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TMI Blog2010 (10) TMI 912X X X X Extracts X X X X X X X X Extracts X X X X ..... bias or prejudice being caused to the petitioner. Appeal dismissed. - W.P. NO. 17126 OF 2010 - - - Dated:- 22-10-2010 - F.M. IBRAHIM KALIFULLA AND N. KIRUBAKARAN, JJ. A.L. Somayaji and R. Murari for the Petitioner. G. Desingu, J. Radhakrishnan, Karthik Seshadri and K. Subramanian for the Respondent. JUDGMENT F.M. Ibrahim Kalifulla, J. The petitioner has filed the above writ petition for the issuance of a writ of certiorarified mandamus to call for the impugned proceedings of the first respondent, AAIFR in Appeal No. 248 of 2009 dated June 16, 2010, quash the same, remit the matter back to the second respondent, the BIFR and to consequently direct the second respondent, the BIFR to appoint any independent agency/bank/financial institution from the list of notified operating agencies, which is not a creditor of the company, as the operating agency and to further direct the second respondent to proceed with the matter in accordance with law. 2. The sum and substance of the grievance of the petitioner is whether the Appellate Authority for Industrial and Financial Reconstruction (hereinafter will be referred to as "the AAIFR", for short) was justified in ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be identified and entrusted with the task of conducting the special investigative audit and the nature of check to be made by the auditors and the report to be filed by the chartered accountants were all indicated in detail. The secured creditors and the petitioner were also directed to file their comments/rejoinders on the findings of the special investigative audit within two weeks and that the factual findings of the special investigative audit would be normally accepted by the Board unless relevant documentary evidence in relation to any of the objections relating to such factual findings are filed within a period of two weeks specified therein. The operating agency was directed to submit the special investigative audit report along with a summary statement. Various other aspects were also indicated in the said guidelines. 4. Aggrieved against the said order of the BIFR, dated October 28, 2009, the petitioner approached the AAIFR by way of appeal. The grievance of the petitioner before the AAIFR was three-fold. In the first place, the petitioner contended that the BIFR ought not to have restricted the verification of the accounts only up to March 31, 2008, but should hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions as well as the Regulations, the order of the AAIFR is liable to be set aside and the petitioner has got no objection for appointing any other agency, which is unconnected to the petitioner, as operating agency. 8. As against the above submission, Mr. Radhakrishnan, learned counsel for the sixth respondent, operating agency as well as learned counsel appearing for the other respondents contended that under section 16(2) of the SICA, every power is vested with the BIFR to entrust the task of holding the enquiry, collect the information relating to financial status of the petitioner to enable the BIFR to determine the question as to whether the petitioner can be declared as a "sick industrial company" under section 3(1)(o) of the SICA. Learned counsel contended that since the petitioner has been given liberty to choose one of the auditors out of three independent chartered accountants to be identified by the operating agency, no prejudice would be caused to the petitioner. Learned counsel for the respondents also contended that there is no legal impediment for the BIFR for appointing any one of the secured creditors as the operating agency. It was lastly contended that sinc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... do not find violation of any of the statutory provisions much less either section 16(2) or section 27 of the SICA. On the other hand, the BIFR has rightly invoked its jurisdiction under section 16(2) when it resorted to the appointment of the operating agency from amongst one of the secured creditors notified by it. Inasmuch as the said secured creditor was not one of the notified institutions of the BIFR, the AAIFR by its order dated June 15, 2010, rectified the said error by appointing the State Bank of Mysore, which is one of the notified institutions of the BIFR, as the operating agency. 10. In so far as the grievance of the petitioner that the said operating agency has got its own grudge against the petitioner as has been disclosed in its letter dated August 8, 2009, placed before the BIFR is concerned, we find that the said letter was filed by the State Bank of Mysore by way of its stand in the reference application preferred by the petitioner, dated April 27, 2009. When the secured creditors have advanced huge sums to the petitioner along with other financial institutions, it was entitled to place before the BIFR any discrepancy which might have been noticed by the secure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lect the report from the independent chartered accountants after the special investigative audit, no other work has been entrusted with the operating agency. In fact, it was open to all the secured creditors as well as the petitioner to place before the chartered accountants, who have been directed to hold the special investigative audit to place all the materials in support of their respective stand. Further, even after filing of the report by the chartered accountants after holding the special investigative audit, then again, in respect of any of the findings mentioned therein, it is open to the secured creditors as well as the petitioner to submit their detailed objections, of course, within two weeks from the date of filing of such request. 12. Therefore, when there is no other scope of interference that could be made by the operating agency in regard to the work to be carried out by the independent chartered accountants while holding the special investigative audit, we do not find any prejudice being caused to the petitioner in the said exercise. Therefore, when statutorily the BIFR as well as the AAIFR are entitled to appoint the operating agency from among one of the notif ..... X X X X Extracts X X X X X X X X Extracts X X X X
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