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TMI Blog2009 (10) TMI 1004X X X X Extracts X X X X X X X X Extracts X X X X ..... a reference under section 15(1) of SICA with the BIFR which was registered as Case No. 149 of 1994. In its hearing held on 16-12-1994 the appellant company was declared a sick industrial company under section 3(1)(o) of SICA and IFCI was appointed as the operating agency (OA) under section 17(3) of SICA to examine the viability of the company through a TEVS, and to formulate a scheme. Pursuant to a joint meeting held on 21-8-1995 with the secured creditors DRS was submitted to BIFR. The IFCI (OA) submitted revised proposals on 25-8-1995 to the BIFR and the BIFR vide its order dated 18-9-1995 circulated the DRS to all the concerned parties for their objections/ suggestions under section 19(1) and 18(2) of SICA. On 20-11-1995, the BIFR heard the objections/suggestions to the DRS and sanctioned the DRS as modified in the light of discussions held at the hearing and sanctioned the Rehabilitation Scheme. Against the order of BIFR dated 20-8-1996 and 18-9-1996, the appellant filed appeal with the AAIFR (Appeal No. 178 of 1996). This Authority, vide order dated 16-12-1996, disposed of the matter with certain directions that the appellant shall lodge with Punjab National Bank (PNB) the ori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Board; (vi) The company will not discriminate- in settlement with unsecured creditors; (vii) JKJMMP will submit the details of membership of their union within 15 days; (viii) PNB (OA) will examine the draft rehabilitation proposal submitted by the company in a joint meeting and submit a status report along with the DRS to the Board within two months." 3. In the appeal, we have heard the learned counsels for the parties. Shri Alok Dhir, learned counsel for the appellant, submitted that the aforesaid directions issued by the BIFR are devoid of any merit and have been passed in a mechanical manner without appreciating the fact that PNB on 18-9-2008 has expressed its unwillingness to act as OA. It was further argued that it was not prudent on the part of the BIFR to reappoint PNB as OA after SBI expressed its willingness to become OA it was further argued that BIFR ignored the submissions that the promoters of the company are based at Calcutta, therefore they had proposed appointment of SBI/IDBI for the convenience of operations of the company and liaisoning with the bank. The company has already settled the dues of PNB and, therefore, PNB was not interested to act as OA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st calculation payable to the secured creditors has also been annexed as Annexure B. He further submitted that in a catena of judgments, this authority has permitted the sale of the assets de hors of the sanctioning of scheme (reliance is placed on the judgment of Kusum Products Ltd., [Appeal No. 51 of 2005 dated 24-3-2005] and Nasa Agro Industries Ltd. [Appeal No. 38 of 1999 dated 11-11-1999]. It was further argued that surplus land is lying vacant unproductive due to which the company has to bear security expenses to safeguard the property from encroachment as also the market value is depreciating with passing time. The appellant along with LRPL is seeking permission to sell its non-productive assets under section 18(2)(i) of SICA for the purpose of the settlement of the dues of LRPL. 5. It was further argued that the impugned direction at paragraph 10(v) is also erroneous which is relating to the dues of the workers. The company has entered into a memorandum of understanding (MoU) on 18-10-2008 with all its 9 workers' unions including JKJMMP and approximately 2,700 workers have signed the agreement individually. The list is also annexed at Annexure-D. The said MoU has been duly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that is how LRPL has come into picture and has filed MA 221 of 2009 praying for permission under section 22(1) of SICA to take legal proceedings against the company in case the appellant company is not granted permission to sell its surplus property. 7. Shri Arjun Chawla, Advocate, for Ganpati Traders, submitted that the company has sold property situated at Katihar and the company is discriminating in payment of dues. J.K. Traders is also not a secured creditor but an unsecured creditor and, therefore, the Ganpati Traders should also be placed at par and provided with the dispensation of settlement at 100 per cent of the principal outstanding and the company should not be allowed to discriminate in settlement with unsecured creditors. 8. Shri Daulat Ram for respondent No. 12 has opposed the appeal and submitted various problems of the workers and submitted that JKJMMP's objections dated 16-12-2008 are pending consideration of the BIFR and, on those objections, the BIFR has directed the company and OA (PNB) to submit their comments. 9. It is submitted by learned representative for JKJMMP union that it has not entered into the agreement and the agreement entered into by the mana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d no reason has been assigned by the BIFR regarding reappointment of PNB as OA. Since the Government of India has appointed IDBI as the nodal agency for the textile industries, the BIFR could have considered the prayer of the appellant to appoint IDBI as OA because it has specialized knowledge about textile industries. 13. In fact, in the instant case, it has to be kept in mind that the BIFR has, in fact, given second opportunity for revival of the company after the earlier rehabilitation scheme failed. Since the sole purpose of SICA is to revive a sick industrial company, therefore, in order to avoid further delay and, on account of the dispute in appointment of OA, it would be in the interest of justice that IDBI is appointed as OA. Thus, we direct the BIFR to appoint IDBI as OA in place of PNB. 14. So far as the agreement with the workers is concerned, the BIFR in its hearing held on 18-9-2008 had issued direction to the company to enter into an agreement with the workers' union including JKJMMP and submit a fully tied up DRS to OA (SBI) in four weeks and it is submitted that in pursuance of the aforesaid direction, the company has entered into an MoU on 18-10-2008 with all it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised from the sale of above assets to pay the dues of LRPL and also to carry on other activities of the company as per the revival scheme to be submitted to the BIFR. In the meeting LRPL has also agreed to forego 50 per cent of its accrued interest on principal amount of debt. In a nutshell the company has no objection for sale of the surplus assets of the company for payment to its secured creditors. In fact we find that it is the second round of revival process and up till now the company could not be revived during the last 15 years during which the company is enjoying the protection of SICA. The basic objective of SICA is not to provide protection to the sick company against its lenders for an unlimited period of time but to revive the sick company as quickly as possible failing which it should be wound up. We cannot grant repeated opportunities for revival process. Though the unions are opposing the attempt of the company to sell its surplus assets yet we are of the view that on the condition that the disbursement/dispensation of the sale proceeds would be according to the sanctioned scheme in the interest of revival of the company, permission can be granted to sell the surp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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