IMPORTANT POINT
Once secured creditors representing three-fourths in value of total amount outstanding decide to take action in terms of Section 13(4) of Securitisation Act, all proceedings before BIFR would automatically abate.

V. Ramasubramanian, J.—Unable to reconcile itself with the opinion rendered by a Division Bench of this Court in Triveni Alloys Limited v. Board for Industrial and Financial Reconstruction (2006 (132) Comp. Cases 190 (Mad)), another Division Bench has referred the following questions for the consideration of the Full Bench:-

(i) Whether an action initiated in terms of Section 13(4) of the Securitisation Act, by the secured creditors, representing three-fourths in value of the total amount outstanding, would result in the automatic abatement of the proceedings before BIFR, in view of the third proviso to section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, inserted by way of amendment under Act 54 of 2002 ?

(ii) Whether the secured creditors are obliged to seek permission of BIFR, for taking action under Section 13(4), for bringing to an end the proceedings before BIFR, when the matter is pending at the stage of Section 15 of Sick Industrial Companies (Special Provisions) Act, 1985 ?

(iii) Whether the ratio decidendi in Triveni Alloys Limited requires reconsideration or represents the correct view ?

2. We have heard Mr.AR.L.Sundaresan, learned Senior Counsel for the petitioner, Mr.Arvind P.Datar, learned Senior Counsel for the first respondent, Mr.K.Moorthy, learned counsel for the second respondent and Mr.K.V.Shanmuganathan, learned counsel for the respondents 3 to 6.

3. Brief facts constituting the background to this litigation, are necessary to throw light upon the significance of the reference made. Therefore, they are summarised as follows:-

(i) The petitioner is a Company carrying on business in spinning yarn. It has two Mills.

(ii) Claiming that the net-worth of the Company got eroded as on 31.3.1998, the petitioner filed a reference before BIFR under the Sick Industrial Companies (Special Provisions) Act, 1985. It was taken on file and numbered as Case No.252 of 1998.

(iii) The petition was later dismissed by BIFR by an order dated 20.9.1999, but the same was set aside by the Appellate Authority (AAIFR), on 28.4.2000 and the case was remanded back to BIFR.

(iv) By a fresh order dated 29.12.2000, BIFR rejected the reference as not maintainable and the petitioner filed an appeal once again before AAIFR.

(v) By an order dated 10.5.2001, the AAIFR again set aside the second order of BIFR and remanded the case back to BIFR for a fresh consideration.

(vi) After the second order of remand, BIFR appointed ICICI Bank Limited as the Operating Agency on 31.01.2002.

(vii) BIFR subsequently passed an order on 30.8.2005, declaring the petitioner-company as a sick industrial company, within the meaning of the expression under Section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 and appointed IDBI Ltd., which is the second respondent herein, as the Operating Agency.

(viii) The Operating Agency was directed by BIFR to carry out Techno Economic Feasibility Studies and to prepare a Rehabilitation Scheme, before the cut-off date 31.12.2005.

(ix) We do not know what happened to the said direction. However, in the meantime, the second respondent herein (IDBI) filed an application in O.A.No.437 of 2001 on the file of the Debts Recovery Tribunal-I, Chennai, against the petitioner for recovery of a sum of Rs.6,28,63,589/-, due as on 31.1.2001, under Section 19 of the Recovery of Debts due to Banks and Financial Institutions Act, 1993, hereinafter referred to the RDDB Act, for the sake of convenience.

(x) Since neither the proceedings before the BIFR nor the proceedings before the Debts Recovery Tribunal were progressing, IDBI and other secured creditors assigned the debts due to them from the writ petitioner, in favour of the first respondent herein. The Deed of Assignment executed by the second respondent (IDBI) in favour of the first respondent is dated 30.3.2009.

(xi) After getting assignment of the dues, the first respondent issued a notice under Section 13(2) of the Sec