2001 (7) TMI 1214 - HC - Companies Law

Issues Involved:
1. Jurisdiction of BIFR and AAIFR under SICA.
2. Effect of the Delhi High Court and Supreme Court orders on BIFR's jurisdiction.
3. Non-consideration of the petitioners' application dated 8-2-2001 by BIFR.
4. Alleged bias and procedural fairness by BIFR.

Detailed Analysis:

1. Jurisdiction of BIFR and AAIFR under SICA:
The petitioner-company, engaged in the manufacture and sale of Indian Made Foreign Liquor (IMFL), sought rehabilitation under SICA provisions. BIFR initially sanctioned a revival scheme in 1991, which failed due to the imposition of prohibition in Andhra Pradesh. Despite partial lifting of prohibition and renewal of the company's license in 2000, BIFR concluded that the company had not revived under the sanctioned scheme. The BIFR directed the Operating Agency (OA) to prepare a draft rehabilitation scheme and invite offers for takeover or amalgamation. The appellate authority (AAIFR) concurred with BIFR's decision, leading to the petitioners challenging the orders.

2. Effect of the Delhi High Court and Supreme Court orders on BIFR's jurisdiction:
The petitioners argued that the BIFR's order, which affected the company's management, contradicted the Delhi High Court and Supreme Court orders, where the petitioner was appointed as Court Commissioner. However, the court clarified that the orders of the Delhi High Court did not affect BIFR's jurisdiction under SICA. The Delhi High Court explicitly stated that it did not intend to conflict with BIFR's powers. Therefore, BIFR's jurisdiction to pass orders under section 18 of SICA remained unaffected.

3. Non-consideration of the petitioners' application dated 8-2-2001 by BIFR:
The petitioners contended that BIFR ignored their application dated 8-2-2001, which claimed that the company ceased to be a sick company as its net worth had turned positive. However, the court noted that the unsecured creditors, who were supposed to convert their loans into preference shares, were not parties to the writ petition. Additionally, the Delhi High Court had stayed the extraordinary general meeting called by the Aggarwal Group to issue preference shares. Consequently, the court found no material irregularity in BIFR's non-consideration of the application, as the company's status as a sick company was not conclusively established.

4. Alleged bias and procedural fairness by BIFR:
The petitioners alleged bias against BIFR, but the court found no evidence to support this claim. The court emphasized that BIFR provided adequate opportunities to all concerned parties before passing the impugned order. The court's jurisdiction under Article 226 of the Constitution is supervisory, not appellate, and it cannot re-appreciate evidence or substitute its findings for those of the quasi-judicial bodies like BIFR and AAIFR. The court concluded that BIFR's decision-making process was not vitiated and that the petitioners' attempts to delay proceedings were evident.

Conclusion:
The court dismissed the writ petition, upholding the orders of BIFR and AAIFR. It found no merit in the petitioners' claims and vacated the interim order earlier granted. The court highlighted the need for expeditious completion of proceedings under SICA to avoid further losses to the company and revenue to the state.

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