The Hindu Business Line : IOC gets BIFR nod to take legal action against Kanoria Ind

THE Board for Industrial and Financial Reconstruction (BIFR) has granted permission to Indian Oil Corporation Ltd (IOC) for initiating legal action against Kanoria Industries Ltd (KIL) for the limited purpose of crystallising the extent of liabilities of the company to IOC.

"As the liability is disputed by the company, IOC is permitted to initiate legal action against KIL for the `limited purpose'," the BIFR said.

In its recent order, the Bench said, "However, no coercive action or execution of decree, if any obtained, shall be taken by IOC without the BIFR's prior approval." It also directed the company to sort out the outstanding issue with all concerned within a stipulated time frame and submit a report to the operating agency (OA).

The OA was directed to forward the same to the Board with its comments and recommendations. At the hearing, IOC's counsel requested the Board for permission to initiate legal action under the Sick Industrial Company (Special Provisions) Act (SICA), for their dues. However, KIL submitted that the amount was disputed. The company had also sought time from the Board to sort out the outstanding issues.

The Bench recalled that in the hearing held in June 2000, KIL, engaged in manufacturing of cement, was declared a sick company. IDBI was appointed as the OA to examine the viability of the company. A draft rehabilitation scheme was circulated in February 2002 to all concerned. The cut-off date proposed was April 1, 2002.

However, the draft scheme ran into difficulties due to various reasons and at the hearing held on January 23, 2003, the Bench noted, inter alia, that the projections and viability of the company were required to be reworked and discussed in a joint meeting of all concerned parties. Further, the Government of Karnataka had yet to convey its decision with regard to deferment of sales tax dues, which was vital for the revival of KIL. The Bench had therefore directed IDBI to formulate a revised rehabilitation scheme.

On a query from the Bench, at the recent hearing, the OA submitted that except the State Government's consent, all other consents were in place. However, the secured creditors wanted a change in cut-off-date but were not willing to make further sacrifices, the OA submitted.

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