( 1 ) SINCE a short point is involved, with the consent of counsel for parlies, this petition is taken up for final hearing.

( 2 ) CONTROVERSY in this petition lies within a very narrow compass, to appreciate which, a brief reference to factual aspects would suffice: Petitioner No. l filed an application before Board lor Industrial and Financial Reconstruction (BIFR in short) Under Section 15 (1) of the Sick Industrial Companies (Special provisions) Act, 1985 (hereinafter referred to as the "act") After hearing on certain dates. BIFR passed an order on loth November, 1999. inter alia, with the following directions:

"therefore, IFC1 is appointed as Coordinating Agency under Section 16 (2) of the Act. CA would appoint a Chartered Accountant for conducting SIA and report in 8 weeks after holding a joint meeting of all secured creditors and company/promoters. Till then out orders on declaring the company as sick will continue to be reserved and after examining SIA report; the Bench would consider passing further appropriate orders in this case".

( 3 ) REPORTS of Chartered Accountants were received on 27th December, 1999 and 31st January, 2000. A meeting was convened by the Industrial Finance Corporation of India (IFC1 in short) on 3rd February, 2000. On that date respondent No. 4-Punjab National Bank (PNB in short) wanted certain information and time to submit its further views. On 4th February, 2000, IFC1 sent its report to the BIFR. Though there is no specific material in that regard, it is PNB s stand that on 24th February, 2000. PNB had submitted its report, which was in line with the report of 1fci before BIFR. On 25th February, 2000. BIFR passed a final order holding that petitioner No. 1 was not a sick company within the meaning of the Act and reference was not accepted. Matter Was carried in appeal before Appellate Authority for Industrial and Financial Reconstruction (AAIFR in short ). Specific stand was taken that there was non-compliance with the requirements of Regulations 21 and 40 of the BIFR Regulations, 1987 ( regulations in short ). However AA1fr did not consider that aspect and on merits held that conclusions of BIFR are in order.

( 4 ) IN support of the petition. Mr. P. Chidambaram learned senior counsel for the petitioners, submitted that there was infraction of the mandatory requirements of Regulations 21 and 40. Mere fact that AAIFR considered the matter at length on merits would not cure the legal deficiencies which occurred by not granting opportunity as stipulated in Regulations 21 and 40. There is no appearance on behalf of respondents except respondent No. 4-PNB and respondent No. 9-ESIC. Learned counsel for PNB submitted that since a fresh reference has been filed before the BIFR lor the period ending on 31st March, 2000 even if there was any deficiency so far as the reference relatable to the period ending 31st March, 1999 is concerned, that is of no consequence

( 5 ) IN order to appreciate rival submissions,, it is necessary to take note of the provisions, which are relevant for the present case: Section 16 of the Act Section 16 : Inquiry into working of sick industrial companies:

(1) The Board may make such inquiry as it may deem fit for determining whether any industrial company has become a sick industrial company (a) Upon receipt of a reference with respect to such company under Section 15; or (b) Upon information received with respect to such company or upon its own knowledge as to the financial condition of the company.

(2) The Board may, if it deems, necessary or expedient so to do for the expeditious disposal of an inquiry under sub-section (l) require by an order any operating agency to enquire into and make a report with respect to such matters as may be specified in the order. "

(3 ). . . . . . . . . . . . . . Regulations 21 and 40 of Regulations "21. Upon a reference with respect to an industrial company under Section 15 or upon information received with respect to such company,