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Issues: (i) whether the appellant had locus standi to challenge the directions issued for rehabilitation after his proposal was rejected; (ii) whether the Appellate Authority under section 25(2) of the Sick Industrial Companies (Special Provisions) Act, 1985 could direct sale of the sick unit's assets and issue consequential directions for utilisation of the sale proceeds; (iii) whether the formulation of points for decision by the Appellate Authority violated principles of natural justice.
Issue (i): whether the appellant had locus standi to challenge the directions issued for rehabilitation after his proposal was rejected.
Analysis: The appellant's role was confined to placing and supporting a rehabilitation proposal. Once the Appellate Authority found that proposal unviable and rejected it, he ceased to have any legal stake in the further mode of rehabilitation. His challenge to the subsequent directions was therefore outside his permissible field of objection.
Conclusion: The challenge was not maintainable and the appellant had no locus standi to question the further directions.
Issue (ii): whether the Appellate Authority under section 25(2) of the Sick Industrial Companies (Special Provisions) Act, 1985 could direct sale of the sick unit's assets and issue consequential directions for utilisation of the sale proceeds.
Analysis: Section 25(2) empowers the Appellate Authority to confirm, modify, set aside, or remand the order appealed against after further inquiry. That power was held to be co-extensive with the relief necessary to give effect to rehabilitation. Where no viable revival proposal is acceptable, the Authority may direct that valuable assets be sold and the proceeds applied to workers' dues, statutory liabilities, creditor dues, and revival measures. The direction was treated as a proper exercise of appellate power and not as an impermissible substitution of the operating agency's function.
Conclusion: The Appellate Authority had the power to issue such directions, and the sale-based rehabilitation plan was upheld.
Issue (iii): whether the formulation of points for decision by the Appellate Authority violated principles of natural justice.
Analysis: The points formulated by the Appellate Authority only crystallised the issues arising from the appeal and did not deprive the parties of an opportunity of hearing on the rehabilitation question as a whole. No prejudice was shown, particularly since the appellant's proposal had already been examined in detail and rejected on merits.
Conclusion: There was no violation of natural justice.
Final Conclusion: The appellate directions for asset sale and rehabilitation were sustained, the appellant's objections failed, and the appeal was dismissed with consequential directions for immediate implementation of the rehabilitation process.
Ratio Decidendi: Under section 25(2) of the Sick Industrial Companies (Special Provisions) Act, 1985, the Appellate Authority may, in aid of rehabilitation, issue consequential directions including sale of the sick unit's assets and utilisation of the proceeds when no viable proposal for revival is found acceptable.
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