SARFAESI enforcement prevails over an unsanctioned SICA draft scheme; section 13(2) notice remains only a show-cause notice.

A section 13(2) SARFAESI notice is only a demand-cum-show-cause notice, so writ interference is generally premature where the borrower can raise objections and pursue the statutory remedy under section 17 after rejection. The pending rehabilitation process under SICA does not bar secured creditors from proceeding under SARFAESI when the draft scheme has not been sanctioned by BIFR. The abatement rule in section 15(1) of SICA, read with the overriding effect of section 35 of SARFAESI, supports creditor action once the statutory threshold is met. Mere consent to a draft scheme does not suspend the right to enforce security before sanction.

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Issues: Whether the notice issued under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 could be interfered with in writ jurisdiction and whether the pending rehabilitation process under the Sick Industrial Companies (Special Provisions) Act, 1985 barred action by secured creditors under the SARFAESI Act.

Analysis: The notice under section 13(2) was only a demand-cum-show-cause notice. After the borrower filed objections, the secured creditor considered and rejected them, and the statutory remedy under section 17 of the SARFAESI Act remained available. The challenge to the section 13(2) notice was therefore premature and had, in any event, become infructuous in view of the subsequent rejection order. On the inter se operation of SICA and SARFAESI, the Court held that the rehabilitation scheme had not been sanctioned by the BIFR and therefore had no operative statutory force. The second proviso to section 15(1) of SICA, together with the overriding effect of section 35 of SARFAESI, meant that where secured creditors representing not less than three-fourths in value had taken measures under section 13(4), the reference abated and SARFAESI prevailed. The Court further held that sanction under section 19 of SICA was not automatic or a matter of right, and mere consent to a draft scheme did not displace the creditors' right to proceed under SARFAESI before sanction.

Conclusion: The writ petitions were not maintainable for interference with the section 13(2) notice, and the secured creditors were entitled to proceed under SARFAESI notwithstanding the pending but unsanctioned draft rehabilitation scheme.

Final Conclusion: The Court gave priority to the SARFAESI recovery mechanism over an unapproved BIFR draft scheme and declined to grant writ relief.

Ratio Decidendi: A section 13(2) notice is only a show-cause notice, and where a draft rehabilitation scheme under SICA has not been sanctioned, the statutory right of secured creditors to proceed under SARFAESI, aided by the abatement rule in section 15(1) of SICA and the overriding clause in section 35 of SARFAESI, is not curtailed.

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