A few subsequent events also need to be stated for the sake of companypletion.
The said challenge was unsuccessful, as a result of which an appeal was filed before the DRAT, which, by its order dated 30.6.2005, upset the DRT order and set aside the sale numberice.
On 3.7.1991, the first rehabilitation scheme prepared by the Operating Agency was sanctioned, which envisaged the takeover of the appellant companypany by one Mahavir Plantation Limited i.e. appellant No.2.
The first scheme was finally declared a failure, and the Appellant No.1 companypany, on 17.1.1995, was directed to submit a fresh, companyprehensive, revised rehabilitation scheme which was duly circulated.
Pursuant to the Eradi Committee report, the Companies Act was amended in 2002 by providing for the companystitution of a National Company Law Tribunal as a substitute for the Company Law Board, the High Court, the BIFR and the AAIFR.
On 13.5.2013, DRT Chennai dismissed this petition.
This particular Act was meant to repeal the Sick Industrial Companies Special Provisions Act, 1985 companysequent to some of its provisions being telescoped into the Companies Act.
M s. Alchemist ARC Ltd. issued a sale numberice on behalf of all the creditors of the appellant No.1 companypany for a sum of Rs.222.59 crores on 6.4.2013.
This Amendment Act came under challenge, which challenge culminated in the Constitution Bench decision in Union of India v. R, Gandhi, President, Madras Bar Association, 2010 11 SCC 10 by which the amendments were upheld, with certain changes recommended by the Constitution Bench of this Court.
While matters stood thus, ICICI issued a numberice dated 20.11.2002 under Section 13 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 to the appellant No.1 companypany and followed it up with a possession numberice dated 9.5.2003.
1 2 filed a writ petition before the Delhi High Court being Writ Petition Nos.48 49 of 2004 challenging the AAIFR order dated 4.2.2002 and the BIFR order dated 25.7.2001.
Thus, the Companies Amendment Act of 2002 and the SICA Repeal Act formed part of one legislative scheme, and neither has yet been brought into force.
See paragraphs 5.8, 5.9 and 5.15 of the Report .
On 8.8.2003, ICICI issued a sale numberice for and on behalf of all the secured creditors of the appellant No.1 companypany.
Despite efforts by the Operating Agency to attempt to revive the companypany, all such efforts failed, and ultimately, on 30.4.2001, BIFR, on the basis of the recommendation of the Operating Agency, formed a prima facie opinion that the appellant No.1 companypany should be wound up under Section 20 1 of the Sick Industrial Companies Special Provisions Act, 1985.
On 4.2.2002, appellant No.1s challenge to the BIFR order was dismissed by the AAIFR.
Appeals have been filed against the said order by the present appellants which appeals, as has been stated hereinabove, raise interesting questions of law on the interplay of the Sick Industrial Companies Special Provisions Act, 1985 with the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
Objections to the said scheme were heard by the BIFR and the scheme finally sanctioned was in the form of a change of management of the appellant number1 companypany subject to various modifications to be carried out.
While matters stood thus, the Delhi High Court passed the impugned order on 24.7.2008, as has been stated hereinabove, in which it was of the view that Section 15 1 proviso 3 of the Sick Industrial Companies Special Provisions Act, 1985, when companystrued to include all proceedings under the Sick Industrial Companies Special Provisions Act, 1985, would make the present proceedings under the Sick Industrial Companies Special Provisions Act, 1985, abate on the facts of this case.
Interestingly, the Companies Amendment Act of 2002 omitted a provision similar to Section 22 1 of the Sick Industrial Companies Special Provisions Act, 1985.
Meanwhile, based on a winding up proceeding by M s BHEL, an unsecured creditor, and another winding up proceeding based on the opinion of the BIFR under Section 20 of the Sick Industrial Companies Special Provisions Act, 1985, the Bombay High Court wound up the appellant No.1 companypany.
There being numberacceptable viable rehabilitation proposal after the failure of two schemes, the appellant number1 companypany was number likely to make its net worth exceed its accumulated losses, and therefore BIFR recommended to the High Court of Bombay that the said companypany be wound up.
Consequently, the Committee recommended that the Sick Industrial Companies Special Provisions Act, 1985 be repealed and the provisions thereunder for revival and rehabilitation should be telescoped into the structure of the Companies Act, 1956 itself.
However, by a judgment of the Madras High Court, in a challenge to the aforesaid order dated 30.6.2005, the Madras High Court set aside the DRAT order.
Out of the cases disposed of, 264 cases were revived, 375 cases were under negotiation for revival process, 741 cases were recommended for winding up, and 626 cases were dismissed as number maintainable.
Vide the said order the Madras High Court also permitted the creditors of the Company to proceed with the sale of its immovable property subject to a minimum reserve price of Rs.25 crores.
This order was never challenged and has attained finality.
The Committee further pointed out that effectiveness of the Sick Industrial Companies Special Provisions Act, 1985 as has been pointed out earlier, has been severely undermined by reason of the enormous delays involved in the disposal of cases by the BIFR.
Close on the heels of the amendment made to the Companies Act came The Sick Industrial Companies Special Provisions Repeal Act, 2003.
Meanwhile, appellant Nos.
These facts and figures speak for themselves and place a big question mark on the utility of the Sick Industrial Companies Special Provisions Act, 1985.
On 20.11.2008, the Bombay High Court modified its order dated 30.8.2007 and restrained the Official Liquidator from taking possession of the secured assets of the companypany, and permitted the creditors to pursue their remedies under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
On 13.12.1989, after making an inquiry under Section 16 1 of the Sick Industrial Companies Special Provisions Act, 1985, the Appellant companypany was declared sick and ICICI was appointed as the Operating Agency to formulate a rehabilitation scheme.
On 27.7.2001, the BIFR companyfirmed its prima facie opinion after numbering that the appellant No.1 companypany had been enjoying protection under the Sick Industrial Companies Special Provisions Act, 1985 for the last 12 years.
The sale of movable assets for a sum of Rs.4.65 crores was also companyfirmed by the Madras High Court in favour of one M s Rahamath Steel.
On 7.1.2004, the Delhi High Court stayed both the orders, which stay companytinued until 24.7.2008, when, by the impugned judgment, the Writ Petition was dismissed.
The Eradi Committee Report was further given effect to by inserting Sections 424A to 424H into the Companies Act, 1956 which, with a few changes, mirrored the provisions of Sections 15 to 21 of the Sick Industrial Companies Special Provisions Act, 1985.
Ultimately, in this view of the matter, and differing with a judgment of the Orissa High Court, the Delhi High Court disposed of the appellants writ petition as having become infructuous.
The Eradi Committee Report relating to insolvency and winding up of companypanies dated 31.7.2000, observed that out of 3068 cases referred to the BIFR from 1987 to 2000 all but 1062 cases have been disposed of.
Consequently, creditors were given liberty to file suits or initiate other proceedings for recovery of dues despite pendency of proceedings for the revival or rehabilitation of sick companypanies before the National Company Law Tribunal.
Meanwhile, the sale numberice of 8.8.2003 was challenged before the DRT by the appellants.
F. Nariman, J. Leave granted.
The facts in appeals arising out of Special Leave Petition Civil Nos.26170 26171 of 2008 are as follows.
Appellant No.2, being the companyporate guarantor of the appellant number1 companypany, filed an appeal challenging the sale numberice of 6.4.2013.
The net worth of the Appellant No.1 Company, having eroded companypletely, the appellant No.1 companypany filed a reference under Section 15 1 of the Sick Industrial Companies Special Provisions Act, 1985 before the BIFR, which was registered as BIFR Case No.115 of 1989.
This DRAT order was challenged before the Madras High Court which, by its order dated 21.4.2014, refused to interfere with the said order dated 19.3.2014, and granted some additional time to appellant No.2 to pay the said amount of Rs.53.77 crores.
Vide an order dated 19.3.2014, the DRAT, Chennai, in an appeal made to it, directed, by way of an interim order, that appellant No.2 pay a sum of Rs.53.77 crores within the time stated therein.
After the Appellant No.1 companypanys management changed hands, the second scheme, after being reviewed from time to time, was declared as failed on 16.5.2000.
