Valmiki J. Mehta, J.

1. These writ petitions have been filed by the two secured creditors who had given foreign currency loan (FCL) to the sick company M/s. Bihar Sponge & Iron Ltd. (BSIL) impugning the order dated 21.6.2007 passed by the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) which upheld the order dated 29.7.2004 passed by the Board for Industrial and Financial Reconstruction (BIFR). Since the issues involved in both the cases are same, both the writ petitions are being disposed of by this common judgment.

2. BSIL became a sick company though it had achieved 100% production because of the devaluation of rupee against the Deutsche Mark (DM) whereby the company's liability rose from Rs. 28.6 crores to Rs. 73.67 crores. On 19.12.1996, BSIL was declared a sick industrial company and IFCI was appointed as an Operating Agency(OA) to formulate the scheme for revival of the company. After various proposals were discussed including circulation of an earlier Draft Rehabilitation Scheme (DRS), ultimately an amended DRS was circulated at the joint meeting of the creditors held on 15.2.2002. This DRS was accepted by a number of creditors but was opposed by the Industrial Finance Corporation (IFC) which mooted an alternative proposal of one time settlement. It was proposed by the IFC, the petitioner in W.P.(C) No. 6915/07 that a sum of Rs. 135 crores be paid to the secured creditors as follows:

i) 65 crores to be paid upfront in cash by the promoters including the Government of Jharkhand

ii) Balance Rs. 70 crores to be paid over a period of 10 years carrying interest @ 8% P.A. On Rupee Term Loan (RTL) and @ LIBOR on Foreign Currency Loan (FCL) loan from company's internal accruals.

GOJ (Government of Jharkhand) was required to furnish the guarantee for timely payment of balance Rs. 70 crores.

3. This alternative proposal put forth by IFC on 18.1.2002 with cut off date as 30.9.2001 was discussed between the creditors and accepted by them. There were further developments, discussions and proceedings before BIFR as regards DRS. However, at the hearing held on 17.2.2003, BIFR considering the DRS passed an order as follows:

(i) GOJ would decide in three weeks whether they are agreeable to extend the reliefs and concessions as provided in the DRS including investment of Rs. 50 crores in the company and guaranteeing the repayment of the balance OTS dues to the secured creditors.

However, in case GOJ is not agreeable to extend their support to the DRS as circulated by BIFR vide order dated 27.11.2002 or no agreed rehabilitation proposal is received from the private promoters, the OA would issue advertisements in leading newspapers within 2 weeks inviting offer for the takeover/leasing/amalgamation/ merger for rehabilitation with or without OTS of the dues of FIs and Banks....

4. The Patna High Court in a writ petition filed by Bihar State Industrial Development Corporation (BSIDC) on 2.9.2003 ordered the sick company to deposit Rs. 12 crores in a no lien account with the OA by 08.09.2003. The Hon'ble High Court further directed that in the event the said deposit is made within time, the OA will not proceed with the direction of BIFR for issue of an advertisement for change of management.

5. A Special Leave Petition was filed by IFC in the Hon'ble Supreme Court challenging the Patna High Court order dated 2.9.2003 and seeking transfer of the writ petitions preferred by the company and also by BSIDC. The same was listed for hearing on 23.4.2004. After hearing the parties the Hon'ble Supreme Court observed as follows:

The reasoning of the BIFR in the order dated 17.2.2003 cannot be faulted. Sufficient opportunities appeared to have been given at every stage to the private promoters and the Government of Jharkhand to invest the amounts as proposed in the scheme of IFCI. The order for advertisement may give a better deal to the secured creditors to give a last chance to the private promoters and the Government of Jharkhan