M/S. ISPAT PROFILES INDIA LIMITED Vs. APPELLATE AUTHORITY FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION & ORS.

JUDGEMENT

(1.) Way back in the year 1989 the petitioner commenced commercial production of steel products at its plant located in District Pune in the State of Maharashtra. It availed credit facilities from various banks and financial institutions such as IFCI, Indian Bank, State Bank of Bikaner and Jaipur, Dena Bank, State Bank of India, State of Bank of Hyderabad and ICICI Bank. Being a new unit, as per the policy of the State of Maharashtra, the petitioner was given a credit facility of collecting sales tax from the buyers of the product manufactured by the petitioner and paying the same to the State Government with a moratorium of ten years i.e. ten years sales tax collected could be paid in installments after ten years of commencement of the sale.

(2.) The net worth of the petitioner turned negative in the year 2000, and on September 30, 2001 the petitioner filed a reference under Sick Industrial Companies (Special Provisions) Act, 1985 before the Board for Industrial and Financial Reconstruction (BIFR). It was registered as Case No.50/2002. BIFR dismissed the reference as belated on June 17, 2003, which order was set aside by the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) on November 08, 2005 and Case No.50/2002 was revived. On March 30, 2006 BIFR declared the petitioner a sick company and appointed IFCI as the operating agency to prepare a revival scheme, which in turn appointed M/s.M.N.Dastur & Co. as a consultant to submit a report regarding revival of the petitioner. M/s.Bhatwadekar & Co. were appointed as a valuer to submit a valuation report regarding assets of the petitioner. Consortium meeting of the bank was held on October, 2006, when in principal decision was taken to proceed for a onetime settlement requiring petitioner to submit a better onetime settlement proposal. Between June to September, 2007 the secured lenders considered a rehabilitation package offered by the petitioner containing offer as to how it would like the debts to be restructured and paid. Matter thereafter lingered on. Interim orders passed by BIFR were repeatedly challenged before AAIFR resulting in proceedings lingering on till when BIFR passed an order on November 04, 2003 issuing a show cause to the petitioner as to why it should not be wound up under Section 20 of Sick Industrial Companies (Special Provisions) Act, 1985. As per the show cause notice the petitioner, its promoters and even outsiders were given an opportunity to submit a proposal for revival of the petitioner. There is haziness in the facts hereinafter and it is not clear whether the petitioner submitted any proposal afresh for revival of itself or any of its promoter gave a proposal for the revival of the petitioner. Order dated January 23, 2014 was thereafter passed by BIFR ordering winding up of the petitioner.

(3.) In ordering winding up of the petitioner, BIFR recorded the journey chartered before it after Case No.50/2002 was registered and that secured creditors did not accept the proposal submitted by the petitioner for a onetime settlement, nor did the petitioner submit a comprehensive report justifying its revival. It was recorded that it would be just equitable and in public interest to wind up the petitioner.