ASSOCIATED CEMENT COMPANIES LIMITED Vs. APPELLATE AUTHORITY FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION

JUDGEMENT

(1.) The facts in short are that Ashoka Cement Ltd. (A.C.L.) with financial participation of West Bengal Industrial Development Corporation (W.B.I.D.C.) floated Damodar Cement and Slag Limited (D.C.S.L.), which was incorporated under the Companies Act, 1956 in the year 1977. A.C.L. disinvested its entire share holding in favour of W.B.I.D.C. in May, 1991. In July, 1993 C.C.I., entered into joint venture agreement with W.B.I.D.C. As a result thereof C.C.I. acquired 51% shareholding interest in D.C.S.L. By another agreement C.C.I. acquired 90% shareholding interest in W.B.I.D.C. on 24/1/1992. As C.C.I. failed to pay the full purchase price, its shareholding interest was scaled down to 58.39% while the balance 41.61% was held by W.B.I.D.C. and other share holders.

(2.) By order passed on 24/4/1994 the Board for Industrial and Financial Reconstruction (B.I.F.R.), was declared D.C.S.L. a sick industrial company. M/s.S.R.Batliboi and Co., the Chartered Accountants were appointed by B.I.F.R. to carry out an enquiry into the financial health of D.C.S.L. Report was filed by the said Chartered Accountant on 8/12/1995, who valued the share of D.C.S.L. at Rs.2.03 each against the original value of Rs.10.00 .

(3.) Associated Cement Co. of India (A.C.C.), the petitioner herein submitted a proposal for rehabilitating D.C.S.L., pursuant to the offer, which was accepted by Industrial Development Bank of India ( the Operating Agency). A direction was issued by B.I.F.R. for preparation of the draft rehabilitation scheme based upon the proposal of the petitioner company. During the proceedings, B.I.F.R. was moved by the Operating Agency that an offer for purchase of shares at the rate of Rs.4.50 per share as contemplated in the draft scheme had been received from Swiss Company, known as Holderbank. On 31/5/1996 B.I.F.R. rejected the offer of Swiss Company on the ground that it had come at a very late stage. On 24/7/1996 when all the concerned parties were agreeable to certain modifications in the terms of the draft scheme an order was passed by B.I.F.R., sanctioning the scheme.