2009 (7) TMI 778 - HC - Companies Law

Locus standi of the petitioners to maintain the proceedings - Held that - There is nothing in the order of June 27, 2008, to sustain interpretation that the BIFR had to restrict itself to the process envisaged under section 17 of the said Act and not to invoke its authority under section 18 of the Act to change the management. Further, the BIFR has not directed a change in management. The BIFR has also indicated that the company s proposal would be considered. The BIFR acted most judiciously in telescoping the process for assessing the revival package by avoiding further delay. If the BIFR does not find the company s proposal worthy, it would immediately have before if other proposals that may be considered and found suitable. It has only avoided the possible delay that would have occasioned in the event the company s proposal was to be rejected. The company s objection to this betrays the promoters motive in lingering the process, which cannot be condoned. In fine, the appellate authority s order of March 19, 2009, is set aside and the BIFR s order of September 2, 2008, is revived. The appearing parties submit that the BIFR has convened a meeting relating to the company on July 7, 2008. The BIFR should complete the exercise that it has embarked upon expeditiously as possible, considering that this company has remained in its records for 22 years.It is also made clear that this order should not be taken to be a recognition of the locus standi of the petitioners to represent the workers of the company and the BIFR will be free to arrive at a decision on such aspect of the matter.

Issues:
1. Locus standi of the petitioners to maintain the proceedings.
2. Interpretation of the order of June 27, 2008, regarding the revival of the company.
3. Jurisdiction of the appellate authority in interfering with the BIFR's order.
4. Assessment of the locus standi of the petitioners to represent the workers of the company by the BIFR.
5. Restriction on the BIFR to follow the process under section 17 of the Act and not invoke its authority under section 18.

Analysis:

1. The judgment revolves around the locus standi of the petitioners, a union representing some workmen of a company, challenged by a rival faction. The company had been languishing before the BIFR for 22 years, with multiple orders passed, leading to a direction for reconsideration of the company's revival.

2. The interpretation of the order of June 27, 2008, was crucial. The BIFR was directed to explore revival possibilities by considering proposals from all parties involved in the court proceedings. The appellate authority's interference was based on a narrow interpretation, restricting the consideration of revival proposals to only the parties represented in the court proceedings.

3. The appellate authority's jurisdiction was questioned for setting aside the BIFR's order and remanding the matter for fresh consideration. The court noted that the BIFR's actions were not arbitrary and fell within its expertise, allowing the consideration of revival proposals beyond the parties involved in the court proceedings.

4. The BIFR's decision to assess the locus standi of the petitioners to represent the workers was criticized as an abdication of its jurisdiction. The BIFR was deemed the sole arbiter in recognizing representation rights, emphasizing the need for a revisit to adjudicate on the petitioners' locus standi.

5. The restriction on the BIFR to follow only the process under section 17 of the Act and not invoke its authority under section 18 was unfounded. The BIFR's actions in considering various revival proposals, including the company's, were deemed judicious in expediting the process and avoiding unnecessary delays.

In conclusion, the appellate authority's order was set aside, reinstating the BIFR's order for expeditious consideration of the company's revival. The judgment clarified that it did not recognize the petitioners' locus standi, leaving the BIFR to decide on this aspect independently.

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