The company, promoted by Bhai Manjit Singh, while ``taking advantage of the BIFR's protection had apparently started implementation of the scheme unilaterally and that too even without its sanction....It was, therefore, highly objectionable on the part of both MIL and IDBI to act in concert for settling deals behind the curtains,'' observed the bench in its latest hearing on the Rs 36.8 crore draft rehabilitation scheme.

Contrary to clear and specific orders from BIFR, the company sold shares held by its subsidiaries in Bausch and Lomb (India) Limited (BLL) and settled dues with IDBI and ICICI of Rs 26 crore in preference to other secured creditors. In return, the companyreceived no dues certificate (NDC) from the financial institutions.

Also, the board found the explanations put forth by MIL and IDBI confusing and held their conduct as ``obviously not above board and the company, in fact, was trying to mislead BIFR and others.''

The IDBI had submitted that the company raised loans to repay its dues prior to the sanction of the rehabilitation scheme. Only after the dues were cleared, the company's shares mortgaged with it were released. The firm sold the shares thus secured and utilised the amount for liquidation of the loans raised by it, IDBI asserted.

The company said the protection under Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 applied only to the assets of the sick company and the promoters in their personal capacity were not bound by the same. The company has deposited full money out of the proceeds realised from the shares held by MIL. It went on to make a fine distinction between the shares held by MIL and its subsidiarycompanies and those held by the promoters in their own name. It further said the shares were bought from the company's profits and not as alleged by the creditors -- diversion of working capital of Rs 10 crore to its subsidiary companies to invest in BLL. Standard Chartered Bank said that the promoters had guaranteed their loans even in their personal capacity.