D.P. Wadhwa, J.
(1) M/S. Shree Bajrang Jute Mills Ltd., a sick company under the Sick Industrial Companies (Special Provisions) Act, 1985 (for short 'the Act') first filed this petition under Article-226 of the Constitution challenging the orders of the Board for Industrial and Financial Reconstruction ('BIFR' for short) confirmed by the Appellate Authority both under the Act sanctioning a scheme for its rehabilitation under the provisions of the Act. Under the scheme the sick company has been taken over by the East India Commercial Co. Ltd (EJCC) which is respondent No.5 in this petition. This petition was filed by the sick company through Shri Subhash Kumar Bhuwalka claiming to be the Director thereof. After we had issued notice to show cause as to why rule nisi be not issued and which was limited to the question as to what was the effect of the Operating Agency not itself coming up with the scheme, an application (C.M. No. 8942/94) was filed on behalf of the sick company stating that the petition was incompetent inasmuch Subhash Kumar Bhuwalka was no longer a Director of the sick company. It-was submitted in this application that the Bifr in the exercise of its powers under section 18(g) of the Act had directed by order dated, 13 September '1994 that the existing Directors of the sick company shall be deemed to have forthwith vacated their offices without any further act or deed and that the Board of Directors was reconstituted. In this view of the matter, an application (C.M. 8937/94) was filed by the sick company as well as by Subhash Kumar Bhuwalka and Murari Lal Bhuwalka that they all be imploded as petitioners. Both Subhash Kumar Bhuwalka and Murari Lal Bhuwalka claim to be original promoters and erstwhile Directors of the sick company. Accordingly, we directed that both these persons shall be substituted as petitioners and that the sick company itself would be transposed as respondent. There are some other applications for intervention, but we do not think it is necessary for us to refer to those as we had issued the show cause notice on a limited question and heard the ar- arguments on that of the substituted petitioners and EICC; Union Bank of India; Idbi - the operating agency, and the sick company.
(2) There is no dispute that the company Shri Bajrang Jute Mills Ltd. was declared a sick company as per the provisions of sections 15 and 16 of the Act. It is also not disputed that Bifr found that it was not practicable for the sick company to make its net worth exceed the accumulated losses 'within a reasonable time, and so the stage under sub-section (3) of section 17 of the Act was reached.
(3) Reference to the Bifr under section 15 of the Act.was made on 18 October 1989. During the hearing held on 6 March 1991 Industrial Development Bank of India (IDBI) was appointed as the Operating Agency to prepare a rehabilitation scheme if feasible after examining the technical viability of the sick company. Thereafter, proceedings Of the Bifr were held on 7 January 1992, 17 September 1992, I November 1993 and 21 February 1994. The Operating Agency could not come up with any rehabilitation scheme. It, however, introduced Eicc as the intending promoters. Schemes furnished by the petitioners being the existing promoters and that by Eicc, the intending promoters, were not found to be acceptable. The Bifr came to a prima facie opinion that it was fair and just to wind up the sick company. The relevant portion of the minutes of the Bifr of its meeting dated I November 1993 are as under :- 'On a consideration of the material on record and the submissions made, the Bench observed that so far there had been no viable scheme to run the unit. The proposal of the existing promoters has not been found to be acceptable by the all concerned. Not only the workers 'but also the bank has expressed lack of confidence in the present promoters. Besides, the elements of the Scheme and the assumptions underlying the same have not been found to be acceptable. The proposal from the intending new promoters does not find acceptance from the bank specially in regard to the offer of settlement of its dues. Similarly, the State Government would not be forthcoming with the reliefs/ concessions as sought for by the new promoters. A section of workers are not willing to support the new promoters. As there is no agreed rehabilitation sheme, the Bench has formed a prima facie opinion that it is fair and just to wind up the company Shree Bajrang Jute Mills Limited in terms of Section 20 of the Act. Further the Bench directs issue of notices fixing 21st Feb., 94 at 10.30 Am for considering objections/suggestions relating thereto Along with an alternative proposal, if any, from anyone concerned in this regard, which should reach the Board latest by 6th Feb., 94.'
(4) We may also note that one Mr. B.D. Bhuwalka was also considered to be an existing promoter though petitioners say he belonged to the minority group and he was also given opportunity to come up with a scheme but only on his depositing a sum of Rs. 10, lakhs in no lien account'. He defaulted and is, thus, out of picture.
(5) In its meeting on 21 February 1994 the Bifr noted the submission of the representative of the Operating Agency that the existing promoters of the sick company, i.e., the petitioners, had been reportedly disposing some of the assets of the company for which the Operating Agency had not given any permission and that the petitioners had also not submitted any rehabilitation proposal to the Operating Agency. Representative of the Operating Agency said that a proposal ha.d been received from Eicc which had also entered into a memorandum of understanding with the workers of the sick company under the aegis of the Andhra Pradesh Government. It is not necessary for us to refer in details to the minutes of this meeting of the Bifr dated 21 February 1994 except to note the concluding portion of the minutes:-
'11.The Bench observed that the existing promoters had no scheme to put before them towards the rehabilitation of the company. However, there is a rehabilitation proposal by taking over the management by Eicc in which workers were willing to participate in equity with the support of State Govt. The Bench also noted that Idbi has agreed for one time settlement with the new promoters. As such there is a broad agreement to the rehabilitation scheme. Bench accordingly decided to formulate a draft scheme with modifications and suggestions made at the hearing. We direct that the short particulars of the draft scheme may be published in two newspapers, one English and one Telugu, in circulation in Andhra Pradesh. A general notice 'shall also be is-. sued to all the concerned parties for attending the next hearing, the date and time of which will be notified in due course. 12. The Bench further directed Apidc to immediately takeover the possession of the mill with such assistance from the State Govt. and local Administration as well as Workers within 15 days. It was further decided to form a Committee consisting a representative Workers, Bank as well as existing promoters, if : they are willing to co-operate to take complete inventory of assets of Bjml within a month. Apidc shall report to Bifr the progress in taking over possession and making the inventory by 10 days. '
(6) Finally in its meeting held on 16 June 1994 the Bifr referred to the proceedings of 21 February 1994, considered the suggestions/objections including that of the petitioners to the draft scheme given by Eicc (Respondent No.5) which had also been published in the newspapers, again went into details and considered the relevant circumstances. The Bifr then recorded as under :-
'IN view of the broad consensus/agreement to the rehabilitation scheme on the part of concerned parties, the Bench in exercise of powers conferred U/s 18(4) read with Section 19(3) of Sica, 1985 sanctioned the enclosed scheme agreed to and consented by Union Bank of India, Govt. of Andhra Pradesh, East India Commercial Co. Ltd., Esic, Idbi and workers together with a compliance schedule. The sanctioned scheme shall come into force with immediate effect and the schedule of compliance as agreed to shall be adhered to meticulously.'
Some further directions were also given which we need not refer to as they are not necessary for the purpose of present petition.
(7) Aggrieved by this order, the sick company filed an appeal before the Appellate Authority under section 25 of the Act. This was dismissed by order dated 7 September 1994, the Appellate Authority holding that there was no substance in the appeal.
(8) Mr. Jain, learned counsel for the petitioners, said that since the Operating Agency was bound to come up with a scheme of its own and it having failed to do so, the Bifr was incapacitated in sanctioning the impugned rehabilitation scheme given by the Eicc (fifth respondent). We have been unable to appreciate this argument. The Operating Agency is an arm of the Bifr and if the Operating Agency expresses its inability to come up with any scheme for any reason, the Bifr cannot be placed in a helpless position that it itself is handicapped in proposing any rehabilitation scheme and that the sick company must be wound up as it appeared to us was the main desire of the petitioners. This Court in Upper India Couper Paper Mills Company Ltd. v. The Appellate Authority for Industrial & Financial Reconstruction and others 1994 (4) D L 209, repeatedly said that one of the main aims of the legislation (i.e., the Act) was to revive to the extent possible viable sick industrial companies. In para 24 of the judgment, the Bench said as under :-
'IT seems to us that the thrust of the legislation is for making all possible endeavors to explore all the possibilities of reviving the sick industrial company.'
(9) The Operating Agency is appointed under sub-section (3) of section 17 of the Act and it means any public financial institution. State level institution, scheduled bank or any other person as may be specified by general or special order as its agency by the Board. The Operating Agency has to prepare a scheme having regard to the guidelines As may be specified by the BIFR. This is sub-section (3) of section 17 of the act which may be reproduced as under :- 'If the Board decides under sub-section (1) that it is not practicable for a sick industrial company to make its networth exceed the accumulated losses within a reasonable time and .that it is necessary or expedient in the public interest to adopt all or any of the measures specified in section 18 in relation to the said company it may, as soon as may be, by order in writing, direct any operating agency specified in the order to prepare, having regard to such guidelines as may be specified in the order, a scheme providing for such measures in relation to such company. ' Then clause (b) of sub-section (41 of section 17 is also relevant and is as under :- '(4) The Board may- (a) ................ (b) if the operating agency specified in an order made under sub-section (3) makes a submission in that behalf, review such order and modify the order in such manner as it may deem appropriate.'
(10) We, thereforee, see no bar on the Bifr in providing for scheme for rehabilitation of a sick company which scheme has not been prepared by the Operating Agency.
(11) Mr. Jain stressed on the following sentence appearing in para 25 of the aforesaid judgment of this Court:-
'Once an order under section 17(3) of the Act was passed the 'operating agency had no option but to frame a scheme. In case it was not feasible to frame a scheme the operating agency could have filed an application for review of the order passed by the Bifr under Section 17(3) of the Act. '
(12) We do not see how this observation in any way helps the petitioners. Reference was also made to two decisions of the Supreme Court in Navnit R. Kamani and others v. R.R. Kamani, : (1989)ILLJ47SC , and The Gram Panchayat and another v. Shree Vallabh Glass Works Ltd and others, : [1990]1SCR966 , but we do not find those have any application to the present case and do not support the proposition advanced by the petitioners. We, thereforee, find no merit in this petition. It is dismissed with costs. Counsel fee Rs.5,000.00 .