under:

(3.) ON the basis of its understanding and discussion contained in the impugned order in the manner extracted above the AAIFR remitted the matter for reconsideration along with objections and suggestions of the appellants i.e. the three respondents presently before us.