RAVI INDER SINGH Vs. AAIFR

JUDGEMENT

(1.) The petitioner, through present writ petition, has assailed the orders dated 21.11.2003 and 18.12.2003, passed by BIFR with respect to Indian Steel and Wire Products Ltd. (hereinafter referred to as 'ISWPL') and order dated 8.12. 2006, passed by AAIFR. AAIFR dismissed the appeals Nos. 358/2003 and 91/2004, filed by the ISWPL and appeal No.40/2004 filed by Bank of Rajasthan against the orders of BIFR, wherein BIFR had approved and sanctioned the scheme of TISCO to revive the sick company ISWPL and also, inter alia, directed the erstwhile directors of the company to vacate their respective offices.

(2.) The facts culminating in the filing of present writ petition may be briefly noted:- Petitioner was the erstwhile Managing Director of Indian Steel and Wire Products Limited (ISWPL) before ISWPL's management was transferred to TISCO by virtue of BIFR's order for rehabilitation of the said Company under SICA. ISWPL was established in year 1927 at Jamshedpur by the petitioner's grandfather. A foundry unit was also established in the year 1936 by the name of Jameshdpur Engineering and machine Manufacturing Company (hereinafter referred to as 'JEMCO'). In 1934-36 ISWPL commenced its commercial production. In 1980 TISCO provided ISWPL with electricity and raw materials. In 1988-91 ISWPL planned to modernize the existing manufacturing facility and for the said purposes financial assistance was sought which was sanctioned as well. The modernization was completed in 1989 and in 1991 JEMCO, a profit making subsidiary unit was merged into ISWPL. According to the petitioner, in the year 1994 TISCO without prior sanction of the Government in writing, unilaterally and arbitrarily raised the tariff rates of electricity and in 1995 it served a notice of disconnection of power on JEMCO, a division of ISWPL and in 1998 disconnected the supply of power to one of the divisions of ISWPL due to which it became inoperative. In 1996 against the said act of TISCO, a writ petition bearing No.686 of 1996 was filed in the Patna High court. The Patna High Court vide its order dated 24.3.2000 partly allowed the writ petition in favour of the petitioner, however, both the petitioner and TISCO filed an SLP in the Hon'ble Supreme Court which was duly admitted but withdrawn on 24.08.2006 by present/new management of ISWPL.

(3.) In view of erosion of net worth of ISWPL as reflected in audited balance sheet for the financial year ending 31.3.2000, a mandatory reference under section 15(1) of SICA was filed. In the mean while, on 20.12.2001, president of Labour Union of ISWPL filed a writ petition no 2645 of 2001 in Calcutta High court praying for quashing of order of BIFR dated 24.9.2001 and handing over the unit to TISCO. BIFR vide its order dated 24.9. 2001 declared the company as "Sick Industrial Company" and appointed IDBI as the Operating Agency hereinafter referred as OA. The OA vide an advertisement dated 16.10.2001, invited offers for change of management. It is alleged by the petitioner that the OA highlighted only negative aspects and completely ignored the positive aspects and potents as a result of which only ISWPL and TISCO submitted their proposals. However, both of them were quite unacceptable to the secured creditors and, therefore, revised proposals were invited. Petitioner states that his revised proposal was placed before the OA, however, the same was not considered and on 22.4.2003, OA proceeded to prepare a Draft Rehabilitation Scheme (hereinafter referred as DRS) based on the proposal of TISCO. The Calcutta High Court also vide its order dated 8.5.2003 directed BIFR to expedite the hearing of the matter of revival or rehabilitation of ISWPL- on the basis of report of OA and proposal of TISCO as early as possible preferably within the period of 3 months from the date of communication of this order. OA on its own prepared a DRS based on proposal of Respondent no 2, which the petitioner claims to be beyond the direction of BIFR and against the provision of Section 17(3) of SICA. The petitioner filed an appeal against the order of the Calcutta High Court but the same could not be heard till the final order of BIFR was passed. The proceedings before BIFR went on and although the petitioner moved an application for removal of IDBI as OA and appointment of neutral OA, BIFR, however, vide its order dated 25.7.2003 approved and circulated the DRS prepared on the basis of the proposal submitted by TISCO. ISWPL on 10.10 2003 filed its objections to the DRS of TISCO before the BIFR. Aggrieved of the said order, the petitioner filed an appeal dated 7.10.2003 before the AAIFR, however the same could not be heard because AAIFR was not functioning at that time. Due to non- functioning of AAIFR, a writ petition before High court was filed on 20.10.2003 praying for quashing of order dated July 25.7.2003 and for appointment of a neutral OA. BIFR on the other hand, on 22.10.2003 sanctioned the rehabilitation scheme submitted by TISCO, however it did not issue any order. In petitioner's array of facts it is further alleged that before the scheme was officially released, TISCO in active connivance with an employee of ISWPL deposited a bank draft of an amount of Rs 5,85,700/- purported value of shareholding of ISWPL at Calcutta. It is alleged that the said employee had no authority to sign the pay-in-slip nor had any authorization of the board of directors. The writ petition filed before the High court was heard on 29.10.2003 and the petitioner undertook to deposit a cheque of Rs 5 crores and deposit the title deeds of property bearing address 17 Tuglak Road, New Delhi. Further vide order-dated 7.11.2003, the court directed not to implement the scheme pending consideration of the case. BIFR on 21.11.2003 released the rehabilitation scheme for ISWPL and in view to give effect to the said scheme a meeting was called on 27.11.2003 without informing the CMD of the ISWPL. CMD on receiving information of the impending meeting, attended the same and also lodged a criminal complaint against the security men of TISCO for harassing the petitioner. The order dated 21.11.2003 passed by the BIFR was challenged before AAIFR on 4.12.2003 vide an appeal No.358 of 2003. The writ petition filed earlier was sought to be withdrawn on the grounds that BIFR had released the sanctioned scheme of TISCO as a result the petitioner was directed to pay costs and BIFR was further directed to proceed further in the matter in accordance with law. BIFR on 18.12.2003 without giving notice to the petitioners dissolved the Board of Directors of ISWPL and directed to constitute new Board of Directors and also asked the erstwhile Directors to vacate the offices forthwith. The new management through the Company Secretary filed application for withdrawal of application filed by the previous management before AAIFR. The Ld single member of AAIFR vide its order-dated 30.12.2003 allowed the said application. The erstwhile management aggrieved of the said order filed another appeal dated 18.12.2003 before AAIFR and also filed a writ petition before Delhi High Court on 23.2.2004 and the High Court vide order dated 19.5.2004 directed the AAIFR to consider the appeal purportedly allowed as withdrawn by the single member. AAIFR vide its order dated 12.8.2005 held that the earlier order passed by single member is non- est and restored and admitted the appeal earlier construed as withdrawn. Finally AAIFR heard the arguments and vide order dated 8.12.2006 dismissed the appeal of the petitioner. Against the said order an SLP was filed which was dismissed as withdrawn and liberty was given to the Petitioner to approach the High Court.