HARYANA STEEL AND ALLOYS LTD Vs. IFCI LTD

JUDGEMENT

(1.) The present appeal has arisen from the judgment dated 21st September, 2006 passed in WP(C) No.14915/2006 preferred by the appellant against respondent No.1 praying, inter alia, for setting aside the bid/auction process initiated by respondent No.1 to sell/assign its debts to a third party and direct respondent No.1 to consider One Time Settlement (in short 'OTS') as proposed by the appellant which is at par with the successful bidder. The learned Single Judge dismissed the writ petition preferred by the appellant by holding that respondent No.1 is entitled to sell its Non Performing Assets (in short 'NPAs') to any other banking institutions or financial institutions under the guidelines issued by the Reserve Bank of India vide circular No.RBI/2005- 06/54 DBOD No.BP.BC 16/21.04.048/2005-2006 dated 13th July, 2005 and also holding that respondent No.1 cannot be directed to consider the offer of appellant to have another OTS for Rs.520 lacs.

(2.) Brief facts of the case that are necessary to decide this appeal are that the appellant is a company incorporated under the Companies Act in the year 1970. Initially, the same was promoted by the Goyal family. However, in the year 1998-99, the management of the company was transferred to the Rawat group. In the year 1999, as a consequence of the appellant having sustained huge financial losses, its net worth got completely eroded and it filed a reference under Section 15 (1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as 'SICA') before the Board for Industrial and Financial Reconstruction (in short 'BIFR'). Vide order dated 11th June, 2002, BIFR rejected the reference of the appellant as being not maintainable. Against the said order, the appellant filed an appeal before the Appellate Authority for Industrial and Financial Reconstruction (in short 'AAIFR'). Vide order dated 28th December, 2005, the said appeal preferred by the appellant was allowed by AAIFR and the matter was remanded back to BIFR. In the meantime, the appellant filed two more references before the BIFR which were also remanded by AAIFR vide order dated 1st December, 2005 directing BIFR to consider afresh, the sickness of the appellant under SICA in respect of first reference alongwith subsequent two references. BIFR, vide order dated 19th April, 2006, declared the appellant as a sick industrial company.

(3.) On 17th February, 2006, for the first time, the appellant made a proposal to respondent No.1 for OTS by offering to pay Rs.275 lacs which was equivalent to 85% of the principal amount. Respondent No.1 replied to the appellant vide letter dated 10th March, 2006 whereunder, it offered to settle the dispute inter se the parties upon receipt of the principal amount of Rs.326 lacs or upon assignment of respondent No.1's loan, to an asset reconstruction company, by 31st March, 2006. Admittedly, the appellant under cover of a letter dated 30th March, 2006 forwarded an amount of Rs.10 lacs to respondent No.1 with a request to reconsider the sanctioned period. However, subsequently it did not pay the amount of Rs.326 lacs as demanded by respondent No.1 to settle the matter by way of OTS.