ICICI says it is forcing the issue because the promoters have refused to share sale proceeds on a pari passu basis.

The court in an ad-interim order on June 16 has restrained the company from sale of assets without passing a final order on the appointment of a receiver. This would completely halt the company's sell-off plans including the proposed sale of viscose filament yarn plant to rumoured suitor Indian Rayon and an office floor to IL&FS.

ICICI had filed a suit for recovery of dues and enforcement of securities in the Bombay High Court against Gaekwad-owned Baroda Rayon Corporation on June 1. ICICI has in its petition sought appointment of a receiver to take charge of the company's properties with the power todispose of all the assets and an injunction on the sale of assets till the final settlement of the suit.

The ongoing battle between ICICI and the company over the non-payment of dues intensified recently when the institution demanded a part of the sale proceeds of its office premises to IL&FS.

"Baroda Rayon is now telling us that the sale proceeds will not be shared on a pari passu basis, whereas that is absolutely the thumb rule whenever there is more than one borrower: this is the basic principle, and the company is not observing it," said an ICICI source, "so we are being compelled into legal recourse to enforce our contractual rights".

"It is a classic case of a business concern facing the prospect of non-existence due to the indifferent attitude of financial institution. Of course, the company is passing through a rough patch on account of recession in the polyester industry. As the lead institution, ICICI should have shown much more restraint. Instead of helping the company and its hundreds ofshareholders, ICICI is adding insult to injury," said sources in Baroda Rayon.

The company's problems are partly due to sluggish market and increasing competition but the absence of a long-term policy and professional management led to the present state of affairs. ICICI has done its bit to put the company back on the rails by suggesting a restructuring of the company's operations. The company on its own part has not been able to carry it out effectively, said industry sources. The argument that the absence of professional management led to the company's downfall is absolutely false due to the fact that the same management had been instrumental in building up the company into a profit-making organisation. Putting the blame on the management, when everything started going against the company does not hold much water, company sources said.

The tiff between ICICI and Baroda Rayon started last year when the former threatened to recall loans following the failure to repay liabilities amounting to Rs 34 crore.Later, ICICI softened the stand and allowed the company to carry out a restructuring operation through the sale of unproductive assets.

As per the programme, the company was negotiating with Indian Rayon for the sale of its viscose filament yarn plant but the deal fizzled out at the last moment due to indifference over the price. After this, ICICI appointed AF Ferguson to thrash out a sale price for the plant.

The company's hopes were dashed to the ground with ICICI raising the banner of revolt against the proposed sale of its 17th floor at Hoechst house in Nariman Point to IL&FS. The sale would have enabled the company to repay its outstandings to IL&FS.