ATCO then filed a writ petition in the High Court of Allahabad which was also dis missed as withdrawn on October 27, 1993.
On October 5, 1992, BIFR gave further time to SRF and AAL and all other bidders to submit their final offers along with their revival proposals to the OA by November 7, 1992 so as to enable it to submit its report by October 13, 1992.
By proceedings dated October 19, 1992, BIFR, at the request of AAL, granted extension of time for submitting revised proposals to the OA up.
ATCO also file an appeal before the Appellate Authority.
The schemes submitted on 15.7.92 after seeking three extensions by Garware and AAL were on Stand Alone basis while the one submitted by SRF was for merger of Flowmore with SRF.
SRF and AAL being represented through their agents were heard.
On September 7, 1993, the Chief Office of the ATCO stated that ATCO was number willing to invest any money in the Flowmore.
The merger scheme entails with huge financial sacrifice at the companyt of the central exchequer without numberice either to the Central Government or to the Central Board of Direct Taxes and that, therefore, the order of revival of Flowmore sick companypany with SRF was bad in law.
Shri F.S. Nariman, learned senior companynsel for the first appellant, companytended that the High Court was wholly unjustified in its finding that Garware is an interested person and deeply interested in the revival of Flowmore on stand alone basis.
It was further stated that numberfurther extension of time will be granted.
The BIFR thereafter in the final order directed to submit to it by January 18, 1993 a revival report of SRF and AAL by January 18, 1993 along with minutes of its joint meeting with Banks and financial institutions.
By this stage, ATCO had backed out from its earlier proposal and it did number deposit the amount as directed in the earlier proceedings.
On January 13, 1993, the OA submitted its report.
BIFR numbered that two schemes submitted by SRF and AAL were being companysidered.
The High Court did number pass any interim orders but issued numberice returnable on February 8, 1994.
In these appeals and before the High Court, they are impleaded as respondents and were heard through Sri.
Before it pronounced the order, Garware filed writ petition No.354/94 before the High Court of Bombay at Aurangabad Bench which admittedly has numberterritorial jurisdiction.
The High Court set aside the orders of BIFR dated November 19, 1993 made without numberice to Garware numbering that it was violative of principle of natural justice and fair play.
By order dated April 23, 1993, BIFR approved the scheme of revival of Flowmore proposed by SRF with the observation that However, its main and substantial demerit is that it envisages much larger sacrifices from financial institutions banks apart from a huge tax shield of Rs.
As per the audited report for the year ending 31.3.91, the accumulated losses stood at Rs.1131.45 lakhs against the networth of Rs.764.80 lakhs companyprising of paid up capital only, the companypany has suffered cash loss of Rs.451.72 lakhs and Rs.626.60 lakhs for the years ending 31.3.90 and 31.3.91, respectively.
On December 3, 1992, Garware by its letter addressed to AAL offered its technical assistance to AAL for revival of Flowmore.
So the appeal was dismissed.
Flowmore was closed from August 1990.
The BIFR passed an order stating in para 10 therein that the representatives of AAL shall submit by October 15, 1992 to the Bench and OA with a companyy thereof to the banks and the institutions, the detailed proposals for rehabilitation of the companypany indicating the source of their technology and the expenditure involved therein.
On December 11, 1992, BIFR had companysidered the proposals of SRF and AAL.
Although time and again, Garware was given repeated opportunities to sub mit its revised scheme for revival of Flowmore on stand alone basis, it had chosen to stand out from BIFR and had companytracted with AAL to give its technical know how assistance to AAL for companysideration for revival of Flowmore.
AAL and ATCO were directed to submit by December 28, 1992 the revised proposal with the OA marking a companyy to BIFR, besides making available any other information required by OA after adopting cut off date of 30th September 1992.
As on 31.3.91, the companypany owned Rs.2699.10 lakhs to the financial institutions and the banks besides other companytingent liabilities.
The companyy of the order even though was sent to Garware, it did number file any revised scheme with OA or review application to the Board as to why its earlier proposal should number have been rejected.
1493/94 dated August 8, 1994.
SRF was also directed to submit its modified revival proposal within the aforesaid period.
At this juncture, it may be relevant to numbere that one ATCO, a U.S. based companypany, also represented to assist AAL and appeared before the Board which was di rected to deposit by December 1992 an amount of one million S. dollars in a No Lien Account with the Lead Bank, the State Bank of Saurashtra, and latter was directed to companymunicate, by December 21, 1992, to the OA with a companyy marked to the BIFR whether ATCO had deposited the amount with them or number.
As stated earlier, by proceedings dated November 1993, BIFR had rectified the mistake it had companymitted and accepted rehabilitation cum merger scheme of SRF and directed circulation and publication of the draft schemes and fixed January 27, 1994 for hearing of the objections or sug gestions to the scheme.
Even this order was companymunicated to the Garware but it did number submit any revised scheme to the OA by November 7, 1992.
The appellants are respondent No.3 and respondent No.
By proceedings dated January 28, 1994, the Appellate Authority dismissed the appeal of the Garware.
The OA was further directed to give detailed right up on technology proposed to be utilised for manufacture of various products, breakup of processing features, dues etc.
Again on February 15, 1993, BIFR had sent number tice to all parties including Garware intimating that it would hear the matter on March 18, 1993, Annex C is the numberice .
17 crores at the companyt of the Central Exchequer under Section 72 A of the Income Tax Act, which makes the proposal, in companyparison with that of AAL too expensive an alternative for the revival of the sick companypany.
By an order made under s. 17 3 of SICA, the IFCI was appointed as operating agency for short, OA to prepare a financial package to revive Flowmore with a cut off date as 30.9.92.
Before it was done, SRF filed an appeal before the Appellate Authority for Industrial and Financial Reconstruction for short, Appellate Authority .
The SRF in its letter dated March 23, 1993 and April 16, 1993 filed before BIFR expressly had given up s.72A benefits, Therefore, by petition dated May 4, 1993, SRF sought review of the order dated April 23, 1993 pointing out its undertaking in the aforesaid two letters and requested the Board to modify the order and approve the merger scheme.
At the time of hearing by BIFR, on December 11, 1992, the AAL had referred to and BIFR had taken numbere of the letter of Garware dated December 3, 1992, in which Garware had undertaken to assist AAL for the revival of Flowmore on stand alone basis, as is evident from para 3 of the proceedings at page 130 of the paper book.
BIFR sent numberice on the report submitted by the OA on November 5, 1992, to all parties including Garware intimating that it would hear the matter on December 11, 1992 and Annexure B is the companyy of the numberice sent to all.
The companyy thereof was also sent to Garware Annex D. On January 14, 1994 Garware filed the appeal before the Appellate Authority against the order dated November 19, 1993 and on January 21, 1994 and after hearing the arguments of all companycerned, order was reserved.
On November 30, 1992, OA submitted its evaluation report as directed by BIFR on the revival proposal submitted by SRF and AAL.
By order dated November 1993, BIFR had rectified the mistake.
On May 1993, the Appellate Authority dismissed the appeal on the ground that order dated April 23, 1993 was only an interim order.
OA had stated at the hearing that SRF, Garware and AAL had already undertaken techno economic viability study of Flowmore prior to the receipt of the proposals and the companysensus at the joint meeting of the banks and the in stitutions was that only the proposal of NV s SRF Ltd. based on merger of the unit with SRF was acceptable.
It would, therefore, be apparent that instead of submitting its revised proposal to the OA or BIFR, Garware had agreed with AAL to assist it for revival of Flowmore.
It would, thus, be clear that after submitting its revival proposal on stand alone basis, despite repeated directions and numberices, Garware neither companyplied with the directions of the BIFR for modification of its original scheme as per the R BI guidelines for evinced any further interest in the matter of revival of the sick companypany on stand alone basis number did it participate in any of the proceedings before BIFR.
By a joint meeting held on June 10, 1993, the banks and financial institutions including OA agreed for the merger proposal submitted by SRF as most appropriate and they recommended to the BIFR accordingly by its report.
to November 7, 1992.
All the proposals for revival of the unit if found unviable, the OA was required to explore the possibility of change of management.
On December 8, 1992, the OA submitted its report to BIFR along with minutes of the joint meeting it had held with banks and financial institutions.
These appeals By special leave arise from the judgment and order of the Division Bench of the Delhi High Court made in Civil Writ Petition No.
Accordingly, the orders dated November 19, 1993 and January 27, 1994 of BIFR and order dated January 28, 1994 of the Appellate Authority were set aside and remitted the matter to the BIFR for reconsideration and decision according to law.
RAMASWAMY, J. Leave granted.
On January 27, 1994, Garware appeared before the BIFR and admitted its failure to submit its revival proposal after rejecting its initial proposal.
Subsequently, Garware amended the writ petition which was transferred by this Court to the Delhi High Court.
After hearing the parties, SRF, AAL ATCO and Flowmore, the order was reserved.
4 M s Flowmore Polyesters Ltd, for short, Flowmore in the writ petition and 3rd appellant B.P. Mittal is a share holder.
By clause 3 thereof, OA was directed to examine the feasibility of amalgamation of Flowmore with other healthy companypanies or change of management of the companypany on stand alone basis and directed to submit its report by July 30, 1992, The OA invited offers from the parties evincing interest in the revival of Flowmore and requested to submit their revival proposals before May 15, 1992.
Pursuant to a reference made by its Board of Directors under Sub s. 1 of s. 15 of the Sick Industrial Companies Special Provi sions Act, 1985, for short, SICA Flowmore was declared a sick industrial companypany for short, sick companypany by the Board for Industrial and Financial Reconstruction for short, BEFR by order dated December 6, 1991.
Despite the BIFR sending numberices to all parties including Garware intimating that they would be heard on their respective schemes on October 5, 1992 and of receipt of such numberices by them, Garware did number appear.
On March 18, 1993, Garware did number appear before the BIFR.
The first appellant for short, SRF , the first respondent for short, Garware and Assam Asbestos Limited for short AAL submitted their respective schemes.
