Binding rehabilitation schemes and promoter default justified BIFR's refusal to extend time and treat revival as failed.

A sanctioned rehabilitation scheme is binding on the industrial company, promoters and creditors, and the BIFR may treat the scheme as failed where the promoters do not bring in committed funds for a substantial period and no workable revival proposal with tied-up finance is placed before it. On those facts, the BIFR was justified in declining further extension of time and in proceeding on the footing that the company should be wound up. The HC found no arbitrariness or manifest unreasonableness in the order, and held that the BIFR was not required to defer its opinion merely because the petitioner wanted to wait for the appellate forum to become functional.

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Issues: Whether the BIFR acted illegally or arbitrarily in declining further time for payment under the sanctioned rehabilitation scheme and in confirming the opinion that the company should be wound up.

Analysis: The rehabilitation scheme under the Act bound the industrial company, the promoters and the creditors, and its implementation depended on performance by all participants. The company and existing promoters failed for a substantial period to bring in the committed funds and no workable revival proposal with tied-up finance was placed before the BIFR. In these circumstances, the BIFR was entitled to treat the scheme as failed and to decline further extension of time. The Court found no vice of arbitrariness or manifest unreasonableness in the impugned order, and held that the BIFR was not obliged to defer its opinion merely because the petitioner desired to wait for the appellate forum to become functional.

Conclusion: The refusal to grant further time and the decision to proceed on the footing that the rehabilitation scheme had failed were upheld.

Final Conclusion: The writ petition was without merit and the BIFR's order was sustained.

Ratio Decidendi: A sanctioned rehabilitation scheme is binding on all stakeholders, and where the promoters fail to honour their commitment and no genuine revival proposal is forthcoming, the BIFR may treat the scheme as failed and refuse further extension of time.

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