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2014 (1) TMI 1388 - HC - Companies LawRejection of reference under SICA - Reference based on the audited balance sheet - Erosion in net worth - Delay in filing reference - Held that - only one point was urged before AAIFR and that was with regard to whether the petitioner fell within the classification of small enterprise under the Micro, Small and Medium Enterprises Development Act, 2006 or not. The petitioner had not even taken the point with regard to the rejection of the reference of account of delay as was recorded by the BIFR - consideration of the question as to whether the petitioner was a small enterprise under the said Act of 2006 or not would be academic in the backdrop of the fact that the petitioner did not challenge the other ground of rejection of his reference on the point of delay before the AAIFR. We, however, leave the question with regard to classification as a small enterprise open and do neither confirm nor reject the stand taken by the AAIFR. Insofar as the point of delay is concerned, we have not gone into the issue as to whether the delay was sufficiently explained or not because that point was not even taken before the AAIFR and, consequently, was not, as it could not have been, taken before us - Decided against Petitioner.
Issues:
1. Rejection of reference under the Sick Industrial Companies (Special Provisions) Act, 1985 based on delay in filing and classification as a small enterprise. 2. Challenge before the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) regarding the classification as a small enterprise under the Micro, Small and Medium Enterprises Development Act, 2006. Analysis: 1. The judgment pertains to a writ petition against the order of the Appellate Authority for Industrial and Financial Reconstruction, New Delhi, rejecting the petitioner's appeal arising from the Board for Industrial and Financial Reconstruction's (BIFR) order. The BIFR rejected the petitioner's reference under the Sick Industrial Companies (Special Provisions) Act, 1985 due to delay in filing the reference and the classification of the petitioner as a small enterprise. The BIFR observed that the petitioner's net worth had eroded fully as per the audited balance sheet of 31.03.2004, while the reference was based on the balance sheet of 31.03.2008. Additionally, the company's investment in plant & machinery classified it as a small enterprise not covered under SICA. The BIFR also noted a violation of Section 23(1) of SICA regarding the reporting of net worth erosion. 2. The AAIFR only considered the classification of the petitioner as a small enterprise under the Micro, Small and Medium Enterprises Development Act, 2006. The petitioner did not challenge the rejection of the reference based on delay before the AAIFR. The court concurred that the consideration of the small enterprise classification was academic since the delay issue was not challenged before the AAIFR or in the writ petition. The court did not delve into the delay issue as it was not raised before them, and the BIFR's finding on delay remained unchallenged. Ultimately, the writ petition was dismissed with no order as to costs. This comprehensive analysis outlines the grounds for rejection of the reference under SICA, the classification of the petitioner as a small enterprise, the lack of challenge on the delay issue before the AAIFR, and the court's decision based on the unchallenged finding of the BIFR.
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