The Appellate Authority for Industrial & Financial Reconstruction (AAIFR) has dismissed all the seven appeals against four orders of the Board for Industrial & Financial Reconstruction (BIFR) in relation of Jessop & Co Ltd.
The AAIFR, while validating the rights issue proposed by Jessop, noted in its order dated February 28 that the company has justly been declared to be out of the purview of the Sick Industrial Companies Act (SICA).
Jessop’s chairman Pawan K Ruia, welcoming the AAIFR order, said: “Jessop will immediately go for completion of the process of the rights issue, which was earlier stayed by the AAIFR.
Jessop had been referred to the BIFR in 1995 when it was still a public sector undertaking. In 1998, the BIFR directed a change in the management as it had failed to implement the revival schemes approved by the BIFR.
The company was privatized in 2003, with 72% of its equity sold to a consortium led by the Ruia group as the strategic partner.
Since then, various appellants had challenged some BIFR orders. In these orders, the BIFR had sanctioned a revival scheme, permitted the restructuring of Jessop’s equity, exempted it from provisions of the Companies Act and the SEBI Act for a rights issue of Rs 52 crore and de-registered the company from the purview of SICA.
In their final order the Chairman and the members of AAIFR have noted that neither of the appellants could be termed to be aggrieved by the BIFR orders.
It said the BIFR had permitted the existing shareholders to bring in funds in exercise of the powers contained in Section 18 of SICA, and the orders were passed to help the revival of the company. The AAIFR also pointed out that the SICA has an overriding power.
“There is no infirmity in the order ? deregistering the company from the purview of SICA, since the company is a net worth positive entity,” the AAIFR noted, citing judicial precedents including its own judgment in the GKW Ltd case, that of the Madras High Court in the matter of Dunlop India Ltd vs Container Corporation.
“We accordingly dismiss Appeal Nos. 350/02, 108/03, 125/05, 128/05, 01/06. 156/06 and 178/06 due to the fact that the company’s net worth has turned positive as a result of which the jurisdiction of this Authority has ceased to exist,” the AAIFR noted.