TMI Blog2010 (1) TMI 576X X X X Extracts X X X X X X X X Extracts X X X X ..... vertisement to be issued for change of management with the direction to the BIFR to examine the proposal of the existing management for infusion of funds through a strategic investor taking into consideration the interest of all the stakeholders and calling upon the stakeholders to take a stand in this behalf. - W.P. (C) NOS. 12599 AND 12606 OF 2009 AND C.M. NOS. 13170 AND 13180 OF 2009. - - - Dated:- 20-1-2010 - SANJAY KISHAN KAUL AND MS. VEENA BIRBAL, JJ. Ms. Maneesha Dhir, Ms. Jayshree Shukla, Ms. Preeti Dalal, Vivek Sibal, Ms. Pooja M. Saigal and Rahul Sharma for the Petitioner. Sandeep Sethi, Arvind Nayar, Sanjay Abbot, Vineet Nayar, Ms. Altaf Fathima, Atul Nanda and Gaurav Gupta for the Respondent JUDGMENT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent No. 2 were never so fully brought in though the substantive funds were brought in by respondent No. 2. There was some difference of view as to the amount of funds infused by respondent No. 2 whether it was Rs. 3.07 crores or Rs. 2.97 crores. In the proceedings of the BIFR held on July 26, 2007, it was specifically recorded that respondent No. 2 would not be entitled to any special privileges or rights or claims whatsoever in nature on the assets of RTL or in the management till the sanctioned scheme is brought into effect. In the subsequent proceedings held on October 25, 2007, the IDBI has confirmed that respondent No. 2 had not fulfilled the terms of the bid on account of their failure to deposit the remaining amount by the stipulate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary 24, 2008, show that the plea of the existing management of RTL was that they should be given liberty to choose their investor/revival partner and change of management would not be required in the case. The operating agency IDBI submitted that RTL had settled the dues of secured creditors as per terms and conditions of the one time settlement scheme along with interest and the entire amount had been paid. The company had also agreed to refund the amount to respondent No. 2, but respondent No. 2 was refusing to take the amount. Not only that, the representative of the SBI submitted that all dues had been settled and the entire amount paid and the stand of Karnataka Bank Ltd., and ISCI were also to the same effect. The AAIFR, however, by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned orders. 10. We are of the considered view that the impugned orders are predicated on a wrong presumption of there being a change of the management in pursuance of the strategic investor coming into the picture. A bare reading of the proposal submitted by the strategic investor would show that the proposal did not envisage a participation in the management of the strategic investor or transfer of shares. The funds were being infused against the security of assets. The funds were to be utilised to clear all liabilities. 11. The relevant portion of the proposal for revival of the company by the existing management specified the role of the strategic investor as under : "G. Promoter Mr. S. Ramachandra strategic partner/co-pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gement. In fact, these entities, despite being served, have not come before the court to oppose the present petitions. 13. It is no doubt true that respondent No. 2 came into the picture in pursuance of an advertisement issued earlier when the existing management had agreed for a change of management. However, that arrangement did not result in satisfactory result and the consequence was that respondent No. 2 wanted to walk out of the deal there being trouble between respondent No. 2 and the existing management. Respondent No. 2, in fact, even accepted the order of October 24, 2008, of the BIFR declaring the earlier arrangement as null and void and directing payment to respondent No. 2 of the funds brought in with interest. This was, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een explored on the merits taking into consideration the stand of the stakeholders. This has not been done by the BIFR. We feel such an exercise needs to be undertaken by the BIFR. 18. We, thus, set aside the impugned order of the BIFR dated October 24, 2008 and of the AAIFR dated September 18, 2009, to the extent they direct an advertisement to be issued for change of management with the direction to the BIFR to examine the proposal of the existing management for infusion of funds through a strategic investor taking into consideration the interest of all the stakeholders and calling upon the stakeholders to take a stand in this behalf. 19. Needless to say that respondent No. 2 is not a stakeholder and is only entitled to the return ..... X X X X Extracts X X X X X X X X Extracts X X X X
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