WP/19522/2000 of M/S.PENGUIN TEXTILES LTD Vs THE APPELLATE AUTHORITY on 13 December 2002

:J U D G M E N T

The present writ petition has been filed to quash the order dated 29.8.2000 passed by the Board of Industrial and Financial Reconstruction(hereinafter referred to as ‘BIFR’) which has been confirmed in appeal by theAppellate Authority for Industrial and Financial Reconstruction (hereinafter referred to as ‘AAIFR’) and for a further direction to the third respondent,Indian Bank, to consider and implement the draft rehabilitation schemeprepared by the petitioner.

2. Petitioner is a company incorporated in 1962 under the Companies Act, 1956. It has got textile mill manufacturing cotton yarn at Tarnaka UpalRoad, Hyderabad. The petitioner company was declared as a sick industrywithin the meaning of Section 3(1)(o) of the Sick Industrial Companies(Special Provisions) Act, 1985 (hereinafter referred to as “the Act”). IndianBank, the third respondent was appointed as Operating Agency to work for therevival of the petitioner company. Proposals were being submitted from timeto time and ultimately some revival scheme was submitted by the petitioner inJuly, 1999 and draft rehabilitation scheme was prepared by the bank. However,under the impugned order dated 29.8.2000, BIFR rejected the scheme given bythe bank and ordered for publication for the change of management. Such orderwas challenged before AAIFR and the order has been confirmed on 3.11.2000.

3. Though several contentions and counter contentions have beenraised by the learned counsels appearing for the parties, it is unnecessary todeal with all those contentions as in my opinion, the matter is required to bereconsidered by AAIFR in view of certain subsequent developments.

4. It has been brought to my notice that a dispute was pendingbetween the petitioner and the Andhra Pradesh Industrial InfrastructureCorporation relating to land whereon the industry has been established.Ultimately on 23.9.2002, the matter had been disposed of by the Division Benchof Andhra Pradesh High Court in W.A.No.252 of 2000. It has been submitted bythe learned counsel for the petitioner that in view of the fact that 20.19acres of land is made available to the petitioner, it would be in a positionto garner financial resources to meet the financial obligations and dues and,therefore, there is longer necessity for change of management.

5. Learned counsel appearing for the Indian Bank has submitted thatthe aforesaid order, which was passed on the basis of settlement between thepresent petitioner and A.P. Industrial Infrastructure Corporation, may not be

6. The fact that 20.19 acres of land would be made available to thepetitioner cannot be considered as irrelevant. It is of course true thatordinarily a writ of certiorari is to be disposed of on the materialsavailable on record at the time of passing of the impugned order and not onthe basis of subsequent factual developments. However, one cannot lose sightof the fact that the avowed purpose under the Act and BIFR Regulations isrehabilitation of the sick industry and not its annihilation and the primaryduty of the BIFR is to find ways and means to revive a particular sickindustry. Since the subsequent development is relevant, it is appropriatethat the matter should be reconsidered by AAIFR keeping in view the impact ofthe order passed by the Division Bench of Andhra Pradesh High C ourt inW.A.No.252 of 2 000.

7. For the aforesaid reasons, the order passed by the firstrespondent, AAIFR is quashed and the matter is remanded to AAIFR forreconsideration in accordance with law taking into account all relevantcircumstances including the order passed by the Division Bench of AndhraPradesh High Court in W.A.No.252 of 2000 dated 23.9.2002. The writ petitionis accordingly disposed of subject to the aforesaid observation. No costs.Consequently, W.M.P.NOs.28321 of 2000 and 4103 of 2001 is closed.

Index : YesInternet : Yesdpk

To

1. The Appellate Authority forIndustrial and FinancialReconstruction,Jeevan Prakash Building, 10th floor,25, Kasturiba Gandhi Marg,New Delhi 110 001.

2. Board of Industrial and FinancialRe-construction,Jawahar Vyapar Bhavan,No.1, Tolstoy Marg,New Delhi 110 001.

3. Indian Bank, rep. by itsChairman and Managing Director,Post Box No.1384,31, Rajaji Salai, Chennai 600 001.

4. Penguin Textile Workers Union,Uppal Mandal, Ranga Reddy District, Hyderabad 500 039.

5. Sri Ghanshyam Sharda

6. Shri V.U. Eradi,representing Cotton Supplies ofof PTL,B-34, Connaught Place,New Delhi 110 001.