~Tata Steel declared as best bidder and promoter for revival of INCAB~

Tata Steel is happy to have been announced as the best bidder and promoter for revival of INCAB by the Appellate Authority for Industrial and Financial Reconstruction (AAIFR), putting aside two other contestors for this bid - R R Kabel (RRK) and Pegasus Asset Reconstruction (PAR).

This announcement once again reiterates Tata Steel’s commitment towards revival of INCAB and industrial development for Jharkhand. Tata Steel thanks the workers and trade unions under the guidance of Shri Rakeshwar Pandey for the unstinted support extended.

The final judgment in the cases of Incab Industries Ltd (IIL), has been pronounced by the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) on 30.6.2011, whereby the scheme proposed by TSL has been found to be the best. The final arguments in the cases were in progress for about one year. A common judgment has been rendered in our favour by the majority (2:1) in two sets of appeals related to takeover of IIL and the Directors of IIL. Presently, we are analysing the copy of the judgement received. At the same time, our lawyers have gone through the operative portion of the judgment. A short note on the matter is placed below:

Issue related to takeover of IIL (Four Appeals):

In April 2000, BIFR declared INCAB as a sick Company. As per interim order of the Hon'ble Supreme Court, the rehabilitation proposals of the three parties (TSL, R R Kabel (RRK) and Pegasus Asset Reconstruction (PAR) were evaluated by the Operating Agency (OA). In this case, the OA is State Bank of India.

On evaluation of all three schemes by the OA in three detailed meetings, the BIFR passed an order on 9.12.2009 holding that the rehabilitation proposal submitted by Tata Steel is best and directed TSL to submit the Draft Rehabilitation Scheme (DRS). Against this order of BIFR, four separate appeals were filed by RRK, PAR and two Unions supporting RRK.

In its majority judgment, the Bench has held that various factors in the scheme of TSL, viz: its financial resources and domestic and international image are far superior to that of RRK and PAR and these positive elements can be harnessed to enormous advantage for revival of INCAB. The Bench has finally concluded that TSL has the maximum potential strength to revive IIL. Therefore, the order of BIFR dated 9.12.2009 is upheld and the aforesaid four appeals by RRK, PAR and two Unions supporting RRK has been dismissed. BIFR has been directed to proceed with implementation of directions given in its order of 9.12.2009 to TSL to submit a fully tied up DRS and take all necessary measures towards revival of IIL in accordance with law.

Day before yesterday (30.6.2011) was the last working day of the Chairman of AAIFR. He has however, given a dissenting view wherein the following are the salient points:

1. That he is demitting office on completion of his tenure and as such not able to write a detailed order and it is not possible for him to go through the full text of the order (prepared by the Member of the Bench) due to paucity of time.
2. The matter should be remanded back to BIFR for reconsideration of the three schemes objectively afresh. The order of BIFR dated 9.12.2009 has been held to be illegal on the ground of judicial propriety of the Bench of BIFR and difference in cut-off dates in all the three schemes of TSL, RRK and PAR.
3. OA has not acted as an independent agency and has not considered the aspect of cut off dates.

Issue related to Directors of IIL: (Two Appeals):
Pursuant to an administrative order of ratification issued by the Bench Clerk of BIFR, M/s RRK have inducted few persons on the Board of Incab, who, according to us, are their nominees. This order was challenged by us and one of the Unions. This set of two appeals thus, dealt with the issue of appointment of Directors.

On account of an interim order dated 14.5.2009, passed by the Hon'ble Supreme Court (directing status quo in the matter of Management), in these two appeals, the Bench has held that it would not go into merits of the case to take a final decision regarding the legality of the order. The said interim order was passed by the Supreme Court in the matter related to assignment of secured debts of Incab in favour of associate companies of RRK.

Tata Steel is analysing the judgment for future steps.