Quick Summary: The Delhi High Court ruled against Elecon Engineering Co. Ltd., who wanted to get interest on a court order against Cement Corporation of India. The court decided that the approved recovery plan under SICA applies to all creditors, including Elecon, stopping them from claiming interest.
The case between Elecon Engineering Co. Ltd. and Cement Corporation of India has been going on since an arbitration decision was made on November 15, 1993. This decision required Cement Corporation to pay Elecon ₹47,00,484 with 6% interest per year. The decision became a court order on October 8, 2002, but faced several legal challenges.
Elecon faced a problem when their appeal against the court order was rejected on January 31, 2003. The order was changed on February 11, 2004, to clarify the interest terms. However, Cement Corporation was declared a financially struggling company on May 3, 2006, and a recovery plan was approved, stopping Elecon's attempts to enforce the order.
The Board for Industrial and Financial Reconstruction (BIFR) declared Cement Corporation a financially struggling company, triggering protections under the Sick Industrial Companies Act (SICA). This stopped Elecon's attempt to enforce the court order in 2009, as the plan prevented the recovery of interest during its implementation.
Elecon sought help from BIFR and later the Appellate Authority for Industrial and Financial Reconstruction (AAIFR), but both bodies supported the plan's terms, denying interest recovery. The plan treated all creditors equally, not allowing any special treatment for Elecon.
Justice Harish Vaidyanathan Shankar emphasized that the recovery plan, once approved, applies to everyone, including unsecured creditors like Elecon. The court mentioned the Supreme Court's view that such plans take priority over individual claims to ensure the company's recovery.
"The legal rules clearly state that an approved plan shall be binding on the financially struggling company as well as on all its creditors," noted Justice Shankar.
The court rejected Elecon's request to recover interest, reinforcing the binding nature of the recovery plan. This decision shows how the legal system focuses on treating all creditors equally under recovery plans.
