The move comes after a consortium of banks, led by the State Bank of India, refused to accept a final recast proposal from MFCL.

"The decision was conveyed to the company at the last BIFR hearing on Monday. Neither the promoters were willing to pump in the money for the revival nor the banks were agreeing to a one-time settlement proposal," banking industry sources said. MFCL officials were not available for comment.

After almost five years of unsuccessful revival attempts, MFCL has submitted a proposal recently which included the waiver of loans amounting to Rs 150 crore and one-time settlement of balance dues. Though financial institutions were favourably inclined to the proposal, banks were not ready to accept it.

Banks were opposing it on the ground that the company was willing to pay up only 25 per cent of the outstanding interest. The banks are believed to have claimed that the company has so far not made any interest on the outstanding amount.

The board has been trying out many options for revival since MFCL became a sick company about five years back. At one point of time, even a change of management--through a probable takeover--was considered without much headway.

The delay has led to the company's position deteriorating over the past few years. A revival was in sight when it made profit during the last year but only to slip into the red with a net loss of Rs 5.9 crore in the second quarter ended September 30.