PUNJAB STATE INDUSTRIAL DEVELOPMENT CORPORATION LIMITED Vs. APPELLATE AUTHORITY FOR INDUSTRIAL & FINANCIAL RECONSTRUCTION, NEW DELHI & OTHERS

JUDGEMENT

(1.) The present proceedings are a saga of a chequered history of the dispute pertaining to M/s Punjab Nitrates Ltd., whose net worth was eroded.

(2.) The company was incorporated and registered on 09.06.1987 and was promoted by Punjab State Industrial Development Corporation (hereinafter referred to as "PSIDC") and Shri B.K.Gupta-respondent No.5. PSIDC was holding 50% shares while Shri B.K.Gupta was holding 16.67% while other shares were held by the family members of Shri B.K.Gupta. A term loan was availed of in the year 1988 by the company from PSIDC and Punjab Financial Corporation (hereinafter referred to as "PFC"). It became irregular as the company went into financial difficulty and is stated to have become sick as per balance sheet on 31.03.1994. The company filed a reference before the Board for Industrial and Financial Reconstruction (for short "BIFR") under the Sick Industrial Companies (Special Provision) Act, 1985 (for short "SICA"). The assets of the company were, however, taken over by PFC and PSIDC by taking recourse to the provisions of State Financial Corporation Act, 1951 (for short "the SFCA"). The BIFR ultimately opined on 13.03.1996 that the reference was not maintainable on account of the fact that the petitioner-company had not completed five years of commercial production.

(3.) This order of the BIFR was assailed by Shri B.K.Gupta before the AAIFR, who simultaneously also assailed the advertisement issued by PSIDC for sale of movable and immovable properties by filing Civil Writ Petition No.8946 of 1996. Shri B.K.Gupta succeeded before the AAIFR, which held that the reference was maintainable in terms of its order dated 24.09.1996.