Delhi High Court Overturns BIFR's Failed Scheme Order

The High Court of Delhi set aside the BIFR's order declaring a scheme as failed due to the non-functionality of the AAIFR. The court acknowledged the substantial implementation of the scheme by the petitioners and their commitment to clear remaining dues. It directed the BIFR to promptly consider the modification application, emphasizing the need for all parties to be present during the decision-making process. The court clarified that its decision did not reflect an opinion on the application's merits, leaving it to the BIFR's discretion.

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Issues:
Challenge to BIFR's order declaring a scheme as failed due to AAIFR's non-functionality.

Analysis:
The High Court of Delhi considered a writ petition challenging the order of the Board for Industrial and Financial Reconstruction (BIFR) declaring a scheme failed due to the non-functionality of the Appellate Authority for Industrial and Financial Reconstruction (AAIFR). The BIFR had directed certain actions, including a change in the management of the company based on the operating agency's report. The petitioners contended that they had fulfilled the sanctioned scheme, except for some dues to specific entities. They provided detailed financial information indicating compliance with the scheme, which was not disputed by the operating agency.

The petitioners highlighted that all financial institution dues had been paid except for specific outstanding liabilities. The Managing Director of the petitioner company assured the court of clearing all remaining dues as per the sanctioned scheme. The court acknowledged the substantial implementation of the scheme and the promoter's commitment to comply with the terms. The court decided to give the existing promoters an opportunity to revive the company, emphasizing the need for the BIFR to consider an application for modification of the scheme promptly.

The court, without delving into other issues raised, set aside the impugned order and directed the BIFR to expedite the consideration of the modification application. The court emphasized the importance of all parties being present for the BIFR's decision-making process and clarified that its decision did not reflect an opinion on the application's merits, leaving it to the BIFR's discretion. The writ petition was disposed of accordingly.

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