MSD INDUSTRIAL ENTERPRISES LTD Vs. APPELLATE AUTHORITY FOR INDUSTRIAL & FINANCIAL RECONSTRUCTION AND ANOTHER

JUDGEMENT

(1.) Challenge in the present petition is to an order dated 31.08.2012 passed by the Appellate Authority for Industrial and Financial Reconstruction (for short 'the AAIFR') constituted under the Sick Industrial Companies (Special Provisions) Act, 1985.

(2.) The petitioner availed financial assistance from the State Bank of India (SBI), Small Industrial Development Bank of India (SIDBI) as well as the Punjab State Industrial Development Corporation (PSIDC) respondent No.2. The petitioner was declared sick company by the Board of Industrial & Financial Reconstruction (for short 'the BIFR') constituted under the Sick Industrial Companies (Special Provisions) Act, 1985 vide order dated 04.02.2002. BIFR after considering the recommendations of the operating agency passed an order on 02.12.2009. BIFR has taken into consideration the settlement arrived at between the petitioner with SBI and SIDBI, who were holding the debt components of 76.12% and 11.09% respectively as well as the debt component of 12.78% of PSIDC. The operative part of the order dated 02.12.2009 reads as under:

(3.) Aggrieved against the said order, PSIDC filed an appeal before the AAIFR. Such appeal was accepted on 31.08.2012 for the reason that the reference filed by the petitioner stands abated in view of the proceedings initiated by PSIDC under the Securitization & Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short 'the SARFAESI Act'). The AAIFR proceeded assuming that PSIDC represents 3/4th of the outstanding secured debt of the company and has taken a valid action under the SARFAESI Act. It was observed to the following effect: