The court established that any ongoing proceedings under SICA abate once secured creditors representing 3/4ths of the debt initiate recovery actions under SARFAESI Act, emphasizing statutory definitions concerning 'outstanding' amounts.

JUDGMENT :

Manindra Mohan Shrivastava, C.J.

1. Instant appeal is directed against the order dated 18.03.2010 passed by the learned Single Judge, whereby writ petition filed by the appellant-company, in the matter of challenge to the order dated 12.01.2009 of the Appellate Authority for Industrial and Financial Reconstruction (hereinafter referred to as ‘AAIFR’) as also the order dated 21.05.2007 passed by the Board of Industrial and Financial Reconstruction (hereinafter referred to as ‘BIFR’), has been dismissed.

Relevant factual matrix of the case:

2. Relevant facts for adjudication of the controversy involved in this case are that the appellant No.1 is a company incorporated under the COMPANIES ACT and appellant No.2 is the promoter. The case of the appellant/writ petitioner was that the appellant-company was incorporated in joint sector with the Rajasthan State Industrial Development and Investment Corporation (hereinafter referred to as ‘RIICO’) for manufacturing and sale of cement. For the purposes of incorporation and commencement of the production of cement, appellant-company availed financial facilities by way of common loan from the financial institutions namely, IFCI, ICICI and IDBI. For various reasons, as detailed in the writ petition, the appellant-company became sick leading to reference made to the BIFR for framing of the scheme for rehabilitation under the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as ‘SICA’). The BIFR appointed an operating agency (for short, ‘O.A.’) to prepare rehabilitation scheme after declaring appellant-company as sick company. A draft scheme was prepared by the O.A., which was sanctioned by the BIFR on 26.02.1990. The case of the appellant is that though by virtue of rehabilitation scheme prepared by O.A., a mining lease was to be transferred in favour of the appellant-company, the State cancelled the lease granted in favour of RIICO on 06.11.1990, which was challenged before the Mining Tribunal. The Mining Tribunal set aside the said order.

3. In the on-going proceedings before the BIFR, an order was passed on 06.01.1994, whereby the BIFR, upon reviewing progress of implementation of the scheme, directed the appellant No.2-promoter to deposit a sum of Rs.2.00 crore in the lien account with the Punjab National Bank by 31.01.1994, failing which proceedings for winding up of the appellant-company would be initiated. The said amount having not been deposited, eventually BIFR issued a notice on 16.02.1994 for winding up of the appellant-company. A writ petition was filed, in which a restraint order was passed against publication of the notification for liquidation of the appellant-company. The said writ petition, however, was dismissed on 05.10.2004. However, even before that, the BIFR cancelled its notice dated 18.02.1994 vide its order dated 07.04.1994. Later on, the writ petition filed by the appellant-company, which was dismissed in default, was restored. The BIFR, however, passed an order dated 10.10.2003 directing the District Magistrate, Kotputali to take possession of the land admeasuring 554 hectare. As some other cement companies were involved in the matter of grant of lease for the purpose of mining limestone, one M/s. Grasim Industries Ltd. filed an appeal agai