The Hindu Business Line : BIFR ticking on despite winding-up moves

Set up in 1987 to provide speedy mechanism for amalgamation, merger and devise such other solutions as may be necessary to deal with the problems of sick units in the large and medium sector, BIFR continues to clock its monthly average of 30 references.

This, even as the Government is taking steps to repeal the Sick Industrial Companies (Special Provisions) Act, 1985 governing BIFR and the Appellate Authority for Industrial and Financial Reconstruction (AAIFR). Except for two years, 1996 and 2000, when BIFR's operations saw minor fluctuations in the number of cases registered, the overall trend has seen upward movement, from 1995.

From 115 cases registered in 1995 to 559 cases during 2002, the number of companies knocking the doors of BIFR has been constantly growing.

Some of the cases which got registered in 2002 included Usha (Ispat) Ltd, Oswal Spinning & Weaving Mills Ltd, Lloyds Metals and Engineering Ltd, Shri Shakti LPG Ltd, Garware Chemicals Ltd and Usha (India) Ltd.

A look at the total number of references received as on January 31, 2003, shows that the board has received almost 5,894 references, of which 5,619 were private company cases and 275 Central and State public sector undertakings.

The board has also denied registration to 1,360 references and registered 4,383. As on January 31, it has disposed of 2,787 references of which 1,072 were dismissed as non-maintainable and 326 references were declared as no longer sick.

There are about 1,596 references pending before BIFR at various levels of rehabilitation. While draft schemes have been circulated for 72 references, winding up notice was issued to 131 companies.

One of the reasons given for winding up BIFR by the Government has been undue delay in disposal of cases. Countering this point, BIFR in its submissions before the Standing Committee on Finance, examining the repeal of SICA, had said,

"Delays in winding up of sick companies have been erroneously attributed to BIFR. There seems to be a popular misconception that delays in the winding up sick industrial companies, which cannot be rehabilitated, takes place at the level of the board.

However, as per Section 20 of SICA, BIFR is only the recommendatory body and on coming to conclusion that a particular sick company cannot be rehabilitated within a reasonable timeframe, it has only to record and forward its opinion to the concerned High Court."

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