IFCL plea dismissed
The Supreme Court has endorsed the Madras High Court judgment which held that the Integrated Finance Co Ltd’s (IFCL) scheme of compromise with its creditors lacked bonafides, was contrary to public policy and violated RBI guidelines.
RBI during 1997-2003 had issued various circulars to regulate activities of NBFCs. Since RBI found various violations by IFCL, it also prohibited the leading NBFC from accepting deposits from the investors and restrained it from transferring assets.
Soon IFCL proposed a scheme of compromise, which was approved by its Board of Directors and also got sanction from the company court in 2005. However, depositors, RBI and others objected to the scheme. The division bench set aside the single judge’s order due to violations of the RBI rules. Approving the High Court’s April 2008 decision, the Supreme Court observed that IFCL introduced the scheme only with a view to avoid repayment to small depositors and violated the rule that every deposit shall be repaid according to the terms of the deposit. Stating that the company court is “not expected to substitute its own wisdom for that of the stakeholders,” the top court said: “The company court, whilst examining the fairness and the bonafide of a scheme of arrangement does not act as a rubber stamp. It cannot shut its eyes to blatant non-disclosure of material information, which could have a major influence/impact on the decision as to whether the scheme has to be approved or not.”
Kerala to demolish tourism joint
Setting aside the Kerala High Court’s order that allowed construction of a hotel/restaurant on the banks of the Periyar river, the Supreme Court directed the state government to demolish within three months the tourism joint, which was a part of renovation and beautification of Manalpuram Park in Aluva.
In this case, Association for environment protection vs State of Kerala, Aluva Municipality had reclaimed a part of the Periyar river and the District Tourism Promotion Council (DTPC) had started constructing a restaurant on the reclaimed land after getting administrative sanction from the state government. The association moved the High Court to restrain it from continuing the construction and