VALMIKI J. MEHTA, J

1. The issue in the present case pertains to the interpretation to the 2nd proviso to Section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). In order to appreciate the issue, it would be necessary to reproduce the entire sub-section 1 of Section 15 and the same reads as under:-

“15. Reference to Board.-(1) When an industrial company has become a sick industrial company, the Board of Directors of the company, shall, within sixty days from the date of finalisation of the duly audited accounts of the company for the financial year as at the end of which the company has become a sick industrial company, make a reference to the Board for determination of the measures which shall be adopted with respect to the company:

Provided that if the Board of Directors had sufficient reasons even before such finalisation to form the opinion that the company had become a sick industrial company, the Board of Directors shall, within sixty days after it has formed such opinion, make a reference to the Board for the determination of the measures which shall be adopted with respect to the company:

Provided further that no reference shall be made to the Board for Industrial and Financial Reconstruction after the commencement of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, where financial assets have been acquired by any securitisation company or reconstruction company under sub-section (1) of section 5 of that Act:

Provided also that on or after the commencement of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, where a reference is pending before the Board for Industrial and Financial Reconstruction, such reference shall abate if the secured creditors, representing not less than three-fourth in value of the amount outstanding against financial assistance disbursed to the borrower of such secured creditors, have taken any measures to recover their secured debt under sub-section (4) of section 13 of that Act.”

2. A reading of the 2nd and 3rd provisos shows that there is a literal difference in the requirement of 2nd and 3rd provisos. Whereas in the 3rd proviso, there is a requirement of the will of 75% and above of the secured creditors to cause abatement of a reference under SICA, there is no such requirement of any minimum percentage of the debt to be purchased by a securitization company or an asset reconstruction company registered under the Securitization and Reconstruction of Financial Asset and Enforcement of Security Interest Act, 2002 (SARFAESI Act).

3. By the impugned order, Appellate Authority for Industrial and Financial Reconstruction (“AAIFR”) has held that in the 2nd proviso to Section 15, the requirement of 75% or more of the financial assets to be purchased by a securitization company or an asset reconstruction company is very much implicit, meaning thereby, unless and until an asset reconstruction company or a securitization company purchases 75% or more of the secured financial assets of a sick company, there does not arise the question of applicability of the second proviso to Section 15(1) of the SICA. The relevant observations of AAIFR are contained in paras 15 to 18 of the impugned order dated 29.11.2007 and the same read as under:-

“15. We have examined the averments made by the companies and the counsels for ARCIL and Banks and Fls. The 2nd proviso envisages a context where the financial assets have been acquired by any securitisation/reconstruction company prior to the filing of the reference. On the contrary, the 3rd proviso envisages instances where majority (not less than three-fourth) of the secured creditor (s) of a sick industrial company, whose reference is pending with the BIFR have taken an action under Section 13(4) of the said Act primarily with an object of realization of its outstanding dues. While the former is merely a metho