Rehabilitation scheme under sick industry law may proceed on asset sale when competing revival proposals are found unviable.

The Madras High Court noted that rival rehabilitation proposals under the Sick Industrial Companies (Special Provisions) Act, 1985 must be compared on their overall financial viability, including secured creditor dues, labour dues, capital needs and working capital. It upheld the appellate authority's finding that the petitioner's revised proposal was not materially better than the third respondent's, and that neither side had shown dependable resource mobilisation to implement the revival package. The Court also held that, where both proposals were found unviable, directing preparation of a rehabilitation scheme based on sale of the undertaking's assets was within jurisdiction under the Act. Certiorari interference was declined.

---

---

Issues: (i) Whether the appellate authority was justified in holding that the petitioner's rehabilitation proposal was not better than the third respondent's proposal. (ii) Whether the appellate authority rightly examined the resourcefulness of the rival parties to implement their respective rehabilitation proposals. (iii) Whether the direction to prepare a rehabilitation scheme based on sale of the assets of the B mill was within jurisdiction and valid under the Act.

Issue (i): Whether the appellate authority was justified in holding that the petitioner's rehabilitation proposal was not better than the third respondent's proposal.

Analysis: The competing proposals were scrutinised issue-wise on secured creditor dues, labour dues, capital expenditure, statutory dues, working capital and reopening expenses. The appellate authority found the third respondent's offer slightly better on settlement with secured creditors and labour dues, while the petitioner's proposal was better only on certain heads such as capital expenditure and working capital. On an overall comparison, the appellate authority concluded that the petitioner's revised proposal did not surpass the third respondent's proposal in a material way.

Conclusion: The finding that the petitioner's proposal was not better was upheld and was against the petitioner.

Issue (ii): Whether the appellate authority rightly examined the resourcefulness of the rival parties to implement their respective rehabilitation proposals.

Analysis: The statutory scheme under the Sick Industrial Companies (Special Provisions) Act, 1985 required a realistic assessment of whether the proposed revival package could be implemented. The appellate authority examined the sources of funds claimed by both sides, the reliability of those sources, past conduct, and the feasibility of the projected contributions. It found that neither side had established dependable resource mobilisation for the amounts projected, and that the petitioner's claimed funding sources were uncertain or unsupported by the material.

Conclusion: The finding that neither party had proved adequate resourcefulness was upheld and was against the petitioner.

Issue (iii): Whether the direction to prepare a rehabilitation scheme based on sale of the assets of the B mill was within jurisdiction and valid under the Act.

Analysis: Once the appellate authority found that neither proposal was financially credible, it was open to direct consideration of an alternative rehabilitation method under the statutory scheme. The Act expressly contemplated sale or lease of part or whole of the industrial undertaking as a permissible measure under section 18(1). The High Court also reiterated the limited scope of certiorari and declined to reappreciate factual findings of an expert statutory body acting within jurisdiction.

Conclusion: The direction to formulate a scheme based on sale of B mill assets was held to be within jurisdiction and valid, against the petitioner.

Final Conclusion: The writ petitions failed because the appellate authority's factual and statutory conclusions were found to be within jurisdiction, and no ground for certiorari interference was made out.

Ratio Decidendi: In writ certiorari, the High Court will not interfere with factual conclusions of an expert statutory tribunal acting within its jurisdiction under the Sick Industrial Companies (Special Provisions) Act, 1985, and the Act permits a revival scheme to be framed on sale of assets when rival rehabilitation proposals are found unviable.

---