The Appellate Authority for Industrial and Financial Reconstruction (AAIFR) has cleared the way for a rights issue by engineering company Jessop & Co Ltd.
AAIFR throws out all the 7 appeals against BIFR orders
KOLKATA: The Appellate Authority for Industrial and Financial Reconstruction (AAIFR) has cleared the way for a rights issue by engineering company Jessop & Co Ltd.
The AAIFR dismissed all the seven appeals against the orders of the Board for Industrial and Financial Reconstruction (BIFR) and allowed existing shareholders to bring in funds for revival of the company.
Jessop chairman Pawan Ruia said, “The true potential of Jessop is now unleashed. We will immediately go for completion of the process of the rights issue, which was earlier stayed by AAIFR.”
Jessop, an erstwhile public sector undertaking, had been referred to BIFR way back in 1995 after its net worth was fully eroded. In 1998, BIFR directed a change in management as it had failed to implement the revival scheme sanctioned by it. Subsequently, as part of government’s disinvestment programme, 72% controlling stake in the engineering company was transferred in favour of a consortium of the Ruia Group.
The set of BIFR orders that were challenged before AAIFR included sanction of a revival scheme, permitting restructuring of Jessop’s equity, exemption from provisions in the Companies Act and the SEBI Act for a rights issue aggregating to Rs52.04 crore and deregistering Jessop from the purview of the Sick Industrial Companies Act (SICA).
The appellate authority held that Jessop was out of the purview of SICA.
“BIFR had permitted the existing shareholders of the company to bring in funds in exercise of the powers contained in SICA. The order was passed to facilitate the revival of the company through adequate inflow of funds. We are of the view that the appellants cannot be termed to be aggrieved by the order of BIFR,” the AAIFR order said.
“There is also no infirmity in the order of BIFR deregistering the company from purview of SICA since the company now is a net worth positive entity and this is in conformity of judicial precedent,” it added.
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