IMPORTANT POINT
Notwithstanding the abatement provided by the third proviso to Section 15(1) of SICA, introduced by virtue of Section 41 read with the Schedule to the SARFAESI Act, the effect of Section 22 of SICA no more survives Section 35 of the SARFAESI Act.

T.B. Radhakrishnan, J.—The petition availed different financial assistance from different creditors, including respondents 1, 6 and 7. In 2005, the BIFR issued an order under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985, hereinafter, the SICA, for short, in pursuance to a reference made to it under Section 15 of SICA. In spite of those guidelines issued as per Ext. P2, nothing worked out ongoing by Ex. R3 (g), the Indian Bank addressed BIFR, requesting to take suitable misfeasance proceedings against the company under the provisions of the SICA. It brought to the notice of BIFR that the movable assets of the company have already been stolen; the premises of the factory are under the control of anti-social elements; due to militant labour present in front of the factory, it is very difficult to enter into the factory and no workers have got their settlements ever since the factory closed; no security is available in the factory even to look after the remaining machines and that the factory is completely rusted and highly dilapidated and it is very difficult for anybody to restructure.

2. With the aforesaid scenario, the secured creditors invoked provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, hereinafter, the SARFAESI Act, for short. This writ petition is filed challenging the said provisions on the fundamental ground that in view of Section 22 (1) of SICA, proceedings under the SARFAESI Act are barred and that those proceedings have to be quashed.

3. The secured creditors have come on record to contest, stating that all of them stand by the securitization proceedings under the SARFAESI Act in terms of the third proviso inserted to Section 15 (1) of SICA, by the operation of Section 41 of the SARFAESI Act and that the proceedings pending before BIFR have abated since the secured creditors before this Court represent more than 3/4th of the value of the amount outstanding against financial assistance disbursed to the writ petitioner by those secured creditors.

4. Learned counsel for the petitioner, with the support of the decision reported in Noble Aqua Pvt. Ltd. v. State Bank of India & Ors.1 contended for the position that Section 22(1) of SICA would apply to the facts of the case in hand inasmuch as the proceedings before BIFR are not at the stage of reference and they, essentially, are much beyond the stage of enquiries, and schemes, because, following the reference and consideration of the petitioner’s case, BIFR conducted enquiries and certain schemes were formulated and operating agencies were also brought on record. This status of the BIFR proceedings, according to the learned counsel for the petitioner, takes it out of and beyond the scope of ‘reference’ for the purpose of the third proviso to sub-section (1) of Section 15 of SICA, as it one stands. It was accordingly contended that there is no question of abatement of reference because the case before BIFR is itself not at the stage of reference and hence, the concept of abatement by the force of the third proviso to Section 15 (1) of SICA does not apply.

5. Learned senior counsel appearing for the contesting secured creditors argued that the materials on record should deter the writ Court exercising its discretionary power in favour of the petitioner since it is clearly demonstrated that assets of the company have just been permitted to wither away, even reducing the value of the securities. It is also pointed out that by virtue of the provisions of the SIC (Special Provisions) Act, 2003, Act 1 of 2004, to which, assent of the President was received on 1.1.2004 and which enactment was published in the gazette on 2.1.2004, SICA itself stands, repealed.

6. For the purpose of deciding this case, it is not necessary to consider whether SICA stands repealed by the enactment of 2004 or whether that repealing enactment stands enforced, as noticed by the Division