IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE A.K.BASHEER FRIDAY, THE 23RD MAY 2008 / 2ND JYAISHTA 1930 WP(C).No. 6625 of 2007(L) ------------------------------------- PETITIONER: ------------------- SHRI. KURIAN PAULOSE, AGED 61 YEARS, S/O. LATE KURIAN PAULOSE, POLACHIRACKAL, THAZHAKKARA, MAVELIKKARA. BY SRI. KURIAN GEORGE KANNANTHANAM (SR.), ADV. SRI.MURALI PURUSHOTHAMAN. RESPONDENTS: ------------------------ 1. APPELLATE AUTHORITY FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION, JEEVAN PRAKASH BUILDING, KASTURIBA GANDHI MARG, NEW DELHI. 2. BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION, JAWAHAR VYAPAR BHAVAN, NO.I, TOLSTOY MARG, NEW DELHI. 3. M/S. ALLUMINIUM INDUSTRIES LTD., REP. BY IST CHAIRMAN & MANAGING DIRECTOR, NO.I, CERAMIC FACTORY ROAD, KUNDARA-681 501, KERALA. 4. STATE BANK OF TRAVANCORE, POOJAPURA, TRIVANDRUM, KERALA, REP. BY ITS CHAIRMAN & MANAGING DIRECTOR. 5. M/S. UNITED SHIPPERS LTD., UNITED INDIA BUILDINGS, 2ND FLOOR, SIR P.M.ROAD, FORT MUMBAI-400 001, REP. BY ITS MANAGING DIRECTOR. 6. M/S. ALIND EMPLOYEES UNION REVIVAL COMMITTEE, M/S. ALUMINIUM INDUSTRIES LTD., REP. BY ITS SECRETARY, NO.1, CERAMIC FACTORY ROAD, KUNDARA-681 501, KERALA. 7. M/S. ALIND WORKS UNION, REP. BY ITS SECRETARY, NO.1, CERAMIC FACTORY ROAD, KUNDARA-681 501, KERALA. W.P.(C). NO.6625/2007-L: *ADDL.R8. STATE OF KERALA, REP. BY ITS PRL. SECRETARY TO GOVT., INDUSTRIES DEPARTMENT, SECRETARIATE, TRIVANDRUM. *IS IMPLEADED AS ADDL. R.8 VIDE ORDER DATED 02/04/07 IN I.A. 4784/2007. **ADDL.R9. ALIND RELAYS EMPLOYEES UNION (AREU), REG. NO. 38/85, KAVINPURAM, VILAPPILSALA, THIRUVANANTHAPURAM - 695 573, REP. BY ITS GENERAL SECRETARY, SRI. K. RAVEENDRA KURUP. **IS IMPLEADED VIDE ORDER DATED 11/09/07 ON I.A. 11318/07. ***ADDL. R.10 TO 12 IMPLEADED: R.10. T.BINU, EXECUTIVE (RELAYS DIVISION), THE ALUMINIUM INDUSTRIES LTD., THIRUVANANTHAPURAM. R.11. JACOB K.C, WORKS MANAGER, THE ALUMINIUM INDUSTRIES LTD., MANNAR. R.12. RAJASEKHAR .B, SENIOR MANAGER (MARKETING), ALUMINIUM INDUSTRIES LTD., MANNAR. ***ARE IMPLEADED VIDE ORDER DTD. 20/09/2007 ON I.A. 12663/2007. # ADDL.R.13. P. KRISHNANKUTTY MENON, CHIEF EXECUTIVE OFFICER, THE ALUMINIUM INDUSTRIES LTD., STATIONED AT MANNAR. # ADDL. R.13 IS IMPLEADED AS PER ORDER DATED 23/05/2008 IN I.A. NO. 13190/2007. BY SR. GOVT. PLEADER SRI. T.B. HOOD - ADDL.R8, ADV. SRI.P.M.POULOSE, ADDL.CGSC - R1& R2, SRI. ARSHAD HIDAYATHULLA (SR), SRI.JOSEPH KODIANTHARA - R3, SRI.K.RAMAKUMAR (SR.) , SRI.M.A.SHAFIK, SRI.N.NAGARESH, SRI.SATHISH NINAN, SC FOR SBT - R4, SRI.S.V.BALAKRISHNA IYER (SR.) - R5, SRI.MATHEWS K.UTHUPPACHAN - R3, SRI.R.S.KALKURA FOR R4, SRI.K.N.SIVASANKARAN - ADDL.R7, SRI.SUNIL SHANKER FOR - ADDL.R7, SRI.T.R.RAJAN - ADDL.R8, SRI.SHAJI P.CHALY FOR R5, SRI.A.JAYASANKAR, SRI.MANU GOVIND, SRI.SANTHOSH MATHEW - ADDL.R.13. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 18/12/2007, ALONG WITH W.P.(C). NOS. 28280/2007 & 34185/2007 THE COURT ON 23/05/2008 DELIVERED THE FOLLOWING: W.P.(C). NO.6625/2007-L: APPENDIX PETITIONER'S EXHIBITS & ANNEXURES : EXT.P.1: COPY OF THE SAID ORDER PASSED BY THE BIFR ON 29/03/1994. EXT.P.2: COPY OF THE ORDER PASSED BY THE BIFR ON 26/07/1994. EXT.P.3: COPY OF THE SUMMARY RECORD OF THE PROCEEDINGS OF THE HEARING HELD ON 27/06/2002. EXT.P.4: COPY OF THE ORDER DTD. 18/11/2003 ISSUED BY THE BIFR. EXT.P.5: COPY OF THE SAID ORDER DTD. 28/01/2005 PASSED BY THE BIFR. EXT.P.6: COPY OF THE SAID ORDER PASSED BYN THE BIFR ON 26/07/2005. EXT.P.7: COPY OF THE SANCTIONED SCHEME PERTAINING TO RELAYS DIVISION. EXT.P.8: COPY OF THE SAID ORDER PASSED BY THE AAIFR ON 06/02/2007. ANNEXURE -A: COPY OF THE OBJECTION SUBMITTED BY THE UNITED SHIPPERS BEFORE THE B.I.F.R. ANNEXURE-B: COPY OF THE ADVERTISEMENT DTD. 04/08/1996 PUBLISHED BY THE B.I.F.R. IN INDIAN EXPRESS DAILY. ANNEXURE-C: COPY OF THE ADVERTISEMENT DTD. 02/01/2003. ANNEXURE-D: COPY OF THE JOINT MEETING HELD ON 19/02/2004 WHICH WAS FORWARDED TO THE BIFR ON 01/03/2004 AND THE COMPANY ON 02/03/2004. ANNEXURE-E: COPY OF THE LETTER DTD. 21/05/2004 ISSUED BY THE SBT. ANNEXURE-F: COPY OF THE APPEAL NO.98/05 FILED BY UNITED SHIPPERS WITHOUT THE ANNEXURES. ANNEXURE-A1: COPY OF THE ORDER DTD. 05/10/88 ALONG WITH THE SANCTIONED SCHEME OF THE BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION CASE. NO. 93/97. ANNEXURE-A2: COPY OF THE ORDER DTD. 05/08/93 OF THE BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION CASE, NO. 93/97. ANNEXURE-A3: COPY OF THE ORDER DTD. 29/03/94 OF THE BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION CASE. NO. 93/97. ANNEXURE-A4: COPY OF THE ORDER DTD. 25/07/94 OF THE BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION CASE NO. 93/97. ANNEXURE-A5: COPY OF THE ORDER DTD. 22/07/96 OF THE BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION CASE NO. 93/97. ANNEXURE-A6: COPY OF THE ORDER DTD 18/08/99 OF THE BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION CASE. NO. 93/97. ANNEXURE-A7: COPY OF THE ORDER DTD. 09/09/99 OF THE BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION CASE NO. 93/97. W.P.(C). NO. 6625/2007: ANNEXURE-A8: COPY OF THE ORDER DTD. 08/11/2001 OF THE BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION CASE NO. 93/97 ANNEXURE-A9: COPY OF THE ORDER DTD. 27/06/2002 OF THE BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION CASE NO. 93/97. ANNEXURE-A10: COPY OF THE ORDER DTD. 19/12/2002 OF THE BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION CASE NO. 93/97. ANNEXURE-A11: COPY OF THE ORDER DTD. 10/11/2003 OF THE BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION CASE NO. 93/97. ANNEXURE-A12: COPY OF THE ORDER DTD. 18/11/2003 OF THE BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION CASE NO. 93/97. ANNEXURE-A13: COPY OF THE ORDER DTD. 28/01/2005 OF THE BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION CASE NO. 93/97. ANNEXURE-A14: COPY OF THE ORDER DTD. 26/07/2005 OF THE BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION CASE NO. 93/97. ANNEXURE-A15: COPY OF THE SANCTIONED SCHEME TO RELAYS DIVISION, TVPM., ANNEXURE-A16: COPY OF THE ORDER DTD. 06/02/2007 OF THE APPELLATE AUTHORITY FOR BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION, NEW DELHI. ANNEXURE-A17: COPY OF THE ORDER DTD. 15/07/2005 OF THE APPELLATE AUTHORITY FOR BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION, NEW DELHI. ANNEXURE-A18: COPY OF THE JUDGMENT DTD. 16/08/2005 IN W.P.(C). NO. 13037/2005 & CM 9960/2004 OF THE HONOURABLE HIGH COURT AT DELHI AT NEW DELHI. ANNEXURE-A19: COPY OF THE COMPARATIVE CHART SHOWING THE SIMILARITY OF THE PRESENT CASE (ALIND) AND THE CASE WHICH WAS THE SUBJECT MATTER OF EXT.P.16 (CAWNPORE SUGAR WORKS LTD. (CSWL). RESPONDENT'S EXHIBITS: EXT.R3.A: COPY OF THE NOTICE DTD. 09/02/2007 BY THE R.3. WITH ENCL. EXT.R3.B: COPY OF THE MINUTES OF THE MEETING OF THE BOARD OF DIRECTORS ON 10/02/2007. EXT.R3.C: COPY OF THE LETTER DTD. 10/02/2007 TO M/S. KHANDELWAL JAIN & COMPANY. EXT.R3.D: COPY OF THE MINUTES OF THE MEETING OF THE BAORD OF DIRECTORS ON 15/02/2007. EXT.R3.E: COPY OF THE LETTER DTD. 19/02/2007 TO THE BIFR. EXT.R3.F: COPY OF THE NOTICE OF THE EGM DTD. 21/03/2007. EXT.R3.G: COPY OF THE MINUTES OF THE BOARD MEETING DTD. 12/04/2007. EXT.R3.H: COPY OF THE RESIGNATION LETTER DTD. 24/04/2007 OF MR. R. VISWANATHAN. EXT.R3.I: COPY OF THE MINUTES OF THE BOARD MEETING DTD. 25/04/2007. EXT.R3.J: COPY OF THE MINUTES OF THE EGM DTD. 26/05/2007. W.P.(C). NO. 6625/2007: EXT.R3.K: COPY OF THE MINUTES OF THE AGM DTD. 26/05/2007. EXT.R3.L: COPY OF THE DECISION OF THE BOARD DTD. 26/05/2007. EXT.R3.M: COPY OF THE INTERIM ORDER DTD. 21/06/2007 IN W.P.(C). NO. 7517/2007 PASSED BY THE HONOURABLE HIGH COURT OF JUDICATURE AT ORISSA. EXT.R3.N: COPY OF THE LETTER DTD. 01/08/2007 ISSUED TO MR. T. BINU AND MR. RAJASEKAR. EXT.R3.O: COPY OF THE MINUTES CONVEYED UNDER LETTER DTD. 07/08/2007 OF THE GOVERNMENT. EXT.R3.P: COPY OF THE BOARD MEETING DTD. 11/08/2007. EXT.R3.Q: COPY OF THE LETTER DTD. 20/08/2007 ISSUED TO MR. T. BINU. EXT.R3.R: COPY OF THE REPLY DTD. 14/08/2007 ISSUED BY MR. T. BINU OF THE RELAY DIVISION. EXT.R3.S: COPY OF THE REPLY DT. 16/08/2007 ISSUED BY MR. RAJASEKHAR OF SWITCHGEAR DIVISION. EXT.R3.T: COPY OF THE THREE LETTERS DTD. 23/08/2007 ISSUED BY THE CHIEF OPERATING OFFICER. EXT.R3.U: COPY OF THE LETTER DTD. 23/08/2007 & 29/08/2007 ISSUED BY THE SOUTH INDIAN BANK, THIRUVALLA BRANCH AND STATE BANK OF TRAVANCORE, TRIVANDRUM. EXT.R3.V: COPY OF THE LETTER DTD. 31/08/2007 ISSUED BY MR. P.K.K. MENON. EXT.R3.W: COPY OF THE LETTER DTD. 02/09/2007 ISSUED BY MR. P.K.K. MENON TO THE COMPANY. EXT.R3.X: COPY OF THE NOTICE DTD. 04/09/2007 ISSUED BY THE REGISTRAR. EXT.R3.Y: COPY OF THE INTERIM ORDERS DTD. 22/02/2007, 30/04/2007 & 14/06/2007 IN W.P.(C). NO. 3369/07 PASSED BY THE HONOURABLE HIGH COURT OF JUDICATURE AT ANDHRA PRADESH. EXT.R5.A: COPY OF THE LETTER DTD. 08/02/2007 ADDRESSED TO R.3. ALONG WITH CONSENT LETTERS. EXT.R5.B: COPY OF THE NOTICE DTD. 09/02/2007. EXT.R5.C: COPY OF THE MINUTES OF THE MEETING OF THE BOARD OF DIRECTORS OF ALUMINIUM INDUSTRIES LTD. ON 10/02/2007. EXT.R5.D: COPY OF THE COMMUNICATION DTD. 10/02/2007 REQUIRING KHANDELWAL JAIN AND COMPANY. EXT.R5.E: COPY OF THE MINUTES OF THE MEETING DTD. 10/02/2007. EXT.R5.F: COPY OF THE MINUTES OF THE MEETING DTD. 15/02/2007. EXT.R5.G: COPY OF THE REPRESENTATION DTD. 19/02/2007 ADDRESSED TO BIFR. EXT.R5.H: COPY OF THE ADVERTISEMENT PUBLISHED BY THE OPERATING AGENCY OF BIFR STATE BANK OF TRAVANCORE ON 02/01/2003. W.P.(C). NO. 6625/2007: EXT.R5.A: COPY OF THE BOARD RESOLUTION DTD. 12/12/2006 AUTHORIZING MR. PRASHANT SOMANI TO SIGN ON BEHALF OF R.5. EXT.R5.B: COPY OF THE ORDER DTD. 29/02/2007 PASSED BY THE HONOURABLE HIGH COURT OF ANDHRA PRADESH IN W.P.NO. 3369/2007. EXT.R5.C: COPY OF THE ORDER DTD. 19/12/1994 PASSED BY THE BIFR. EXT.R5.D: COPY OF THE ADVERTISEMENT DTD. 22/02/2002 ISSUED BY THE OPERATING AGENCY. EXT.R5.E: COPY OF THE ADVERTISEMENT DTD. 02/01/2003 ISSUED BY THE OPERATING AGENCY. EXT.R5.F: COPY OF THE MINUTES OF MEETING OF THE LENDERS HELD ON 19/02/2004. EXT.R5.G: COPY OF THE LETTER DTD. 03/06/2005 ISSUED BY THE BENCH OFFICER OF R.2. EXT.R5.H: COPY OF THE OBJECTIONS DTD. 22/07/2005 FILED BY R.5. EXT.R5.I: COPY OF THE ORDER PASSED BY R.2. DTD. 05/08/1993. EXT.R6.A: COPY OF THE MINUTES OF THE MEETING HELD ON 15/09/07 TO DISCUSS THE PROBLEMS OF THE ALIND ALONG WITH THE COVERING LETTER. EXT.R.8.A: COPY OF THE REPLY AFFIDAVIT OF THE STATE BEFORE THE R.1. APPELLATE AUTHORITY. EXT.R.13.A: COPY OF THE MINUTES OF MEETING DTD. 01/12/2005 OF THE BOARD OF DIRECTORS OF R.3. APPOINTING CHIEF EXECUTIVE OFFICER. EXT.R.13.B: COPY OF THE ORDER DTD. 13/02/2007 GRANTING PROMOTION AS SENIOR DEPUTY GENERAL MANAGER. DOCUMENTS MARKED BY COURT X I : BIFR PROCEEDINGS AND ORDERS IN CASE NO. 93/87. X 2: PROPOSAL FOR REHABILITATION OF ALIND. //TRUE COPY// prv. A.K. Basheer, J. - - - - - - - - - - - - - - - - - - - - - - - - - W.P (C) Nos. 6625, 28280 & 34185 of 2007 - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 23rd day of May, 2008. Judgment These three writ petitions are being disposed of by this common judgment since the issues involved in them are common and closely inter- related. W.P.No.6625/2007 will be treated as the leading case and the parties and documents in this petition will be referred to in the judgment unless otherwise indicated. 2. The primary question that arises for consideration is whether Ext.P8 order passed by the Appellate Authority for Industrial and Financial Reconstruction, New Delhi granting a further opportunity to the promoters to frame a comprehensive rehabilitation scheme to revive the sick Aluminium Industries Limited, is illegal and invalid. 3. Petitioner who is stated to be a Non Resident Indian had submitted a proposal before the Operating Agency, State Bank of Travancore, Thiruvananthapuram, for taking over the Relays Division of the Company at Thiruvananthapuram. The Board for Industrial and Financial Reconstruction, New Delhi (BIFR for short), accepted the above offer made by the petitioner and consequently approved sanction for the scheme to hive off the Relays Division from the parent company as an independent entity and to merge it with the firm of the petitioner. W.P(C).6625,2820,34185/07 2 4. The above order of the BIFR was challenged by the promoters/major shareholders and several others before the Appellate Authority for Industrial and Financial Reconstruction, New Delhi (appellate authority for short). All these 8 appeals were heard and disposed of by the appellate authority by a common order (Ext.P8). 5. Petitioner while calling in question the legality and propriety of the above order contends that the appellate authority ought not to have entertained the appeals preferred by the promoters and other shareholders since they were hopelessly time barred. More importantly, they had not challenged the earlier order passed by the BIFR way back in 2003 accepting the proposal made by the petitioner for revival of the Relays Division. It is further contended by the petitioner that the appellate authority was not justified in interfering with the order of the BIFR at the instance of the promoters who had admittedly failed to revive the Company. The BIFR had recorded its dis- satisfaction about the indifferent attitude of the promoters who had evinced no interest in the affairs of the Company for the last several years. 6. Petitioners in the other two writ petitions viz. W.P.Nos.28280/07 and 34185/07 are respectively some of the senior executives and two of the employees' organisations in the Company. While the officers of the Company pray for issuance of a writ of mandamus or such other writ, order or direction to W.P(C).6625,2820,34185/07 3 the operating agency not to accept the proposal for change of authorised signatories in view of the interim order passed by this court in WP.6625/2007, the employees' organizations pray for a direction to the operating agency to honour the cheques issued by the Company for its day today operations through its authorised signatory. They further pray for a declaration that the decisions taken at the extra ordinary general meeting of the shareholders of the Company on March 21, 2007 to constitute new Board of Directors is violative of the order passed by the appellate authority and also the interim order issued by this Court in W.P.No.6625/2007. 7. A brief reference to the chequered history of the beleaguered sick company is necessary to decide the issue involved in these cases. 8. The Company which was incorporated in 1946 had been giving thrust to manufacture of products primarily to cater to the needs of the power sector. It has got 5 manufacturing units (consisting of 3 manufacturing divisions and 2 contracting divisions) spread over Kerala, Andhra Pradesh and Orissa with more than 1600 employees. The manufacturing divisions consist of Conductor Division at Kundara (Kerala), Hirakud (Orissa) and Hyderabad (Andhra Pradesh). There is a Steel Products Division at Kundara, Machinery Division at Hyderabad, Switch Gear Division at Mannar (Kerala) and Relays Division at Thiruvananthapuram. The Services Division W.P(C).6625,2820,34185/07 4 of the Company are: (a) Material Handling Division at Hyderabad and (b) Contracts and Agencies Division at Thiruvananthapuram. 9. The Company was declared sick under Section 3(1)(O) of the Sick Industrial Companies (Special Provisions) Act 1985 (for short, the Act) by the BIFR in October 1987. A Scheme for rehabilitation of the sick Company was sanctioned by the BIFR by its order dated October 5, 1989. Term liabilities of financial institutions and Banks were restructured and fixed at Rs.4040 lakhs. The cost of rehabilitation Scheme was put at Rs.949 lakhs out of which Rs.300 lakhs had to be brought in by M/s.Somani Group of Industries, the promoters, and Rs.649 lakhs by the financial institutions and banks. M/s. Somani was inducted into the management with an initial investment of Rs.300 lakhs to the equity capital. The promoters had to arrange a further sum of Rs.100 lakhs after one year in the form of equity and/or unsecured loans. 10. It is beyond controversy that the Somani Group of Industries owns approximately 45% of the equity share capital of the Company and M/s. United Shippers Limited, which is a part of the Somani Group, owns 29.02%. It is also on record that the promoters had taken unsecured loans amounting to Rs.239 lakhs and also arranged finance of Rs.240 lakhs, after sanctioning of the Rehabilitation Scheme by the BIFR. 11. But the revival package did not achieve the results W.P(C).6625,2820,34185/07 5 envisaged in the rehabilitation scheme. At the hearing held on August 5, 1993 the BIFR recorded its disillusionment over the failure of the promoters to implement the rehabilitation scheme and directed the operating agency (IIBI) to submit a revised Scheme within 3 months. 12. At the meeting held on July 26, 1994, the BIFR noticed that no viable scheme had emerged. Therefore the operating agency was directed “to issue a comprehensive advertisement within 15 days for take over of the Company/divisions of the Company, to formulate a viable rehabilitation package, hold joint meeting of the involved parties and submit the Scheme to the Board within 2 ½ months”. 13. At its next meeting held on December 19, 1994 the BIFR considered the status report filed by the operating agency. It was noticed that several enquiries from various groups/parties had been received in response to the advertisement issued in the newspapers for take over of the Company/divisions of the Company and to formulate a viable rehabilitation package. But no concrete proposal had been received from any of the parties. 14. Several meetings were held by the BIFR thereafter between 1995 and 2001. A perusal of the summary record of proceedings of the BIFR will reveal that several attempts were made at various levels involving Banks, financial institutions, State Governments, employees organizations, promoters etc. to evolve a viable scheme for take over/change of management of W.P(C).6625,2820,34185/07 6 the Company. 15. In the hearing held on November 8, 2001, the BIFR concluded that only 3 units of the Company were operational and considered viable. They were the Switch Gear Division (SD) and Relays Division (RD) in Kerala and Machinery Division (MD) in Hyderabad. It was also observed by the BIFR that even after a lapse of 14 years since the proceedings had commenced, no workable proposal for revival could be evolved. It was clarified that sale of the above three operational units on “going concern” basis with whatever liabilities, to the willing parties for takeover, would have to be done. 16. At the meeting held on June 27, 2002 the operating agency informed the BIFR that in response to the advertisement issued by it on February 22, 2002 as directed by the BIFR, five offers had been received for the individual running units, out of which only 2 were accompanied by Earnest Money Deposits (EMD). Petitioner had made an offer of Rs.1.22 crores for the Relays Division at Thiruvananthapuram. It was further informed by the operating agency that the petitioner had subsequently increased his offer to 1.35 crores, apart from agreeing to take over the liability of the workers' dues to the extent of Rs.60 lakhs. The BIFR also noticed that the consensus at the joint meeting of the representatives of the Banks and other parties was that the offer made by the petitioner was too low as compared to the value of the assets and therefore it was not W.P(C).6625,2820,34185/07 7 acceptable. A similar view was taken regarding the offer for the Switch Gear Division at Mannar. In this proceeding (Ext.P3) the BIFR ordered that the operating agency be changed since it omitted to discharge its duties and responsibilities properly. Accordingly State Bank of Travancore was appointed as the new operating agency under Section 17(3) of the Act, in place of IIBI. Certain other directions were also issued in the matter of take over of the other revivable units through merger, amalgamation etc. I will revert back to the above record of proceedings of the BIFR (dated June 27, 2002) a little later. 17. In the meeting held on December 19, 2002 the BIFR directed the operating agency to issue advertisements in 2 prominent newspapers for unit-wise sale of Switch Gear Division and Relays Division in Kerala and Machinery Division at Hyderabad on a “going concern basis” with or without some or all their liabilities, within one month. For the remaining divisions which were admittedly non revivable, the BIFR directed the operating agency to issue advertisements for sale of assets (inlcuding land, buildings, plant and machinery etc) in convenient packages. Several other directions were also issued with regard to the manner in which the bids were to be submitted by the parties and the procedure to be followed thereafter. 18. At the meeting held on November 10, 2003, the operating agency informed the BIFR that the petitioner had W.P(C).6625,2820,34185/07 8 offered Rs.234.50 lakhs for take over and revival of the Relays Division at Thiruvananthapuram in response to the advertisement issued in this regard. It is not necessary to refer to the other issues which came up for consideration in the hearing, at this stage. However it may be mentioned that the BIFR made it clear that separate orders for rehabilitation of the three revivable units will be issued later. Accordingly a draft rehabilitation Scheme (DRS) in respect of Relays Division was circulated by the BIFR along with its order dated January 28, 2005 calling for objections/suggestions to be considered at the next hearing on April 13, 2005. A copy of the said order issued by the BIFR is on record as Ext.P5. 19. When the Draft Rehabilitation Scheme came up for consideration before the BIFR on July 26, 2005, sanction was accorded making it clear that the sanctioned Schemes for the machinery/Conductor Division at Hyderabad, Relays Division at Thiruvananthapuram and Switch Gear Division at Mannar shall come into force with immediate effect. A copy of the sanctioned scheme in respect of the Relays Division, Thiruvananthapuram is on record as Ext.P7. 20. Under Ext.P7 Scheme the entire Relays Division of the Company had to be hived off into a new Company that would be floated as ALIND Relays Ltd. Transfer of liabilities to the extent of Rs.234.50 lakhs under the provisions of Section 18(1)(d) of Act 1985 was to be allowed. The Scheme W.P(C).6625,2820,34185/07 9 envisaged that on and after the date of transfer (April 1, 2004), the newly floated Company would be merged into the firm of the petitioner . Yet again, it is not necessary to refer to the other terms contained in the sanctioned Scheme at this stage. 21. As mentioned in the earlier part of the judgment, the orders passed by the BIFR on January 28, 2005 and July 26, 2005 have been set aside by the appellate authority in the impugned order (Ext.P8). Since we are concerned in these cases only with the sanctioned Rehabilitation Scheme in respect of Relays Division, for which the petitioner had submitted his bid, it is not necessary to refer to the other schemes in respect of Machinery Division at Hyderabad or Switch Gear Division at Mannar. 22. As has been noticed already, the Company was declared sick under Section 3(1)(O) of the Act 1985, way back in the year 1987. M/s.Somani Group of Industries was inducted into the management under a Scheme of revival sanctioned by the BIFR in 1989. It is true that the promoters (M/s.Somani Group) had not succeeded in implementing the Scheme of revival though they had been in charge of the sick Company for more than a decade. It is on record that in the year 1994, the BIFR had noticed that the Scheme for revival had not taken wings as envisaged or expected. The promoters who had pumped in funds in accordance with the terms provided under the scheme, seemed to have lost interest and enthusiasm W.P(C).6625,2820,34185/07 10 midway through. The proceedings of the BIFR clearly revealed that various study reports from qualified technical groups and other financial institutions were kept in view while considering ways and means to keep up the momentum for revival and rehabilitation of the sinking Company. 23. It is borne out by records that the assets and liabilities of the Company had been reckoned on more than two or three occasions. Understandably, the liabilities had grown manifold over the years. Curiously at one stage the value of the assets had reportedly come down; obviously for the reason that the valuation of the plant and machinery had been reduced because of depreciation and other similar factors. But significantly the value of the land owned by the Company in the 3 States of Andhra Pradesh, Kerala and Orissa had appreciated considerably over the years. Yet another factor which apparently persuaded the appellate authority to set aside the orders passed by the BIFR was the potential for growth of the power sector in the rapidly changing industrial scenario of the country. 24. Reference has been made to the above aspects only as a prelude to the consideration of the main issue