Rehabilitation scheme share allotment cannot be reopened in oppression proceedings once affirmed and finalised in prior litigation.

Share allotments made under a BIFR-sanctioned rehabilitation scheme, including conversion of unsecured loans into equity, were treated as valid because the scheme operated with overriding effect and had already been upheld in prior proceedings. The challenge could not be reopened in oppression and mismanagement proceedings merely by alleging illegality or procedural defects. The Tribunal also found no basis to interfere on grounds of res judicata, limitation, delay and laches, as the core dispute had attained finality before BIFR, AAIFR and the High Court. The rejection of the company petitions was therefore upheld and the allotments remained undisturbed.

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Issues: (i) Whether the allotment of shares made pursuant to the BIFR-sanctioned rehabilitation scheme could be invalidated in oppression and mismanagement proceedings. (ii) Whether the impugned orders rejecting the company petitions called for interference on the grounds of res judicata, limitation, delay and laches, or alleged procedural irregularities in the share allotment.

Issue (i): Whether the allotment of shares made pursuant to the BIFR-sanctioned rehabilitation scheme could be invalidated in oppression and mismanagement proceedings.

Analysis: The allotments were made in implementation of the modified/sanctioned rehabilitation scheme approved by BIFR and upheld by AAIFR and the High Court. The scheme required conversion of unsecured loans into equity, and the company was financially stressed. The conversion was carried out under the scheme, which operated with overriding effect. In these circumstances, the allotment could not be treated as illegal merely because it was later challenged under company law allegations of oppression or procedural non-compliance.

Conclusion: The challenge to the share allotment failed and the allotments were sustained.

Issue (ii): Whether the impugned orders rejecting the company petitions called for interference on the grounds of res judicata, limitation, delay and laches, or alleged procedural irregularities in the share allotment.

Analysis: The core controversy regarding the share conversions had already been litigated before the BIFR, AAIFR and the High Court, and had attained finality. The Tribunal also found no reason to interfere with the findings that the petitions were stale and that the prayers had been duly considered. On the facts, the appellant failed to show any basis for overturning the dismissal or the consequential costs.

Conclusion: The objections based on res judicata, delay and laches, and alleged irregularity were rejected, and the dismissal of the company petitions was upheld.

Final Conclusion: The appeals were without merit and the Tribunal affirmed the rejection of the company petitions, leaving the share allotments under the rehabilitation scheme undisturbed.

Ratio Decidendi: A share allotment made in accordance with a BIFR-approved and finally affirmed rehabilitation scheme, carrying overriding statutory effect, cannot be reopened in oppression and mismanagement proceedings once the issue has attained finality in prior proceedings.

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