TMI Blog2009 (4) TMI 1049X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Sanjiv Sen, Mr. Sameer Dewan, Advs., Mr.Dushyant Dave, Sr.Adv. and Mr. Jayant Bhushan, Sr. Adv. with Mr. D. Kundu and Mr. Tarun, Adv., Mr. Vivek Sibal, Mr. Tarunvir Singh, Advs., Mr.Radha Rangaswamy, Adv. JUDGMENT V.K. SHALI, J: 1. This order shall dispose of three Writ Petition No.942/2007 (M/s R.R.Kabels Ltd. Vs. AAIFR Ors.), WP(C) No. 2865/2007 (M/s Pegasus Assets Reconstruction Pvt. Ltd. Vs. AAIFR and Ors.) and WP(C) No.2880/2007 (The Indian Kabels Workers Union Vs. AAIFR Ors.). All these three writ petitions are challenging the same order dated 22nd September, 2006 passed by AAIFR though for different reasons. By virtue of the said order, AAIFR has passed the following directions:- 46. We also give the following directions to the BIFR which we expect will be followed by the Board. All parties are also directed to fully cooperate with the BIFR so that the time frame given to the BIFR can be maintained. i) All four parties who have been permitted by the BIFR order dated 12.04.2006 shall give their respective proposals to the OA i.e. SBI for its evaluation within two weeks of the passing of this order, during which period all the four parties, nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t had already purchased 85% of the secured credit, signed MOU with Union not to retrench any employee and the direction given by the BIFR for submission of the fresh scheme to be given by these four parties would further cause delay in the rehabilitation of the sick company which has already been lying closed for a considerable length of time. It was also contended that the petitioner is doing the same business which the sick company was doing. These submissions of the petitioner company were negatived and the appeal was dismissed by the impugned order dated 22nd September, 2006 by which the petitioner is feeling aggrieved and has challenged it by filing the present petition. 3. Pursuant to this order, M/s R.R.Kabels Ltd. submitted a revised and duly tied up proposal with the operating agency and also deposited a sum of ₹ 21 crores on 21st April, 2006 and a sum of ₹ 5 crores on 9th May, 2006. Simultaneously, it preferred the present Writ Petition bearing WP(C) No.942/2006 before this Court praying for quashing of the impugned order dated 22nd September, 2006 and further praying that the rehabilitation scheme proposed by the petitioner namely M/s R.R.Kabels Ltd. ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of which the Company had to be closed down as it had suffered losses. In October, 1999, a reference was made to BIFR for the purpose of declaring the Company as a sick unit. On 4th April, 2000, BIFR declared the Company as a sick unit under The Sick Industrial Companies (Special Provisions) Act, 1985 and the State Bank of India was appointed as an operating agency. On 20th October 2000, since no viable rehabilitation scheme could be framed, BIFR directed the operating agency to issue an advertisement for change of management of the Sick Company. However, no party came forward for taking over the management of the company. In the year 2006, BIFR formed a prima facie opinion that the company could not be revived and therefore, should be wound up on account of the fact that there was no viable or agreed rehabilitation proposal with means of finance tied up, as no party was available to take over the grant of rehabilitation. However, as a last measure, BIFR gave an opportunity to various parties to submit a rehabilitation proposal in respect of the aforesaid company. As a consequence of this, three proposals were submitted before BIFR, one by M/s R.R.Kabels Ltd. (petitioner in WP(C) 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent no.24, M/s Pegasus Assets Reconstruction Pvt. Ltd., Respondent no.32 and The Indian Kabels Workers Union-respondent no.27, apart from other counsel. 12. So far as the submissions which have been made by the respective sides are concerned essentially constitute three groups. One group is headed by M/s R.R. Kabels Ltd. which is getting the support of respondent No.27-The Indian Kabels Workers Union, Respondent no. 28-Jamshedpur Mazdoor Union, respondent no.30-All India Trade Union Congress, respondent no.38-M/s Kamala Mills Ltd. and respondent no.39-M/s Fasqua Investment Pvt. Ltd. 13. The second group is represented by M/s Tata Iron Steel Co. Ltd. which is respondent No.24 and although it had not given the scheme for rehabilitation originally but by virtue of the interim order passed by this Hon ble Court on 23rd April, 2007, M/s Tata Iron Steel Co Ltd., respondent no.24 was permitted to submit a proposal without prejudice to the rights and contentions of the other bidders. This proposal of M/s Tata Iron Steel Co. Ltd. is supported by respondent nos.27, 29 and interveners which are stated to be M/s Incab group Staff and M/s Karamchari Union and 763 Individual Worker ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by giving a direction to BIFR permitting all the four parties namely, M/s Silver Jubilee Infrastructure Ltd., M/s Pegasus Assets Reconstruction Pvt. Ltd., M/s R.R.Kabels Ltd. and M/s Land Lease Company (India) Ltd. to submit a revised rehabilitation proposal despite the fact that M/s R.R.Kabels Ltd. had already complied with the directions of BIFR inasmuch as it had deposited ₹ 25 crores as its share in the interest bearing no lien account in addition to have been able to obtain a commitment for investment of ₹ 34 crores into the capital assets of the company for its revival. In addition to this, it was contended on behalf of M/s R.R.Kabels Ltd. that it is essentially dealing with in the business of cables and so was the Incab and therefore, it was best suited for revival of the company. It was urged that the proposal which was submitted by it would have not only rehabilitated the Incab company but it was also going to ameliorate the condition of the workers in general. It was contended by M/s R.R.Kabels Ltd. that before passing of the order by BIFR on 21st April, 2006, it had entered into a memorandum of Understanding on 27th March, 2006 with respondent Nos.26, 27, 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also ensure that it retrieves its total unsecured loss while as the interest of other secured creditors will not be fully protected. It was also urged on behalf of the respondent Nos.27,28 and 30 that so far as the proposal which has been given by M/s Tata Iron and Steel Company Ltd. is concerned, it has been invited by way of a surrogate interim applications in the shape of so called interveners/applicants namely M/s Incab Graded Staff Association, M/s Kabels Karamchari Union and 763 individual workers/Deponents whose affidavits are attached. It was also urged that so far as the interveners are concerned, such an application cannot be entertained inasmuch as no permission under Order 1 Rule 8 of CPC has been sought to place on record the individual affidavits and reliance in this regard has been placed on case titled as R.C.Sunita Vs. UOI Others 1999 (9) SCC 105. It was further urged that according to Section 36 of the Industrial Disputes Act, 1947, the representation of parties before a Tribunal can be only through its Trade Union and not by individual workmen and therefore, these applications with individual affidavits cannot be taken cognizance of by the Court. Reliance was p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut only to develop the land which belongs to the sick industrial unit and thereafter make a substantial profit by either development of the property or the sale of the property. So far as the stand of the M/s R.R. Kabels Ltd. that consideration of Tata s proposal would cause further delay is concerned, it was contended that no delay would be caused because after the passing of the order by the BIFR the revised proposal which was submitted by the M/s R.R. Kabels Ltd. on 10.5.2006 was yet to be examined by the OA alongwith the other proposals submitted by other parties. Learned counsel for M/s Tata Iron and Steel Company Ltd. has placed reliance on case titled as Navnit R.Kamani Ors. Vs. R.R.Kamani (1988) 4 SCC 387 to para 7 at page 397 reads as under:- 8. When the two schemes are viewed in juxtaposition, there is no manner of doubt that the scheme presented by the applicant appears in a rather poor light. In fact the said scheme suffers from some fundamental infirmities. It is not shown that there is any commitment on behalf of any bank or financial institution to provide the requisite financial resources to enable the applicant to modernize the plant and to run it. The applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to deposit such a sum. In fact he did not even mention that the applicant was prepared to deposit a lesser sum in order to show his good faith and bona fides and in order to protect the legitimate interests of the workers. Counsel wanted the court to consider the scheme without any such provision being made merely on the assertion that the scheme presented by the applicant was the only feasible scheme which appears to be an altogether ill-founded assertion for the foregoing reasons. Under the circumstances we do not have the slightest hesitation in refusing the applicant s prayer in this behalf. 23. Reliance was also placed on Aarey Drugs Pharmaceuticals Ltd. Vs. Appellate Authority 1995 (34) DRF (DB), para 4 at page 148-149 reads as under:- 4. On filing of this petition, we issued notice to show cause as to why rule nisi by not issued and in answer thereto respondents 5,6 and 7 do not object to the prayer being allowed. There is no response from respondent No.4, the Operating Agency, and from that it would appear that it also has no objection to this petition support the petition, of course it has also the support of the second respondent, the sick industrial company. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he respective sides but we feel that this Court in exercise of its jurisdiction neither has the expertise nor ought to sit as a body to evaluate the respective merits and demerits of the proposal. This exercise ought to be done by the Operating Agency only. So far as the objection which has been raised by the petitioner herein that the scheme which has been floated by M/s Tata Iron and Steel Co. Ltd. is highly belated or has come on record through surrogate intervention of a group of applicants who have joined hands together and filed individual affidavits and not sought the permission of the Court, we are of the view that these pleas are too technical and that these objections which should not deter the Court to pass an order in its writ jurisdiction to consider the merit of the scheme floated by Tata in comparison to the other schemes given by M/s R.R.Kabels or Peagasus. No doubt the Tatas had initially not filed any scheme despite being a party to the proceedings before BIFR or AAIFE for more than seven years. We are of the view that ideally this was a very valid objection raised by the petitioner but keeping in view the fact that even the revised scheme submitted M/s R.R. Kabel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pendent relief but are only voicing their concern before the Court to urge that A proposal or B proposal is better for their interest which ought not to be ignored because this exercise cannot be done by the High Court but only by a specialized agency which is called the Operating Agency in the instant case. Therefore, we are of the considered opinion that the matter deserves to be remanded back to the Operating Agency for considering the two proposals , (a) of the petitioner and (b) that of M/s Tata Iron and Steel Co. Ltd. for fresh evaluation by Operating Agency. However, it is made clear that this consideration would be open only to the petitioner and M/s Tata Iron and Steel Co. Ltd. This would be notwithstanding the fact that M/s R.R. Kabels Ltd. is purported to have deposited ₹ 25 crores in pursuance to the directions passed by BIFR earlier and the fact that it is purported to have purchased 85% of the secured debt from various statutory/ financial institutions. But at the same time we want to add a caveat that as the M/s R.R. Kabel has already deposited 25 crores of rupees and has shown its bonafide and has also purchased the 85% of the secured credit, this would ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dustrial unit could hardly be said to be an asset of the sick company and thus if the petitioner M/s R.R.Kabels Ltd. has purchased the debt or the non-performing asset of the sick industrial unit it can hardly be said to be violation of the order dated 12th May, 2006. For this purpose, learned counsel for the petitioner relied upon on the judgment of the Division Bench of this Court in case titled as Haryana Steel Alloy Ltd. Vs. IFCI Ltd. (137) 2007 DLT 554 where the Division of the High Court has held that a Non-Performing Asset of a sick industrial company could not be said to be an asset. 33. We have gone through the provision of Section 22A of The Sick Industrial Companies (Special Provisions) Act, 1985, which reads as under:- [ 22A, Direction not to dispose of assets.- The Board may, if it is of opinion that any direction is necessary in the interest of the sick industrial company or creditors or shareholders or in the public interest, by an order in writing direct the sick industrial company not to dispose of, except with the consent of the Board, any of its assets- (a) during the period of preparation or consideration of the scheme under section 18; and (b) du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Steel Co. Ltd. which was submitted by way of an interim order before this Court deserves to be evaluated by the Operating Agency along with the scheme which has been submitted by the M/s R. R. Kabels and both the parties are given three weeks time for the purpose of submission of schemes, from the date of the judgment and further the said schemes will be evaluated by the Operating Agency as expeditiously as possible but not later than four months from the date of pronouncement of the judgment. However, it is also clarified that the deposit of ₹ 25 cores by the petitioner herein or the purchase of 85% of secured debt by the petitioner M/s R.R.Kabels Ltd. will not come in the way of Operating Agency to evaluate the respective merits of the scheme though while evaluating the said factum, if the operating agency considers is a factor which has an overall bearing on the respective merits of the scheme, it may do so. 38. The BIFR would take into account while evaluating the schemes inter alia :- (a) The petitioner R.R. Kabels proposal was given earlier than the Tata s and that they had purchased 85% of the secured debt of the financial institutions and that the petitione ..... 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