R.R. KABEL LIMITED Vs. INCAB INDUSTRIES LTD.

JUDGEMENT

(1.) These three writ petitions share common questions of fact and law in respect of the order of the Appellate Authority for Finance and Reconstruction ("AAIFR" in short) dated 30.06.2011 (hereafter "the impugned order").

(2.) M/s Incab Industries Ltd (hereafter "Incab") was a sick industrial company. It preferred a reference to the Board for Industrial and Financial Reconstruction (hereafter "BIFR") in October 1999. BIFR declared it a sick industrial company on 04.04.2000. The State Bank of India ("SBI") was appointed as the Operating Agency ("OA") under Section 17 (3) of the Sick Industrial Companies (Special Provisions) Act, 1985 ("SICA") to examine feasibility of its revival and to that end, submit a rehabilitation scheme. This task encountered several impediments. As there was no viable rehabilitation scheme in sight, BIFR had directed the OA to issue an advertisement for change of management. Discussions to revive the scheme continued; eventually Incab's original promoter, on 11.12.2002, offered during the hearing before BIFR, to transfer their shares, free of cost, to a new promoter selected in that regard by the OA and approved by BIFR. The BIFR, on 19.03.2004 expressed its prima facie opinion that Incab should be wound up under Section 20 (1) of SICA. Later, on 24.09.2004, it directed publication of advertisements vis -à -vis change of management of the company (Incab).

(3.) Four proposals were submitted by the following companies for rehabilitation of Incab: Silver Jubilee Infrastructure Ltd. (SJIL), R.R. Kabel (RRK) Land Lease Co. Ltd. (LLC) and Pegasus Asset Reconstruction (P) Ltd (PARL). Except RRK, i.e., the petitioner, which indicated a cut -off date of 31.03.2005, all other proposals envisioned different cut -off dates (COD). Those proposals were assessed by the OA, which conferred with the promoters. There were BIFR hearings as well, where it was directed that there should be negotiations with the workers' unions and secured creditors. The petitioner, RRK, had, in the meanwhile, deposited different amounts aggregating to Rs.25 crores on various dates (21.03.2006, 21.04.2006, and 09.05.2006) in a No lien account under directions of the BIFR. RRK preferred an appeal against the order of 12.04.2006 by BIFR (directing re -negotiation of the dues of workers and secured creditors) before AAIFR (Appeal No.110/2006). AAIFR directed maintenance of status quo to restrain secured creditors from creating third party rights. In this background, third party entities i.e. Kamala Mills Ltd, Fasqua Investment (Pvt) Ltd, (who according to some of the contesting respondents, i.e. Tata Steel Ltd, are sister concerns of RRK) acquired the debts of various secured creditors as assignees.