The fate of the Manu Chhabria-controlled company can now be determined only after the AAIFR hearing slated for December 1.

The move is a fallout of the authority's decision to stay a BIFR order dated June 22, whereby IDBI had been appointed as the operating agency to clear the company's rehabilitation proposals for granting a scheme under section 17(3) of Sick Industrial Development Act (SICA). The perception that IDBI is delaying the revival plan does not hold water as the AAIFR order prevents the institution from finalising the proposals.

The appellate authority had stayed the BIFR order following a petition filed by the company requesting for a scheme under section 17(2) of SICA which does not make the appointment of an operating agency mandatory.

"IDBI is not legally empowered to clear the rehabilitation proposals as the BIFR order is not valid. The institution will take a final decision on the matter only after a directive to this effect from the AAIFR. The fact that AAIFR hearings are not taking place for want of quorum puts the company's prospects on an uncertain pedestal," said institutional sources.

It is believed that IDBI after assessing the rehabilitation proposals of the company came to the conclusion that a techno-economic feasibility study was essential to determine the plan's viability.

IDBI's plan to appoint a consultant for conducting the study was put on the backburner following the AAIFR order.

The proposals envisage an infusion of Rs 168 crore to the company through a combination of rights issue and the sale of excess land, including the company's corporate headquarters in Mumbai. The company plans to generate Rs 80 crore from the real-estate sale and Rs 26 crore through a 1:1 rights issue.

Since the sale of land involved a lot of clearances, the institution was a bit apprehensive about the scheme, sources said.

Meanwhile, reports say that the company is incurring a loss of Rs 10 crore a month owing to non-implementation of the revival plan. The company has incurred a loss of Rs 63 crore during the nine-month period ended December 1997 and a loss of Rs 37 crore during January-June 1998.

Banks and the West Bengal government are opposed to the idea of the company being granted a scheme under section 17(2) of SICA, sources said. The company's future plans will depend on the stand of the institutions which hold a crucial 34 per cent stake. Manu Chhabria has 40 per cent stake in the company.