SC rejects BIFR cases

The Supreme Court recently disposed of a bunch of cases in which the basic legal question was whether, after the approval of a scheme by the Board for Industrial and Financial Reconstruction (BIFR) under the Sick Industrial Companies (Special Provisions) Act, an unsecured creditor has the option not to accept the scaled down value of its dues, and to wait until the scheme for the rehabilitation of the respondent company has worked itself out, with an option to recover the debt with interest post rehabilitation.

The apex court answer with a ‘no’. Taking the case of Modi Rubber vs Continental Carbon as an exemplary one that will settle other such cases, too, a Supreme Court bench comprising Justice MR Shah and Justice CT Ravikumar noted that the submission that unsecured creditors should have an option not to accept the scaled down value of dues “has no substance and cannot be accepted”.